Research focus: Product Lifecycle Management (PLM)

„Everything used to be better!” is a quote often used in many situations, especially in difficult times. All companies are confronted with the new challenges of globalization. From the outside, there is increased competitive pressure, which is mainly reflected in the need to reduce costs. As new, innovative products are demanded faster and faster, product life cycles shrink. The consequence of this is the internal requirement to reduce the number of development cycles required until the product is ready for use. The aim is to introduce a new product to the market more quickly, with the intention of achieving an earlier and longer-lasting unique position. Only those who maintain a unique position on the market are also in the position to escape the pressure of price competition and to dictate their prices. [1]

These changes should not be seen as a burden but as a new opportunity for the further development of the company. In the last ten years, many optimization potentials have been exploited in the area of production automation, so that turning this adjusting screw can only lead to marginal changes. Progress in this area can only be achieved by further developing the manufacturing technology.

Another field for further improvements is offered by development and design. Here, the possibilities that information technology offers, can lead to a significant increase in time and cost efficiency. It has long been known that all relevant properties and 70 to 80 percent of all life cycle costs of a product are determined during its creation. (Fölster/Zint (2004), p. 29).

In order to remain competitive, it is necessary to open up new markets while maintaining existing customer relationships. Three components can be considered fundamental to this:

- manufacturing of innovative products

- increased cooperation with partners

- relocation of the production towards customer markets

No matter how innovative a product may be – it will not succeed if it does not benefit the customer or if it is introduced to the market at the wrong time. In addition, defective products can ruin the buyer's trust in the company and its product range as well.

The necessary innovations, however, require specific know-how. Therefore, a focus on the core competence of one’s own enterprise is inevitable, which requires in turn an intensified cooperation with specialized partners. Thus, the company no longer acts as a lone fighter on the market, but as part of a value chain consisting of several stations [2].

The image of a company that accommodates all organizational units at one location typically no longer exists in the form of medium-sized and large companies. The division into at least one production location and one administrative and sales location in one country can be observed. In the meantime, distribution has also taken place across national and regional borders. The use of the advantages that low raw material and personnel costs present, requires a relocation of production to all parts of the world. Access to development and design data around the clock and independent of time zones is therefore necessary.

All three components mentioned above require an information and communication infrastructure that provides an integrated view of existing data and information across site boundaries. Furthermore, IT-supported cooperation between different companies within the supply chain must be implemented in order to enable data exchange. Thirdly, the customer's wishes must be passed on continuously from the beginning of the value chain (research and development) to the end (finished product) as quickly, completely and correctly as possible.

The development of a new, complex product or the search for revolutionary manufacturing processes represents an incalculable, high risk for any company. If the new development fails or if the solution that has been found cannot assert itself on the market, this often results in the end of the company due to the high investment costs. In order to distribute this risk, cooperation is sought with partner companies preceding and following the own position in the product life cycle, but also with their own competitors on the supplier side. These also serve to achieve learning effects. The type of collaboration depends on individual factors and can range from voluntary cooperation, e.g. in joint ventures [3], to concentration in the form of a merger or group formation. This requires unrestricted cooperation in this common field while protecting the remaining know-how.

In the following, you will find two scenarios that illustrates the need for Product Lifecycle Management.

The development periods in company A are long because existing components are either not used as a matter of principle, or – if they are used – finding them takes very long. This reduces developers’ motivation to search for existing components and the decision is thus made in favor of in-house development [4]. If a component has been identified for reuse, its documentation cannot be accessed because it is only available in a decentralized way and not every employee has access to it. This means that the part cannot be used without risk [5].

In competitor B’s company, the product development is supported by an IT system. This requires the input of components and the maintenance of the resulting product structures, which initially leads to additional work for the employee in charge. With the introduction of the PDM-system, the business processes were optimized and paralleled and the component master data was standardized. This results in considerably shorter work processes for all other activities, and the defined tasks ensure transparent development. Bottlenecks and delays are recognized immediately and can be traced by all parties involved. The increased need for communication in parallel development promotes the exchange of information. The rapid transfer of information, not only to decision-makers, but to all employees involved, is supported. The final outcome is a faster and more cost-effective development of high-quality products by the reuse of existing parts.

The requirements of the market for high quality, innovative products on the one hand and low costs on the other can be met more easily by company B, and in some areas these requirements can even be met only by this company. In the long run, company B will be able to receive orders from customers and sell its products on the market, while the demand for company A's products will be lower.

The scenarios described above illustrate the need for optimization in company A’s processes.

The chair of Software Tools and Methods for Integrated Applications makes use of this topic in order to show development potential for selected areas of product life cycle management (PLM) in the emergence of products.

In the following, you will find two scenarios that illustrates the need for Product Lifecycle Management.

The scenarios described above illustrate the need for optimization in company A’s processes.

PLM describes a strategic concept for the management of a product throughout its entire life cycle. This concept includes supporting IT systems as well as methods, processes and organizational structures. PLM is not to be confused with Product Data Management (PDM), even though this system usually plays a central role in its implementation in order to store, manage and retrieve all data that arises during the development, production, warehousing and sales of a product in a uniform manner. Ideally, all areas or systems that come into contact with a product access a common database: from planning (PPS/ERP), design (CAD), calculation (CAE) and production (CAM) to controlling, sales and service.

PLM is neither a self-contained system nor a simply purchased IT solution, but rather a strategic concept that must be implemented in a company-specific manner by means of suitable technical and organizational measures.

1] For an in-depth analysis of competitive strategies see Porter (1999) or Fleck (1995)

2] Supply chain is the part of the value chain of a manufacturing industry which comprises the purchase of raw materials and semi-finished products, the production of finished products and the distribution of products to customers (usually trading companies). Supply Chain Management (SCM) connects the parts of the supply chain within a company and with the value chains of suppliers and (retail) customers to form a whole or a comprehensive business process. Supply chain management can therefore also be understood as integration management. (Chrobok (1999), p. 297 f.)

3] The term joint venture refers to cooperation between companies in which a new, legally independent business unit is founded in which both founding companies have a share with their capital. In addition to the capital, the founding companies usually contribute a substantial share of the resources in technology, industrial property rights, technical or marketing know-how and/or operating facilities. A joint venture is characterized by two aspects: cooperation and autonomy (cf. Wöhe (2002), pp. 314, 1038).

4] In addition, there may even be a lack of confidence in the components already developed, comparable to the NIH(= not invented here)-syndrome from software development.

5] The times for individual activities without the support of a PDM system can be taken from VDI 2219 on page 42.