A Roadmap For Product Lifecycle Management Implementation in Smes
A Roadmap For Product Lifecycle Management Implementation in Smes
Implementation in SMEs
Anneli Silventoinen*
Lappeenranta University of Technology, Department of Industrial
Management, P.O. Box 20, 53851 Lappeenranta, Finland
E-mail: [email protected]
Jorma Papinniemi
Lappeenranta University of Technology, Department of Industrial
Management, P.O. Box 20, 53851 Lappeenranta, Finland
E-mail: [email protected]
Hannele Lampela
Lappeenranta University of Technology, Department of Industrial
Management, P.O. Box 20, 53851 Lappeenranta, Finland
E-mail: [email protected]
* Corresponding author
1 Introduction
This study aims to discuss the implementation of product lifecycle management (PLM) in
small and medium sized enterprises (SMEs) from the point of view of knowledge and
information management in product-related processes. PLM is seen as a new method for
companies to better manage product development and service processes from beginning
to end in product lifecycle [1]. Especially in industrial manufacturing companies,
managing product information through the whole lifecycle is seen as an answer to
growing demands in product development, for example in shortening time to market and
managing more complex products, and the estimated growth rate of the PLM systems
market was 13,5 percent [2], [3]. One of the “next level PLM systems”, a product
development integration framework (PDIF) by IBM enables faster engineering changes
and linking design and development to other business processes, as well as providing
enterprise level information to executives [4].
A typical problem concerning product and customer needs is that the information is
scattered or is not available when it is needed during product lifecycle (PLC) processes:
product concept, product design, order configuration, manufacturing, delivering, in-use,
maintenance and disposal. By utilizing new operations model /framework and PLM
information systems SMEs can better serve their customer and supplier networks and at
the same time speed up information exchange across lifecycle processes, which in turn
speeds up both the product development and delivery processes.
The focus of the paper is on the challenges, benefits and requirements of
implementing PLM in SMEs. Customer needs on product properties are related with all
stages of the PLC. There are several challenges for today's enterprises, including SMEs,
such as dynamic and individual customer needs, rapid technological development,
collaboration in innovation, product development and production, not forgetting
efficiency requirements of internal processes of the enterprise and profitability. In
addition, challenges of SMEs are related with their limited financial and human
resources. The practical aim of the research is to plan a model of PLM acquisition and
implementation for an SME.
The main research question of this study is, what kind of special characteristics and
challenges are related to PLM implementation in SMEs and what kind of benefits support
the adoption of new practices?
The sub-questions in this study are:
What are the benefits associated with PLM systems, and are they similar for large
and small companies?
What kind of organization is mature to acquire a PLM system and how to assess the
maturity?
What should the implementation process of PLM for SMEs be like?
2 Literature overview
Current literature on PLM is mainly focused on large companies with ample resources,
and their processes. In the literature of SMEs, the PLM aspect of business processes has
been an increasingly interesting topic, but the research is still scarce. Traditionally,
product data management (PDM) has been discussed mainly in the domain of product
development and design, but the concept has evolved and expanded to include all the
processes during the lifecycle of a product or lifecycle of a customer relationship. The
product process and the customer process can be seen as the core of all business
processes, and PLM brings these together by enabling the integration of all product-
related information. Despite the bright prospects promised, SMEs face big challenges in
implementing the PLM ideology and they don't always see the benefits of it, because the
existing research has emphasized larger company focus.
2.1 Benefits and challenges of PLM systems for SMEs
There are both internal and external drivers and needs for PLM systems: the internal
reasons include the need to improve the efficiency of innovation process and to speed up
the innovation as well as improve or enable network collaboration [5], (see Table 1
below). The mass customization strategy emphasizes customer needs focus, and
furthermore the current PLM software features offer possibilities for managing vast
amounts of complex, scattered information [5], [6].
The external needs for increasing use of PLM systems are the common macro trends
in many industries: globalization and competition which often lead to distributed co-
operative product development, in order to save costs or gain access to resources,
competencies and markets [7]. In this environment, PLM gives the possibility to manage
complex products which have shorter life cycles than before and also enable quality
improvement by responding to diverse collaboration needs with suppliers and other
partners.
Table 1 Drivers for PLM and challenges for strategy, processes and IT
Driver Impact on strategy Impact on processes Impact on information
technology
Managing Less vertical, more PLM processes Data exchange
extended horizontal integration. enabling collaboration standards, computer-
products Focus on modular with defined aided modeling of
products and platforms interfaces. Process complex products,
to improve component capability to manage integrating business
re-use. Complex complex products. applications.
products.
Globalization Focusing on Improving process Integrating IT systems
differentiation or automation. with partners. Work
standardization. Enterprise-wide flow management.
Complex supply process standards.
chains.
Legislation Complying to Standardized and well Ensuring data
legislation documented processes. consistency. Methods
requirements with Traceability of for long-term
PLM (environment, processes. archiving.
safety, product
reliability).
Source: Modified from [14], [15].
All these factors lead to the increase in the amount and complexity of product-related
information, thus increasing the need for systematic and transparent information
management [5]. This is a challenge especially for SMEs with limited resources, and the
emphasis in implementing PLM can be on different issues than in bigger companies, for
example focusing on the traceability of products and user feedback, to enable customer
needs scanning, quality and feature improvements and proactive service. [8].
Often the SMEs have a possibility to join a bigger customer’s system, when there is
no need to develop own systems, but this means multiple process changes to integrate the
functions between organizations [9], [10], which requires interoperability and
standardization [11], and an online access [12]. Implementing PLM in and SME can be
faster than in bigger companies because of less need for system customization and easier
adoption of new routines, since cultural changes in smaller organizations might be easier
[13].
Benefits of PLM
Companies are not willing to make investments unless they have facts on the business
potential or benefits that are counted as cost savings. PLM benefits are often “soft” by
nature, not easily transferred to monetary benefits. [16], [13]. Implementing PLM can
result in reduction of product development time from weeks to days, and causes
significant changes also in manufacturing, service, maintenance and support. The biggest
benefits can be realized through faster product development time and faster time to
market [12]. In a study on European automobile and airplane industry, implementing
PLM and PDM systems with a strategic focus and utilizing them in a versatile manner
improved the key figures of the companies [17]. PLM systems also have the possibility to
improve organizational learning, and to help knowledge accumulation [5]. According to
Stark [16] general benefits from PLM are identified as:
better access to customer need information,
more innovative ideas,
improved sales process,
utilizing distributed development,
better possibilities for make-buy decisions,
improved user support,
less product defects,
utilizing accumulated knowledge for service and maintenance,
more effective re-use of product parts, and disposal of products.
Because the PLM systems are normally customized, the benefits vary between
organizations and depend on the final outcome of the system configuration. General
benefits of PLM systems are easy and fast dissemination of knowledge, documents and
expertise, and it diminishes some of the risks associated with distributed product
development. Information is better organized and easier to find, which enables
productivity improvement [5]. Standardization and transparency add process and product
quality [13]. Customer claims and feedback can be utilized effectively in development
and production, and product and process problems can be prioritized and solved faster
[18].
Complicated product design and manufacturing processes are easier to control and
reacting faster to changes in markets, standards and legislation becomes possible. Also
the mistakes in product planning decrease, which lowers product development costs
because necessary changes can be done earlier in the process and testing costs are lower
[13], [7]. The simultaneous dissemination of information enables faster decision-making
and sequential information sharing is not needed. Also tacit engineering knowledge can
be better codified and utilized. In companies which use PLM effectively, engineers use
more time for value-adding tasks (53%) than in other companies (47%). This is due to
improved communication and accessibility of information [13]. Work processes become
more standardized and automated, and utilizing existing knowledge and design models
enables faster time to market with better quality insurance. This has a positive effect to
market share, profits and customer loyalty [13].
The improvements in PLM systems make the implementation easier, faster and
cheaper than before [6], so they have become available for also SMEs, although few
Finnish SMEs have seen the need to implement PLM systems so far [7].
Challenges of PLM
The implementation challenges of PLM in SMEs can be related to the technology on one
hand and knowledge/information management on the other. In big companies, the
implementation is a long-term process, often organized as a massive project. Since the
systems need to be customized, the total costs include the purchase and maintenance. [5].
Also the philosophy of business processes is changing, which means a cultural and
mental change [13].
In small companies, the fear of significant process changes slows down the PLM
adoption and implementation process [19]. The integration to other systems such as CAD
used in the company presents an important challenge. Additional costs come from user
training, which can be made easier by standardized graphical user interface (GUI) that
shortens the training and planning time needed and reduces costs. Technical consulting
can also be acquired from the software vendors [7].
SMEs are afraid of acquiring and implementing PLM systems because of the costs,
infrastructure requirements and possibly changes in processes and strategy [19]. The total
costs of implementation can be three times the original purchase price of the system,
when taking into consideration the process- and configuration changes, so despite the
knowledge management and other business benefits it is such a remarkable investment in
an SME with limited resources that the planning and implementation has to be considered
carefully [20].
The impact of PLM technology in different industries is dependent on the product life
cycle and the product development and market introduction process, as well as on the
development drivers of the industry (marketing, projects, technology, production) [21].
PLM affects the central business requirements such as time to market (product portfolio
management, distributed product development, customization, and information
management during the product life cycle), production volume (networked production,
and component delivery) and profits (management of life cycle processes, extended
product) [21].
In addition to industry-specific factors, company-specific factors and plans for
product development, expansion and networking also affect the need for PLM and the
requirements and functionality of the system. The benefits of PLM are best achieved
when the original purchase price of the system is not the only significant factor, but the
acquisition is done with a strategic intent and the process focuses on the quality and costs
of implementation [17]. The needed level of the functionality needs to be defined and
found, and also the integration with other systems (own and stakeholders) needs to be
considered. Choosing a system to use means complying with a standard that might have
limitations, and the quality management system might also set some limits to PLM [9].
2.2 PLM Maturity assessment of the organization
When a company is planning to deploy PLM or to implement a PLM system, maturity
assessment is one of the main themes to be considered by the company. Has the company
readiness to develop, implement or extend the use of PLM? What is PLM maturity and
how should it be assessed? Which are the main elements of PLM maturity? Maturity
models on PLM are classified in several assessment approaches for PLM implementation
in literature.
Assessing an organization’s readiness for product lifecycle management requires
assessment of all the elements of PLM: technology, not only enabling technology, but its
infrastructure, processes, people and practices [22]. This assessment needs to be done
using a systematic and understandable framework that compares where we are now and
where we need to be in the future. Grieves [22] and Batenburg et al. [15] suggest an
assessment framework of Capability Matrix Model (CMM) that was originally applied in
the information systems area. The CMM has five levels: Initial (ad hoc), Repeatable,
Defined, Managed and Optimized. For instance reuse of design maturity can begin from
‘easier for engineers to design new than reuse (Initial)’ towards ‘automated searching of
BOM for similar components (Optimized)’. Batenburg et al [15] have carried out a study
on a PLM maturity framework adapting the Capability Maturity Model.
The idea of the PLM maturity model by Saaksvuori and Immonen [23], (see Table 2,
refer to the generic maturity model CMM combined with the COBIT standard) is to
describe, on a rough level, how a company and its management team can develop and
extend the use of a corporate-wide PLM concept and related processes and information
systems. The origin of the model lies in the idea of phases or stages, which a company
usually goes through as it adapts to new cultural issues, processes, management practices,
business concepts, and modes of operation. These stages represent the organizational
growth, learning, and development that occur as new methods are implemented in large
corporations.
Table 2 The modified generic maturity model for PLM [23]
Some clients require that during design phase Life Cycle Impact Assessment (LCA)
should be performed in order to predict and when possible to prevent harmful impact
throughout the lifecycle. Therefore, recycling and disposal are also considered in LCA in
order to take them into account in material selections and other design solutions.
Regulatory requirements to assess the conditions of exploitation during lifetime are
affecting to design solutions too. Follow-up data would be gathered during whole
lifecycle, especially in-use of the boat. Assessment procedures and record keeping shall
create a new field for information and knowledge management.
EngCo predicts increasing demand of special-purpose boats, hence modular product
strategy would be developed further, as modularity would allow to offer to customers
certain range of ready, proven solutions as well as speed-up design and manufacturing
processes. For sales process a kind of configurator is considered to increase re-use of
product solutions and reduce time used for definition of the delivery (physical product
and additional services). Figure 3 shows two different views on the product: for customer
the boat is one entire object, but for designers the boat has many sub-systems.
The contribution of this research is better understanding of the requirements, benefits and
challenges related to PLM when the implementing organisation is a SME. The
implementation of PLM in a SME has special challenges such as fear of costs and
integration of new information technology to the existing ones, the need to change or
rework company processes and working habits which also bear costs, and the fact that
SMEs are not necessarily aware of PLM benefits for their case. Such factors need to be
taken into consideration when planning the implementation of PLM processes and
systems in SMEs. The results also highlight the important role of customer needs
information in different stages of the product lifecycle. Our case company was found to
be at level 2 (of 5), close to lower line as defined by [23] Saaksvuori et. al., in respect to
PLM processes such as document management, product structure management and
description of work processes. The company is following Quality Manuals, but they
consider mainly manufacturing processes therefore design processes have less structured
form. In the course of the maturity analysis and acquaintance with PLM the company was
able to work out the specific reasons why it would benefit from a PLM system and define
what would be the most beneficial implementation sequence for PLM processes and
which components of the information system would need to be implemented first.
For the management of SMEs, this study gives practical advice on how to proceed
and on the aspects that need to be considered especially in SMEs when planning PLM
adoption and system implementation. Important themes include, for example, the need to
educate management and key personnel on PLM before even making the As-Is analysis,
the fact that relatively easy questionnaire-type tools are available to do a maturity
analysis, and the realization that PLM implementation should not concern only
technology, but in first hand work processes and habits and the whole organizational
culture and approaches, including attitudes of personnel to information management as
part of their work. Furthermore, the suppliers of SMEs need to be informed and included
in the planning process to a relevant extent at an early stage. Information systems
designers can benefit from this study when designing new PLM systems and sales
/product configurators, especially for SMEs’ needs.
One limiting factor in the study is, despite a thorough literature review and in-depth
interviews, that the empirical analysis is based on one case company only. A further
research topic would be to study, how well the developed simplified PLM
implementation roadmap for SMEs would suit other companies, also in different
industries. Another future research question is, how to integrate the necessary cultural
change aspects better in the implementation process, as the current implementation
models do not discuss this in very much detail.
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