Organisational change and knowledge management in PLM ...

Int. J. Product Lifecycle Management, Vol. 1, No. 1, 2005

Organisational change and knowledge management in PLM implementation Marco Garetti Department of Management, Economics and Industrial Engineering, Politecnico di Milano, Piazza Leonardo da Vinci 32, 20133 Milano, Italy E-mail: [email protected]

Sergio Terzi* Department of Industrial Engineering, University of Bergamo, viale Marconi 5, 20044 Dalmine, Bergamo, Italy E-mail: [email protected] *Corresponding author

Norma Bertacci and Maurizio Brianza Bticino group, Vial Borri, 231, 21100 Varese, Italy E-mail: [email protected] E-mail: [email protected] Abstract: PLM, Product Lifecycle Management is a new organisational, technology based, business model to run Company activities for accomplishing current product innovation requirements. The PLM business model may be applied both in the manufacturing sector, in the engineering & contracting and in the service sector. PLM is being considered as one of the major technological and organisational challenges of this decade to face the shortening of product lifecycles, the trend toward collaboration in product design and product manufacturing and, in general, to deal with the large amount of product related data amongst business actors in interenterprise contexts. The implementation of the PLM approach can foster a company’s product innovation ability, supposing that organisational change and knowledge management are jointly conducted. Keywords: product lifecycle management; knowledge management; change management. Reference to this paper should be made as follows: Garetti, M., Terzi, S., Bertacci, N. and Brianza, M. (2005) ‘Organisational change and knowledge management in PLM implementation’, Int. J. Product Lifecycle Management, Vol. 1, No. 1, pp.43–51. Biographical notes: Marco Garetti is Full Professor of Industrial Technology at the Department of Management, Economics and Industrial Engineering of Politecnico di Milano, Engineering Faculty. He developed his activities since 1971 at Alfa Romeo cars and since 1974 at Politecnico di Milano. He is the Director of the first Italian post graduate course on Product Lifecycle Management at MIP, business school of Politecnico di Milano. Copyright © 2005 Inderscience Enterprises Ltd.

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M. Garetti, S. Terzi, N. Bertacci and M. Brianza He is a member of the WG 5.7 Integrated Production Management of IFIP (International Federation for Information Processing) and Chairman of the Special Interest Group (SIG) Advanced Computing Techniques in PP&C. He is author or coauthor of several issues (four books and approximately 80 papers at domestic and world-wide level) concerning: industrial plant engineering, industrial technology, automated production, operations management. Sergio Terzi is Researcher at University of Bergamo. He took his MSc in Economics from University of Castellanza and his BS in Industrial Engineering from the same university. He received his PhD in Management Engineering from Politecnico di Milano, Department of Economics, Management and Industrial Engineering. He received his second PhD in Automatic Production from the University of Nancy, Centre of Automation, France. He is author of more than 30 papers, at national and international level. His current research interests are Product Lifecycle Management and Performance Measurement. Norma Bertacci received her MSc in Management Engineering from Politecnico di Milano in 1993, after which she joined Bticino, where she is the PLM Project Manager. Maurizio Brianza received his MSc in Informatics from the University of Milano. After a period spent in diverse industries, he joined Bticino, where he is responsible for the ICT implementation of the PLM project.

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PLM, a new paradigm in product management

The Product Lifecycle Management approach to the manufacturing of complex goods is now being considered as one of the major technological and organisational challenges of this decade to cope with the shortening of product lifecycles, the trend toward collaboration in product design and product manufacturing and in general, to deal with the management of the increasing amount of dispersed product related data. Many consulting companies and production research centres are defining/ evaluating the new PLM paradigm (i.e., www.amr-research.com; CIMData, 2002a; www.daratech.com; ARC Advisor Group, 2003; www.gartner.com), while case studies on PLM implementation are being published (Wilson, 2003). According to CIMData (2002b), Product Lifecycle Management can be defined as “A strategic business approach that applies a consistent set of business solutions in support of the collaborative creation, management, dissemination, and use of product definition information across the extended enterprise from concept to end of life, integrating people, processes, business systems, and information.”

As far as PLM addresses the entire lifecycle of a product, it has an intimately cross functional nature: i.e., it deals with the way a Company runs its business, it addresses its market, it leverages on its core competences. The present paper aims to discuss the main topics which are registered during the implementation of a PLM project in a company; in particular, the following points are discussed:

Organisational change and knowledge management

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a brief description of the business process context from which PLM is emerging as a new approach, with a related overview of the Information and Communication Technologies involved

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the organisational issues in the PLM context, illustrating the key role that business process analysis plays in PLM implementation and how knowledge management is related to PLM

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the paper ends with a dissertation on the role of change management in a PLM project and the skills required for its successful implementation.

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The PLM context

The aim of industrial companies is ‘value creation’; this objective may be obtained by maximising revenues while primarily minimising cost and inefficiency. Thus, if in the 80’s, value creation was mainly based on costs reduction and automation, in the 90’s the aims of ‘time to market’ and customer satisfaction led companies to outsource and to integrate their operations into company networks. This strategic approach to business greatly enlarged openness of the companies. As a consequence, business activities were more dispersed among different subjects. Therefore, companies had to pay more attention to a more process oriented views – compared to the previous functional one – to accordingly manage the new situation. Today, proceeding in the same direction, engineering and production activities are being dispersed among many subjects with the objective to benefit of the ‘best of breed’ opportunities in a world scale scenario. In this context, the PLM approach aims to be a paradigmatic company model of how to keep operations efficient while working in a locally efficient, but dispersed method. The PLM paradigm proposes two main action lines: •

the implementation of an interventional organisational view of the extended enterprise operation, allowing smooth transition among the different activities related to product (from concept to design, engineering, production, distribution, after sales, dismissal, i.e., for the entire product life cycle)

•

the implementation of an ICT infrastructure allowing a inclusive integration of all product related data, through the establishment of a software strategy to link together the engineering, the production and the supply chain management worlds, with the use of appropriate ICT technologies.

From the ICT point of view, PLM can be defined as the ‘connective tissue’ that allows the connection of design software to production and supply chain management software, taking into account the dispersed nature of the extended and collaborative enterprise. For example, using a simple model (Figure 1), the global operations of a manufacturing company can be divided into three main process streams:

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M. Garetti, S. Terzi, N. Bertacci and M. Brianza

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the macro-process design (consisting of product design, process design and production system design, i.e., the ‘chain of engineering processes’)

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the macroprocess operations (consisting of production planning, production scheduling and production control, i.e., the ‘chain of production management processes’)

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a group of service processes (consisting of marketing, procurement, sales, distribution, after sales, quality and maintenance).

On the same figure it is reported that the ‘chain of engineering processes’ is supported by the following software tools: CAD (Computer Aided Design), CAPP (Computer Aided process Planning) and CAPE (Computer Aided Production Engineering), while the ‘chain of production management processes’ is supported by such tools as: MRP (Material Requirement Planning), APS (Advanced Planning and Scheduling), SCM (supply Chain Management) and MES (Manufacturing Execution System). Figure 1

PLM software context

The integration paths of these tools started some years ago. In the production management area, the ERP (Enterprise Resource Planning) is the umbrella, bringing together under the same roof, MRP, APS, SCM, MES (and much more). On the other hand, PDM (Product Data Management) is the management tool connecting CAD, CAPP and CAPE in the design area. More recently, CRM (Customer Relationship Management) allowed linking of customer related data to production management and product reengineering (even if more than one person says that CRM and SCM will disappear in the future), encapsulated in ERP and PLM software suites for their execution and engineering contents respectively. In this context, the PLM approach can be considered as a trend toward a full integration of all the software tools taking part in design and operational activities during a product life cycle (also in a distributed way). Therefore, from a software point of view, PLM can be considered as:

Organisational change and knowledge management •

data and document management tools (that is to say an enlargement of the PDM approach)

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local and remote collaboration tools (based on collaboration software and web technologies)

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software infrastructures allowing interoperability among different software tools (mainly between the engineering software and the production and supply chain management one).

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Organisational issues in PLM

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PLM entails a close review of the way a company is running its engineering processes (i.e., how they deal with design reviews, how they cooperate in product design, how they organise and operate their supply chains, the way they collect and use field data on products etc.). The availability of several new and powerful technologies (Cugini and Wozny, 2001; Macchi and Garetti, 2001) introduces the possibility to substantially reshape all the engineering and business processes along the product lifecycle. This situation can have a dramatic impact on the company organisation. To drive the involved organisational changes in a successful way, new approaches are being introduced and used. For example, Experimental Learning has been introduced (Smeds, 1997; Smeds and Haho, 1995) as a technique to allow people, from different sections of a company or from different companies, to integrate their knowledge of company and intercompany processes. Experimental Learning techniques help employers to redefine the business processes they are involved in through brainstorming sessions about the new ways of working. Virtual simulation on the new way after PLM adoption is performed by teams of users ‘to be’, allowing learning of the new organisational needs. This way, drawbacks are identified, thus allowing the refinement of the organisational model that must be adopted. Generally speaking, business process analysis techniques (Scheer, 1999) have a central role in PLM projects. In fact a PLM project requires a careful understanding of the business processes involved and the grade of the required reengineering activity, so as to take full advantage of the PLM approach. More substantially than in the past, in similar new technology implementation projects, a PLM project can be considered as a medium technology intensive project (from the mere technical point of view), but as a high intensity project from the organisational point of view. In fact, the ICT effort of a PLM project can be substantially reduced by using ‘out of the box’ software solutions, that have to be customised to company needs. On the contrary, the time spent for mapping engineering and organisational processes should not be underestimated. Therefore, a careful balance of the detailed level of the analysis phase is to be made: if process analysis is inalienable, the opposite mistake – to detail processes so much that one never starts with software development – should be avoided too. A company lives and modifies its processes in time. So it is more profitable to adopt solutions that are as flexible and adaptable as possible, relying on the stability of the full scale organisational model developed during the analysis phase. The reengineering phase has to be carried out in collaboration with the employers of the involved areas and according to the outcome, may require the top management approval. For example, if in the future model it is

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expected to disseminate to many departments the use of a function, which was formerly the exclusive prerogative of a single one, it is necessary to agree with the organisational change and related requirements of culture and competences. From a strictly data processing point of view – after that the process analysis is concluded with the definition of related information exchanges – the most important thing is to establish a correct sequence for software development and implementation. Furthermore, considering the rapid evolution of PLM software tools, it is absolutely necessary to select the one (that) that better matches the present needs of the company, and especially, the future ones. Therefore, particular attention has to be paid not only to the internal road map established for project implementation, but also to the evolutionary road map of the selected product.

3.1 The role of knowledge management As related to the management of product data (of every type from design, to engineering, to supply chain), the PLM software infrastructure is especially suited to capture, store and manage company knowledge (i.e., PLM is intrinsically related to knowledge management issues). From a general point of view, the company’s knowledge can be divided into two types: •

operational knowledge

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specific knowledge

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operational knowledge deals with practices being used in the company in order to run the different types of business processes (from more technical processes to more managerial ones)

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specific knowledge deals with specific products and processes related to know how, used in the making processes (i.e., the material to be used for a two stoke engine piston).

Operational knowledge can be captured through the traditional ‘as is’ and the ‘to be’ process analysis (Scheer, 1999). This way, a best practice operational solution can be achieved and implemented inside the PLM system with the support of the workflow and document management tools. Specific knowledge may be registered through interviews to experts and stored into the databases of the knowledge management tools (like rules, choices or cautions that are to be considered when performing a specific design or engineering task). For, relevant to this point, databases and search engines also, can offer a substantial contribution to information search and knowledge management. For what concerns knowledge dissemination within a company, it is interesting to note that the more the quantity of information grows, the more it is important to have a single procedure or one standard inquiry interface to access it. Thus methodological uniformity in information search is an important functionality of PLM software; furthermore, from the knowledge management point of view it is important to have the possibility to link the information one another, making them available not only through specific inquiries, but also by a surfing activity. For this reason, the development of web oriented software over the last few years enabled many companies to spread their know how in an easier way and considerably contributed to the enlarged business concept.


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Change management in PLM projects

Change management is strictly related to a PLM project, due to the large amount of change involved in project implementation. It is possible to sum up two main strategies that can be followed for successful change management: •

the ‘niche project and follow up approach

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the ‘overall and step by step’ approach.

The strategy based on the first approach is to select a niche area inside the company to implement and verify the results and benefits of the implementation experiment in a comparatively short time. Motivated and more open minded personnel might be selected for the niche project; furthermore implementation times should be compressed as much as possible. Tangible results from niche project execution and lessons learned should be used to secure project enlargement for the whole company. If the company chooses the strategy based on the second approach, it might devote more time to the careful planning of the project within the full company scale. In this case, the definition of the ‘as is’ and ‘to be’ form of the engineering process model plays a fundamental role. Also training has to be carefully linked to process reengineering and project management techniques have to drive and control the project implementation. Both strategies have advantages and drawbacks as is reported in the following Tables 1 and 2. Table 1

Drawbacks and advantages in the ‘niche project approach’

Drawbacks

Advantages

Difficulty in the following, full scale, project implementation

Motivated and involved personnel are made available, with a driving force effect

Difficulty in evaluating the full scale project involvements

Quick implementation of the technical solution

Project is known only to a few persons

Objective outcome in short term horizon

Few variables are controlled risking conflict arising during the following full scale implementation

Focused resource allocation

Table 2

Drawbacks and advantages in the ‘overall and step by step approach’

Drawbacks

Advantages

Strong effort due to commitment on many parallel streams

Full scale project defined

A lot of time required for the analysis work

Personnel involved globally

Middle term outcome possible

Easiness to evaluate global advantages

Many variables to be managed simultaneously

Project is known to many persons

Unfocused resources allocation

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In order to take the opportunity to benefit from the advantages of both solutions, mixed strategies are adopted frequently. ‘As is’ and ‘to be’ situations are analysed in full scale in order to have a global project that must be illustrated to the top management for approval. On the other hand, many project segments are organised, adopting the niche mode. It goes without saying that an appropriate coordination effort is required to focus and direct all technical and organisational development activities in the middle term. After the top management commitment to the project, a successful change management strategy has to pursue the following path: •

ensure regular information to top management on project implementation steps

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apply the experimental learning approach in the change management activity

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ensure regular communication on project progress to everyone involved.

PLM implements the logic of a company communication and coordination network: for this it demands remarkable effort both for its implementation and for its reception. Besides, the bigger the company (many internal departments, foreign subsidiaries, various partners, a lot of suppliers), the more the project is complicated by an increasing number of factors to be kept under control. First of all it is necessary to have a global outlook over the architecture of the company’s data processing system. In fact, the PLM approach wants to put in action a connecting network among specialised software tools, therefore a framework about how to exchange information or how to make integration has to be defined. Another important aspect is the knowledge of the involved business processes, a knowledge that has to be as ‘visionary’ as possible, to allow an evolutionary path towards prearranged targets. The organisational change management path may be carried out gradually or massively, leaving the choice to the top management. Another basic competence is the ability to incite the involved users to a correct use of the PLM tools. The combination of two different approaches has proven to be effective on the field: •

experimental learning first, in order to push users to modify their working attitudes towards the new reengineered processes

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training on the use of software tools, together with practical use cases derived from the literature, afterwards.

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Conclusions

The paper debated the most relevant topics which might be taken into account during the implementation of a PLM project. After introducing the PLM paradigm and its technical context, the organisational issues and the role of knowledge management and change management in a PLM project has been discussed and highlighted. It is important to remark that the major part of the arguments discussed in the paper are reported from the reality of the day by day implementation in one of the most important experiences in PLM in Italy, represented by the Bticino case, an Italian company working in the electromechanical sector.


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References Macchi, M. and Garetti, M. (2001) ‘Enterprise interoperability: a critical survey of modelling methods with special concern to manufacturing systems engineering’, Proceedings INCOM 2001, Wien. ARC Advisor Group (2003) PLM Market to More Than Double. What is PLM?, www.arcweb.com. CIMData (2002a) The Benefits of Digital Manufacturing, A CimData White Paper, www.cimdata.com. CIMdata (2002b) Product Lifecycle Management. Empowering the Future of Business, ww.cimdata.com. Cugini, U. and Wozny, M. (2001) ‘From knowledge intensive CAD to knowledge intensive engineering’, Proceedings of IFIP WG 5.2., International Workshop on Knowledge Intensive CAD, 207, 264, Boston, USA. Scheer, A.W. (1999) ARIS- Business Process Modeling, Springer-Verlag, Berlin. Smeds, R. (1997) ‘Organizational learning and innovation through tailored simulation games: two process re-engineering case studies, knowledge and process management’, The Journal of Corporate Transformation, Vol. 4, No. 1, pp.22–33. Smeds, R. and Haho, P. (1995) Simulation Games in Business Process Re-engineering, The Simulation and Gaming Yearbook, Games and Simulation for Business, London Kogan Page, Vol. 3, pp.246–253. Wilson, G., (2003) Product Lifecycle Management in the Manufacturing Industry: End-User Survey Shows Solid Market Opportunities for Application Software Providers, IDC Press.

Websites AMR Research, www.amr-research.com. Daratech, www.daratech.com. Gartner group, www.gartner.com.