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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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agenda
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

plm in the automotive industry
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

who did we talk to
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

we categorized the 52 participants into plm champions advanced plm users and plm stragglers

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

slide6

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

a plm environment typically includes a variety of integrated systems processes and tools
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

agenda1
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

plm benefits are realized across many areas for both plm stragglers and advanced users
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

slide10

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

one of plm s major goals is to improve innovation
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

slide12

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

advanced plm users lead in using innovative product development methods

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

slide14

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

slide15

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

agenda2
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

plm functionally overlaps with other enterprise systems and needs to be integrated
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

slide18

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

slide19

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

big changes are expected in the consolidation of their engineering it landscapes

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

slide21

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

advanced users are focusing on providing web based access in the u s

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

slide23
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

slide24

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

slide25
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

slide26

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

agenda3
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

plm success can best be attained with a top down strategy that closely involves top management

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

a lack of user acceptance and communication are main causes for failed plm implementations

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

slide30
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

slide31

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

slide32

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

agenda4
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

conclusion
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