Product lifecycle management is a promise half-fulfilled—a good idea that has yet to become great. It involves actively managing a profitable portfolio of products across their entire lifecycle, from earliest concept to end-of-life phase-outs. It comprises the enterprise business strategy, the execution processes, and the technology required for management of all the critical events of the product's life—from concept to development and testing, from launch to manufacturing and optimization, through sales and service, and eventually to retirement.

In a sense, then, PLM is about a demand and supply chain of product-related information. And the principles supporting this effort are similar regardless of whether the product is an agricultural tractor or a mobile phone circuit board.

Yet despite its boundary-spanning nature, PLM has grown up as an engineering concept, owned by product development managers, production engineering specialists, and others primarily in the realms of engineering development and production. With this limited perspective, supply chain professionals are often not appropriately involved in product lifecycle initiatives. (For that matter, nor are leaders from sales and marketing functions.) If PLM projects are to begin delivering their full potential, that has to change.

The involvement of supply chain experts can have a profound impact on product lifecycle profitability. That's true whether their specialty is parts procurement or transportation, inventory management, or international logistics. Their influence would have changed outcomes in several cases that we know well. In one situation, an automotive manufacturer opted to outsource a door module. The company found out—too late—that the module would not fit in its inbound transportation racks. The result: unplanned short-term product shortages, mid-term transportation cost increases, and long-term capital expense to replace the racks. Similarly, an electronics supplier discovered that its new online order configuration tool accepted product configurations that actually could not be built.

This article explores some of the traps that endanger PLM projects and looks at the areas of greatest potential improvement. Breaking the PLM "supply chain" into its key elements, we examine where and how supply chain professionals can best influence PLM initiatives to correct the omissions of the past.

In 2002, companies worldwide spent more than $10.4 billion on product lifecycle management products and services. That makes PLM one of today's largest and fastest-growing enterprise application categories.¹ But as Exhibit 1 shows, there are three other categories that add value to the enterprise, and the effectiveness of PLM's interactions with them can have a significant bearing on the overall profitability of the product portfolio.

The rising interest in PLM and the resulting increase in the number of PLM initiatives stems in large part from the intuitively obvious value they offer. Companies that manage their products with consistency across the entire lifecycle and across the extended supply chain can reap benefits such as:

• Reduced time to market—by reducing errors that take time to correct and by using state-of-the-art capabilities for virtual development and testing.
• Lower total development cost—by cutting nonvalue-added time that highly trained professionals spend chasing information and through the appropriate reuse of existing parts, assemblies, and tooling.
• Better cost at launch—by more effectively involving key influencers of product cost, such as manufacturing and suppliers.
• More appeal for customers—by including customer requirements and market performance in product development and improvement processes.
• Fewer unexpected and costly surprises—by providing the visibility that comes from connecting supply chain partners, often in real-time, to change and issue management systems, companies can sharply reduce the numbers of unplanned delays and cost overruns.
• Improved service/service parts profitability—by including service earlier and more intimately in the product development and change processes.
• Optimized IT spend—by rationalizing the myriad of systems that have evolved to manage specific aspects of the product lifecycle.

There are still abundant opportunities for improvement in these areas because in many companies, in-house departments and external supply chain partners often operate in isolation using disparate purpose-built tools. As a result, the IT environments in most large organizations are a combination of hundreds of software tools, both official and unofficial, used to manage the tasks required to move products through their lifecycles. Many of those companies are discovering what supply chain professionals have known for some time now—that optimizing the program elements individually often leads to a less-than-optimal whole.

Well-built PLM systems comprise several categories of capabilities operating in unison, all using common sets of data. (See Exhibit 2.)

We identify six discrete categories of PLM capabilities:

• Product Data and Configuration Management—everyone is operating on the same current version of the product.
• Product Portfolio Management—the best product offering is, and will remain, in front of customers.
• Product Requirements Management—a realistic set of product requirements is maintained to reflect customer and other market needs.
• Project and Program Management—everyone is operating on a common set of tasks and issues and working towards a common product-related goal.
• Collaborative Design and Visualization—all product development participants have appropriate input into design development and design change.
• Collaborative Direct Material Sourcing—the best suppliers are selected and defined partnering relationships are set up to provide the highest possible service and value.

Sound PLM practice dictates that key participants convene in common environments to cut the "transaction costs"—the operational friction—of collecting data, making decisions, and disseminating those decisions across the supply chain. Companies that take this approach are reflecting the central impact they believe product lifecycle management has on corporate performance. Yet many still find that their PLM initiatives don't deliver the value so obviously trapped in the product lifecycle.

What's the problem? If companies can readily deploy sophisticated analytical tools and have such rich product and process data available to them, why then can't they quickly push product portfolios to their full profit potential? Based on my firm's involvement in hundreds of PLM initiatives in a wide range of industries, we can make some important observations about failed and subpar efforts to manage product lifecycles.

Economist E.F. Schumacher summed up many enterprise transformation initiatives when he said: "Any intelligent fool can make things bigger, more complex, and more violent. It takes a touch of genius—and a lot of courage—to move in the opposite direction." Schumacher might have been describing product lifecycle management. PLM is particularly complex because it already involves a variety of functional experts, large numbers of suppliers across many tiers, vast quantities and types of data, and high rates of product introductions and change. Although dedicated practitioners have worked to make PLM as effective as possible, it still operates in an ad hoc fashion.

It is no surprise then that many PLM initiatives fail. We have identified these six common traps:

Lack of a Complete Vision

It sounds trite, but if you don't know where you are going, it's hard to know when you've arrived. Lack of vision in PLM can be particularly troubling and expensive. It can lead to throwaway solutions—investments that can't be scaled up to accommodate future requirements. It can encourage project proliferation as different participants develop their own, unnecessarily unique ways of managing the product. And it can make it very difficult to explain the strategic importance of the current initiative.

Not Having a Business Case

PLM initiatives often fall afoul of the "case of the missing business case," in terms of both the financial justification of the project and the subjective rationale that accompanies it. The lack of consistency shows up in a simple test. If you ask PLM project team members to give their "60-second elevator pitch" describing the situation, past problems, and how the current initiative will improve things, there will almost certainly be significant divergence in their responses. It is equally important to deal with the project's financial aspects. The financial business case often uncovers opportunities that would be overlooked with a simple subjective project design.

Failure to develop a common, intuitive business case can dilute the cohesion of project teams. (Members may even begin to question why they are on the project.) It can undermine management's interest as the project progresses—particularly if team members provide confusing views of the goals and objectives. That in turn can make it tough to get more time or funding for the project.

Failure to Construct a Business Release Approach

Many PLM projects have two- to three-year deployment plans. But companies have little appetite today for such lengthy "wait-and-see" programs. Additionally, the project's initial momentum and excitement can evaporate if it takes too long to see initial change. A lengthy "Big Bang" release plan may also make it impossible to include the newest technology applications or approaches to deployment. Finally, large-scale initial deployments frequently devolve into exercises in complex process mapping at the expense of focusing on the project outcomes themselves.

Making PLM a Departmental Initiative

Product development and management is a dynamic activity involving many people and organizations. Yet it's common for a single department—often engineering—to lead PLM initiatives. But in many companies, that doesn't mean there's only one initiative. Other departments—finance or sales, for example—often lead parallel efforts in bids to further their requirements. We know of one automotive supplier that has six portal projects for collaborating with suppliers. The consequences of such activity include: "broken" processes when a project tackles only one department's portion of a multi-departmental process; limited cross-functional support of or negative attitudes toward the single department's approach to improvements; and the obvious frustration of partners, such as suppliers, who see too many faces.

Experienced supply chain professionals could bring their wisdom to bear on this problem. They understand all too well the negative impacts of optimizing inventory without considering customer service, of cutting transportation costs without considering inventory carrying costs, and of setting prices without considering quality. In fact, they are attuned to many situations requiring varying degrees of trade-off.

Placing Too Much Burden on Application Software

The complexity of PLM processes in terms of data, workflows, and the number of parties involved makes it hard to imagine how one software application could tackle the entire process. (In fact, the complexity parallels supply chain management's experiences with enterprise software packages.) Yet, many PLM initiatives rely on deployment of a single application. The results are not pretty. An initial release can take years because data/process modeling and legacy systems migration require many months of preparation. Product launches can go awry when unseen legacy data is lost or complex processes are not enabled. Hard-coded legacy software can limit data and process-modeling changes and lock out new technology. Finally, necessary application modifications can cause substantial cost and time overruns.

No Owner of the Product Lifecycle

In too many companies, the product is like an unfortunate foster child, passing from functional owner to functional owner as tasks and the lifecycle phase change. This favors optimization of a given function, task, or lifecycle stage at the expense of overall PLM efficiency. It also can lead to problems such as poor overall product-performance metrics, a firefighting approach to solving problems (even recurring ones), and failure to reach the interdepartmental compromise needed to optimize the entire product lifecycle. Many supply chain managers have experienced this same trap.

So how can PLM project leaders dodge those traps? It's instructive to note the characteristics of managing a product across its lifecycle:

• Many functional departments, each performing highly specialized tasks.
• A large number of n-tiered suppliers.
• Huge amounts of data and information.
• Critical and time-sensitive goals.
• A large number of existing purpose-built tools.
• Constant change and firefighting.
• A "just-get-it-done" attitude.

This is familiar territory to the supply chain professional. While most supply chain experts may lack the deep product-development skills associated with PLM, they do possess the mindset and methods to deal with complex physical supply chains and the information that surrounds them.

Indeed, our studies of PLM practices reveal that product lifecycle leaders are more apt to learn from the supply chain than from other disciplines and to seek out the viewpoints and counsel of their supply chain colleagues. Further, we find that those interactions rise in importance and economic impact with increasing levels of PLM collaboration. At one end of the PLM set of capabilities are "nice to have" interactions with the supply chain; at the other end are "must have" involvements if the greatest product portfolio potential is to be realized. (Exhibit 3 depicts how and where supply chain expertise can benefit PLM.)

Let's look more closely at the interaction with each set of PLM capabilities:

Product Data Management—Historically, product data management (PDM) and supply chain functions have rarely interacted. But we believe that companies that are developing multilayer PDM environments will benefit from including supply chain data in those PDM models. This data could include weight, cube utilization, packaging, and supplier statistics and metrics. Supply chain professionals should participate in the development of those data models to ensure that isolated data repositories are as useful as possible and aren't replicated needlessly.

The benefits of supply chain involvement can be substantial. We know of one equipment manufacturer that anticipates savings of more $40 million per year simply by reducing the number of servers and maintenance contracts associated with "one-off" product information systems. Following a successful initiative to determine requirements across all functions—supply chain input was vital—the company is replacing standalone data sources with a single enterprise-wide PDM environment.

Product Portfolio Management—The review of product portfolios must include some aspect of the total cost to develop, produce, sell, deliver, and service the products. That information is tracked by several categories of supply chain professional—among them materials managers, transportation and warehousing specialists, and international logistics managers. Companies need this information to form a complete understanding of current and future product profitability. Recently, one original equipment manufacturer (OEM) began to realize $25 million in annual savings associated with more quickly "killing" flawed new-product programs. Critical to this process was supply chain information that enabled the OEM to get a true picture of its total costs of program and product analysis.

Product Requirements Management—Supply chain experts can help with applying some reasonable parameters on definition of product requirements. At several leading companies we know of, international supply chain managers are providing invaluable information to product design and development teams based on their knowledge of product recyclability laws.

Project and Program Management—Supply chain expertise begins to have greater economic influence in this area. It's not unusual for project management activities to proliferate unnecessarily; a project at an automobile manufacturer recently uncovered 60 isolated systems designed to manage issues. When critical project information such as issues, deliverable templates, and milestones are managed in standalone departmental systems, it's tough to get a true picture of a product's history—and it's just as difficult to manage its future success.

For many companies, the standardization of project management is low-hanging fruit. Supply chain leaders can and do add significant value here by establishing or adapting standard project management tools. We are familiar with one electronics manufacturer that took a "whole system" view to halve development time, from concept to launch, largely by establishing a standard project management process for product development.

Collaborative Design and Visualization—In this area, supply chain involvement becomes critical. Failure to include appropriate supply chain functions in the design of PLM collaboration environments can lead to unexpected and unfortunate events, as noted in the earlier example of the automotive manufacturer whose outsourced door module would not fit its inbound transportation racks.

Collaborative Direct Materials Sourcing—The direct, immediate, and substantial influence of supply chain managers is of enormous importance in this area. Direct materials sourcing (DMS) is a PLM "hot button" these days; companies that excel at it routinely see cost reductions at product launch of anywhere between 5 and 15 percent. However, companies have difficulty realizing the benefits of DMS because so many technology vendors have leapt onto the bandwagon. One recently surveyed automotive supplier had six "supplier collaboration portals," each sponsored by a different division or functional organization.

The evolution of sales and operations planning (S&OP) sets a precedent for supply chain involvement in PLM. S&OP teams were developed to deal with the complex, highly volatile, cross-functional environments in which companies were attempting to strike the most profitable balance between supply and demand. Supply chain professionals played a key role in developing and operating successful S&OP teams.

The situation that product development and management faces today is similar and even more complex. In the absence of a chief product officer and staff, some companies are finding that new teams—what we call "product lifecycle optimization" teams—are an effective way to strike the balance required to manage products most profitably across their entire lifecycle. Just as they were pivotal players in successful S&OP initiatives, supply chain experts are uniquely qualified to shape new PLM directions today.

So how best to ensure that supply chain managers are positioned to help optimize product lifecycle management initiatives? It may help to view PLM in terms of a simple set of guiding activities designed to overcome the six traps discussed earlier. These activities center on:

• Creating ownership of the PLM initiative.
• Establishing your own "brand" of PLM.
• Assessing your current status and available opportunities.
• Developing a transformation roadmap.
• Building upon an "adaptive architecture."
• Tying the PLM initiative to a living business case.

Create Ownership of PLM

In many organizations, the product-management role is a marketing or manufacturing function with limited direct influence on the product over its entire lifecycle. Instead individual organizations and individuals interacting with the product own their portion of the lifecycle. As discussed just above, the lack of consistent ownership can be an expensive way to manage products.

A number of leading companies have effectively established PLM ownership in the form of cross-functional PLM councils. The councils are similar to the sales and operations planning teams created to manage the complex process of meeting customer demand. With the appropriate sponsorship, charter, success metrics, and team composition, PLM councils are proving that product profitability can be successfully managed through a cooperative, cross-functional effort.

As with S&OP teams, supply chain leaders are often the most logical leaders of robust PLM initiatives. Their extended-enterprise view of the product supply chain and their experience in supply/demand and risk management uniquely qualify them to lead complex PLM initiatives.

Establish Your Own "Brand" of PLM

No two companies develop products in the same manner and in the same legacy environment, so no two PLM initiatives should be expected to be alike. The critical first step in any initiative is to establish your company's PLM vision for the future. You need to define the core categories of product information that will be managed with consistency across the product lifecycle. Regardless of lifecycle stage or functional ownership, this information will be managed in a common environment to ensure consistency and accuracy. The key here is not to exhaustively define the future but rather to directionally describe the PLM capabilities that your company will develop and deploy. Simple process mapping and interview techniques sketch out the PLM environment, pinpoint current issues, expose challenges to any improvements, and estimate the value of improving.

Assess Your Current Status and Available Opportunities

All PLM initiatives must start with the development of an intuitive understanding of the issues and costs associated with your current way of managing the product across its lifecycle. Specifically, this involves determining factors such as: the key objectives and the interim and final deliverable products/reports; the overall process by which they are produced; the supply chain participants and their roles; the current systems and tools employed (and, where possible, the costs to operate them); and some understanding of past efforts and reasons for failures. It is not yet necessary to fully decompose each process; that will occur during definitive planning for individual PLM business releases. Input from supply chain professionals can be particularly useful at this point to identify "profit leaks."

Develop a Transformation Roadmap

PLM initiatives are particularly in need of a "roadmap" approach to pinpointing a destination and identifying the steps to start the journey. This "getting from here to there" phase is the most critical stage of PLM planning, and one that is commonly bypassed in the rush for implementation. Exhibit 4 illustrates a PLM transformation roadmap. The x and y axes are the sets of PLM capabilities defined in the PLM vision, while the header defines the "release waves" for each, bucketed by time period and converging on the PLM vision at top right. Generally, the transformation roadmaps are established during the same PLM planning phase as the overall vision and current state assessment. The transformation-mapping phase may range from four to 12 weeks.

Build on an "Adaptive Architecture"

Replacing all of the myriad legacy systems that drive today's PLM initiatives would be expensive, risky, and time consuming. The concept of a common PLM environment is appealing, but it must not be translated to mean one common software application. A robust PLM environment will include legacy systems, hardware, middleware, online analytical processing tools, workflow tools, data warehouse capability, and new applications. Exhibit 5 illustrates Cap Gemini Ernst &Young's adaptive architecture approach to dealing with PLM software complexity while preserving the flexibility to change as product lifecycle management processes change.

It is also true that human creativity and intervention are required in many situations across the product lifecycle. Supply chain experts familiar with risk assessment and management have much to offer PLM initiatives in terms of intervention. It's important during planning and deployment phases for managers to identify key points in time and areas where they need to "touch" the process and intervene to resolve bottlenecks.

Tie Initiative to a Living Business Case

It is critical to have a current and relevant business case that can be expressed in a high-level "elevator pitch" that explains the need for, and the basics of, the PLM initiative. There must be a high-level cost/benefit description of the entire program. The business case must also have enough detail on short-term (three to 18 months) PLM releases to confirm the benefits, fund the project, and ensure that no functionality and no associated costs or benefits have been overlooked. Additionally, there should be a routine review period to ensure that neither costs nor benefits have changed based on changes in the environment (see sidebar above).

Today, too many companies operate on the edge of control when it comes to managing their products. True, many have recognized that product lifecycle management disciplines can dramatically affect overall profitability, and plenty of companies have invested accordingly in PLM tools and resources. Yet PLM initiatives have, for the most part, not yielded anything like the expected results.

The insight that has eluded many PLM project managers to date is that their function is not an island. Supply chain leaders learned that lesson some time ago, and supply chain managers as a whole have been gradually mastering the outreach and collaboration necessary to reach their operation's full potential. As such, they are uniquely qualified to play a key role in establishing effective demand/supply environments for product information and the management of products from earliest design concept to phase-out.

If PLM is to contribute to the fullest extent to corporate performance, it is imperative that PLM project leaders reach out beyond their engineering walls for ideas and assistance. The six guidelines noted earlier are vital groundwork for that outreach. At the very least, PLM professionals must find economical ways to learn what their supply chain colleagues have been learning for years about the merits of constant collaboration. At best—and especially in cases where collaboration with external suppliers is common—PLM leaders must seek the input of supply chain professionals.

It will mean inviting supply chain representatives to key PLM council meetings. It will demand a greater understanding of the true costs, benefits, and risks of sourcing parts, materials, and subassemblies. And it will force much greater liaison with those in the best positions to control those risks. With a renewed emphasis on the product everywhere from the automobile industry to the household goods sector, there has been no better time to do so.