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ECONOMIC CONTRIBUTIONS AND
COLLABORATIVE BENEFITS OF PLM (PRODUCT
LIFECYCLE MANAGEMENT) TO ORGANIZATIONS
A Project Submitted to
The Graduate School of Engineering and Sciences of
İzmir Institute of Technology
in Partial Fulfillment of the Requirements for the Degree of
MASTER OF SCIENCE
in Engineering Management
by
Oğuz VARHAN
Advisor
Assistant Professor Habil GÖKMEN
January—2020
İZMİR
I
ABSTRACT
With the increasing competition between businesses, businesses have to produce more complex
products, faster and innovative. Along with this competitive production, the products also need
to be of good quality and low cost. This low-cost requirement, competition and increases in raw
material prices make it increasingly difficult to manage complex products. The whole process
of these products, starting from the idea stage to the design, manufacturing, timing and customer
satisfaction, should be performed with the highest efficiency. At this stage, there is a need for
error-free and use of past experiences. In addition, throughout the process, there must be a
smooth and uninterrupted exchange of information within the enterprise. Based on these
needs, companies offering computer-aided design and manufacturing software have introduced
the terms PDM (Product Data Management) and the more comprehensive one PLM (Product
Lifecycle Management).
The Product Lifecycle Management (PLM) concept incorporates the seamless integration of all
information generated in all stages of a product's lifecycle, with all suppliers and customers, to
everyone at every administrative and technical level. And also if PLM is not in a company, it
cannot do activities to develop a product and create innovation, and the company cannot
survive. PLM also increases the innovation in the business, allowing it to increase revenues,
reducing time-to-market for new products, and providing superb support and new services for
existing products. Thanks to the PLM strategy, it is easier to obtain financial resources. This is
because it enables the company to show its current and future revenues, costs and current values.
Helps businesses reduce product related costs (bug tracking, change management, etc.). It
enables him to foresee the costs of materials, resources and energy at the idea and design stage.
Gives speed and accuracy by managing the processes related to the development of existing
products. In this way, the product also provides economic contribution to after-sales services.
II
The main topic of this article will be on the economic and cooperative benefits of PLM. We
will discuss the economic benefits to businesses by collaborative management of products from
a single source, digital process simulations, access to ideas of projects, design and
manufacturing experiences, tracking issues, changes and workloads. At the same time, we will
examine the case studies provided by companies providing PLM system software to
manufacturing companies.
Figure 1.Processes involved in PLM
(Source: https://www.da-group.com/technology-services/lifecycle-services/ )
ACKNOWLEDGMENTS
I would like to express my gratitude to Asst. Prof. Habil GÖKMEN for his great support and
guidance during my last project. I would like to thank the companies that formed the basis of
this study and assisted in the field analysis. I want to thank my parents and my dear wife who
supported me unconditionally at every stage of my life.
January 2020 Oğuz VARHAN
III
TABLE OF CONTENTS
ABSTRACT I
ACKNOWLEDGMENTS II
TABLE OF CONTENTS III
LIST OF TABLE VI
LIST OF FIGURES VII
LIST OF ABBREVIATIONS VIII
CHAPTER
1. INTRODUCTION ................................................................................................................ 1
2. LITERATURE REVIEW .................................................................................................... 3
2.1. PRODUCT LIFECYCLE MANAGEMENT .............................................................. 3
2.1.1. History of PLM: The Subdivision of PLM, PDM ................................................. 4
2.1.2. PLM Manifesto and Principles: Management of Complexity .............................. 6
2.2. THE SCOPE OF PLM .................................................................................................. 8
2.2.1. Activities in the Scope of PLM ............................................................................ 8
2.2.2. The PLM Grid ...................................................................................................... 9
2.2.3. Resources in the Scope of PLM ......................................................................... 10
2.2.3.1. Objectives and Metrics ........................................................................ 10
2.2.3.2. Organization and Management ............................................................ 12
2.2.3.3. Activities .............................................................................................. 12
2.2.3.4. People .................................................................................................. 12
2.2.3.5. Product Data ........................................................................................ 13
2.2.3.6. Product Data Management System ...................................................... 14
2.2.3.7. PLM Applications ................................................................................ 15
2.2.3.8. Facilities and Equipment ..................................................................... 16
IV
2.2.3.9. Methods and Techniques ..................................................................... 16
2.2.3.10. Products ............................................................................................. 16
2.3. BUSINESS OBJECTIVES OF PLM ......................................................................... 17
2.3.1. Improving Business Performance ....................................................................... 18
2.3.2. Improving Business Performance with PLM Active Collaborative Work ......... 21
2.3.2.1. Defining of Collaboration .................................................................... 22
2.3.2.2. Objective of Collaboration .................................................................. 22
2.3.2.3. Fundamental Collaborative Working Concepts ................................... 23
2.3.2.4. Commonly Supported Collaboration Processes .................................. 24
2.4. ROI OF PLM ............................................................................................................... 26
2.4.1. Main Objective of PLM ROI .............................................................................. 27
3. IMPLEMENTATION OF PLM AND COLLABORATIVE SERVICES IN
DIFFERENT INDUSTRY TYPES ....................................................................................... 29
3.1. MATURATION OF PLM WITH INDUSTRIES ..................................................... 29
3.1.1. Aerospace & Defense Industries ........................................................................ 29
3.1.2. Automotive Industries ........................................................................................ 31
3.1.3. Electronics/High-Tech Industries ....................................................................... 33
3.1.4. Fabrication and Assembly Industries ................................................................. 33
3.2. PLM BENEFIT AND COST CALCULATION METRICS .................................... 34
3.3. ROI FOR PLM CALCULATION METHODS ........................................................ 36
3.3.1. Cost Model for PLM Solution ............................................................................ 38
3.3.2. Software Costs .................................................................................................... 38
3.3.3. Selection & Implementation Costs ..................................................................... 39
3.3.4. Cost Factors ........................................................................................................ 39
V
4. RESULT AND DISCUSSION ........................................................................................... 40
4.1. CONTRIBUTION OF PLM WITH INDUSTRY EXAMPLES .............................. 40
4.2. RETURN OF PLM INVESTMENTS ........................................................................ 44
5. CONCLUSION ................................................................................................................... 50
REFERENCES ....................................................................................................................... 52
VI
LIST OF TABLES
Table 1:Typical targets of a PLM initiative (J. Stark, Product Lifecycle Management) ........... 4
Table 2. Examples of Activities within PLM ............................................................................. 8
Table 3. PLM Time KPIs Examples (Resource: [4]) ............................................................... 10
Table 4. PLM Cost KPIs Examples (Resource: [4]) ................................................................ 11
Table 5. PLM Quality KPIs Examples (Resource: [4])............................................................ 11
Table 6. PLM Flexibility KPIs Examples (Resource: [4]) ....................................................... 11
Table 7. PLM Infrastructure KPIs Examples (Resource: [4]) .................................................. 11
Table 8. “Examples of business processes in the PLM environment” (Resource: [1]) ........... 12
Table 9. Examples of product data in the PLM environment (Resource: [6]) ......................... 14
Table 10.Examples of equipment in the PLM environment (Resource: [8]) ........................... 16
Table 11.Table of PLM Metrics - I (Resource: [21]) ............................................................... 35
Table 12. Table of PLM Metrics - II (Resource: [19]) ............................................................. 35
Table 13.Benefit Table of ROI for PLM (Resource: [22]) ...................................................... 36
Table 14. Costs of PLM (Resource: [22]) ................................................................................ 36
Table 15. Risks of PLM Survey (Resource: [22]) .................................................................... 36
Table 16. Companies that optimize the product development process, increase the product
portfolio and increase productivity and quality. (Resource: [28]) ........................................... 42
Table 17. Firms providing occupational health to prevent risk and foresee deviations and take
proactive and informed corrective measures. (Resource: [28]) ............................................... 42
Table 18. Companies that change their engineering capabilities to provide innovation in the
process of developing new technology. (Resource: [28]) ........................................................ 43
Table 19.Companies using PLM and virtual testing environment to pre-validate and optimize
your products, limit testing, and make it right the first time.(Resource: [28]) ......................... 43
Table 20.”Model: TEI Analysis Summary — Core Product Data Management” (Resource:
[22]) .......................................................................................................................................... 45
Table 21.Model: TEI Analysis Summary — Extended PLM (Manufacturing) (Resource: [22]
) ................................................................................................................................................. 46
Table 22.Model: TEI Analysis Summary — Extended PLM (Services) (Resource: [22] ) ..... 46
TABLE 23. FINANCIAL ANALYSIS STRATTEC'S PTC WINDCHILL PROJECT
(ROI) ........................................................................................................................................ 49
VII
LIST OF FIGURES
Figure 1.Processes involved in PLM ......................................................................................... II
Figure 2. The Innovation Profit of PLM, from history to now. ................................................. 5
Figure 3.Benefits from Investment in PLM/Innovation Technology 2004-2005 ...................... 6
Figure 4.The PLM grid (Resource: “Springer International Publishing Switzerland 2015 ....... 9
Figure 5.PLM benefits people and teams (Resource: [7, 7]).................................................... 13
Figure 6. PDM to PLM (Resource: [9]) ................................................................................... 14
Figure 7.Some of the 3DEXPERIENCE PLM Applications ................................................... 15
Figure 8.Life of a product with PLM (Resource: [10]) ............................................................ 17
Figure 9. Business Objectives of PLM (Resource: [11]) ......................................................... 18
Figure 10. Next Generation Product Development /Processes in Single Source by PLM
(Resource: [14]) ........................................................................................................................ 21
Figure 11. Time Consuming of Asynchronous Method ( Resource: [15]) .............................. 23
Figure 12. Time Consuming of Synchronous Method ( Resource: [15]) ................................. 24
Figure 13.Companies Common Strategic Objectives Pyramid(Resource: [17]) ..................... 27
Figure 14. "Benefits" and "Topics to Calculate" Hierarchy of PLM Collaborative Strategy
(Resource: [21]) ........................................................................................................................ 34
Figure 15.5 “Simple formulas measure PLM software's financial benefits” (Resource: [23]) 37
Figure 16. Types of PLM Benefits (Resource: [29])................................................................ 47
Figure 17.Cumulative Net Benefit(Resource: [29]) ................................................................. 48
Figure 18.Net Cash Flows (Resource: [29]) ............................................................................. 48
VIII
LIST OF ABBREVIATIONS
PLM: “Product Lifecycle Management”
PDM: “Product Data Management”
ERP: “Enterprise Resource Planning”
FMEA: “Failure mode and effects analysis”
E-BOM & M-BOM: “Engineering & Manufacturing Bill of Materials”
KPI: “Key Performance Indicators”
OOTB: “Out of the Box”
cPDm: “collaborative Product Definition management”
ROI: “Return on Investment”
NPV: “Net Present Value”
DMU: “Digital Mock-Up”
CAD: “Computer Aided Design”
1
CHAPTER 1
INTRODUCTION
In industries where engineering, production and service exist, activities such as planning,
product, production, sales and service must be well planned. Thanks to this planning, especially
the producers, consumers and countries also benefit. Industrial products; In addition to the low
cost, timely and error-free operation of the equipment, operating in the specified operating
conditions until the end of its life, etc., it should also include numerous criteria and issues,
standards and new technologies. To summarize these criteria,
I. Avoiding excessive material, energy, labor and time
II. To achieve efficiency in product processing and operating activities.
III. To be able to combat competition by making innovation and difference from the
production stage of the product.
In addition to these criteria’s, the organization needs to be organized and managed in the best
way in all activities throughout the life of the product.
Companies have used many methods and technologies to benefit from these criteria and
problems and to manage their existing processes. Product Lifecycle Management is one of the
leading methods in today's conditions. By using Product Lifecycle Management, you can keep
track of all processes within the company and record these processes. Then, using these records,
you can optimize your processes within the company, learn from your mistakes, react quickly
to changes, and manage the demands & changes from your customers in a systematic way.
When it comes to Product Lifecycle Management, you can divide the product into processes by
thinking of it as a living entity. This is a management that covers the processes from the idea
2
stage to the death of the product. The product life cycle has many fractures under it. In summary,
these fractures; managing the product or service (FMEA, Requirement Management, etc.) from
the idea stage of the product to the project stage, managing the R & D processes (design,
simulation, variation, etc.), managing the documents and data of the product, production
processes(E-BOM & M-BOM, Plant Layout, Process Flow Management) and managing
production issues (issue management) , managing changes to a product that is now on the
market (change management) , managing service requests, etc.
In order to implement the Product Lifecycle Management approach, software and computer
systems are needed. The companies that develop these softwares are big software companies
that have become brands in the world with their design programs. When we say Product
Lifecycle management, there are major companies and programs in the world that are accepted.
Some of them are software such as; 3DEXPERIENCE®by Dassault Systèmes©, TeamCenter®
by SiemensPLM©, Windchill® by PTC©, Vault® by Autodesk©, SAP − PLM® by SAP©. In
this study, using the data obtained from such software companies in the studies and analyzes
carried out together with the industry, the economic benefits of the industry firms will be
examined. Other programs and mainly 3DEXPERIENCE® were used in the analysis.
Management, design and manufacturing data derived from these programs and used by
companies in real life are considered.
All these programs are the systems developed and used by the companies in order to benefit the
companies. The initial installation costs of these systems are very high, implementation
processes are risky and painful. However, if it manages to create a collaborative culture within
the Firm, it provides valuable benefits as we will talk about in our article. We will examine the
proofs of these benefits with the analysis and ROI Tables.
3
CHAPTER 2
LITERATURE REVIEW
2.1. PRODUCT LIFECYCLE MANAGEMENT
Product Lifecycle Management (PLM) is a business activity that assumes that organizations
manage their products in the most effective and quality way throughout the life cycle of that
product. PLM is a management system used for the products produced by the company. Its aim
is not only to manage the products themselves, but also to manage all parts, product-related
documents, personnel assigned to the product and the product portfolio in an integrated way.
PLM not only manages a single element, it manages the entire product portfolio of the
organization, from individual parts to individual products.
At the highest level, the goal of PLM is to increase product revenue, reduce product-related
costs, maximize the value of the product portfolio, and maximize the value of existing and
future products for both customers and shareholders. [1]
When companies want to invest in PLM software, the main objectives are;
I. To improve the product performance as a result of the difficulties encountered
as a result of the competition brought about by today's conditions. The structure
of the products is becoming increasingly complex, the production time is
shortened, the number of parts is increasing, requirements and quality standards
are rising, and must be cheaper.
II. To make the company culture for the ability to manage the life of the product.
Due to the necessity of increasing product diversity and shortening of the life
cycles of the products.
4
New product release rate
+100%
The rate of income generated during the product's life cycle
+25%
Product reevaluation factor
x 7
Cost ratio, such as product recalls, malfunctions and requirement issues
-75%
Time to create new product
-50%
The ratio of raw materials and work energy costs
-25%
Recycling ratio
+90%
Product life traceability
100%
Lifecycle control
100%
Lifecycle visibility
100%
Income rate obtained from the service of the product
+40%
Innovative and creative product release rate
x 3
Table 1:Typical targets of a PLM initiative (J. Stark, Product Lifecycle Management)
2.1.1. History of PLM: The subdivision of PLM, PDM
The birth of PLM as an idea came when American Motors Corporation In (AMC) was looking
for a way to accelerate product development to better compete against its bigger competitors.
In 1985, AMC began developing new model, which later emerged as the Jeep Grand Cherokee.
Computer-aided software, where engineers can be more flexible and productive in concept
design, was at the forefront of what needs to be done to make the product development process
faster. The second part of this quest was the effective communication system, which enabled
faster resolution of conflicts and reduced costly engineering changes, thanks to the spread of all
drawings and documents from a single database. The impact of product data management was
so great that Chrysler, who bought AMC, applied this system to the entire enterprise (everyone
involved in design and production was interconnected). The name of this technology was PDM
(Product Data Management). As one of the first to implement PDM technology, Chrysler
became the most cost-effective manufacturer of the automobile industry, which recorded
development costs of half the sector average until the mid-1990s. The innovation that came at
the end of these quests has survived and encouraged all companies, from software companies
to OEMs, to invest in CAD, PDM and PLM systems.
5
Some milestones in the evolution of PDM / PLM:
• 1960s: “New imaging methods and equipment, first CAD draft and design
applications, sketch book and light pencils bring innovation to the design process” [2]
• 1970s: “Introduction of CAD / CAM systems, automated 2D drafting, first
independent production workstations” [2]
• 1980s: “PC systems born to the real word, introducing 3D systems, PDM problem
gains importance” [2]
• 1990s: “Parametric CAD / CAM / CAE sys integrate with other PLM components,
global market brings collaboration in large PLM systems anywhere in the word, HW
components prices and IT systems expand
CAx / PLM market space rapidly” [2]
Today, PLM helps organizations to profit from
innovation by adding value to the innovation they
are required to survive. This value is achieved by
incorporating institutionalism by facilitating the
dissemination of design information and processes
and maintaining control and consistency in these
processes. With PLM's collaborative approach,
organizations benefit by increasing innovation and
using it appropriately. A company's continued
success is strongly linked to how effectively it can
capture and remove its intellectual property and
product-related information; PLM also provides
value as an enterprise “repository for product
information. [2]
Figure 2. The Innovation Profit of PLM, from history to now.
(Resource: Introduction to Product Lifecycle Management | White Paper)
6
Figure 3.Benefits from Investment in PLM/Innovation Technology 2004-2005
(Source: https://www.tristar.com/)
2.1.2. PLM Manifesto and Principles: Management of Complexity
PLM systems integrate people, processes, business systems and information. PLM System
suppliers have many shared publications on business systems. Business-related pages talk about
trends in the use of PLM tools. PLM Integration consultants provide information on which
solution tools benefit and where. The executives of the PLM Project talk about the success
stories of their organizations at conferences.
Companies need a PLM culture that focuses on the integration of people's direction because
people are asked to change. They have to fulfill their duties in the new application. A PLM
distribution will increase the company's profits if it allows the development of new application
potentials.
The Culture of PLM specifies a range of solutions that focus on information management,
taking into account the human aspects of data management and confidentiality, collaborative
and collaborative integration that keeps people in the center, procedure integration, the
7
necessary tools for the smooth running of procedures. The values of this culture which can be
determined by the conferences, shares and articles mentioned earlier are detailed below:
1. Collaboration (People): When collaboration is said, it must form a wholeness of all
existing information and demonstrate that this information is a trigger mechanism for
other people in the organization. In addition, this information should be descriptive,
clear and valid. Collaborative work creates the need to comply with behavioral
standards and limits. These behaviors and limits should be subjected to the continuous
improvement process, which is the target of the PLM. Collaboration requires open
communication and openness about rules, shared decision-making and need-based
justice. In summary, collaborative work aims at the systematic and wide-ranging
collaboration of the enterprise.
2. Procedures (Processes): As a procedure definition, a general plan of tasks and gates in
an organization may come to mind. This business process plan explains and executes
what should be delivered on who's side, how, where and with which tools. Procedures
are the output of discussion of multi-functional teams. Each team member must
understand the role and purpose of the department. In addition, that member must be
aware of inter-departmental interaction. It guarantees the consistency, accuracy and
validity of the information arranged in the data structures that control the change for the
persons who will use the information.
3. Tools (Business Systems): The application environment is the result of an IT and
Engineering strategy derived from business processes and functions. The target
environment offered by PLM is a consistent set of tools that comply with industry
criteria, standards and processes. The solution tool options offered address the
weaknesses that are needed in the old operation. This increases the profitability and
8
accuracy of the organization. These tools should be easy to learn and use and should not
be affected by performance or errors.
4. Information: The information is structured by elements that the organization organizes
into frameworks (eg product, customer, supplier) (the product requested by the customer
is produced and delivered by the supplier), allowing for close navigation to real-world
relationships. The information that using in PLM is linked to procedure numbers (step,
role, interaction time) and allows optimization of procedures based on key figures, but
prevents stealing knowledge. [3]
Thanks to PLM, which enables systematic and efficient use of these four criteria, significant
profitability can be achieved in all stages of product life in the organizations.
2.2. “THE SCOPE OF PLM”
2.2.1. “Activities in the Scope of PLM”
PLM is a high-level commercial activity. All of a company's product-related lower-level
activities are merged under the PLM umbrella. Table .2 shows some of these activities. [1]
Table 2. Examples of Activities within PLM
(Resource: “Springer International Publishing Switzerland 2015
J. Stark, Product Lifecycle Management, Decision Engineering”)
9
2.2.2. The PLM Grid
The scope of the PLM is shown in Figure 4 in a 5 x 10 matrix. The phases of the Product Life
Cycle are shown in the line, 5 main headings. The 10 contents (information, application tools,
processes and activities) that should be considered when managing the product life cycle are
shown in the column. This matrix helps to demonstrate the complexity of the product lifecycle
and that it is difficult to manage. The scope of the frame is wide. A wide range of topics have
been addressed, from ideas for new products to organizational structure and end-of-life
recycling equipment. In this respect, although the scope seems broad, it reflects the reality of
product management.
Figure 4.The PLM grid (Resource: “Springer International Publishing Switzerland 2015
J. Stark, Product Lifecycle Management, Decision Engineering”)
10
2.2.3. Resources in the Scope of PLM
2.2.3.1.Objectives and Metrics
The main goals that a company expects from PLM are to carry out all activities of PLM. PLM
goals express and deliver what is expected of PLM in many areas such as financial improvement
(top priority), time saving, quality improvement and business process development. Using
metrics known as KPIs (Key Performance Indicators), it helps the organization set goals and
measure progress for future activities.
“In the area of financial performance, for example, possible metrics and targets could be to
increase the value of the product portfolio by 20 %, or to reduce costs due to recalls, failures
and liabilities by 75 %”. [1]
NO
KPIs of PLM
Process
1
Creating/copying a style/material time
study
Data Management
2
Creating a new BOM time study
Data Management
3
Creating/copying a new BOM item time
study
Data Management
4
Creating a color library time study
Data Management
5
Issuing a supplier request time study
Data Management
6
Massively issuing supplier requests time
study
Data Management
7
Loading aggregated information
in table views time study
Data Management
8
Costs calculations of processing time
Data Management
9
Printing a table view time study
Printing
10
Printing a set of BOMs time study
Printing
11
Printing Data Packages time study
Printing
12
Exporting the report of BOM items to
ERP time study
Import/Export
configuration
13
Exporting the report of supplier quotes to
ERP time study
Import/Export
configuration
14
Importing style / material / suppliers’
codes from PDM time study
Import/Export
configuration
15
Downloading reports imported in PLM
time study
Import/Export
configuration
Table 3. PLM Time KPIs Examples (Resource: [4])
11
NO
KPIs of PLM
Process
16
Number of monthly PLM actions
Data Management
17
Cost of implementing a special request
Data Configuration
18
Time study of searching data
Data Management
19
Version update cost
Data Configuration
Table 4. PLM Cost KPIs Examples (Resource: [4])
NO
KPIs of PLM
Process
20
ERP data transfer trend
Import/Export
Configuration
21
The actual data transfer frequency to
the ERP system
Import/Export
Configuration
22
Loop count tracking and management
Data Configuration
23
PLM system scalability (adapts to
resource growth)
Data Configuration
24
Information (Product Traceability and
History) monitoring
Data Configuration
Table 5. PLM Quality KPIs Examples (Resource: [4])
NO
KPIs of PLM
Process
25
Number of user profiles
Data Configuration
26
PLM's trace left in the company
Data Configuration
27
PLM system flexibility
Data Configuration
Table 6. PLM Flexibility KPIs Examples (Resource: [4])
NO
KPIs of PLM
Process
28
Upgraded versions per two-year term
Data Configuration
29
Business compatibility with PLM
software requirements
Data Configuration
30
Business compatibility with PLM
hardware requirements
Data Configuration
31
“Number of OOTB Business Objects”
Data Configuration
Table 7. PLM Infrastructure KPIs Examples (Resource: [4])
12
2.2.3.2. Organization and Management
There are many resources to manage and a wide variety of resources in the PLM Environment.
In addition to all this dimension, resources have complex interrelated relationships to manage
products, components, and customers. Organizational structures, strategies and plans are
necessary to manage all these activities. The effective management of the organization and
resources is so important that it can be called the necessity of PLM. No matter how good the
resources from Human and Information Systems Applications are, all resources need to be
organized to achieve the PLM objectives. (Examples of organizations in the PLM environment:
Departmental, flat, functional, hybrid, matrix, team, project etc.)
2.2.3.3.Activities
Each company has a lot of activity as the product is developed, manufactured, supported and
deprecated. In the PLM environment, the activity is organized into business processes. Business
processes (In many companies, 35 to 55% of business processes are related to the product.)
enable companies to effectively develop, sell, deliver and support their products. The quality of
the processes throughout the product life cycle greatly impacts the success of the product. [5]
[1]
Table 8. “Examples of business processes in the PLM environment” (Resource: [1])
2.2.3.4. People
People and departments need to develop, support, design, and manage a product throughout its
life. Organizations can recruit and motivate highly skilled people to help them do their best.
However, this does not always contribute to company's sustainability. It is very important that
departments are involved in PLM. People (departments) define the requirements of the products
within the PLM, develop the products to meet the requirements, strive to produce high quality
13
products and continuously improve them with feedback from the field. PLM can increase
profitability and benefit by contributing to manpower in all these processes. [6]
Figure 5.PLM benefits people and teams (Resource: [7, 7])
2.2.3.5. Product Data
Product data is used to identify and explain the product, while products are the source of revenue
for organizations. The data of an organization's product is the common knowledge of that
organization (Know-How). This data is an important asset and strategic resource. The company
should use this information in the most profitable and efficient way. Problems with this data
cause problems with the products and this will cause companies to lose money. Throughout the
life of the product, the product data should be available wherever needed by the people who
need it, as soon as possible. It is a great challenge to organize and store this data in the
organization memory. Regardless of the product produced by a company, it is necessary to
develop and support the product throughout its life cycle. This requires a huge volume and
variety of product data. Product data cannot manage itself, and if this data is not managed, it
14
leads to great complexity and deterioration within the company, products and even people's
yields. The use of PLM can prevent such problems from occurring. This provides an in-house
knowledge, regular storage of data can become a culture, and access to this data is fast thanks
to powerful search engines. These values provide profitability to the company in every sense.
[8]
Table 9. Examples of product data in the PLM environment (Resource: [6])
2.2.3.6. Product Data Management System
PDM is a system for managing products data, primarily for managing product data. PDM is a
subset of PLM and is the first important input for PLM. Manage all information generated and
used throughout the life of a product and the maturity levels of that information. This system
provides access to the right information. The PDM application takes this strategic resource
under control and makes it available to anyone in need, wherever and whenever it is needed.
Figure 6. PDM to PLM (Resource: [9])
15
2.2.3.7. PLM Applications
In the PLM Environment, there are many application solutions, such as the complex data and
processes of the product. Even in a medium-sized enterprise, a PLM system can be installed
up to 50 separate applications. PLM Apps help users to develop & support products. Without
these applications, it is unlikely that such a complex and delicate product (such as airplane,
automobile, defense technologies) can be developed, produced and supported. With PLM
applications, organizations can reach productivity that is impossible for people to achieve in
standardized operation. This can reduce product costs and increase profitability. They can also
take part in the market with flexible and competitive products that are open to changes.
Below is an example of a variety of applications for 3DEXPERIENCE®, a product of Dassault
Systémes©.
Figure 7.Some of the 3DEXPERIENCE PLM Applications
(Resource: https://www.ccsl-cad.co.uk/blog/3dexperience-platform/)
16
2.2.3.8. Facilities and Equipment
The plant and equipment are used throughout the product life cycle; The product is used in
every stage from developing, producing, maintaining, operating and disposing of the product.
It can affect every element from product cost, quality, quality to production time. A business
can have more than a thousand vehicles and equipment. Companies want to focus on their
efforts and use the most relevant tools that offer solutions to these activities. This is one of the
most critical challenges for PLM. Once this definition is made, even the machines can become
a member of the collaborative working environment.
Table 10.Examples of equipment in the PLM environment (Resource: [8])
2.2.3.9. Methods and Techniques
Many methods and techniques have been proposed to improve performance throughout the life
cycle. These methods developed for product development time, product cost, service cost,
product development cost, product quality and disassembly costs. Examples include
“Concurrent Engineering, Assembly Design (DFA), Early Manufacturing Engagement (EMI),
Lean Manufacturing, Life Cycle Design (LCD), Open Innovation, Six Sigma and Total Quality
Management (TQM)”. Typically recommended benefits for these methods include: shorter time
to market; Improved quality; low costs; advanced service; and reduced cycle time.
2.2.3.10. Products
One of the most important revenue sources of a company is the product the customer wants and
perhaps some related services. To ensure that everything works well and makes good money
17
for the company, the product must be managed at all stages of its life cycle. The only solution
that can achieve this in today's conditions is PLM.
Figure 8.Life of a product with PLM (Resource: [10])
2.3. BUSINESS OBJECTIVES OF PLM
PLM is a commercial activity that enables to increase product profit, reduce product-related
expenses, expand and add value to the product portfolio, and maximize the value of existing
and future products for both customers and shareholders.
PLM, indirectly, such as time reduction and quality improvement, provides economic
contributions to the company, while also having business objectives related to improved
financial performance. [11]
18
Figure 9. Business Objectives of PLM (Resource: [11])
2.3.1. Improving Business Performance
PLM is not a purpose alone. But companies that benefit from this powerful and technological
solution provide great benefits. Containing technologies that support management programs
and procedures, PLM acts as an accelerator catalyst solution for the enterprise. To benefit from
PLM, an organization's business processes need to be examined. In addition, the organization's
structure and internal relationships create the infrastructure to build the PLM system network.
Changes created with the system address internal processes within the company. What's more,
it also covers how the interaction with suppliers and customers is.
Achieving a strategic advantage in the market, satisfying customers and providing brand loyalty
to them improves business performance. It provides flexibility to adapt to environmental
changes. PLM provides these values by offering the ease of managing the footprint, knowledge
and business processes of the product.
19
PLM solutions can also increase the capacity, efficiency and effectiveness of the organization.
These benefits are provided if enhanced corporate communications, organizational
responsiveness to change, and optimal use of PLM's concurrent engineering and other industrial
applications are supported. It is also beneficial to integrate mechanical and electronic design
automation environments, ERP, SCM, CRM and other systems with PLM. These technologies
can also enhance the security and distribution of access to product identification information by
protecting valuable intellectual assets on which an enterprise builds on its competitive position.
The solutions brought by PLM offer the business lower costs in product or service performance.
On the other hand, it offers more line time capacity, faster product delivery and extra quality
benefits. All of these are the details that meet the expectations of the customer and provide an
advantage in a competitive environment. These solutions allow creating fully defined
workflows to increase the performance of individuals. Defined workflows offer task
distribution to interested people. It manages the workload of the individual and the task of the
individual. In addition, it provides the correct data to the person in time. In this way, process
efficiency and effectiveness are increased.
PLM solutions contribute to every value of an enterprise. Using product description information
efficiently is important for sales and service, marketing, production planning, factory
operations, customers and suppliers. All disciplines should have detailed and timely
information about which products are designed and manufactured. In this way, the wrong
production is prevented and the financial loss of the company is prevented. Thanks to the
capability of PLM, all of these is manageable easily. It makes PLM and business loyalty
meaningful by adding the flexibility and agility of a business to market changes, new market
risks and quickly responding to new competitors.
20
PLM,
• Increases customer proximity by offering more innovative products, services and
marketing techniques.
• Increases quality and accuracy while reducing costs. In this way, it increases
investment income and return while shortening the time to market.
• Establishes more comprehensive, collaborative, advanced relationships with customers,
suppliers and stakeholders and manages changes quickly. In other words, the company
has a more sustainable structure.
PLM Solutions contribute significantly to enterprise profitability. Examples of specific benefits
of key businesses using PLM solutions:
• They add about 40% speed to the product life cycle time.
• They reduced the need to make prototype products by 15-30%.
• They have reduced the delivery times of the product to 40% earlier.
• They reduced the time spent on product design by 25%.
• They reduced the development time of family products by 3/4, reducing them from 18
months to 4 months.
• They were able to reduce the time consumption of a product from 5 days to 5 minutes.
• They were able to reduce the time spent for engineering inspection and quality control
by 83%, from 12 days to 2 days.
“These measurable improvements and cost savings stemmed from PLM applications. PLM
solutions provide an advanced ability to create inter-institutional innovations through
information sharing. Based on current practice results, it estimates that it may potentially
generate revenue growth of between 5 and 10 percent (said by CIM Data). The benefits of PLM
solutions can increase a company's percentage of profit. Results such as those described above
and linked savings and business performance recoveries might help increase net profit for
organizations ranging from 10 percent to 100 percent” (said by CIM Data). [12]
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2.3.2. Improving Business Performance with PLM Active Collaborative Work
It is called collaborative work when people come together and develop methods of working
together in order to carry out the task which is of a size and importance that a person cannot do.
Methods of working together have always existed throughout human history. However, the
ways in which employees cooperate are always constrained by techniques that are existing for
flexible and timely sharing of information, feedback and transactions on shared data. In the
past, technologies that assist business performance have allowed real-time, simultaneous
collaboration with telephone or audiovisual conferences only when users can work face-to-face
or in some basic endeavors. Nowadays, Product Lifecycle Management Systems (PLM) help
to support both simultaneous and asynchronous collaboration by managing the effective
working area, data and information access with a single, logical and open source resource. [13]
Figure 10. Next Generation Product Development /Processes in Single Source by PLM (Resource: [14])
Most of today's PLM solution systems allow complex work teams to share and work with
complex information. “Product Data Management (PDM)” technology is used to organize and
provide quick access to data and information within an organization's PLM sub-scope.
However, although it is important to organize data well, it provides limited added value. PLM
concept and “collaborative Product Definition management (cPDm)” capabilities include the
22
combined use of managed information in an enterprise’s decision-making processes. PLM
system features in the current technology include collaborative working space, simultaneous
viewing & designing, common discussion and explanation space, 3D design model pool &
libraries, analysis outputs, production processes, all kinds of documents (FMEA, RFQ,
DFMEA, etc.), multimedia files and more . [13]
2.3.2.1. Defining of Collaboration
By definition, being collaborative is a repetitive process in which many employees work
together towards a common outcome. As mentioned earlier, as long as people come together to
perform tasks that can be better done by a team than an individual, there are methods of working
together in cooperation. Under this heading, the common objectives of collaboration, important
concepts of collaboration, some of the processes commonly supported by PLM-supported
collaboration technologies, and collaboration technologies will be discussed. [13]
2.3.2.2. Objectives of Collaboration
Being advantageous in the competitive environment has always been the most important
business drive. In a highly competitive environment, companies have sought to put their
products on the market as quickly as possible, reduce their costs to a minimum, and produce
the highest quality. This was especially important due to increasing economic concerns.
For competitive reasons, companies are changing the way they do business. In the past,
organizations that both design, manufacture and provide services now divide business with their
stakeholders. Designing, producing the product and transferring service to these stakeholders
helps companies reduce their costs. With all this change, secure communication channels must
be created. Control procedures and administrative processes should be followed through these
channels. Manufacturers have to expand their talent network, from customers to suppliers (in
23
some cases, including subcontractors and competitors). This requires the support of new
processes, organizational structures, and technologies provided by PLM that relate to the
collaborative product lifecycle.
As a result, the products that are collaborative has made it necessary to improve the change, to
use the product information more extensively in the decision-making process, and to develop
advanced communication between stakeholders (partners, suppliers and customers). Time to
market, eliminating costs, improving quality and supporting product innovation - all the
important measures to take, no matter how stressful the economic climate. [13]
2.3.2.3. Fundamental Collaborative Working Concepts
The cooperative working method is divided into two, the first of which is asynchronous method.
In this method, working people transfer the information done to the next person after the
assigned tasks are restored. Due to the nature of this working method, there is a serial workflow.
This flow consists of disposable tasks and contacts. Communication between collaborators is
normally done by phone or email. Data is managed in an unhealthy way on the basis of what
we call data-based (common data storage disks). Flow and task control are managed by non-
live, asynchronous and product-independent project management tools.
Figure 11. Time Consuming of Asynchronous Method ( Resource: [15])
24
In the second method, synchronous and real-time collaboration, users can view 2D and 3D data
(CAD, Drawing, documents, etc.) simultaneously and together. These data can work on
common and synchronous. They can see the maturity levels and authority status of the data.
They can communicate between their team and other teams and transfer information and data
within social areas. In making this all together, an innovative approach, model-based approach
is used.
Figure 12. Time Consuming of Synchronous Method ( Resource: [15])
2.3.2.4. Commonly Supported Collaborative Processes
Today's PLM solutions support many business processes. Commonly used PLM-supported
collaborative solutions are listed below:
I. Change & Issue Management and Design Review
PLM environment, where teams connected to a project can examine the project-related
data together, identify and systematically manage potential issues and conflicts in the
25
early stages of the product lifecycle, and make product changes quickly according to the
feedback received by the customer provides tremendous can benefit to the organization.
II. Supply Chain Management
The transition to a supply chain where product life is divided into common stakeholders
means that suppliers, partners, subcontractors and customers are involved in every stage
of the product. Synchronizing the product information (BOM, E-BOM, M-BOM) from
the PDM stage to the PLM system with ERP (enterprise resource planning) programs
provides great advantages in supply chain management. Error-free and fast orders
reduce product costs, avoid delay penalties, contribute to quality and increase
profitability.
III. Sales and Quotation
There are opportunities to participate in collaborative sessions where product options,
alternatives and concepts for sales, engineering, purchasing and production are reviewed
simultaneously in each discipline. In this way, the offers are faster, more efficient and
accurate and less costly. [13]
IV. Maintenance and Support
The application of collaboration tools in maintenance and support activities is
recognized in a number of different sectors, including aerospace and defense,
automotive, process and machine tools. For example, animation and simulation tools
are used to show how products are operated and maintained. In this way, fast and error-
free maintenance of products, the company provides financial and temporal profit. In
addition, thanks to PLM systems, variant and configuration management makes the
26
major product part information accurate. Revised spare parts are always shipped to the
customer with the right compatibility. Assemblies with configuration matrices and rules
automatically provide information on which part to use for which product, and the
correct product is sent to the customer. Assembly and maintenance information
generation tools make it possible to profit from the on-field work times.
Thanks to all these capabilities PLM offers, organizations provide competitive advantages,
increase their profitability with error-free, and avoid the wrong cargo costs on the field and
technical support side.
2.4. ROI OF PLM
PLM can provide great benefits to companies. However, despite all these benefits, PLM
systems are software that consumes very high computer resources and is very expensive
compared to license types of tools to be used. Initial investment costs, Server investment, the
cost of employing people for installation, training and discovery cost, server licensing cost,
PLM licensing cost can be very costly.
As the firm size grows, these costs increase in parallel. For this reason, PLM providers have
developed cloud (ready-to-run and internet-based software) systems to save small businesses
from these troubles. Regardless of the system used, investing in this business creates risks with
slowing down of the firm and paying a large fee. The ROI method is also included in this
section. With this method, analysis results will be given about how many years the companies
benefit from PLM product. [16]
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2.4.1. Main Objective of PLM ROI
Return on investment is used to evaluate the efficiency of the investment. It can also be
explained as trying to measure the return on investment according to direct investment cost.
The benefit of the investment for its calculation is divided by the cost of the investment. the
result is expressed as a percentage. On the PLM side, the main reasons for calculating ROI are:
• Finance department wants to know if the Project is the right investment
• Management wants to examine whether the benefits of these high wage investments
• Desire to measure savings that are the target of PLM projects
Figure 13.Companies Common Strategic Objectives Pyramid(Resource: [17])
For companies, the strategic goals shown in the pram are often common. These targets can be
supported by PLM. Before you start describing goals and costs, the types of costs used in ROI
28
calculations must be defined. The strategic goal is to reduce the time to market. Here are two
ways to do this:
I. Improving the bid return process provides a fast turnaround to the potential customer
and accelerates product-wide inquiry time. It has been observed that PLM can assist
the bid response process by automating approval workflows, keeping all documents
in one place, and generating the right BOM.
II. Once the customer has placed the order, it must be managed by the project team as
a project until product delivery. PLM has been shown to be able to assist here by
providing a comprehensive project management environment that coordinates a
large team. If the project is poorly managed, market out will be delayed.
The actual costs of these objectives are:
1. Accelerating the processing of the proposal can be achieved with PLM in complex products.
The more waste of time, the higher the cost.
2. Quick quotation and putting the quotation into production allows it to make more offers for
the firm and gain profits.
3. The management of separate and discontinuous programs for each process can be continuous
and automatic on the PLM side.
4.Last product penalties can be avoided by managing the project with PLM.
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CHAPTER 3
IMPLEMENTATION OF PLM AND COLLABORATIVE SERVICES IN
DIFFERENT INDUSTRY TYPES
3.1. MATURATION OF PLM WITH INDUSTRIES
PLM, which is widely used in industrial sectors, is widely applied and used especially in
electronic and mechanical industry sector where very complex products are designed.
Especially in automotive, defense industry, aerospace and industrial equipment manufacturers,
it has become compulsory to use PLM collaborative solutions in recent years. PLM
environments also include vital roles for companies such as safe workplaces and access to
historical information. PLM can provide companies with very high profitability, but initial
investment costs are also very high. Furthermore, during the implementation period (in the first
years when the PLM system was used), there is a significant loss of momentum in the
companies. The headings below will describe how PLM implementation is made for industries
and what losses and profits are provided to companies in this PLM implementation.
When making calculations such as profitability and loss, the most important source will be KPIs
and ROI tables. However, due to company confidentiality, not all data is financially accessible,
and the majority of the data is reflected in percent performance.
3.1.1. Aerospace & Defense Industries
Companies that produce products for the aerospace and defense industries produce components
with complex product lifecycles that need to be managed for years. They design, guarantee and
undergo thousands of tests to ensure the desired performance. These tests have international
documents and difficult conditions. The approval process of designs requires accuracy from
30
start to finish. Engineering changes should be carried out very well to ensure a large amount of
revenue and not to disrupt parts work.
In military and civil aviation, each aircraft has to be produced advanced than the previous one.
The material list for all these planes is unique. This forces highly reliable documentation and
configuration management systems that can provide excellent information to organizations
responsible for protecting and supervising these complex structures. In addition, the design and
supply chains in this sector are very complex.
For this reason, if we look at the old and new performance indicators thanks to the tools used
in PLM systems, the headings that benefit:
• Document control makes access to product information much faster and more reliable.
In this way, it has been observed that the delays caused by inability to obtain material
approval in the past significantly reduced.
• Since the number of iterations related to aircraft design, development and production is
very high, there is a significant loss of time and material in these processes, while
products digitized by PLM systems are developed much faster and open to change.
Before reaching the final product, the actual product tests are performed less, and thus
it is observed that test costs and man-hour costs are reduced.
• It has been observed that managing the designs in different countries in a coordinated
manner, avoiding the inconsistencies between the parts and reducing the cost of
incorrect product cargo and material expenses.
• Thanks to PLM, the products are digitally continuous. In this way, the product will have
the same material list since the design stage, and changes in product design and
development will be automatically transferred to ERP systems. This technology has
been tested to ensure error-free product ordering. [18]
31
We will examine all these results based on cost reports, executive interviews, observation and
analysis results.
3.1.2. Automotive Industries
In the automobile market, the two segments are Original Equipment Manufacturers and parts
suppliers. This commitment often leads to the exchange of information and raw materials. PLM
has been shown to reduce these workloads and costs.
The challenges facing this industry and the solutions PLM offers to these challenges have been
found to provide economic benefits.
These benefits and reductions are reported by looking at KPI results and resource consumption
results.
Challenges and Benefits:
• Due to the globalization of the market, customer expectations are increasing,
productions are made in different countries, supply of product parts and raw material
tracking become more difficult. When the benefits of PLM tools are observed in terms
of time and cost, it has been reported by users that Track tracking with BOM
management tools becomes error-free and faster, the results of this report are examined.
A Problem Management and Change Management and Know-How pool was created to
manage customer expectations. When the time studies are done, before the design and
analysis, this information prevents wrong designs and gives too much speed, feedbacks
were taken and these results were used in the reporting. This reduces operating hours
and is claimed to prevent material losses by eliminating defects in the product
beforehand, and reports have been received from people in this unit.
32
• It is very difficult to update such complex products quickly in the market. Thanks to
PLM, project management (from idea stage) and M-BOM (Manufacturing)
management has gained much speed compared to the past. This allows for quick access
to the market and profitability of the market first. Here, the use of these systems has led
to the need for competent staff. It is expected that the personnel in the production
department will understand the software language. This may bring a separate financial
burden to companies. These topics could be analyzed through time studies and
observations.
• Since PLM technologies have interconnected data and information, they use old
technical knowledge and smart computer technologies in product design. This includes
component strength optimization, material mitigation, problem prediction, workload
risks, project delay alerts, production simulations, and so on. It allows to be done. These
benefits have been claimed to reduce the cost and time to market of finished products,
and KPI results in this area have been reviewed and reported. It has been claimed that
the time and resource burdens for the company have decreased compared to the past and
information has been received from the managers in this field. This information is
provided using internal reports after PLM installation. [19]
Finally, virtual design teams cover continents, and PLM solutions are used to provide team
members with access to design information and status, regardless of location. Similarly,
suppliers and OEMs can exchange information seamlessly across borders. PLM solutions are
claimed to provide an environment to manage multiple rebuilding and chassis, body and Option
variations, as well as component and part classification capabilities required to reuse and share
parts. On these strategies, the figures were analyzed and the benefits before and after PLM were
measured. PLM is used by organizations in product development processes. Because, while the
33
product is being developed, it integrates production workflows and tools with the project. It
provides great functionality in the classification of parts. This functionality allows design teams
to use parts more than once as part sizes increase. This unit reduces the cost. (Information has
been received from company managers about this success.). [13]
3.1.3. Electronics/High-Tech Industries
Due to the type of products produced by companies producing in this sector, high-tech device
manufacturers must manage content through a wide variety of engineering disciplines. High-
tech device manufacturers must manage content through a wide variety of engineering
disciplines. For this reason, technological device manufacturers claim to benefit enormously
from the management and inclusion of Multi-Disciplinary Data, one of the most important
features of PLM. During the analysis, the improvements provided were reported. The PLM user
reports that product delays are reduced thanks to the Model Based Approach logic, which
accelerates suppliers' information sharing. Suppliers should provide customers with design
information for integration into their products, and OEMs and large subassembly manufacturers
should provide suppliers with material requirements for production. It has been seen that all
members of the design. and supply chain help ensure sustainable corporate revenue through the
rapid transmission and sharing of 24/7 based information to remain competitive. In particular,
the outputs of KPIs in the Configuration Management and Change Control tools that come with
PLM are examined. [20]
3.1.4. Fabrication and Assembly Industries
Managing the sub-group companies with supply chain and joint parent companies in a
collaborative way are the biggest challenges these companies face. The companies working in
34
the Machinery Manufacturing Sector have to give importance to technical service and spare
parts which play a big role in their income. Here PLM can help companies with service BOM
and Issue Management tools. When performing the analysis, it is necessary to look at the KPI
results on these tools. In addition, these companies are designed according to customer demand
and produce expensive products. For this reason, the design capabilities were examined before
and after PLM by using Variant matrix and Data Reuse. Comments were made according to
this review report.
3.2. PLM BENEFIT AND COST CALCULATION METRICS
Methods used in KPI and Analysis when calculating percentage benefits.
Figure 14. "Benefits" and "Topics to Calculate" Hierarchy of PLM Collaborative Strategy (Resource: [21])
35
Table 11.Table of PLM Metrics - I (Resource: [21])
Table 12. Table of PLM Metrics - II (Resource: [19])
36
3.3. ROI FOR PLM CALCULATION METHODS
When determining the scope of a PLM initiative, it is compulsory to disinterestedly assess the
financial impact of the enterprise on the enterprise. In this study, we will use the simplified
version of Forrester's Total Economic Impact method. [22]
1. Benefits. “How can PLM benefit companies?”
Table 13.Benefit Table of ROI for PLM (Resource: [22])
2. Costs. “How will your company pay for PLM at both difficult costs and resources?”
Table 14. Costs of PLM (Resource: [22])
3. Risks. “How can uncertainties change the overall impact of PLM on your business?”
4.
Table 15. Risks of PLM Survey (Resource: [22])
37
Resources used to produce the necessary data:
1. Document search time study of users.
2.The time spent from the LOG files of the systems used.
3. Cost and time calculations for manufacturing.
4. Financial statements and expense statements.
5. Problem and information from Quality monitoring systems and teams.
PLM Software’s Financial Benefit Measurement Formulas [23]:
Figure 15.5 “Simple formulas measure PLM software's financial benefits” (Resource: [23])
38
3.3.1. Cost Model for PLM Solutions
• “PLM software & maintenance” [24]
• “Hardware (additional needed for PLM) & maintenance” [24]
• “PLM appraisal, selection, and implementation planning” [24]
• “Solution implementation” [24]
• “Training” [24]
• “Business and system administration” [24]
3.3.2. Software Costs
• “Client licenses” [24]
o “Subscription licensing may be possible”
o “Or none at all with Open Source”
• “Server licenses” [24]
o “PLM software modules, e.g., document management, parts management,
product structure, engineering change management, etc.”
• “Software maintenance or subscription” [24]
o “Annual fee, usually a % of value of installed SW”
• “Database management software” [24]
o “For meta‐data”
• “Other”: [24]
o “Application integration”
o “View & markup, collaboration, etc.”
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3.3.3. Selection & Implementation Costs
• “Internal costs for system selection, appraisal & justification, implementation planning”
[24]
• “Internal cost of subject matter experts” [24]
• “Cost of lost user productivity (time away from job)” [24]
• “External consultancy” [24]
• “Training (internal and external)” [24]
• “Data and process modeling” [24]
• “Integration with applications” [24]
• “Tailoring and/or customization” [24]
• “Data capture & cleaning” [24]
• “Business and system administration” [24]
3.3.4. Cost Factors
• “Number of users & sites” [24]
• “Implementation phasing” [24]
o “By solution, group or project”
• “Number of PLM solutions to be deployed” [24]
o “PDM, visualization, DMU, collaboration, CAD, Dig. Mfg…”
• “Quantity of legacy data to be cleaned & moved” [24]
• “Number of other systems to be integrated (CAD, ERP, business planning, etc.)” [24]
• “Level of tailoring needed” [24]
• “Training” [24]
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CHAPTER 4
RESULT AND DISCUSSION
4.1. CONTRIBUTION OF PLM WITH INDUSTRY EXAMPLES
1. Product Life Cycle Management tools developed by Dassault Systemés
3DEXPERIENCE to find the balance of Quality, Regulation and Cost in the automotive
sector have been reduced by 10% from testing, simulation and prototyping costs. Today,
automotive OEMs spend € 1 billion per year for testing, simulation and physical prototyping
to meet regulations. Using the Total Quality Management tools in the PLM system,
solutions to problems encountered are quickly found. These problems are 80% recurrent
and known to solve [25]. Thanks to PLM's know-how culture, these problems can be solved
before they occur. This reduces repetition errors in tests and simulations. In addition,
collaborative virtual prototyping and simulation with all stakeholders enabled a reduction
of € 100 million (10%) over € 1 billion spent per year. [26]
2. BAYER HEALTHCARE uses Oracle Enterprise PLM for Pharma. With this product,
BAYER wanted to increase the visibility of product, packaging, labeling and content data
to ensure regulatory compliance, improve supplier cooperation and reduce overall
production costs, as well as accelerate time marketing, with production and distribution
information spread across various systems and locations around the world. Oracle
Enterprise PLM solutions helped Bayer Healthcare to:
a. Reduced cycle times for packaging by 1/3.
b. Reduces packaging labeling errors by 50%.
c. By consistently monitoring component data per country, it prevented errors and
reduced drug rejections.
41
In this way, BAYER has shortened cycle times and increased product consistency. So that, the
product costs have been reduced. [27]
3. Using Oracle Enterprise PLM, HERBALIFE (“Herbalife is a global nutrition company
designed to help weight management, deliver targeted nutrition and enhance energy, fitness and
personal wellbeing.”(https://www.herbalife.com/)) has provided the following
improvements.
a. The project has reduced Cycle Time by 70%.
b. The material increased its reuse by 20%.
c. Improve product margin at launch by 5-15%
As a result, the company has improved efficiency and visibility in product development and
product replacement processes. [27]
4. With the merger of Dassault Systemés SIMULIA and 3DEXPERIENCE PLM
environments, a collaborative working method called Simulation Lifecycle Management
(SLM) has been formed. The Power Technologies Group of Dana Holding Corporation,
which uses SLM (Dassault Systemés), has achieved the following benefits;
a. Reduce costs by up to 90% in the execution of simulations with less effort for data
collection, modeling, preprocessing, decoding, postprocessing, reporting and
simulation data and process management.
b. Reduce the cost of managing third-party analytics with better management and
coordination of its work.
c. Increased use of analysis model that can reduce cost by up to 60%.
d. Reduced costs of up to 40% thanks to fewer prototypes and tests.
e. Reduce simulation technology budgets by up to 40% by combining simulation
tools and techniques.
f. Lower rework costs due to early analysis of the life cycle and earlier results for
designers.
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5. In the automotive sector, companies using Dassault Systemés 3DEXPERIENCE PLM
have found solutions to their business objects and drivers. These companies aimed to
optimize their existing assets, develop, add new products to their portfolios and profitability.
The companies that benefit from PLM in this industry and the benefits provided are given
in Table.16, Table.17, Table.18. [28]
BRANDS
BENEFITS
BRANO GROUP
Proposal projects time reduce by 50%, so
that number of projects to bid on increased
by 25%
ENDURANCE OVERSEAS S.R.L.
100% digitized and inefficient paper-based
methods were eliminated. In this way, time
and cost were reduced in all processes.
HSIN CHONG GROUP
Post-production engineering changes
reduced by 30%.
KNAPHEIDE
The new component creation time was
reduced by 10 minutes, saving 6,000 hours
per year.
Table 16. Companies that optimize the product development process, increase the product portfolio and increase productivity
and quality. (Resource: [28])
Table 17. Firms providing occupational health to prevent risk and foresee deviations and take proactive and informed
corrective measures. (Resource: [28])
BRANDS
BENEFITS
LAND ROVER-JAGUAR
The use of Excel allows instant access to
data anytime, anywhere, in any field by
removing it. In this way, it reduced the
document-based error rate by 70%.
TESLA
They can manage accelerated business
decisions that save time and improve vehicle
quality. (Cannot share data for privacy reasons.)
43
BRANDS
BENEFITS
NGK SPARK PLUG
Design reconfigurations accelerated by
using modular design capabilities
Control of design information is unified
BCON
Commissioning time at the customer site
reduced by 50% and improved design
productivity by 30%
HVAC supplier
3D printing solution improve efficiency,
reducing drastically development cycle and
production costs
Courtesy of RENAULT
Even with a data center in France, Korean
engineers have an average 8% difference to
load, modify or save their data compare to
French engineers
Table 18. Companies that change their engineering capabilities to provide innovation in the process of developing new
technology. (Resource: [28])
Table 19.Companies using PLM and virtual testing environment to pre-validate and optimize your products, limit testing,
and make it right the first time.(Resource: [28])
BRANDS
BENEFITS
DANA
Realizes up to 25% time-savings in their
computer-aided engineering projects
EATON
Ensured the Reliability of Critical
Supercharger Components
with fe-safe
YAMAHA
Simulation is an effective means of
identifying locations for strength
countermeasures and for developing new
and more-effective designs
SOOSAN HEAVY INDUSTRIES
Thanks to PLM collaboration and access to
data from a single source, the development
time for specially designed products is
reduced by 40%.
44
4.2. RETURN ON PLM INVESTMENTS
PLM investments are difficult decisions for firms. The costs of these investments may vary
according to the needs of the industry. Likewise, factors such as the size of the organization,
the number of employees, the products it produces, and the availability of multiple locations
are the factors that determine the costs required for PLM licensing and infrastructure
technologies.
PLM can create a collaborative structure for organizations and benefit in many areas. However,
it should be noted that such drastic changes necessitate a good scrutiny of risk factors in firms.
Like PLM, a big communication and server infrastructure (cloud systems are a bit prevented.)
And investments that require competent personnel. Especially in the first years, it causes serious
slowness and financial losses. There are many examples of firms that cannot take or use these
investments and that are recorded as dead investment. In relation to this, after investing in PLM,
companies should create a culture in it and perform KPI analysis of PLM benefits and monitor
their return on investment.
PLM Collaborative Systems, if used correctly and systematically, provides significant
profitability and profit above the very investment cost after approximately 2 years.
In the following, the tables containing the ROI rates of the PLM investment are available in
CASE studies.
45
1)
Forrester Research Inc has worked with companies
1
to calculate PLM ROI. They used the
"Total Economic Impact ™ (TEI)" framework in their calculations. As a result of the analyzes
conducted in the companies, the expected return on investment by using the basic level PDM
capabilities is 80% and net present value (NPV) is approximately $ 5,816,200(Table.20). [22]
Table 20.”Model: TEI Analysis Summary — Core Product Data Management” (Resource: [22])
1
Accenture, Aras, Arena Solutions, Autodesk, Capgemini, Data stay PLM, Infor, Infosys Technologies, ITC
Infotech, PRTM, Larsen & Toubro Infotech Parametric Technology Corporation (PTC), SAP, Syntel, and Tata
Consultancy Services
46
However, with the use of expanded PDM + PLM capabilities, including production and service
parties, the expected return on investment is 119% and the net present value (NPV) is
approximately $ 7.904,500 and $ 9,103,500 (Table.21 & Table.22). [22]
Table 21.Model: TEI Analysis Summary — Extended PLM (Manufacturing) (Resource: [22] )
Table 22.Model: TEI Analysis Summary — Extended PLM (Services) (Resource: [22] )
47
2)
STRATTEC Security Corporation has chosen PTC Windchill as an existing product
lifecycle management (PLM) system solution. Nucleus developed product design monitoring
and collaboration using the PTC Windchill solution. As a result of some analysis, it has been
found that productivity increases and reduces design costs and waste. As a summary of the
analyzes, the ROI rate was 122%, the time of transition was 11 months and the average
annual benefit was calculated as $ 1,023,449. [29]
While calculating here, two types of benefits were analyzed. These are Direct and Indirect
benefits (Figure.15).
Figure 16. Types of PLM Benefits (Resource: [29])
Some of the business objective benefits provided for KPI are listed below (Figure.15):
i. Using the data access capabilities of the PLM system, the time spent managing data
is reduced by 1 hour per day by means of search capability tools. [29]
ii. Due to the fact that designs (3D Digital Mock Up) are accessible at all enterprise
level (within access privileges), repetitive parts in different projects have reduced
design and testing times. In addition, the units authorized in Supply Chain
DIRECT; 40% INDIRECT; 60%
TYPES OF BENEFITS
DIRECT INDIRECT
48
Management provided a preview to pass the correct parts order, thereby reducing
the cost of faulty parts orders. [29]
iii. Having more information about design changes and product lines, STRATTEC has
reduced prototyping and QA / QC testing. This has reduced the amount of scrap
scraps. [29]
iv. Instead of using different software for each business process, execution of all project
processes in a single software provided digital continuity. This reduces both the
processing time of the users and the maintenance of the IT team. [29]
Figure 17.Cumulative Net Benefit(Resource: [29])
PLM as main costs are; project costs include software license subscription fees, staff time to
implement and support implementation, enterprise-wide training, and consulting costs
(Figure.17). [29]
Figure 18.Net Cash Flows (Resource: [29])
Year 1
$328.855
Year 2
$1.613.500
Year 3
$3.070.346
Initial
-$839.500
Year 1
$1.168.385
Year 2
$1.284.616
Year 3
$1.456.846
49
Nucleus Research Company's ROI calculation (Table.23) included software subscription and
maintenance costs, staff time required to implement and support the application, employee
training time, and 3-year consultancy service for PTC Windchill as costs.
As direct benefits, IT costs, reduced scrap and rework costs are added. As indirect benefits,
productivity increases calculated for engineers, developers, and support departments based on
annual average full loaded costs are added. [29]
TABLE 23. FINANCIAL ANALYSIS STRATTEC'S PTC WINDCHILL PROJECT (ROI)
Annual ROI: % 122 Payback Period: 0.9 years Cost : Benefit Ratio = 1 : 2.5
50
CHAPTER 5
CONCLUSION
Just like everything in the universe and the second law of thermodynamics says, as a system
grows, its entropy (disorder) will increase and the building blocks that make up that system will
want to create a chaos environment. This law will appear all over our lives. Growing
organizations are also experiencing this situation and after reaching a certain size, they prefer
the way of division. For this reason, as the workload size, number of employees, variety of parts
produced, etc. in an enterprise increases, complexity will increase and it will become
increasingly impossible to manage. In such cases, organizations need computer technologies
and auxiliary management systems. PLM is one of these systems and is becoming an imperative
in today's consumption and production frenzy, especially in businesses over a certain size. The
PLM system can create a large financial investment expense for organizations. Upon this
investment, the changing company culture and functioning, the extra workload that needs to be
learned and implemented constitute a great burden for companies. That is why businesses are
afraid to make this investment. However, since the past, many software and production
companies that want to develop this collaborative and regulatory system have brought those
system to the present day, allowing us to use these systems that add enormous value. And, today
thanks for these systems capabilities, we can use more complex industrial products, we can buy
cheaper and safer stuffs, we can develop faster and more experienced.
In this article, we examined the examples of industry value and the economic return on
investment tables of companies and investigated whether such large investments really add
value to the companies. In the results we obtained by using certain methods and KPIs and
consulting the authorized people from the relevant units, we observed that these software, if
51
used properly, create very very high profitability rates in the long run. As a result of these
observations, we concluded that PLM systems in many different brands contribute to the
sustainability of the company if used properly, regardless of the brand and the industry in which
it is applied. However, it is always open to debate whether these analyzes are sufficient because
the scope of the system called PLM is very large and it is not very old today. However, thanks
to its collaborative structure, which is not very open to interpretation, companies gain great
value and can follow their projects from the ground up with their stakeholders all over the
world.
In the future, can PLM become a must in technology-oriented industries called industry 4.0?
Can PLM systems improve themselves by using artificial intelligence learning because they
work at the computer base? Could PLM be the operating system of unmanned factories with a
different name in the future, which currently improves the organization by utilizing past
knowledge and allows us to learn from mistakes and even automate processes?
When you look at its history, you can see in this article with the numbers that the system we
call PLM has come a long way and has provided great benefits. Therefore, you can ask yourself
how realistic the above questions are.
52
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