Lecture 3

1. Lecture 3 Ch.6 Product Lifecycle Management & pp. 191-194

2. Agenda (to p3) • 1. New Economy and Business Responses • 2. Product Information • 3. Product Lifecycle Management (PLM) • 4. Collaborative PLM • 5. Data Integration • 6. System Integration and Collaboration • 7. Questions to Ponder (to p6) (to p8) (to p14) (to p28) (to p33) (to p33)

3. 1. New Economy and Enterprise Reponses The digital economy has opened up new avenues for competition that challenges market leadership. Businesses therefore, must resort to strategy to better understand and organize product data as they influence product value along the product’s lifecycle. (to p4)

4. What is product’s life cycle? • It involves with 4 stages of development • It is thus critical for SC firms to possess accurate product data so that the each stages of issues could be addressed in a timely basis. • These product data could be situated in a form of product information in a SC firm (to p5) (to p6) (to p2)

5. Product Life Cycle Introduction Decline Growth Maturity (to p4)

6. 2. Product Information Product information is traditionally maintained in different software systems. • ERP • CRM • CAD/CAM/CAE (Computer-aided Engineering) • DfM/A (Design for Manufacturability/Assembly) • PDM (Product Data Management) Major problem of these product information remains as …. (to p7)

7. Product Information The lack of integration, coordination, and collaboration of these software systems limit the free flow of information to enterprise stakeholders. The lack of timely and accurate product information data makes it difficult for the enterprise to achieve its rapid response strategy in the dynamic market environment. Key Answer -- Product life cycle management (to p8) (to p2)

8. 3. Product Lifecycle Management • Product lifecycle management (PLM) offers a solution strategy to the lack of integration, coordination, and collaboration of the mission critical software systems (ERP, CRM, SCM, e-business). • It coordinates all product information in a structured form to offer a consistent view of the product through its lifecycle stages to all enterprise stakeholders. • How PLM works? (to p9)

9. PLM • The key is • To organize a central product database that is WEB-enabled and accessible to both internal and external users in the product value chain. • to be able to share and reuse product knowledge (with supply chain members or stakeholders) to create value to customers. How PLM helps in SCM? (to p10) Also include clients, vendors, inter/intra-org.

10. The supply chain will be ineffective if vendors are unaware of information that influences product demand and product performance. They need to know for example, warranty and legal actions that may be associated to product failures. They need to know the changes in demand since that will have potential effects on orders and inventory management and they need to know changes in customer preferences since that may also influence product designs. With knowledge, enterprise stakeholders are able to adapt their processes and practices to be capable of responding to market changes. (to p11)

11. Exercises • Optional Internet ex 1 • Optional Internet ex 2. • Main function of PLM • Collaborative PLM (to p12) (to p13) (to p14) (to p2)

12. Ex 1: PLM Software Vendors • Optional Internet Assignment: Visit and explore the Internet site for one of the vendors of PLM software – QAD. Briefly describe the features of QAD’s PLM software. (to p11)

13. Ex 2: mySAP PLM Optional Internet Assignment:Visit and explore the mySAP PLM Web site and see if you can identify its key features. (to p11)

14. 4. Collaborative PLM • Product lifecycle management (PLM) enables enterprise stakeholders to collaborate in real time to share and leverage the enterprise’s intellectual capital. • … via WEB-enabled system ….of which it achieves functions like …. (to p15)

15. The objectives of a collaborative PLM can be identified as follows (pp 91-93): • Rapid Market Response – eg intro a new product (such as Mc-Chicken) • Customer Satisfaction – eg to match the wants and needs of clients • Product Innovation – eg mobile phone by B&O with Samsung • Cost Reduction (Strategic Issues; End-to-end Product Life Cycle) • Order Fulfillment and Tracking – eg DHL customer system • Reduces Maverick Buying – eg promote standardization • Product Liability – eg all follows the same standards and benchmarking (to p27) (to p17) (to p16)

16. The major creditability of collaborative PLM is that it focuses on: • Data integration (to p2) (to p28)

17. Strategic Issues in Product Life Cycle (to p18) Standard Product Demand Mgt. Design Exit Strategy Quality Supply chain Planning Stable Process Production Planning Quality and Reliability Production Costs Productivity Improvement Introduction Decline Growth Maturity (to p15)

18. Forecasting – example(pp.191-194) Sam: What is to come in terms of Christmas sale? • 1st, Sam needs to know some definitions: • Y=seasonal demand forecast • μ=average • σ=standard deviation • P=the probability that actual demand will exceed a given supply (that is, Y) • MP=marginal profit • ML=marginal loss • Zy= the standard normal Z value for a given supply Y (The Obermeyer Method) (to p19)

19. 2nd, Sam needs to follow the following solution steps to find Y (X’mas demand): • Solution: (to p20)

20. Solution • Step 1 Find the forecasting information and then find μ and σ • Step 2 Get the MP and ML • Step 3 Find P using the following relationship: P*MP=(1-P)*ML • Step 4 Construct the normal curve • Step 5 Find Zy with the specific P value • Step 6 Solve for Y with Zy=(y-μ)/σ (to p21) (to p22) Break-even concept (to p23) (to p24) (to 25) (to p26) (to p17)

21. Step 1 Find the forecasting information and find μ and σ Mean = ∑ xi / N σ = √ ( ∑ ( xi – Mean) / N) (to p20)

22. Step 2 Get the MP and ML Price/per notebook computer = $400 (given) Cost/per notebook computer = $120 (given) MP = $400 - $120 = $280 (profit made by selling each additional notebook computer or Cost of Understocking) ML = $120 (loss by not selling each additional notebook computer or Cost of Overstocking) (to p20)

23. Step 3 Find P using the following relationship: P*MP=(1-P)*ML P*$280=(1-P)*$120 Thus, P=0.3 (to p20)

24. New York 4800 Step 4 Construct the normal curve Los Angeles Chicago 6600 2800 Dallas (to p20) 2867

25. Step 5 Find Zy with the specific P value If P is 0.3, then the corresponding Z value (or denoted as Zy) is 0.52. =440 New York P 1-P Optimal cycle service level (CSL) Y =4800 ZY (to p20)

26. Step 6 Solve for Y with Zy=(y-μ)/σ Solving for Y we obtain the following solution table: (to p20)

27. End-to-end Product Life Cycle (to p15)

28. 5. Data Integration • PLM’s focus is on the product and not the other activities of the enterprise. • The aim is to organize product data by integrating information from the mission-critical software systems (ERP, CRM, SCM, e-business), and making information available to value chain partners for effective decision-making. • This is shown in the next figure. (to p29)

29. Data Integration - PLM (to p30) Important notes

30. Data Integration - PLM • It is obvious from the previous figure that there are many phases in product development and each phase may need information that is housed in a different mission-critical system. • Yet, it is clear that all these mission-critical systems work for the same goal or purpose, which is to improve product performance and thereby, enhance the competitive posture of the enterprise. • Note of attentions to concerned parties … (to p31)

31. Data Integration - PLM • Enterprise stakeholders must understand that their unified effort would help the enterprise to achieve competitiveness and should not see themselves as competing against each other. • Thus, data integration and collaboration are the major functions of PLM. PLM integrates all the mission-critical systems to provide a “single point of reference” to product value chain providers. • How it works …. (to p2) (to p32)

32. 6. System Integration and Collaboration It is shown in the following figure that PLM could be used as a system integrator for all the mission-critical systems that are scattered in the organization. (to p2)

33. 7. Questions to Ponder • Why must product lifecycle management be exercised to ensure product success in the 21st century? (to p2)