# Category "PLM Expert Insights"

In the previous posts regarding PLM ROI ( Part 1, and Part 2, we introduced the hierarchy of strategic objectives, business targets and business costs. Examples were provided of all these categories.

In this post, lets look at some examples of how to calculate business costs and how savings can be derived from these. We will look at two examples: time searching for documents and manufacturing rework. The first example represents an efficiency gain and the second is a cost saving.

### Time searching for documents or information

Assumptions:

• Burden rate for engineer = \$70/hr
• Number of engineers = 120
• Hours per week = 40
• Weeks per year = 48
• Time spent looking for documents (before PLM) = 2 hrs/week
• Time spent looking for documents (after PLM) = 1.5 hrs/week

Cost:

• Before PLM – \$806,400 (this is obtained by multiplying the first five quantities together)
• After PLM – \$604,800 (this is obtained by multiplying the first four and the last quantities together)

Savings:

\$201,600

### Manufacturing Rework

Assumptions:

• Manufacturing Costs = \$2,290,000,000
• Rework as a % of manufacturing costs = 1%
• % of rework costs resulting from engineering (before PLM) = 25%
• % of rework costs resulting from engineering (after PLM) = 20%

Cost:

• Before PLM – \$5,725,000
• After PLM – \$4,580,000

Savings:

\$1,145,000

A few comments on these example calculations:

1. The majority of the business costs can be calculated using addition or multiplication
2. Efficiency gains are normally smaller than cost savings because of the nature of production centered businesses
3. Calculation of ROI for PLM can easily be handled in a spreadsheet; this can also be used to produce graphs

Of course, anyone looking at these calculations will immediately have two questions: what is the source of the raw data and how do you arrive at the savings?

Here are some suggestions for deriving the data required:

1. In the case of the time spent looking for documents, one can conduct interviews and ask participants to estimate the quantity
2. A more efficient way of doing this is by sending out a online survey to selected individuals
3. It is possible that IT have logs of various systems and can derive data on time spent in these systems
4. Manufacturing rework is often recorded in the official accounts of the organization and can be derived form this source
5. Alternatively, rework may be tracked on the shop floor to measure efficiency
6. In the case of savings, there are industry benchmarks available from research firms who track this information
7. Often, participants will be able to give ranges of what they think the savings will be
8. If an organization has an issue or quality tracking system, then this can be a useful source of data

Once all the savings are calculated, it is a matter of spreadsheet manipulation to produce results and graphs. Below is an example of a cash flow projection:

Tata Technologies has a complete suite of tools that can help with ROI calculations. Consult any of your contacts in our organization or email

info.americas@tatatechnology.com

In our previous blog post Does PLM Pay? Part 1, we set the stage for calculating PLM return on investment and defined the hierarchy of Strategic Objectives, Business Targets and Business Costs.

Lets look at an example of this hierarchy:

The strategic objective is reducing time to market. The example shows two ways this can be done:

1. Improving your bid response process will allow you to get back to potential customers quicker and speed up the overall time of enquiry to delivered product. PLM can certainly help with the bid response process by automating approval workflows, having all documents in one place and producing accurate BOM’s.
2. Once a customer order is received, the delivery of product will have to be managed by some sort of project management team. PLM can help here by providing a inclusive project management environment that coordinates a large team. Poor project management will result in overruns and increase time to market.

Given these business targets, we need to put actual costs against them. The example gives four savings to which we can attach costs:

1. Effort to process bids – it takes a time to respond to a bid request or query. In organizations that are dealing with complex products, this effort can be spread across multiple people (engineering, finance, manufacturing etc.) and can take a large amount of cumulative time. A cost can be attached to this. Any reduction in this cost as a result of implementing a PLM system will be a saving. Note this is an example of a efficiency gain (see Part 1).
2. Profit from additional bids – Assuming that a PLM system allows bids to be turned around more quickly and with greater accuracy, the organization can expect to be more successful with winning business. More bids can translate into additional revenue and profits. Profits can be viewed as negative costs and would contribute to an ROI as a subtraction from costs. Note that this is an example of cost savings (see Part 1).
3. Effort to manage programs – Often a product producing organization will have a separate function which focuses on managing programs and projects. (office of program management, Director of Programs etc.). If the process of managing programs could be improved by a PLM system, then the potential exists to have less program managers and save personnel costs. Note this is an example of a efficiency gain (see Part 1).
4. Late Penalties – Product delivered late to a customer can result in contractual late penalties, which are a direct expense to an organization. If we can improve project management by implementing PLM, this can prevent project overruns and late penalties. Note this is an example of a cost savings (see Part 1).

These four examples represent the 43 total business costs that can be impacted by a successful PLM implementation.

In Part 3 we will look at some examples of calculating actual costs.  For more information, email us at Info.Americas@tatatechnologies.com

Here is a scenario familiar to many PLM professionals:- a project is initiated to implement or enhance a PLM system within an organization. All the participants are excited and everybody can clearly see the benefits to processes, collaboration and data security. All the pieces are in place; pricing, implementation schedule, software requirements, training plan – down to the last detail.

The champion starts getting all the signatures required to issue the purchase order. VP of engineering – done. CIO – done. CAD manager – done.

Then the fateful moment arrives and the champion walks into the CFO’s office. The first question out of his mouth is “You want to spend this money! What’s the return on investment?” And there it stops.

So, how do you calculate an ROI for a PLM initiative? The remainder of this post and the follow on articles will give an answer to the question. Here are the various reasons why you would want to calculate an ROI for PLM:

1.  To justify the project to a Finance department (scenario above)
2. For presentation to a Board of Directors. If the project is substantial enough, this is a possibility
3. The object of the CFO is correct – a PLM project should result in real, quantifiable savings
4. Savings from the investment over a period of time will improve the organization’s competitiveness
5. Savings will allow for company expansion as improved cash flow can be invested in other areas

The approach relies on breaking down PLM impact areas into categories that align with business targets. Consider the following hierarchy:

The strategic objectives at the top of the pyramid are common to all companies and can be supported by PLM systems in one way or another. Of course, PLM is not the only contributor to these objectives as other business initiatives can help meet these goals. Supporting these strategic initiatives are 22 business targets (more on this in Part 2) which are further divided into 43 business cost (more on this in Part 3).

Before we start describing the targets and costs, a definition of the types of costs used in ROI calculations is needed. There are two categories of costs – referred to as efficiency gains and cost saving. The illustration below gives examples of this division

We will start looking at some specific targets in Part 2.   For more information, email us at Info.Americas@tatatechnologies.com

Do you currently have a problem with migrating data from one system to another? Do you wish that the current manual method could be automated? Do your qualified staff spend time on the mundane activity of transferring data from one system to another?

If you answer yes to any of these questions, then Tata Technologies may have a tool available to solve these probelms – i Migrate It.

This tool is an on-demand solution for any mannner of migrations and translations. It is configured for a given situation and allows for a user specify on demand what data he needs migrated and in what format.

From a user perspective, a typical workflow would be as follows:

1. User logs into the tool. Configuration of the tool would determine what that specifc user is allowed to do (examine only, examine and migrate etc.)
2. The user searches for the data that needs migration. Based on the search result, user chooses the exact data set required and specifies what must be preserved during the migration (full geometrical feature definition, brep only, metadata only etc.)
3. Once all this is completed, the user would submit the job for processing. At this point, i Migrate It would take over and run the necessary background tasks required to complete the request. Depending on the nature of the systems, the job could take some time to complete (e.g. overnight batch process). The user has access to a dahboard that shows the status of the pending jobs and historical jobs.
4. If the job fails (for example the requested data has already been migrated), the user is alerted with an error message which can be used to determine a future course of action.

This tool has several advantages for migration and translation problems:

1. Only data that is really required by the users is migrated. This can reduce the cost of a complete migration.
2. By providing options, the most efficent process is applied as determined by those who really know.
3. After a period of time, usage will drop and the tool can be eventually phased out.
4. Data remains secure during the process.

Consider this option when next you are faced with a migration problem!

In Active Workspace 3.4, Siemens PLM has made some significant improvements to search capabilities. Here are some of the highlights

Numerical Range Filters

Users can now filter and narrow down search results by entering a range of values for numerical properties in the filter panel so that they  get results only in the range of what they’re have specified. For example find bolts with a length between 60 and 100 mm.  They can also use open ended ranges by leaving the lower or upper range value blank.  This is supported for both classification & object properties in both global and in-context search using  integers and real numbers.

Active Workspace 3.4 allows application of property based pre-filter for in-context search.  This provides a better control of allowable choices when adding related objects with the ability to retrieve context sensitive search results via configuration.  The configuration is to set a “query type” pre-filter in the XRT definition of the “Add” command, which can be based on any property value. User can always widen the scope by deactivating the filter.

Search for Business Objects based on Form Properties

Users can now search and filter on properties of Master Forms and other Forms attached to any item revision without using compound properties . Master forms are supported OOTB, other forms (including custom forms) require adding a reference to the form storage class . The properties from forms can be configured to display as Form Name.Property or  only Property . This is used in filter panel and search string syntax. This can be also used in conjunction with dynamic compound properties (DCP) to avoid making schema changes to enable search and filters for properties on related forms.

With every release of Active Workspace, Siemens PLM keeps adding more enhanced capabilities for Schedule Manager process execution, Active Workspace 3.4  is no exception.

The most exciting Schedule Manager process execution improvement in Active Workspace 3.4 is the ability to perform a “what-if analysis”.  What-if analysis mode enables project managers to experiment on a live schedule without impacting it . This is like working with the schedule in a “sandbox” environment to perform changes  to the tasks without committing them to the production database.  This helps project managers to determine how various schedule component changes may affect the outcome of the schedule, before actually committing the changes to the schedule. Once they are satisfied with the changes,  they can promote and commit the changes to the schedule. If they are not satisfied with the outcome of the changes, then they can choose to discard the analysis.

There are also enhancements to make the Schedule Manager tool usage easier .  Now users can change the Gantt timescale using the zoom in/out feature. They can add and remove schedule deliverables, assign multiple schedule tasks to one team member using multi-select mode, add multiple tasks quickly and easily by pinning the ‘Add schedule task’ panel and also manually launch workflow on a task. These advances in schedule authoring provide project managers and coordinators greater ease and flexibility in schedule definition and maintenance.

Product Excellence Program helps Siemens PLM Software to understand how customers use their products and assists them in improving the software in future releases .The Product Excellence Program is designed to protect the privacy of the user and the intellectual property created through the use of Siemens PLM Software products. It’s used to collect data about Siemens PLM Active Workspace product usage and associated Teamcenter platform installation. Data collection occurs in the background as software is used and does not affect performance or functionality,  collected data is sent to Siemens PLM Software for analysis. Per Siemens PLM no contact information is contained in the data collected not any information about data created or managed is collected. Data is solely for use by Siemens PLM Software and is never shared with third parties .

Participation in the Product Excellence Program is enabled by default during installation using either TEM or Deployment Center. System administrators can always opt out during install. Post install, participation can be controlled  with the TC_ProductExcellenceProgram site preference.  All data collection is anonymous and includes product usage; Teamcenter server platform (version, platform, architecture), client environment (browser type, version), client page visits and collected data is sent from the client browser.

My last blog focused on the need for a Manufacturing BOM (mBOM). When organizations start to embrace the value of mBOM and  decide to invest on solutions to manage a mBOM, the first question is where to master it , PLM or ERP ?

The answer to that question varies depending on the maturity level of PLM and ERP adoption and penetration in the organization .  If both PLM & ERP are at the same or similar maturity level, then there are many good reasons to author & manage mBOM in a PLM system and to make ERP a consumer of the mBOM mastered in PLM.

First, in PLM mBOM is integrated with the eBOM and design process . eBOM integration and reuse enables front loading, and helps manufacturing team to lower cost of mBOM authoring and management and shorten time to market.  Manufacturing users can also leverage the 3D visualization data in mBOM for better decisions and  better quality. With the master model approach being adopted by leading organizations, there is lot of Product Manufacturing Information (PMI) on the 3D Master Model, which can be leveraged in both mBOM and downstream process planning.  mBOM can also act as the starting point for detailed process planning to create the Bill of Process (BOP) inside PLM . BOP or Routing can also leverage the 3D visualization data to produce visual work instructions , which will always remain updated with the upstream design changes. The process plans can  also be simulated and validated (feasibility, human ergo, collision etc) before actual execution.  The validated Routing then get sent to Manufacturing Execution Systems (MES) along with the visual work instructions. That way there  is full traceabilty from CAD to eBOM to mBOM to BOP and eventually to MES.

The traceability enables users to run where used queries among all products and plants during a change process. This ensures all product changes are evaluated for impacts in both engineering and manufacturing contexts.

Embracing a true PLM platform and solution is not an easy endeavor for many companies, even with the reckoning of the potential value and ROI offered by a rightly architected PLM solution.  Success in any Enterprise software implementation like PLM often requires careful planning, dedicated resources , right technical expertise, executive sponsorship, and a receptive culture, among other things.  When done the right way the results of such efforts are transformational, producing significant business benefit which can be measured and validated.

One of the biggest challenges to adopting PLM is organizational change management given the breadth and scale of a true PLM solution . Many companies approaches it in phases and rightly so; but the key is how the phases are architected, tracked and measured.  PLM involves managing and linking Data, Processes  and People together as the product goes through it’s lifecycle from inception to design to manufacturing to support and eventually end of life.   The first step of this is often managing Data; specifically Engineering CAD data.  Most solutions start with a way to vault the CAD data along with some basic part numbering schemes and revision rules . Sometimes engineering documents are also vaulted along with the CAD data.   Yes data  vaulted in a central repository brings  lot of benefits like elimination of duplicates , basic check-in-checkout / access controls and  added search capabilities as opposed to it scattered across multiple locations.  But the measured value of this alone may not substantiate the heavy PLM IT investment companies needs to make for a true scalable PLM platform.   Sometimes there is an expectation misalignment on the full PLM value and just the data vaulting value . This at times sends companies to a long and lull “PLM assessment” period  after data vaulting.  Sometimes cultural resistance or organizational change overturns any momentum.  Maybe a technical glitch or integration shortfall previously overlooked becomes a deal breaker . Over-scoped and under supported initiative can also run out of money or time.

Companies make a considerable amount of IT investment on the PLM platform upfront, so that they have a scalable solution for all phases and not just CAD vaulting.  Most of the time they can add more capabilities and processes on the PLM platform without additional IT investments .  So it’s very important to get past the initial data vaulting phase and move to the next phases to maximize the utilization of existing IT investments.  Now the question is where do we go after CAD vaulting. This is where upfront PLM Roadmap definition is so important in terms of  how the phases are architected, tracked and measured.  For companies who have successfully completed data vaulting but do not have a formal PLM Roadmap defined yet, some of the next focus areas to consider can be Engineering process management, BOM Management,  Change management , Requirements management , Project and Program management , in no specific order.

Anyone who has dealt with Bill of Materials (BOM) knows about the challenges and complexities involved with it. Sometimes we get asked, managing a single BOM itself is cumbersome, then why do we even need another one in the form of a Manufacturing Bill of Material (mBOM)..?

What we have seen with our customers  is that, when there is only one BOM then it is usually owned by the engineering department (CAD BOM/ eBOM) and will be available for  the Manufacturing Department as  a “read only”. This is not good enough for the manufacturing teams as they need to author and add data specific to manufacturing , for example  manufacturing specific consumable parts like glue, oil or Tool Fixtures and such. Another key factor is how the BOM is structured; typically eBOM is structured around organization systems and functions and represent the product architecture, but for manufacturing team a mBOM needs to be  organized according to the manufacturing assembly order.

When customers need to work towards the industry 4.0 goal, they need to have  smarter manufacturing  solutions and systems that provide more ways to capture the manufacturing business intelligence and then suggest solutions based on the previous patterns. With this in mind they need to invest in  manufacturing BOM authoring and management area. During a mBOM adoption, the key is not to recreate the data that’s already in eBOM, but to reuse the eBOM and add additional information specific to manufacturing. That way there is both reuse and traceability of the data.

At a high level mBOM creation automation solutions exist in multiple flavors

1.  Recipe based mBOM:  In a recipe based mBOM, customers can initiate the mBOM creation via pre-configured  templates pointing to eBOM. Based on the recipe stored with the template it will automatically fetch the engineering parts into mBOM. This kind of solution helps customers who have heavy standardization in their product offerings.
2. Reusable Manufacturing Assembly: In such a solution, customers can leverage the same manufacturing assembly across multiple product lines to reduce the design, development and procurement costs
3. New Offline Processing Solutions: This approach is to tailor the mBOM creation process and application to the customer need using customization. This standardizes and automates the process to capture the business intelligence and its reuse via customization.
4. Smarter Validations: Such solutions suggests what’s next to the business users, that way users spends less time discovering the problem and more time solving it.

Over all value of such solutions is not just the flexibility it offers the manufacturing team, it also reduces manufacturing process planning and execution lead time with improved structure accuracy and significant reduction in change reconciliation processing time.