PLM's Biggest Risk? The Narrow View

"Record numbers" is how Ed Miller, president of CIMdata, Ann Arbor, Mich., describes market acceptance of Product Lifecycle Management (PLM) solutions. In 2005 investments in that enterprise solution grew 8.7% to reach $18.1 billion, a rate that exceeded Miller's earlier estimates.

But don't assume that growing acceptance means that all users have refined and optimized conceptual attitudes toward PLM, adds Miller. He says some still tend to characterize PLM more as a software tool than as an enterprise business process philosophy. That misperception, positioning PLM as just another software tool, is the biggest challenge, notes UGS Corp.'s Bill Carrelli, the Milford, Ohio-based vice president of strategic marketing for the Plano, Texas-based solution provider. Carrelli says the best resolution of the challenge comes from companies that adopt a strategy of integrating PLM within their normal work processes -- the procedures of day-to-day activities. (Even so, CIMdata anticipates market growth will reach $26.3 billion by 2010, a compound annual growth rate of approximately 7.7%.)

Miller sees broad forces combining to drive market growth. In addition to cost reduction, quality improvement and time to market, Miller emphasizes the process performance edge PLM brings to competing and collaborating in a global business model.

For example, in Taiwan, Cheng Loong Corp., a leading paper container manufacturer, is using Windchill, the PLM solution from Needham, Mass.-based PTC to facilitate the development of a RFID paper container design platform. The company expects PTC's Windchill to help Cheng Loong and its international clients, suppliers and strategic partners to accelerate development time.

Miller's one caveat -- PLM's need for an effective interface with ERP, the other major process thread in manufacturing.

Both ERP and PLM providers offer solutions. Examples range from QAD's QXtend interface product to the UGS Teamcenter Gateway for the mySAP Business Suite solution.

CIMdata's research reveals some of integration's benefits:

• A 75% reduction in the time, cost and errors associated with re-keying data.
• A 75% reduction in bill of material error cost as BOMs are created once and then managed consistently in both PLM and ERP.
• A 15% reduction in inventory costs from knowing what parts are already on hand for redesigns and new products.

Adds UGS' Carrelli: Gaining traction with PLM starts with an integration strategy with business processes.

For example, research by the Boston-based AberdeenGroup indicates PLM helped "Best-in-Class" companies shorten time-to-market by 10% to 20% by including procurement early in product development process."

And sometimes a customer's experience helps refocus the PLM provider. That's how PLM vendor Aras Corp., Lawrence, Mass., began a Lean Product Design marketing initiative, says Marc Lind, vice president, marketing. The customer, Plymouth, Mich.-based auto parts supplier Freudenberg-NOK, was routinely using the Aras PLM solution to improve new product quality, shorten development cycle times and improve product margins, says Lind.