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IBM Global Business Services

A Cup Half Full: PLM in the automotive industry

September 2008

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© Copyright IBM Corporation 2007

Agenda


PLM Study Overview

Significant PLM benefits are being achieved today

PLM Integration is a BIG challenge

PLM implementation approaches are improving

Conclusion

2 PLM for the Automotive Industry | 11-Apr-20



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




4

Who did we talk to?

 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%

PLM for the Automotive Industry | 11-Apr-20

 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



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



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

5

PLM stragglers… largely have an average level of PLM functions, but only have limited integration solutions

Level of PLM Integration

Combined PLM Champions & Advanced Users


U.S. Europe

PLM Champions

Advanced PLM Users

PLM Stragglers



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

PLM is a “strategic management approach”

 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 integrates systems and processes

IT systems product data engineering processes integrated by PLM product strategy engineering organization




A PLM environment typically includes a variety of integrated systems, processes and tools

Org 1 Org 2 Org 3 Org 4

Market/

Sales Order

Process

Reqm;ts.

Specials

CAD

CAE

Own solution

Own solution

Own solution

SAP

Org 5

SAP

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

Engineering

PDM

E-BOM

MPM

M-BOM

Operations

ERP

Own solution

Own solution

Own solution

SAP SAP

7

Decision point —mandate system commonality (“rip & replace”) or integrate existing systems through SOA (“best of breed”)!


To collaborate on enterprise projects these disparate systems cause major challenges for product & process definition


Agenda






Conclusion




PLM Benefits are realized across many areas for both PLM

Stragglers and Advanced Users

PLM stragglers 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

9 standardization of processes availability of information reduction of non-value activities data flow and exchange data quality re-use of data and knowledge collaboration and comunnication geographic integration lower IT maintenance integration of legacy systems optimized product quality

Reduced number of product changes higher ability for innovative products


0

0

4

0

4

4

8

8

8

16

16

16

16

Advanced PLM users

18

6

9

3

3

0

3

12

12

12

6

12

3



PLM Champions and Advanced Users are much more proficient in even doing ROI evaluations, and thus see better returns share of companies which have carried out a ROI calculation in %

80

57 return on investment in months

(averages of entries)

35

28

7

10

PLM advanced PLM champions users

PLM stragglers


PLM champions advanced PLM users



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 engineeringcentric 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.aspx http://www.ngmanufacturing.com/pastissue/article.asp?art=271207&issue=218




Advanced PLM users focus on speed of innovation, while PLM stragglers focus on decreasing the costs of innovation

The impact of PLM on product innovations advanced PLM users and

PLM Champions

PLM stragglers

17 Increasing the amount of reused parts faster rollout of innovations decreasing innovation costs effective use of platform strategies decreasing the number of variants developing mass customized products extending the product economic life-time

0

5

5

10

19

29

33

6

11

11

11

11

33




Advanced PLM users lead in using innovative product development methods

2006 European participants 2007 U.S. participants

100%

100%

100%

77%

71% parametric geometry modelling behaviour modelling

100%

100%

100%

100%

80%

23%

50%

80%

42%

71%

80%

62%

64%

62%

100%

European participants 2006

PLM stragglers advanced PLM users

80%

PLM champions

93%

46%

71% interdisciplinary modelling digital product master digital test bench 4 configured DMU 3 design in context 2

50%

83%

50%

67%

33%

67%

83%

83%

33%

50%

100%

100%

100%

100%

U.S. participants 2007


PLM champions

100%




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

New parts

Slightly modified parts

Existing/standardized parts

14

Component reuse in new developments

(consolidated European and U.S. participants 1 - averages each classification group)

PLMAdvanced PLM champions users

PLMstragglers

32% 30%

38%

35% 33%

32%


28% 44%

27%

All PLM users

32% 38%

30%



15

What is going on?



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

What are the implications?



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



Agenda






Conclusion




PLM functionally overlaps with other enterprise systems, and needs to be integrated

CRM

PLM

SRM

SCM

ERP

17

Source: Alan Mendel 2007 presentation



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) enterprise resource planning (ERP) customer relationship management (CRM) supply chain management (SCM)

U.S. Participants 2007

PLM Stragglers

Advanced PLM Users and PLM Champions

European Participants

2006

PLM Stragglers

Advanced PLM Users and PLM Champions requirement traceability management (RTM) service & support

0 1 2 3 degree of integration in the engineering environment

4

0  no integration

1  communication between the departments

2  exchange of information over system interfaces

3  shared database

4  integrated processes and functions




Advanced PLM users are integrating engineering applications more than the stragglers in the physical environment virtual product creation real product creation

100 80

100 83

100 80

100 86

45 40

PLM stragglers advanced PLM users and champions

43 33

29 20

29

29 20

(U.S. participants - averages in each classification group in %)

14

0

14

0 bill of material management

CAD

DMU visualization simulation / calculation testing / prototyping

CAM requirements management project management

CAQ production planning factory planning resource planning

14

17

29

0

29

15

0

14 20

0

33

33 43

33

60

71

86

86




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)

10

9

8

7

1 1

4

2

1


PLM champions

2003 2007 2011




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

B 94%

B 55% A 33%

PLM Stragglers

B 94%

B 43% B 72%

21

B 67%

C 14%

D 43%

C 18%

D 27%

C 14%

D 14%

D 6%

D 6%

Trend Europe

2010

U.S. 2007 Trend U.S. 2011

European participants 2006

B: commercial system with adaptations

D: home grown system/interfaces

Trend

Europe 2010

U.S. participants 2007

U.S. 2007 Trend U.S. 2011

A: commercial system without any adaptations

B: commercial system with adaptations

C: externally developed individual solution

D: home grown system/interfaces




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 %)

18

82

15%

70%

Trend Europe

2010

15%

U.S.

2007

75%

17%

8%

The trend to completely web based systems will be more of a focus for the US participants than the European participants.

Trend U.S. 2011

U.S. participants 2007 complete web based system

Core system with partial web access no web based access to the system

European participants 2006 complete web based system

Core system with partial web access




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) data exchange and interfaces 60% confidentiality (IP protection) multi-CAD management building a common PLM strategy reduce parts, foster reuse and common parts

40%

20%

20%

20%

20%

0%

0%

14%

14%

29%

43%

23





Advanced PLM users apply more sophisticated techniques to communicate requirements along the supply chain, however communication is still not high


Communication of product interfaces to customers and suppliers

(average of classified results in % - multiple entries possible) data shared electronically 100% design evolution tracked by system data integrated into and communicated via BOM 25%

0% 42%

42%

100%

Communication of assembly constraints to customers and suppliers

(average of classified results in % - multiple entries possible)

CAD-based communication verbal communication paper-based communication no communication

40%

40%

20%

8% 0%

57%

42%

28%




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 cross enterprise PLM company wide PLM

2007

18%

54%

2011

100%

100%

92%

100%

PDM

92%

100%

CAD data management

USA participants only



25


26

What is going on?


 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



Agenda






Conclusion




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 %)

PLM stragglers

0

0 top management determines the

PLM strategy (top-down) advanced PLM users and champions

50

18

50

44 important decisions are coordinated between TM and the PLM project team

50

70

33

33

TM supports PLM strategy,

PLM team makes decisions

0

12

17

23

U.S. 2007

Europe 2006 in the PLM strategy

0

U.S. 2007

Europe 2006




A lack of user acceptance and communication are main causes for failed PLM implementations.

Risks when introducing

PLM

(averages in each classification group) user acceptance missing communication too much focus on technical details insufficient PLM project management complex data migration too large project steps missing cost transparency advanced PLM users and PLM champions not risky

3,9

3,6

3,3

4,1

4,0 very risky

4,7

4,6

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 stragglers not risky

3,2

3,5

2,7

3,3

4,0 very risky

4,3

3,8

1. not risky

2. somewhat risky

3. moderately risky

4. risky

5. very risky




A successful PLM initiative has top management commitment, as well as a clear process and business focus, rather than being IT-driven

Success factors for introducing PLM

(averages in each classification group) top management commitment division / user involvement initiative is process-, not IT-driven accompanying change management consideration of quick wins clear democracy of scope clearly defined responsibilities assessing potential for improvements costs (hardware, software, implementation) detailed assessment before implementation

ROI analysis for prioritization of activities advanced PLM users and PLM champions not very important important

4,1

3,9

3,6

3,4

3,4

4,7

5

4,3

4,3

4,3

4,3

PLM stragglers not important very important

3,7

3,3

3,3

4,2

4

3,7

3,8

3,8

4,7

4,7

4,3

1. not important

2. somewhat important

3. moderately important

4. important

5. very important



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 %)

PLM Stragglers project costs

+10

+47

PLM Champions and

Advanced PLM Users

+12

+4

U.S. Participants 2007

PLM Stragglers

Advanced PLM Users and PLM Champions project time

+71

+300 +37

+13

European Participants 2006

PLM Stragglers

Advanced PLM Users and PLM Champions system functionality

-30 system integration

-30

+2

+3

-12

-16

+7

+3

 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




32

What is going on?



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 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



Agenda






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

34

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



The document title is 28

A Cup Half Full: PLM in the automotive industry

We categorized the 52 participants into PLM Champions,

Advanced PLM Users and PLM Stragglers

One of PLM’s major goals is to improve innovation

Advanced PLM users lead in using innovative product development methods

PLM functionally overlaps with other enterprise systems, and needs to be integrated

Advanced PLM users show a slightly higher level of integrating non-technical departments into the engineering environment. No user has achieved a full integration.

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.

Compared to Advanced Users, PLM Stragglers significantly exceed project costs and time. There is also a significant loss of System Functionality.

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The document title is 28

A Cup Half Full: PLM in the automotive industry

We categorized the 52 participants into PLM Champions,

Advanced PLM Users and PLM Stragglers

One of PLM’s major goals is to improve innovation

Advanced PLM users lead in using innovative product development methods

PLM functionally overlaps with other enterprise systems, and needs to be integrated

Advanced PLM users show a slightly higher level of integrating non-technical departments into the engineering environment. No user has achieved a full integration.

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.

Compared to Advanced Users, PLM Stragglers significantly exceed project costs and time. There is also a significant loss of System Functionality.

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