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A Cup Half Full: PLM in the automotive industry

A Cup Half Full: PLM in the automotive industry. September 2008. Agenda. PLM Study Overview Significant PLM benefits are being achieved today PLM Integration is a BIG challenge PLM implementation approaches are improving Conclusion. Joint study with:

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A Cup Half Full: PLM in the automotive industry

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  1. A Cup Half Full: PLM in the automotive industry September 2008

  2. Agenda PLM Study Overview Significant PLM benefits are being achieved today PLM Integration is a BIG challenge PLM implementation approaches are improving Conclusion PLM for the Automotive Industry | 9-Jun-14

  3. Joint study with: Automotive Analysis Division, University of Michigan Transportation Research Institute (2007) Cranfield University (2006) Ruhr University Bochum (2006/2004/2000) IBM We conducted a combination of in-depth interviews and surveys with directors and managers with expertise in the fields of automotive engineering and information technology. Findings are “indicative,” but the sample is not large PLM in the Automotive industry PLM for the Automotive Industry | 9-Jun-14

  4. Who did we talk to? • Dana Corporation • Eaton Corporation • Ford Motor Company • General Motors Corp • Valeo • Yazaki Corporation • BorgWarner, Inc. • Tenneco Inc. • TRW Automotive • Lear Corporation • Michelin North America, Inc. • International Truck and Engine Corp • Siemens VDO Automotive Corp • Daimler Trucks North America • Harley-Davidson Motor Company • 16 USA automotive OEMs and suppliers • 39 European automotive OEMs and suppliers • Findings focus on 2006 & 2007 data (2004 data available) • The participating companies are: • OEM: 32% • Tier 1 supplier: 62% • Tier 2 supplier: 6% U.S. Participants (Full List) • Aston Martin Lagonda • Behr GmbH & Co. • Bentley Motors Ltd • Bertrandt AG • BMW AG • Claas KGaA mbH • DaimlerChrysler AG • Delphi Automotive Systems • Deutschland GmbH • Faurecia • Jaguar Land Rover • Lotus Cars • Johnson Controls GmbH • Lear Corporation GmbH & Co. KG • Linde AG • Nissan Technical Center Europe LTD • Mann+Hummel GMBH • Cooper-Standard-Automotive GmbH • Brose Fahrzeugteile GmbH & Co. • Continental Teves AG & Co. oHG Europe Participants (Extract, total of 39) PLM for the Automotive Industry | 9-Jun-14

  5. Level of PLM Usage Level of PLM Integration We categorized the 52 participants into PLM Champions, Advanced PLM Users and PLM Stragglers There is a gap today between leaders and stragglers • Advanced PLM users have an above-average level of integration, but only use average PLM methods and tools • PLM champions are the leading edge of the Advanced users, show a high, well-balanced level of integration and use. They are strategically ideally set up. Top 10% are champions • PLM stragglers… largely have an average level of PLM functions, but only have limited integration solutions U.S. Europe PLM Champions Advanced PLM Users PLM Stragglers Combined PLM Champions & Advanced Users PLM for the Automotive Industry | 9-Jun-14

  6. engineeringprocesses IT systems product strategy integrated by PLM product data engineeringorganization IBM defines Product Lifecycle Management (PLM) as a strategic management approach for running the business, not just an engineering tool PLM is not a single tool, technology, or packaged product • consisting of integrated methods and tools • for the cooperative development, maintenance and use of all relevant engineering information • in the entire distributed product lifecycle PLM is a “strategic management approach” PLM integrates systems and processes PLM for the Automotive Industry | 9-Jun-14

  7. A PLM environment typically includes a variety of integrated systems, processes and tools Org 1 Org 2 Org 3 Org 4 Org 5 PLM processes often have a high degree of variation between organizations, locations or projects. PLM transformation initiatives are challenged by these barriers and may cause problems during execution To collaborate on enterprise projects these disparate systems cause major challenges for product & process definition Market/Sales Order Process Reqm;ts. Ownsolution Ownsolution Ownsolution SAP SAP Specials Engineering CAD CAE PDM E-BOM MPM M-BOM Operations ERP Ownsolution Ownsolution Ownsolution SAP SAP Decision point—mandate system commonality (“rip & replace”) or integrate existing systems through SOA (“best of breed”)! PLM for the Automotive Industry | 9-Jun-14

  8. Agenda PLM Study Overview Significant PLM benefits are being achieved today PLM Integration is a BIG challenge PLM implementation approaches are improving Conclusion PLM for the Automotive Industry | 9-Jun-14

  9. PLM Benefits are realized across many areas for both PLM Stragglers and Advanced Users PLM stragglers Advanced PLM users • Significant reported benefits include: • higher levels of process standardization • improved data flow and exchange • increased re-usage of data and knowledge • better geographical integration • reduced number of changes • improved product quality standardization of processes 18 16 Processes availability of information 8 9 reduction of non-value activities 6 0 data flow and exchange 12 16 Data data quality 4 3 re-use of data and knowledge 16 12 collaboration and comunnication 3 4 Organization geographic integration 16 12 3 lower IT maintenance 4 IT integration of legacy systems 0 0 optimized product quality 8 6 Product Reduced number of product changes 8 12 higher ability for innovative products 0 3 PLM for the Automotive Industry | 9-Jun-14

  10. share of companies which have carried out a ROI calculation in % return on investment in months(averages of entries) 80 35 28 57 7 PLM champions advanced PLM users PLM stragglers PLM champions advanced PLM users PLM Champions and Advanced Users are much more proficient in even doing ROI evaluations, and thus see better returns PLM for the Automotive Industry | 9-Jun-14

  11. One of PLM’s major goals is to improve innovation “PLM enables collaborative product development work environments that bring together expertise from multiple organizations. These are environments where people can develop new, innovative products and services, and design and establish innovative business, manufacturing, and support processes” - Peter Bilello, senior consultant, CIMdata “Today’s PLM solutions provide essential support for innovation. PLM has steadily evolved from engineering-centric solutions focused on engineering data management to extended enterprise intellectual asset management solutions that support the collaborative creation, management, dissemination, and use of project definition information from concept to decommission.” - John MacKrell, senior consultant, CIMdata Source: http://aecnews.com/articles/786.aspxhttp://www.ngmanufacturing.com/pastissue/article.asp?art=271207&issue=218 PLM for the Automotive Industry | 9-Jun-14

  12. Increasing the amount of reused parts 33 17 Advanced PLM users focus on speed of innovation, while PLM stragglers focus on decreasing the costs of innovation advanced PLM users and PLM Champions PLM stragglers The impact of PLM on product innovations faster rollout of innovations 29 11 33 decreasing innovation costs 19 effective use of platform strategies 10 11 decreasing the number of variants 5 11 developing mass customized products 5 11 extending the product economic life-time 0 6 PLM for the Automotive Industry | 9-Jun-14

  13. PLM champions advanced PLM users PLM stragglers Advanced PLM users lead in using innovative product development methods 2007 U.S. participants 2006 European participants 77% 100% parametric geometry modelling 71% 100% 100% 100% 100% behaviour modelling 100% 100% 50% 23% interdisciplinary modelling 80% 50% 83% 100% 50% 42% digital product master 71% 67% 80% 100% 33% 62% digital test bench4 64% 67% 80% 100% U.S. participants 2007 83% 62% configured DMU3 93% 83% 100% 100% European participants 2006 33% PLM stragglers 46% design in context2 advanced PLM users 71% 50% 80% 100% PLM champions PLM for the Automotive Industry | 9-Jun-14

  14. 35% 28% 44% 33% 27% 32% 32% 30% 38% Slightly modified parts New parts Advanced PLM users obtain about 10% more reuse (for Slightly modified and Existing) than the stragglers Advanced users also: • Pursue a high level of component reuse • Reusing readily available as well as slightly modified parts Existing/standardized parts Componentreuse in new developments(consolidated European and U.S. participants1 - averages each classification group) PLM-champions Advanced PLM users PLM-stragglers All PLM users 32% 38% 30% PLM for the Automotive Industry | 9-Jun-14

  15. What is going on? What are the implications? • PLM is a strategic management approach for running the business; it is not just an engineering tool • We believe that the fundamental difference between leaders and stragglers in the automotive industry is in the way they think about PLM • Leveraging product development methods are in much greater use of PLM Leaders • PLM benefits are being achieved by all, but advanced users are getting better benefits from their more comprehensive approach to PLM • The best benefits come from thinking of PLM in terms of a comprehensive, strategic change process management approach • The fact that Advanced PLM users report lower IT costs means that automotive companies should aim for more comprehensive PLM benefits, and not just aim at lowering costs. • PLM as a management strategy needs to be at the core of how the business fundamentally operates • An innovation focus will lead to a larger business impact for an automotive company than focusing on cost cutting alone PLM for the Automotive Industry | 9-Jun-14

  16. Agenda PLM Study Overview Significant PLM benefits are being achieved today PLM Integration is a BIG challenge PLM implementation approaches are improving Conclusion PLM for the Automotive Industry | 9-Jun-14

  17. PLM functionally overlaps with other enterprise systems, and needs to be integrated PLM SRM SCM CRM ERP Source: Alan Mendel 2007 presentation PLM for the Automotive Industry | 9-Jun-14

  18. Advanced PLM users show a slightly higher level of integrating non-technical departments into the engineering environment. No user has achieved a full integration. Integrating non-technical departments into the engineering environment(averages in each classification group) maintenance, repair & overhaul (MRO) U.S. Participants 2007 enterprise resource planning (ERP) PLM Stragglers Advanced PLM Users and PLM Champions customer relationship management (CRM) European Participants 2006 PLM Stragglers supply chain management (SCM) Advanced PLM Users and PLM Champions requirement traceability management (RTM) 0  no integration 1  communication between the departments 2  exchange of information over system interfaces 3  shared database 4  integrated processes and functions service & support 0 1 2 3 4 degree of integration in the engineering environment PLM for the Automotive Industry | 9-Jun-14

  19. 100 80 86 60 bill of material management 100 83 14 CAD 100 80 17 DMU 29 100 86 visualization 45 40 0 simulation / calculation 29 43 33 testing / prototyping 29 20 15 CAM 29 0 requirements management 29 20 14 20 project management 14 0 CAQ 0 33 86 production planning 14 33 43 factory planning 33 71 0 resource planning Advanced PLM users are integrating engineering applications more than the stragglers in the physical environment virtual product creation real product creation PLM stragglers advanced PLM users and champions (U.S. participants - averages in each classification group in %) PLM for the Automotive Industry | 9-Jun-14

  20. PLM champions advanced PLM users PLM stragglers 10 9 8 7 4 2 1 1 1 2003 2007 2011 Big changes are expected in the consolidation of their Engineering IT landscapes Number of product data management (PDM) systems in engineering (U.S. participants - averages in each classification group) PLM for the Automotive Industry | 9-Jun-14

  21. B: commercial system with adaptations D: home grown system/interfaces Currently, advanced users and champions tend to focus on commercially available solutions with adaptations, with a move toward more off the shelf solutions in the future. Degree of standardization of the implemented PDM solutions (averages in each classification group) Advanced PLM Users and Champions PLM Stragglers A 33% B 94% B 43% B 94% B 55% B 72% C 14% C 18% B 67% D 43% C 14% D 27% D 14% D 6% D 6% Trend Europe 2010 U.S. 2007 Trend U.S. 2011 Trend Europe 2010 U.S. 2007 Trend U.S. 2011 European participants 2006 U.S. participants 2007 A: commercial system without any adaptations B: commercial system with adaptations C: externally developed individual solution D: home grown system/interfaces PLM for the Automotive Industry | 9-Jun-14

  22. 18 15% complete web based system complete web based system 75% 70% 82 Core system with partial web access Core system with partial web access no web based access to the system 17% 15% 8% U.S. 2007 Trend U.S. 2011 Advanced users are focusing on providing web based access in the U.S. Web based access to central PLM system components (Share of all entries in %) U.S. participants 2007 The trend to completely web based systems will be more of a focus for the US participants than the European participants. European participants 2006 Trend Europe 2010 PLM for the Automotive Industry | 9-Jun-14

  23. Advanced PLM users are focusing more on integrated workflow processes, while stragglers are focusing more on data integration The top challenges relating to the relationship with customers and suppliers (U.S. participants - average of classified results - multiple entries possible) integrated configuration management (incl. change and release management) 20% 43% 60% 29% data exchange and interfaces 20% 14% confidentiality (IP protection) 20% 14% multi-CAD management 40% 0% building a common PLM strategy 20% 0% reduce parts, foster reuse and common parts PLM stragglers advanced PLM users and champions PLM for the Automotive Industry | 9-Jun-14

  24. Advanced PLM users apply more sophisticated techniques to communicate requirements along the supply chain, however communication is still not high PLM stragglers Communication of product interfaces to customers and suppliers (average of classified results in % - multiple entries possible) advanced PLM users and champions 100% 100% data shared electronically 0% 42% design evolution tracked by system 25% 42% data integrated into and communicated via BOM Communication of assembly constraints to customers and suppliers (average of classified results in % - multiple entries possible) 40% 57% CAD-based communication 40% 42% verbal communication 20% 28% paper-based communication 8% 0% no communication PLM for the Automotive Industry | 9-Jun-14

  25. Participating companies are planning to use PLM functionalities company wide and across the extended enterprise by 2011 Companies are optimistic about reaching full integration by 2011 Self assessed level of PLM integration 2007 2011 100% cross enterprise PLM 18% 100% 54% company wide PLM 100% 92% PDM 100% 92% CAD data management USA participants only PLM for the Automotive Industry | 9-Jun-14

  26. What is going on? What are the implications? • Automakers are challenged to integrate their separate enterprise IT systems on which they run their business • Integration along the supply chain also remains a difficult challenge • Automakers are optimistic about achieving strongly integrated capabilities within 5 years • Companies are taking different approaches to PDM customization • Advanced users focus on PLM workflow processes, not on data integration • The major integration effort within an enterprise will be integrating its key enterprise systems, which often means PLM and ERP • It is unclear which approach to PDM customization will succeed or dominate • Business focused scenarios can highlight PLM integration success, as opposed to a data integration approach PLM for the Automotive Industry | 9-Jun-14

  27. Agenda PLM Study Overview Significant PLM benefits are being achieved today PLM Integration is a BIG challenge PLM implementation approaches are improving Conclusion PLM for the Automotive Industry | 9-Jun-14

  28. 0 50 top management determines the PLM strategy (top-down) 0 18 50 50 important decisions are coordinated between TM and the PLM project team 44 70 33 0 Europe 2006 Europe 2006 TM supports PLM strategy, PLM team makes decisions U.S. 2007 U.S. 2007 33 12 17 0 TM is not involved/interested in the PLM strategy 23 0 PLM success can best be attained with a top-down strategy that closely involves top management Involving top management when implementing a PLM strategy (averages in each classification group in %) advanced PLM users and champions PLM stragglers PLM for the Automotive Industry | 9-Jun-14

  29. user acceptance 4,7 4,3 too much focus on technical details 4,1 3,2 insufficient PLM project management 4,0 3,5 too large project steps 3,6 3,3 missing communication 4,6 3,8 missing cost transparency 3,3 2,7 complex data migration 3,9 4,0 A lack of user acceptance and communication are main causes for failed PLM implementations. advanced PLM users and PLM champions PLM stragglers Risks when introducing PLM (averages in each classification group) not risky very risky not risky very risky not risky somewhat risky moderately risky risky very risky An expert statement: “People are used to ad-hoc [working], but PLM implies additional business control that people are not used to. So we will have to change the culture to adjust to PLM.“ PLM for the Automotive Industry | 9-Jun-14

  30. A successful PLM initiative has top management commitment, as well as a clear process and business focus, rather than being IT-driven advanced PLM users and PLM champions PLM stragglers Success factors for introducing PLM (averages in each classification group) not important very important not important very important top management commitment 5 4,7 division / user involvement 4,7 4,7 initiative is process-, not IT-driven 4,3 4,3 4,3 3,7 accompanying change management consideration of quick wins 4,3 3,8 clear democracy of scope 4,3 3,8 clearly defined responsibilities 4,1 4,2 assessing potential for improvements 3,9 4 costs (hardware, software, implementation) 3,6 3,7 detailed assessment before implementation 3,4 3,3 not important somewhat important moderately important important very important ROI analysis for prioritization of activities 3,4 3,3 PLM for the Automotive Industry | 9-Jun-14

  31. Compared to Advanced Users, PLM Stragglers significantly exceed project costs and time. There is also a significant loss of System Functionality. Deviating from the project plan in the last PLM activity (averages in each classification group in %) U.S. Participants 2007 PLM Champions and Advanced PLM Users PLM Stragglers PLM Stragglers Advanced PLM Users and PLM Champions +10 +12 project costs European Participants 2006 +47 +4 PLM Stragglers +300 +37 Advanced PLM Users and PLM Champions project time +71 +13 • PLM champions reduce the scope of the project to the advantage of the project plan (cost and time). • Clear scope and small project range guarantee the adherence of the project plan. • “Quick Wins” with clearly arranged project scope and user groups -30 -12 system functionality +7 +2 -30 -16 system integration +3 +3 PLM for the Automotive Industry | 9-Jun-14

  32. What is going on? What are the implications? • PLM should be tied to the overall corporate strategy, however leadership is reluctant to buy into large projects • It might be easier to justify PLM projects as small IT projects limited to engineering, but then the full benefits of PLM do not materialize • It is better to approach PLM as a major change project for the entire business culture, but that makes it more difficult to get buy-in • Comprehensive change projects like PLM need support and top management coordination, as well as compelling business cases • PLM projects also need strong end user support from the engineers and planners who will work with the system when it goes live • Advanced PLM teams focus on quick wins with clear scope to show business value • Focus on change management processes is an attribute of successful implementations PLM for the Automotive Industry | 9-Jun-14

  33. Agenda PLM Study Overview Significant PLM benefits are being achieved today PLM Integration is a BIG challenge PLM implementation approaches are improving Conclusion PLM for the Automotive Industry | 9-Jun-14

  34. Conclusion Automotive industry’s PLM cup is “half full” • Some are doing PLM well, and all are improving • Most are getting benefits • Integration and implementation is still a major challenge • Focus on the small quick wins with process focus, such as engineering change PLM stragglers need to imitate the leaders: • who tend to think “innovation” and “process transformation” for the business as a whole • and not think just “tool” and “cost savings” for the engineering department • We are optimistic that PLM will continue to be a driving force for the innovation needed to meet the rapidly changing demands on automakers today and into the future PLM for the Automotive Industry | 9-Jun-14

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