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Why PLM Is So Important For High-Tech Manufacturers

Wed, 07/17/2013 - 8:21am
Kevin Prendeville, Managing Director, Accenture

Product lifecycle management (PLM) may sound like one of those deep-in-the-weeds business terms, but it has become one of the most important arenas for accelerating product deliveries, reducing costs, and generating more revenues in major manufacturing industries. Going forward, aerospace, consumer electronics, medical device, semiconductors, and wireless infrastructure manufacturers would need to invest even more in product lifecycle management technologies and capabilities and Product Lifecycle Servicesto make this complex process more streamlined, cohesive, and simplified.

So what is product lifecycle management? Put simply, it’s all the processes and systems involved in product development from the original product conception through the end of its life. Product lifecycle management involves numerous corporate groups such as marketing, engineering, manufacturing, and purchasing. These processes and systems are particularly designed for use by manufacturers employing thousands of highly skilled designers, scientists and engineers working within global processes across hundreds of current and future products.

Why is PLM so important?

Product development has become strategically crucial to the financial performance of these manufacturing companies so they are investing more in it. They understand and appreciate problems PLM addresses and the benefits it can reap such as lower production costs, as well as accelerations in new product designs and launch schedules and engineering cycle times.

What’s at stake for high-tech manufacturers?

Each year these manufacturers companies spend as much as 25 percent of their revenues—in some cases billions of dollars—on innovation and product development, according to Accenture analysis. But nearly half of the investment is on products that are either late to market or don’t  address customer requirements. A one percent reduction in the time it takes to deliver a product to market by improving PLM, for example, can translate to major financial benefits.

While PLM can solve a plethora of problems, a one-size-fits-all offering does not exist. The correct remedies depend on the company, industry, specific needs, and competitive dynamics. Based on Accenture’s extensive experiences with clients, however, the most pervasive and common problems are inefficient end-to-end processes, fragmented data systems, mounting offering and product complexity, and difficulties adhering to more and increasingly stringent regulations.

Four Product Development Problems Vex Manufacturers

Inefficient end-to-end processes: Because of deeply ingrained silos within these companies, the marketing, product planning, engineering, manufacturing, purchasing, sales, and service groups often operate independently. Too often these groups are disconnected islands that rarely talk to each other. To boost efficiency, they need to operate in a more coordinated and streamlined fashion by determining areas where the overall process can be improved. To further improve end-to-end process efficiency, they should enhance and supplement their work forces, as well as enhance product design, validation, and manufacturing.

Fragmented data systems:  When investing in product development, companies seek data about requirements, designs, parts, bills of material, software codes, and quality. But within these companies such data often remains disorganized, unclear, redundant and dispersed throughout different groups spread among hundreds of applications. Valuable product development data does not get captured, categorized, managed nor disseminated efficiently. These firms need to create centralized data owners and management systems. By doing so, they increase accessibility of accurate, timely and reusable data throughout the business. This increases process efficiency and re-use of product development data and, therefore, investment dollars.

Mounting product complexity: Most companies have seen a steady increase in their number of product offerings, which often combine sophisticated services and features. But due to the mix of mechanical, electronic, software, and service elements, these products are increasingly complex. As such, the offerings are more complicated to conceptualize, develop, and deliver to market. These companies need to examine and enhance the profitability of different product types and features as well as project platforms. Furthermore, if companies are challenged to gather excellent internal and external product ideas, they can accelerate innovation processes, incubate new businesses, and create and mine new product ideas.

Difficulties adhering to increasingly stringent regulations: In the product development arena of high-tech companies, the number of global regulations continues to grow and often has become more complex. To avoid fines and penalties, these companies need to be vigilant and well-organized in following product regulations. They need to more uniformity in the ways in which these regulations are abided by and tracked.

Final Thoughts

It’s not an overstatement to say that PLM is fast becoming one of the most important areas in manufacturing companies for improving business performance. The potential improvements PLM offers are widespread and significant. They can be realized using a number of approaches and techniques. This is the time for manufacturers to derive all the benefits they can out of their PLM processes.   

For more information about Accenture’s PLM offerings, go to Product Lifecycle Services.

Kevin Prendeville is a managing director with Accenture’s Product Lifecycle Services practice. He can be reached at kevin.p.prendeville@accenture.com.

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