May 2003 | Commentary | Supply Chain Technology

The 411 on Product Lifecycle Management

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The age we live in may very well be be remembered as the "Age of Acronyms." The logistics industry has certainly contributed its fair share. Among the many new SCAs (Supply Chain Acronyms) to make their way into our daily lexicon is an upstart called Product Lifecycle Management (PLM).

Like supply chain management (SCM), PLM is a hot topic these days as businesses conceptualize the impact of logistics activities in other areas of a product's lifecycle such as marketing and sales. Software developers, naturally, are capitalizing on this growth.

PLM software is expected to grow 31 percent this year, according to AMR Research's Business 2.0. Accordingly, when AMR asked 100 technology managers to list solutions they would most likely invest in, PLM software outranked all other categories with 47 percent of votes, compared to 27 percent response for ERP and 28 percent for SCM.

That SCM and PLM share a vital role in business logistics activities today comes as little surprise. PLM is directly related to SCM functions and vice versa. To best capture their similarities and differences, we can analyze their roles within customer and supplier relationships.

One key component of supply chain management is the supplier's role—specifically, who the supplier is, what the supplier does, at what cost, at what level of quality, and how expeditiously the supply is handled (as in just-in-time logistics activities, for example).

PLM similarly incorporates the needs of suppliers, but within a different context. If for comparison's sake we characterize SCM as the logistics of "goods in motion," PLM essentially drills down one more level to the design change of "products in transition"—whether planned, new, existing, or mature.

The strategy of PLM is to offer seamless, electronically-based processes for managing the various phases of a product's life cycle. This means going from design concept to manufacturing and maintenance of the product during its time in the aftermarket environment. PLM's concern with supply is centrally one of change management and associated quality management. If a product, new or old, changes, these alterations have direct bearing on the choice of supplier, supply availability, the timing of the supply, and the cost or added cost of the modification. A design modification can be a harbinger of many changes throughout an enterprise.

Even changing the finish on a product such as a stove, for example, can alter the procurement and supply processes of other stove components—the paint specification and in some cases the metal or plastic under-layer. One small change can lead to a dozen ramifications.

PLM's dependence on computer-aided design, therefore, penetrates deep and comes from long-standing efforts at information integration, a process of protocols, and sign-off procedures that give PLM its central core of reliability.

The Be-all and End-all

In the context of SCM, the customer is the be-all and end-all. Without customer-driven demand—and the demands of a customer's customers—the supply chain would not exist. The objectives of supply chain management—cost reduction, better communication, visibility, shorter lead times, faster delivery—are driven by the customer.

Accordingly, its values, tastes, and degree of need play a starring role in SCM and ultimately set the tone for the product, the timetable for action, and the level of maintenance required to meet these demands.

In a similar manner, the customer plays a vital role in PLM. But unlike the supplier paradigm, where change is pinpointed by drilling down to transition points within a product's lifecycle to forecast other changes in supply, the impact on a customer is more easily perceived by taking a step back and looking at the process as a whole.

The design of a product may, or may not, be built upon the taste and needs of the customer. However, over a product's lifecycle, the customer will influence design, function, service, and cost. Collaboration within PLM that has traditionally been design-team oriented is now being extended to the entire enterprise. The overlap with customers becomes a given as it is these companies that buy and use the product and their opinions and suggestions become valuable.

Both SCM and PLM work most effectively in a collaborative online environment. The sharing of data and the collaboration of decision-making are shared by both disciplines and from what we have reviewed it is clear that both activities function across the whole range of business processes within an enterprise. Process visibility and the ability to maintain centralized order within the process is common to both as well.

Visibility and order make for good business. It is equally important for a company to know how much material is in manufacturing and how much raw material is being shipped to manufacturing. This must be shared knowledge because planning and execution depend on this information.

The question looking forward is how will businesses coordinate all this information and meld the functions of PLM and SCM? Many, of course, predict that ERP II will be the backbone of the melding. Do you agree? Let me hear from you. Drop me an email at:

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