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A Roadmap for Product Lifecycle Management 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 Abstract: The focus of the paper is on the challenges, benefits and requirements of implementing product lifecycle management (PLM) in small and medium sized enterprises (SMEs). Customer needs on product properties are related with all stages of the product lifecycle (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. Keywords: Product lifecycle management; PLM implementation; SMEs; maturity;

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 productrelated 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 cooperative 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 extended products

Less vertical, more horizontal integration. Focus on modular products and platforms to improve component re-use. Complex products.

PLM processes enabling collaboration with defined interfaces. Process capability to manage complex products.

Data exchange standards, computeraided modeling of complex products, integrating business applications.

Globalization

Focusing on differentiation or standardization. Complex supply chains.

Improving process automation. Enterprise-wide process standards.

Integrating IT systems with partners. Work flow management.

Legislation

Complying to legislation requirements with PLM (environment, safety, product reliability).

Standardized and well documented processes. Traceability of processes.

Ensuring data consistency. Methods for long-term archiving.

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] Level

Working practice Unstructured

PLM Maturity

2

Repeatable but intuitive

Lifecycle and product management processes have developed to the stage where similar procedures are followed by different people undertaking the same task (i.e. the processes function on ad hoc bases). There is no formal development, definition, training, or communication of standard processes; all responsibility is left to individuals. There is a high degree of reliance on individual knowledge and therefore errors occur.

3

Defined

Processes and basic concepts are standardized, defined, documented, and communicated through manuals and training. However, the human factor is important, there is no end-to-end PLM process supporting IT systems, all work is completely or partially manual from the process point of view. IT systems support individual parts of processes. The PLM processes or basic PLM concepts are not best-of-the-breed, nor are

1

The PLM topic has been recognized and its importance agreed. Work must be done to defi ne and develop the PLM concept and standards. However, at present, there are no defi ned approaches concerning lifecycle management; all lifecycle and product management issues are resolved by individuals on a case-by-case basis.

they uniform throughout the corporation, however they are formalized. 4

Managed and measurable

It is possible to monitor and measure the compliance between processes and to take action where processes are not functioning well. Processes and concepts are under constant improvement and provide best practices. IT systems support PLM processes well. Process automation is used in a partial or limited way. Processes and concepts are developed through clear vision throughout the corporation. The state of uniformity of processes is clear.

5

Optimal

Processes and concepts have been refined to the level of best practice, based on continuous improvement and benchmarking with other organizations. IT is used in an integrated manner and process automation exists on an end-to-end basis.

In order to successfully develop business- and PLM-related issues such as processes or information, the current situation of every business unit, regional unit, or product area must be recognized and sufficiently understood. The PLM maturity model is valuable tool for this evaluation and analysis. The maturity model for PDM by Stark [16] is based on the progress in four evolution stages: Traditional, Awakening, Adapting and Modern. At each stage a company can be described and assessed by a pre-defined questionnaire from three viewpoints – the company, the product development process, and PDM. For example the level of customer orientation affects the maturity stage of PLM implementation. The PLM maturity model by Sharma [24] describes the integration progress of product lifecycle support from intra-enterprise through inter-enterprise to collaborative information systems. The highest level of collaboration is based on web services allowing Just in time virtual collaboration. Schuh et al. [25] have proposed an implementation framework that comprehends seven maturity elements of PLM: 1. a tangible definition; 2. the specification of the fundamental concepts (PLM foundation); 3. a set of process reference models; 4. a list of vendor neutral software requirements; 5. the profiles of specific software solutions (PLM software support); 6. a knowledge base; 7. the specification of the potential benefits. The PLM definition provides the boundaries within which the reference models are detailed. The PLM foundation is based on a robust specification of the product structuring that provides the necessary fundament for the implementation. The set of process reference models is located in the middle of the framework and integrates its other elements. It provides different reference models varying according to a group of characteristics of a company (sector, size, order type, etc.) which coherently define typical industrial enterprises. The vendor neutral software description consists of a structured catalogue that lists the software requirements needed to support process activities. Detailed software profiles and capabilities to support PLM have been identified in relation to the neutral functional representation. The knowledge base supplies the necessary material to support training. Finally, the PLM benefits show the potential competitive advantages related to each reference process.

2.3 PLM implementation process In order to succeed in PLM deployment and PLM system implementation, it needs to follow a systematic process or methodology [19]. By acquiring a PLM system it is possible to support Business Process Reengineering (BPR) for instance in the fields of product design and after-market activities. There’s no reason to imagine that BPR happens automatically by acquiring a PLM system, without business process reassessment. In fact the PLM system seldom supports working practices right away, but it requires changes in work processes. The PLM framework and PLM issues questionnaire developed by Batenburg et al [15] has been applied to define a PLM roadmap for individual companies. The PLM roadmap process phases include: 1. Current PLM maturity and alignment 2. Benchmark maturity 3. Desired PLM maturity and alignment 4. Identify items to be improved 5. Define PLM roadmap The roadmap process is one of the tools that companies, especially SMEs, could use in their PLM implementation project covering parts of the readiness & design and the implementation preparation phase. Schuh et al. [25] have proposed a PLM process oriented framework that can be applied to guide PLM implementation at the industry. Companies aiming to implement PLM can refer to the provided conceptual framework to establish their own framework, linking the company elements in a comprehensive PLM environment. Therefore, the following ten steps are necessary: 1. Define the goal of the PLM implementation: according to the PLM definition companies can identify the most important points to focus on. 2. Analyze the existent PLM foundation: the ability of the current product structure to support PLM must be analyzed and if necessary enhanced. 3. Rank processes: the processes to be implemented can be selected from the PLM process list, considering company aims and the expected benefits. 4. Identify company maturity level (as-is process): comprehends the mapping of company current processes (only for the previously selected processes). 5. Select an appropriate reference model: from the provided set of reference models it is possible to identify the process type that best suits company characteristics. 6. Customize reference model: although processes that target different kinds of company are available, processes must still be refined to reflect very specific business needs. The customized processes picture the to-be PLM scenario. 7. Specify requirements for system selection: the vendor neutral software requirement catalogue related to the already configured processes provides the system specification. 8. Select software solution: based on previously defined requirements and considering detailed software profiles. 9. Define the evolution path and implement software solution: the differences between the as-is and to-be processes allow the definition of implementation roadmaps, including the necessary implementation of the selected software solution.

10. Teach employees: the knowledge base connection to the processes indicates the new necessary qualification and provide the necessary training material and context. This implementation approach in ten steps is derived from classical approaches for process engineering [26], but it goes a step further for PLM, as it considers the needs and conditions of this area. As a result, a company specific PLM framework linking process, IT and knowledge is generated. For facilitating the difficulties of PLM implementation for SMEs, software vendors and consultants have recognized and are providing tools and techniques to help reduce the overall change effort. Aberdeen Group [27] identified the most popular methods that smaller companies used to meet their PLM goals and then conducted further analysis to determine which approaches were used by companies that are top performers in meeting product development goals (Figure 1).

Figure 1 Successful PLM Implementation Approaches [27]

Aberdeen Group found that best-in-class companies are taking advantage of implementation aids such as templates, adopting industry-specific solutions where available, and modifying solutions where required. In fact, these approaches were more common among the top performers than among other companies surveyed – indicating that these approaches improve the ability to use PLM to better meet product development targets. In short, PLM product offerings that help smaller companies achieve the available benefits are emerging, leading to increased adoption by SMEs. However, achieving value requires more than just PLM software. It also requires efforts to transform the organization and business processes, in combination with the underlying supporting technology.

3 Conducting a PLM case study in an engineering company The study is based on a literature review and an empirical case study of an SME planning the implementation of PLM. The study utilizes an action-oriented approach. The case data was collected with participatory observations and a group interview of the company management and analyzed by the researchers to achieve interpretations and organize the data to form a case description. Our research interest was to find out a PLM reality in a SME size company. The case company is an Engineering Company (EngCo) designing and manufacturing special-purpose aluminium boats in Finland. EngCo has only three permanent employees, but altogether 270 people in the Concern of EngCo’s parent company. Collaboration within a network of designers and sub-suppliers has a significant role for successful deliveries. EngCo’s product strategy is to produce boats from 6 to 12 meters for special proposes, like for rescue activities. Each delivery is a project customised according to customer requirements and exploitation conditions of a boat. The most challenging technical task is the optimisation of critical parameters of each boat variant: primarily weight and speed taking into account other customer requirements. Design is running in close cooperation with clients and EngCo is using as much as possible pre-designed modules. EngCo offers also services for the period of exploitation of boats, like maintenance and inspection services. Major business challenge is to make deliveries of tailor-made boats a profitable business. Modular strategy allows out-sourcing of those elements, which are not critical for the delivery process or not considered as core competence of EngCo. The company is under way to build up a product platform system utilising component commonality and combinability as well as interface standardization and functional binding as described by Salvador [28]. Currently used IT systems include enterprise resource planning (ERP), 3D-design and modelling tools, project and document management software as well as software for manufacturing automation. One of the main challenges recognized is, how to integrate PLM with the existing data systems.

4 Case study findings By conducting this case study we got several interesting results. First of all we found out that a small engineering company has very different working environment compared to medium- and big-size engineering companies. Small amount of personnel and projects induces that amount of EngCo’s internal and external interrelations is relatively low as well as that there is no need to have strict procedures or necessity to apply information systems for knowledge and information sharing. But anyway management of complex system products, like a special-purpose boat is, requires customised product management in order to be efficient and competitive in this kind of business. Therefore we found that PLM readiness in SMEs has specific features and adaption requires first of all changes in mental approaches (see Figure 3 below). Small companies having small number of personnel rely on individuals more than on collectives, therefore written procedures are not common. This environment has opportunity for experimentations, innovations, prototyping and even adventures, but rigorous rules and procedures or planning much beforehand is not so popular. Atmosphere favours heroes rescuing problematic situations.

Figure 3 Two mental approaches to design process

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.

Figure 3 Transformation of customer requirements into product structure in design phase

Product liability and warranty issues are also requiring product data management. EngCo foresees that data collection, analysis and storage are required also during exploitation of boats in order to provide sufficient information for maintenance purposes. During exploitation major notices of defect result in root cause analysis, which requires traceability, i.e. design, manufacturing and maintenance data as well as information and parameters of exploitation. For all above mentioned reasons and first of all for strategic reasons EngCo is considering develop PML system. Our preliminary analysis shows that EngCo has just passed to level 2 according to the Maturity model showed in Table 2. Based on the literature review and the case company experiences, a simple PLM implementation process model (roadmap) from level 2 to level 3 could include the following steps (see Figure 4): 1. As-is situation analysis: PLM strategy, goals, practices, tools, professional competence and information flows in order-delivery process. 2. PLM training of top management: conceptual understanding of PLM elements, experience of other companies. 3. Review of product strategy / product platform development: product modularity, modularization principles, standardisation possibilities. 4. Item management and document management: standardisation of items, document naming, used digital formats, document vaults. 5. Change management process: efficiency for design and manufacturing process 6. System integration: information system configuration, master data location.

Figure 4 PLM road map for building up defined processes in EngCo

Our research shows that a decision on PLM implementation in SMEs has mainly strategic character. The PLM roadmap for advancing from level 2 to level 3 contains several analyses of the current situation, business goals, maturity analysis, as well as, training, product strategy reviews and procedural changes.

5 Discussion and conclusions 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.

References and Notes 1.

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