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design data to multiple manufacturing sites, and manages changes to the design in a closed loop fashion. PDM provides the vault infrastructure that controls the design cycle and manages change.

Having control of the electronic and physical documents is essential in a fast moving design process. Effective utilization of this design engine can save an organization 15 to 20% in product cost. The innovation engine is powered by a PLM system through the collection of what the organization has learned about what works best in designs and provides insight into best practices in design. Remember that more than 80% of the final cost of the product is committed during the design phase of the product. Once the design is locked down there is only relatively small improvement that can be made to reduce product cost. Having the loop closed from the manufacturing process back to the design process provides that critical feedback for innovation on the next product. This innovation engine explores design alternatives and defines innovative options and alternatives, including developing products targeted at individual customers. Having direct linkage to the manufacturing system to get feedback to the engineers about the costs and as-built configuration is needed to incorporate this information into the next design. This can be integrated directly into the Customer Relationship Management (CRM) part of the Enterprise Resource Planning (ERP) system. PLM can result in several orders of magnitude improvement to the product design process.

PRODUCT DATA MANAGEMENT

(BOM), but also tracks the revisions and history of the asdesigned and as-built conditions. By utilizing an integrated CAD and PDM system, the quality of the design is improved and the response time to the market is significantly improved. After all the virtual tests, a direct link to manufacturing (computer-aided manufacturing [CAM]) is also possible. Until recently the missing link has been used to automatically update the ERP system planning data. This is now possible in a seamless connection due to the openness of the database tools and the sophistication of middleware used to perform the linkages. This integration into the planning system is essential so that the right part with the right configuration can be ordered at the right time.

The other side of PDM is the definition of what goes into the parent part. Where a machine shop may use relatively few materials to manufacture a part, an assembler may take hundreds if not thousands of parts to make an end item. When ordering for a company that builds sophisticated satellites or ships, an engineer may use thousands of parts to complete the final unit. The as-designed and as-built configuration must be concisely documented in this type of business since part of the total deliverable is the product catalog to provide critical service information. Keeping track of all these pieces, assemblies and quantities can be very confusing. A PDM system integrated with the BOMs provides the planning system with a clear definition of the product and the materials required. Having this linked to the as-installed and as-serviced configurations of the products through the field service application provides a full 360-degree view. Field service is covered in more depth in Chapter 20.

Expected Benefits of PDM

The enterprise is faced with many challenges both internal and external. The benefits of PDM can be divided into four categories:

1. Market share

2. Customer satisfaction 3. Profit margins

4. Returns to stakeholders

Market Share

The use of an integrated design system should increase market share since the enterprise can be expected to increase the introduction rate of new products and lower costs. PDM significantly reduces the time it takes to bring new products to market by reducing the amount of nonvalue-added time in the product release process. This increased frequency of introduction can help gain a competitive advantage. If the competition is releasing products at a slower rate, there is significant potential to grab market share through product innovation. This faster introduction of new products at a lower cost can also allow the enterprise to introduce products that meet the needs of emerging market segments or smaller niches that could not otherwise be accessed in a profitable way. In addition, the selling price of these products can potentially be lower since the cost of the design is lower, thus lowering the break-even point for the product launch. Given the dramatic reduction in product life cycles, being able to bring more products more quickly

to market can provide more opportunities to develop products that may be the next big market success.

Customer Satisfaction

PDM provides the enterprise with the ability to increasingly fit its product introductions to the market needs. With this ease of design, the company can try innovative products that leverage what has been learned in prior designs. Feedback from customers can more easily be incorporated and introduced to the market. Since the design, fabrication, and services systems are integrated under a fully implemented ERP system, the components that exhibit early or frequent failure can be identified and the design can be modified to improve overall service levels. These experiences can also be leveraged back into the design system. The PDM system supports the low-cost introduction of additional features, as the market demands them because the design does not have to start from scratch. Derivative products can be introduced to the market at a reduced introduction cost.

Profit Margin

As discussed in the customer section, the use of PDM and CAD can significantly decrease the cost of developing a product. The number of derivatives that are possible from the same base design increases. A derivative is a product that is very similar to another product that has already been introduced. Typically a derivative product would share production processes. An excellent example is the Kodak disposable camera. Kodak introduced this camera as a standard product, a panoramic product, and a weekender product sealed in a plastic case. The basic design of the product is the same; only small changes were made and very different products are available for the market at a very low incremental cost. Kodak also strategically integrated its production design process into this approach so that the fabrication lines could be used to build any of the derivates. This strategy provided the company with good flexibility as the market demand changed. PDM facilitates the reuse of previous designs and knowledge because this information is easy to access and use. Where possible, previously proven material and parts are incorporated into new products that are coming to market. The benefit of this approach is that the volume for these parts goes up and therefore the cost per piece goes down.

In addition, when proven parts are used, the number of parts that could cause a risk in the project should decline because the start-up production problems have already been resolved. Another side benefit of this approach is that the warranty cost should be reduced as the number of different parts that have to be stocked for service is also reduced. The strategy of developing a product with all new parts may be exciting and attractive to the design engineers, but it sets into motion a series of very expensive consequences. The complexity in managing the overall development processes increases because any one of the new parts could cause the overall project to be delayed. All these new parts must have an item master added to the ERP system. This addition alone can introduce errors to the system. The parts must then be added to the BOM—another

potential source of errors. If this is a durable product, replacement parts must be held in inventory to fulfill the field service and internal service demand. As the product variety increases, this level of inventory investment can quickly become substantial. When the PDM system is used to reduce the number of new parts used in a design, the warranty cost is reduced. The parts have been proven and the cost to provide service parts is significantly reduced.

Return to Stakeholders

The ability to bring new products to market quickly and profitably has a direct impact on the corporate image. The corporation is viewed in the

Figure 9.1 Design resource requirements.

market as being innovative and fresh in its product design. This competitive advantage usually provides improved market share and increased investment in addition to improved returns to stakeholders. When this strategy is continued over time, the returns to stakeholder can continue to improve as well. This steady growth and profit curve is well received by the financial markets and other investors.

This improvement in product design drives benefits across all elements of the extended enterprise. One measurable objective for new product introduction improvement is lead- time reduction. Without substantial improvement in the underlying processes, even though the lead-time may be reduced the amount of resource required for completing the design did not change. This is shown as the transition from the resource line labeled 1 to line 2 as shown in Figure 9.1. The drawn out process shown in line 1 has been simply shoved into a smaller time frame. The total amount of resource required has not changed. The next step in the improvement process results in an overall reduction in the amount of resources required to complete the design. This is shown in Figure 9.1 as the transition from line 2 to line 3. Line 3 shows a reduced resource level through the improved design processes such as change management using of a PDM system. Management’s awareness

of potential problems occurs very late in the traditional product design cycle. Typically this is too late to really impact the overall cost of the product. Product costs are committed because of decisions made early in the cycle. Actual production costs are incurred much later. Too many times, cost overruns cannot be affected because the design is the cause. Dramatic savings can be made when problems and issues can be identified earlier in the product design cycle.