THE 411 on PLM

Many merchants who have done quite well selling products manufactured by others are deciding to make some goods of their own. According to a study by AC Nielsen, private-label products accounted for 16% of retail sales in the U.S. in 2005, up 7% from the same period a year earlier. Across the globe, private-label sales grew by 5% in 2005, more than double the 2% growth in manufacturer brands, the study found.

Clearly there's opportunity in private-label products. But as merchants begin making their own merchandise, they face new challenges. They must develop and design the product and its packaging, source the materials, and manufacture or assemble the goods, in addition to seeing that the products get to their distribution centers and on to their customers. This requires creating and managing an enormous amount of information, especially when the products or supply chains are complex or when numerous products are involved.

Product lifecycle management (PLM) software assists in this effort. Most PLM applications, according to Mike Burkett, vice president of product lifecycle management at Boston-based AMR Research, offer five capabilities: data management, collaborative product design, supply chain management, market trend tracking, and overall product portfolio management.

While these are not new applications, PLM brings them together in a common architecture, says Tom Shoemaker, vice president of solutions marketing with Parametric Technology Corp. (PTC), a provider of PLM solutions based in Needham, MA. And PLM solutions tend to be more user-friendly than database management applications, some of which are complicated enough that a user has to be a database expert to retrieve information. PLM software “facilitates administration of the data,” says Lance Murphy, technical marketing manager with Dassault Systemes, a Westford, MA-based PLM solutions developer.

As a result, PLM allows companies to more quickly introduce products. PLM applications developer Agile Software Co. has found that, generally speaking, consumer-product companies see their product launch cycles decrease by about 30% following implementation of a PLM solution. Murphy adds that for some technical products that require a number of design iterations, product development cycles can be cut by 60%.

Decreasing the time it takes to get a newly designed product to market obviously reduces the costs of product development. But it can also boost revenue. That's because companies are more likely to introduce a product in time to catch a trend, rather than trail it.

PLM on the job

Karsten Manufacturing Co., a Phoenix-based firm known for its Ping brand of golf equipment, successfully introduced several products in 2000, such as the i3 iron and the TiSL driver. Even so, management was concerned that the company wasn't bringing new products to market quickly enough, says Dan Shoenhair, director/engineering business manager. “If we don't innovate on a regular basis, we're out of business.”

But before Karsten could boost the number of new products the company introduced each year, management needed to cut the time it took to get merchandise from concept to market. At the time, the company's engineers were hamstrung by a legacy computer-aided design (CAD) system, which often led to changes in product design occurring late in the design process, slowing development.

To change this, Karsten's management took several steps, including implementing PLM software and moving to a lean manufacturing process. The PLM application, from PTC, manages design and manufacturing information. If a designer revises an engineering drawing, all employees accessing the document from the PLM system will see the updated version. And because the information is available electronically, the ability to update and access it is streamlined.

Karsten's PLM system was tested in 2001, when circumstances forced a less experienced engineer to oversee the launch of i3+ wedges. Thanks to the PLM application, the newer engineer and his colleagues were able to model four new wedges in about five days. Previously this would have taken about two months.

The pace of product introductions at Karsten has continued to accelerate. In 2001 the company brought two new product lines onto the market. That number jumped to 15 in 2006; these accounted for about 85% of revenue. The time needed to bring a new product from concept to commercial availability dropped from 24 months in 2001 to nine months in 2006. What's more, the number of engineering employees has grown only slightly, rising from 65 to 67 between 2001 and 2006.

Because Karsten introduced several operational changes at once, it's difficult to pinpoint exactly which results can be attributed to PLM. But by helping to manage product information and facilitating collaboration among employees, PLM contributed significantly to Karsten's operational improvements, says Shoenhair.

Reaping the benefits

To date, most of the companies that have adopted PLM have been larger firms that operate globally and have more than 1,000 users, says AMR Research's Burkett. In fact, PLM got its start in the automotive and heavy-manufacturing industries. Companies in those sectors have to manage volumes of engineering data on each product and see that all departments are working with the latest version of product information.

The applications now are moving into the food, beverage, consumer packaged goods, and apparel sectors. Although the processes and products within these industries may not appear as complicated as, say, designing a commercial airplane, they can get quite involved, notes PTC's Shoemaker. “The lingo's different, but there are the same things to contend with: lots of pressure and lots of different configurations. And you're sourcing from various sources who might change or go out of business.”