Fact 6: PLM Offers Measurable Business Improvements
It has been shown that PLM can very positively impact your company's financial, time,
quality, and business performance.
Companies are basically looking for PLM to provide benefits in four main areas:
Financial Performance - for example, PLM should lead to increased revenue from earlier market
introduction, and reduced product development costs
Time Reduction - PLM should, for example, reduce project overrun time, and reduce engineering
change time
Quality Improvement - PLM should help, for example, to reduce manufacturing process defects,
reduce the number of returns, and reduce the number of customer complaints
Business Improvement - for example, PLM can increase the innovation rate, increase the part reuse
factor, increase product traceability, and ensure 100% configuration conformity
In the area of Financial Performance, companies are looking to PLM to increase value, revenues and
profits. They want PLM to reduce costs such as material costs, warranty costs, prototyping and validation
costs, personnel costs, production costs, service costs, and IT costs.
In the area of Time Reduction, companies are looking to PLM to reduce time to market, time to volume,
time to profit, issue resolution time, project times, and cycle times.
In the area of Quality Improvement, companies are looking to PLM for more and better products, and
more meaningful product options and product variants. They are looking to PLM to improve conformance
with customer requirements, reduce product faults in the field, prevent recurring product problems, and
reduce errors, rework and wasted efforts.
In the area of Business Improvement, companies are looking to PLM to help increase reuse of data and
parts, provide better visibility of data, improve customer responsiveness, improve supplier
communications, improve risk management, ensure compliance with standards, provide the ability to
share information, manage product portfolios, analyze product information across the product lifecycle,
enable collaborative working, protect Intellectual Property, provide feedback from each phase of the
lifecycle, enable better management of outsourced tasks, respond faster to new market opportunities, etc.
Metrics and Targets
Experience from the companies that we work with shows that, in the area of Financial Performance,
examples of metrics and targets include:
Increase the value of the product portfolio by 20%
Increase profit by 100%
Increase annual revenues by 10%
Increase revenues, through faster product introduction, by 15%
Increase revenues, through wider product range, by 20%
Increase revenues, through extended product life, by 25%
Increase revenues, through new services on existing products, by 40%
In the area of Time Reduction, examples of metrics and targets include:
Reduce time to market by 50%
Reduce project time overrun by 80%
Reduce engineering change time by 80%
Reduce time to profitability by 25%
In the area of Quality Improvement, examples of metrics and targets include:
Reduce defects in the manufacturing process by 25%
Reduce customer complaints by 50%
Reduce product liability costs by 40%
In the area of Business Improvement, examples of metrics and targets include:
Increase the rate of introduction of new products by 100%
Increase the part reuse factor to 7
Increase recycled part usage to 90%
Increase product traceability to 100%
Ensure 100% configuration conformity
So how are some of these figures achieved? Take for example:
Product innovation and development performance. PLM can help your company improve product
development, enabling it to grow revenues by improving innovation, reducing time-to-market for new
products, and providing superb support and new services for existing products. PLM can help you
develop and produce products at different sites. It enables collaboration across the design chain and
supply chain. PLM helps manage Intellectual Property. It helps maximize reuse of product
knowledge. It helps ensure compliance with regulations.
Reduce product-related costs. Product-related material and energy costs are fixed early in the
product development process. PLM provides the tools and knowledge to minimize them. PLM helps
optimize resource utilization during product development. And PLM can help cut recall, warranty and
recycling costs that come later in the product's life and eat into profits.
Be in control of products. Not being in control of your products can have serious consequences. If
you lose control of a product during product development, the product may be late to market and
exceed the targeted cost. If the company loses control during use of the product, the results for the
customer may be lack of satisfaction, serious injury, or worse. These results may lead to loss of
customers concerned about product problems, revenues lost to low-cost competitors, and reduced
profit due to costs of recalls and legal liabilities.
Provides Visibility. PLM gives your company visibility into what is really happening with your
products. Without it, managers are faced with an opaque mass of conflicting product information.
PLM provides the opportunity to manage better. With access to the right information, they can make
better decisions. With accurate, consolidated information about products available, revenues from
new products can be increased and low-cost ways found to extend the revenue-generating lifetimes of
mature products.
Seize market opportunities for new products (and new customers). PLM provides support for
companies wanting to create and support products that take advantage of new technologies such as
biotechnology, robotics, mobile communications, Radio Frequency Identification (RFID), and the
World Wide Web. Its collaboration and communication technologies enable products to be sold and
supported in huge new markets in countries such as China and India.
