PLM Case Study - Telecom Equipment Manufacturer

Creating aftermarket value for telecom equipment manufacturer through efficient product management By Antti Saaksvuori, Sirrus Capital Ltd. The case company is an international electronics manufacturer. Its products are sold and delivered to global markets. The products consist essentially of standard electronic components, mechanical parts and pieces of software. There is some configurability and scalability in the mechanical and electronic assemblies; however most of the product variation is done in the software side. The company has operations at five sites, two of which are in Nordic Region, two in Central Europe and one in Eastern Europe. Product development and production have been divided across the sites in such a way that some product lines are designed and manufactured and assembled in one site only and others at all the sites. All software development and related support has been centralized to the company headquarters in Finland, however one offshore partner is responsible for some parts of the SW-development. Additionally, one global contract manufacturer makes products ready for distribution i.e. for sales packing (box build). Efficiency as a goal The strongly increased international competition of the 1990s and early 2000 created pressure inside the company and provided the impetus to develop product management. The intensification and streamlining of the operation of its main processes had been the biggest challenge to the company over the last few years. The products were good, but it took too long and required far too much labor to bring them to market. The product information creation processes were laborious and the quality of information was low. The company had very high activity costs in knowledge management of critical product information. In other words, the productivity of the product creation process and related information management systems had not evolved in the desired way during the early years of the first decade of 2000. It was also too slow and expensive to make changes to products at later stages in the life cycle; in other words, the company was unable to achieve the best possible margin for its products in the market. The company also struggled in with slow capacity implementation due to lack of electronic information transfer in value network. There were problems also in the aftermarket processes. The company lacked the traceability of delivered product units with related critical component BOM and software set-up information as they were unable to transfer data automatically between information systems. The company understood that the root of their problems were the lack of comprehensive product management framework and turned to me for advice. My team designed and implemented a series of PLM development projects: 1. PLM vision and RoadMap creation with product process GAP analyses and PLM maturity analyses as well as baseline definition for success measuring 2. PLM development planning 3. PLM concept creation with new PLM related product management model

4. PLM system selection and business requirements definition 5. PLM implementation and roll-out (delivered by a system vendor) 6. Process for continuous PLM redevelopment When the set of projects were launched, the company decided to nominate one full-time in house project manager. His task was the planning, management and carrying through each of the projects. Furthermore, it was decided that a clear framework for the whole PLM development should be made by deciding the objectives of the development work and drawing up a coarse progress plan or Road Map. This was made in a common workshop, with the top management of the company, in order to get the necessary commitment and set targets for the development work. In a way one of most important outcomes of this management workshop was a common level of expectations for the PLM development shared in the top management of the company. While the first project revealed the current state of the product management and product development including the challenges explained in the first paragraph. The PLM development planning focused on resolving the existing problems with product creation and aftermarket processes. The first issue in the PLM development path was to align the product management to the quite recently set strategic goals of the entire company.

The second stage of the development project was to pinpoint the operational improvement points in the supply network.

Then it was decided in the project to focus on the most significant problem areas of the product creation and management processes as well as to the after aftermarket process which was seen as one of the most important areas of strategic development. Product creation process

Faster capacity implementation Time to Volume (volume production ramp-up) Streamlined information processes and quality of information Electronic information transfer in value network

After market process

Traceability (product creation process, product unit) Automate information processes to streamline information transfer and enable eBusiness opportunities (e.g. SW / HW upgrades)

At this point of the project the project team consisted of selected top managers of the company as well as couple of other key stakeholders and experts in the company. This team set the priorities for the development work so that there would be two phase approach model for the PLM development in the company. The priorities were set to be the following:

Launching the system implementation Based on the list of priorities set by the project team, it was decided that the actual system implementation (full functionality) will be executed in two phases. And both relese roll-outs will be done site by site. In the first phase the whole spectrum of product lifecycle management was brought into use at one go, though at first only at one site. All the product data, items, structures, documents, and related software were brought within the scope of the system. The system allowed paper based processes to be transferred immediately into an electronic form. One great advantage of the move to electronic documents was the ability to see the information in real time. Uniform modes of action in the companys departments and simplification of core processes could be clearly seen. The product lifecycle management was made to cover all the sub processes of product creation sub-processes from establishing a new item to the process of killing the old item, the approval procedures for new products and the change processes of products in production. In addition to physical components, in this case an item refers also to the software installed in the products and to documents connected to the items describing the products and defining the assemblies or their manufacturing and actual assembly work (e.g. assembly instructions). Concerning physical components, a more systematic way was introduced to control the component knowledge of the company. A new issue was the control of sourced standard components and the item numbering schemes for these items as well as the management of the manufacturers and suppliers of these sourced components. In the first stage of the project, the companys product development processes were also connected to the ERP system. In the first stage of the PLM project a semiautomatic data transfer mechanism, over which new elements could be built later, was carried out. XML format was used, as well as the existing export/import features of PLM and ERP-systems. The better management of change processes was especially important. Change management immediately informed the people who needed to see the effects of the change. This

accelerated reaction and gave more time for carrying out the actual changes. The beginning of electronic product lifecycle management required considerable initial exertions in specifying product data, most of this work was already done in the PLM concept definition project where the framework for all product data definitions was basicly created. The phase two In the phase two of the system implementation the main focus was set to the aftermarket processes and to building ebusiness capabilities in the areas of product upgrades and support. One of the key issues was creating the key component BOM and software set-up traceability to all delivered product units as it was absolutely necessary to know exactly the configuration set-up of each delivered product unit in order to make the upgrades possible though the net. The actual realization of the phase two was very smooth due to experience out of the first phase and well documented critical issues from the first release implementation. The partners came along When introducing the PLM solution to partners, the objective was to increase the ability of the company to react to changing situations and to ease the routines of information retrieval and transfer within the company. With external partners, the goal was to reduce the mistakes taking place in data transfer between the partners. The idea was also to reduce the work required for serving design partners and to decrease the amount of manual re-entering of information into the information systems by the partners. The partners became better able to fetch the information they needed for themselves and to add information directly into the PLM system. In other words, the objective was really to increase the productivity of the design work. Summary The outcome the PLM development initiative is summarized in the following table. The first project was launched in early 2006, the PLM system implementation was in motion in early 2007 and the first release of the system was rolled out in Sept 2007 and the second release in March 2008. The organization has used the new processes, ways to operate with the new PLM system now for year and a half and the results are impressive.