Read an Excerpt
PRODUCT LIFECYCLE MANAGEMENT
DRIVING THE NEXT GENERATION OF LEAN THINKING
By MICHAEL GRIEVES The McGraw-Hill Companies, Inc.
Copyright © 2006 The McGraw-Hill Companies, Inc.
All rights reserved.
ISBN: 978-0-07-178630-0
Excerpt
CHAPTER 1
Introduction—The Path to PLM
Productivity is driven in waves. We create new ways of doing things or new things to do that drive a new wave of productivity. Some waves of productivity are driven by a seminal invention such as the steam engine, the automobile, or the computer. Other waves are driven by our approach to the way we do things, such as the assembly line, the multidivisional or M-form corporation, or lean manufacturing.
As the newest wave in productivity, Product Lifecycle Management—popularly referred to as PLM—emerged in the last few years fully formed, or so it seemed. PLM was first piloted in the automotive and aerospace industries: two sectors with complex, manufactured products. The electronics industry, which has product management issues that focus more on software configuration than the complex product configurations of the automotive and aerospace industries, was also an early adopter of PLM or PLM-like technologies. With the success of PLM in these three industries, interest in PLM has spread to businesses as diverse as consumer packaged goods (CPG), industrial goods, medical devices, and even pharmaceuticals.
PLM is an outcome of lean thinking—a continuation of the philosophy that produced lean manufacturing. However, unlike lean manufacturing, PLM eliminates waste and inefficiency across all aspects of a product's life, not solely in its manufacture. PLM is focused on using the power of information and computers to deliberately pare inefficiencies from the design, manufacture, support, and ultimate disposal of a product. Wherever possible, PLM enables the movement of inexpensive information bits in place of expensive physical atoms, a concept popularized by Nicholas Negroponte.
In doing this, PLM takes "lean" to the next level. Lean manufacturing is a continual process that works at taking out the inefficiencies in the manufacturing process. However, as lean manufacturing efforts find and eliminate waste, products are being produced less efficiently at other phases of development. PLM uses product information, computers, software, and simulations to produce the first product as efficiently and as productively as the last product throughout the design, development, and delivery process.
Lean manufacturing requires considerable resources because changes that improve production cause equipment to be reconfigured, machines rearranged, and material relocated as the lean manufacturing engineers test their hypothesis that this new method will decrease waste. Once the system is set in place, PLM uses little in the way of resources, since this same process is done digitally.
Testing lean approaches is time intensive, so only the most promising ideas for streamlining the manufacturing process can be tried. The wall clock ticks away as the new configurations are set up, production commences, and the results are evaluated. PLM does not operate under the same time constraint. PLM can simulate wall clock time, and it can do multiple versions of it simultaneously, so all hypotheses can be tested, not just the most promising.
Finally, lean manufacturing can only take an organization so far. The most efficiently produced product resulting from the best lean manufacturing processes can be flawed as a result of design failure or failure in actual use. It is nothing more than efficiently produced scrap that is a waste of time, energy, and material. Productivity increases in the production of scrap are a disappointing, but logical, result of a limited approach to lean manufacturing.
Lean Thinking–Globally!
Seeing what lean thinking can do on the manufacturing floor has left companies eager to extend these benefits of lean into other parts of the organization. But, to do so, lean will have to be accompanied by an integrated approach to product information and the tools and techniques needed to enable that integrated approach. The level of productivity that PLM can drive promises to be enormous, as evidenced by the attention it has received in a short period of time.
PLM has attracted worldwide attention on a global basis; it is not solely an American or European initiative. It is being adopted by organizations everywhere. We expect organizations based in the more industrial Asian countries such as Japan and Korea to be early adopters of PLM. However, organizations in such diverse countries as India, Malaysia, and China are also not only adopters, but innovators of PLM.
PLM is able to raise the bar on productivity because it allows for the complete integration of everything related to a product or service—both internal and external—into the organization producing it. As you'll learn as you read this book, PLM uses information technology and organizational practices and processes to improve efficiencies both within and across functional areas. Dividing work along functional areas, such as engineering, manufacturing, sales, and service, is an organization's method of dividing tasks in order to simplify complexity.
In the past, a great deal of effort and focus has been placed on increasing efficiencies within these functional areas. Although improvements can always be made within the various functional areas, these initiatives suffer from the law of diminishing returns. The high-return projects have been identified and remediated. This is especially true of those companies that have embraced Six Sigma project teams, where their mantra is continual improvement.
In fact, PLM initiatives are becoming an option for Six Sigma teams looking for areas of improvement. Because PLM generally originates in a specific departmental area, it may be natural simply to view PLM as a functional area initiative. PLM projects can naturally start in engineering, because that is where product information originates, and there are a substantial number of opportunities to make improvements through better organization of product information. However, as we shall see throughout this book, the bigger opportunity is to use PLM to enable better information flow across the entire organization.
Functional areas can easily become isolated silos, with little communication or coordination among them. Attempts to optimize performance within these silos can actually lead to substantial underperformance across the whole organization and its related supply chain.
PLM holds the promise of improving productivity through a cross-functional approach, using product information. By linking different functional areas through shared product information, PLM can help organizations break down the silo perspective and unlock productivity gains as functional areas benefit from a shared base of information. As supply chains become more integrated, PLM has the potential for impact across these supply chains—not just within the organization. This will enable productivity and performance gains that cannot be obtained if the focus is solely on individual areas.
The other allure of PLM is that it does not improve efficiency and productivity from simply a cost-reduction perspective, but also from a revenue perspective. Increasing costs are not an inherently bad thing. If revenues are increasing, it is almost impossible not to increase costs. The key to increasing profits is just not to let costs increase at a faster rate than revenues.
PLM has within its framework the opportunity to increase innovation, functionality, and quality—three drivers of increased revenues—by better organizing and utilizing the intellectual capital of an organization. The ability to develop and build creative, more useful, and better products from the same amount of effort will also drive productivity and is a great deal more sustaining than cost cutting. As the old adage goes, "You can't simply save your way to prosperity." Real prosperity requires revenue growth.
At first blush, PLM appears to be a relatively straightforward concept. As the name implies, it is the management of the information about a product throughout its entire life cycle from initial design to final disposal. However, as will be explained in the next chapter, the devil is in the details of this seemingly obvious explanation. In addition, there is still a good deal of discussion and disagreement regarding the form, scale, scope, and implementation of PLM.
Even in its initial phases, PLM is a "big idea" information technology undertaking. Similar to Enterprise Resource Planning (ERP) initiatives, PLM's greatest promise is not in the foundation projects that affect one functional area, but in its larger strategic use that is cross-functional, enterprise-wide, or even supply chain inclusive.
However, the days of the chief executive officer (CEO) and chief information officer (CIO) going to their board of directors and saying, "Give us $500 million and two years, and we'll give you an enterprise system" have come and gone—if they ever really existed. So too are the days when any project involving the Internet received automatic approval without the annoyance of having a financial justification or even a business proposition that was quasi-logical.
As John Crary, CIO of Lear Corporation, a $13 billion automotive supplier says, "The only way CIOs will bring projects to their board for approval is if they have a well defined Return on Investment (ROI)." PLM holds that promise, and it does it on a "pay as you go" basis, as we shall see. This is the only way that such a broad technological concept could even hope to be funded in this day and age.
In this introduction, we will explore why PLM and other information systems have the potential for such a powerful impact on the productivity of an organization. This will be the basis for the claim that PLM will drive the next wave of lean thinking in organizations that adopt and embrace PLM. The success of PLM relies on some underlying fundamental premises. We will explore four of them in this introduction. We use these premises every day to guide our decisions regarding information technology adoption. However, we often do not realize it. Nor do we realize the increasing impact of these premises. The premises we will discuss are: information as a substitute for time, energy, and material; the trajectory of computer technology development; the virtualization of physical objects; and the distinction between processes and practices.
Information as a Substitute for Wasted Time, Energy, and Material
We often lose sight of why Information Systems (IS) have such a powerful impact on organizations. Systems that enable approaches such as PLM are developed and find a place in organizations for a fundamental reason: with these systems, we can substitute the use of information for the inefficient use of time, energy, and material. Since we live in a physical world, we cannot substitute information for all uses of time, energy, and material, only for those used inefficiently. With physical products, we eventually have to do something with atoms: move them, shape them, reconfigure them, assemble them, etc. To produce physical products, we have to use material, expend energy, and use people to do so.
Let's take an example from everyday life to illustrate this principle of substituting information for wasting time, energy, and material. Those of us who play golf will be all too familiar with this example. We hit our first golf shot off the tee. We then drive our golf carts up to where the golf ball rests. Because we need to know the distance to the green in order to select the right club and hit our next shot accurately, we need to find out where we are. While there are yardage markers on the course marking the distance to the green, we usually have to find them. This entails some time and some energy to drive our golf cart around to find these markers.
We then compute the distance between these yardage markers and our ball, sometimes by stepping off the distance between the yardage marker and our ball—again taking more time and more energy. We also sometimes drive our golf carts farther up the course to survey the green to see if there is water or other nasty hazards that might come into play on our next golf shot. Again, this entails more time and energy. Only after we use this time and energy, do we select our club and hit our next shot.
Contrast this with golf carts that are equipped with a small computer and GPS system that show us an image of the hole, where we are on that hole, and yardage to the green and to hazards that we ought to avoid. We now drive up to our tee shot, look up at the computer screen, and know precisely how much yardage we have to the green and what hazards we ought to avoid surround the green. We can immediately get out of the cart, select the right club, and hit our shot.
While the waste of time and energy on the golf course is unlikely to become a national issue, it does illustrate nicely the substitution of information for the waste of time and energy in a common, familiar task. While we may have the luxury of this waste in a leisure task situation, the situation is very different when our objective is to minimize the use of resources, as we need to do in for-profit organizations.
Time, energy, material, and information are not directly comparable because, with respect to quantities, they all have different units of measure. However, with respect to the value we typically place on them, we can compare them because we can translate each of them into a cost, and then compare the costs.
Figure 1.1 represents the relative costs of a typical task that we perform. It could be designing a product that has specific functions, drilling a hole in a part that will match up with another part to be bolted on, routing material through three stations on a production floor, or, on a personal level, assembling a bicycle to put under the Christmas tree. On the left bar, there are three components of that task. The lower part of the bar represents the cost function of the time, energy, and material we would expend if we did the task in the most efficient manner possible. We waste no material. The time to perform the task is the least possible time of all possible ways to perform the task. We minimize the amount of energy used. With today's focus on "lean" manufacturing and other functions, this is the optimal "lean" task.
The second or middle part of the bar is execution inefficiencies. These are inefficiencies that develop because, even though we know what the optimal procedure is to perform the task, we just do not do it properly. We design the part, but forget to include one of the functions. So we have to redesign the part to include the forgotten function. We drill the hole in the wrong place when producing the product, and we have to scrap the material. We also waste the time and energy we have used to drill the misplaced hole. We move the wrong material to the wrong station on the factory floor, and we have to relocate it to the right station, wasting time and energy. We select the wrong bolt to put the wheel on the bicycle, and we have to dissemble the bike and reassemble it with the right bolt.
The top part of the bar represents the information inefficiencies. This is the inefficient or wasted use of time, energy, and material because we just do not have the information required to do the task efficiently. We do not know how to get all the functions incorporated into a single design without trial and error. We do not know exactly where the hole to be drilled is or what tolerances we need so that the hole lines up with the other part later on in the production cycle. We do not know what the machine loading is on the factory floor so that we can route the material to the machines with capacity. And something we have all experienced, we just cannot tell from the bicycle plans—supposedly written so a child could understand them—what size and type of bolt among all the bolts in the package is the one required to hold the front wheel on the bicycle.
On the right bar, we have the relative impact on costs of information replacing inefficient or wasted time, energy, and material. The bottom part of the right bar is still the same optimal use of time, energy, and material for our task. The middle part of the right bar, execution inefficiencies, is still the same. While an area of concern, remedying execution inefficiencies is where engineering usually plays its part. Engineering excels at taking task inefficiencies where the optimal use of time, energy, and materials are known, and devising processes and machines to reduce those inefficiencies as much as is possible in an imperfect physical world. Six Sigma project teams are aimed at these execution inefficiencies.
The top part of the right bar is where information can replace the inefficient or wasted use of time, energy, and material on the top part of the left bar. Our vault of drawings shows us how the functionality we need was accomplished in previous designs. Computer Aided Design (CAD) and engineering specifications make it possible to know exactly where to drill the hole so it will fit perfectly every time with another part, with no wasted material or the time and energy necessary to process that material.
Information systems that monitor each work station let us know which machines are available at what specific times so that the material moves continually through the three machines in the least amount of time with the least amount of effort. An instructional video showing someone assembling the bicycle with a close-up on the parts used at each step minimizes the wasted effort dismantling and reassembling the bicycle by trial and error. (Although, from experience, the author would recommend the most efficient use of time, energy, and material would be to have the store that assembles hundreds of these bicycles do the assembly.)
Figure 1.1 shows a substantial reduction in overall cost resulting from the substitution of information for the inefficient use of time, energy, and material. However, Figure 1.1 is only meant to be an illustration and does not reflect the actual cost function for any particular task. Admittedly, it is also an ideal representation.
As shown in the right bar, information might not replace all the inefficient use of time, energy, and material. In a typical situation, information might substitute for a substantial amount of wasted time, energy, and material, but not all of it. For complex tasks, the most efficient use of time, energy, and material might not be know-able because the permutations and combinations are so vast.
(Continues...)
Excerpted from PRODUCT LIFECYCLE MANAGEMENT by MICHAEL GRIEVES. Copyright © 2006 by The McGraw-Hill Companies, Inc.. Excerpted by permission of The McGraw-Hill Companies, Inc..
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.
