Manufacturing is global these days. Nothing is done by a single company. Usually manufacturing is to connected to variety of supplier for different purposes – design work, contract manufacturing, component sourcing. There is a great desire to create a data model that can connect all dots of product development, suppliers, parts, bill of materials, inventory availability, cost, quality, etc. It is a complex problem and PLM system can play a great role to define data framework to connect islands of information about the product and its lifecycle with respect to all changes.
Supply chain comes to product lifecycle management in three major forms – design supply, component supply and contract manufacturing. Modern global manufacturing creates bigger challenges in front of traditional supply chain management software. The biggest one is how to move from company specific data management into global distributed system.
In today’s world, more and more companies need to collaborate globally. In the supply chain, this is a result of companies wanting to optimize their operations and having more suppliers involved in all processes of their activities. There are many solutions that companies are using for the global supply chain. With the current development of online tools, internet, and services, most of these tools have established online spaces where you can share and exchange information and transmit messages.
Unfortunately most of these systems are creating their own eco-system. I think there will be a significant improvement if we are able to connect these solutions to organizational processes. But this is not always possible because companies today do not share their processes. In most of the cases, they use different tools to implement business process management in their organization.
How can you make this collaboration possible? In my opinion, development of process interoperability can provide a new dimension in how company processes work together. The ultimate requirement is to keep processes separate, but, at the same time, allow them to work together. The main problem of such integration, as I mentioned above, is that because business processes are separate, database schemas are different. Each company process uses its own data schema to represent information which is tightly bound to a specific process implementation.
I can observe two major ways process integration occurs: (1) mapping based approach; (2) query based approach.
For the mapping based approach, the integration creates a map between two local schemas. By doing this, a new “federated schema” is created. In some cases, companies are trying to use one of the schemas as a federated one. This is not always possible as sub-sets of schemas are used. But whatever the final schema is, this process is complicated and requires multiple mapping operations to happen. This way is also expensive, in my view, for long term support and changes.
Another approach is query based. In this approach, a special interoperable query system needs to be developed. This “query” is able to establish a connection with both (or multiple systems) and extract/load information. With the latest development of SOA and Web Services, this way has become very popular.
An alternative way – integrated ontology development. This ontology would place a super-set on top of both business process models. Ontology, in simple words, is a data model. So, we need technology and/or a tool that would allow us to develop an intermediate data model. There are such technologies in today’s world developed as part of Semantic Web W3C initiative – technology based on RDF (Resource Description framework) and OWL (Web Ontology Language). These technologies have been developed for the past 7-10 years and, in my view, have become more and more popular. They allow you to establish a global model for content and message transfer, thereby simplifying communication. The main advantage of this collaboration is that a new level of data models will be created. These data models, represented by RDF/OWL, will allow companies to establish a connected data environment that can be used by multiple systems.
PLM and Supply Chain in Web 2.0 Era
When life of manufacturers becomes even more complicated than before, issues related to the supply chain or more, specifically to an ability to control and protect your brand from various supply chain issues raising their priorities. Supplier-related issues can significantly impact the whole product lifecycle starting from time-line and ending by serious quality and regulation issues.
In a new connected world to control your supply chain became one of the most critical elements for manufacturing companies. The ideas of connected supply chain can put a surge protector between supply chain and brands. As such, a growing need to monitor social activity around your brand in order to identify the possible problems earlier, establishing code of business conduct and dialog between OEMs and suppliers.
I think web and online monitoring are the essentials of the business these days. It is absolutely true for personal brands and for large international companies. When thinking about Web 2.0 trends, I definitely Supply Chain Management 2.0 capabilities to use the information on World Wide Web that can help to organize a more effective supply chain. However, last two issues made me think about some problems where I believe a solution can come from Product Lifecycle Management systems and implementations. I’d like to figure out two important issues related to supplier management: Product Data Integration and Supply Attention Economy.
Product Data Integration
In my view, the issue of data integration between OEMs and Suppliers will come to the emergent level of the attention very soon. The ugly truths of this issue is that nobody these days can provide a consistent product data landscape from OEM (or Tier 1) side on what is going on in the supply chains. The complexity of the system is so high that companies are mostly focused on procedures of data transfer between OEMs and Suppliers. However, the data quality will start alarming very soon. It stats from various regulation topics and need to provide up-to-date information related to product bill of materials and ends from the ability to optimize product behavior.
Attention Economy and Cost Control
This one is a bit more complicated. Nevertheless, I see it as an emergent trend in a couple of years. The supplier relationships G-forces are moving from centrally controlled OEM-Supplier model to somewhat I’d call Supplier-Focused. It means that we’ll see a growing number of suppliers and much more complicated supply chain network. Internet, online business, globalization will play an additional role in helping to create a more granular supply chain. However, how possible to optimize this network. Here what is called “Economy of Attention” will come. In simple words the relationships between OEM and Suppliers are going to change. It won’t be completely controlled by upper supplier level anymore. The suppliers will be pro-actively looking how to optimize their business by offering their business online. It will come in design, supply, manufacturing. However, it will also change upper OEM/Supplier level. Their systems will need to come to the higher level of optimization. Such structural changes will allow to optimize cost and improve the quality of products and services.
The PLM domain is the best candidate to think about such a type of system development. The obvious advantage of PLM is an ability to handle Product related data. However, PLM will need to learn a lot in order to move into this interesting journey.
PLM Supply Chain – Go Big Data or Go Home
For many people PLM is associated with Engineering. At the same time, it is not true. Very often, major portion of product design, development and manufacturing is delivered by partners (suppliers). Value chain management, supplier integration during different phases of a product-development process is very important. These days with growing trends in globalization and interest of companies to optimize and product cost, it became even more important than usual.
Many companies are looking how to innovate in product development. I’d like to talk about an interesting trend in supply chain optimization related to Big Data. In information technology, big data is still very loosely defined term. The researches are talking about Big Data as a new concept in supply chain. It can potentially solve problems in supply chain PLM systems are trying to solve.
First is to speak and define business problems. Very often, I can see PLM vendors are talking too much about technological pieces related to data exchange between OEM and suppliers. At the same time, companies are losing focus of business problems. For the business leader, it is not about data. It is about solving the business problem. In fact, as supply chain leaders try to tackle new problems, most do not realize that they are entering into the world of Big Data, it just happens. The term is not in their vocabulary. They just want to do more, and solve new problems, with new forms of data. They are frustrated with current systems. At the same time, we need to admit that data is growing exponentially in the enterprise and global value chain.
I captured some interesting data points about globalization and data in supply chain in the following research article ‘Big Data – Go Big or Go Home’ by Lora Cecere of Supply Chain Insights.
The scale of data is growing and it comes to enterprise too. Today, 8% of respondents have a Petabyte of data in a single database. It is growing. It is a concern of survey respondents. 47% of companies responding to the survey either have or expect to have a database with a petabyte of data in the future. It is higher for those currently having Big Data initiatives underway (68%). The petabyte is the new terabyte.
Until now, I can see how PLM vendors are mostly focusing on “transactional data”. Nowadays, a lot of additional data sources are coming into play of product development and supply chain. Take a look on the picture I captured form the same report – transactional data is only small piece of information need to be used to optimize supply chain.
Another interesting aspect is the relation between supply chain and product data. Analyzing the ability of a company to use various data sources for supply chain, we can see “product data traceability” as one of the top 3 factors. It leads me directly to the data located in PLM and other engineering systems.
Big data is one of the big things PLM can use to optimize supply chain, in my view. PLM vendors need to switch gears from supply data exchange towards supply chain optimization. In order to do so, PLM vendors need to bring additional capabilities to analyze supply chain, related information. It is an important topic to for coming years.
Cloud will change supply chain. The question is when?
For many years, supply chain was a space that drove lots of attention. One of the major trends, I can see for the last decade of manufacturing transformation is an increased granularity and optimization among the value chain. Design supply, manufacturing supply chain optimization and many other things in this space are raising many questions and interest of software vendors and customers.
The article Apple Turns Over Its Entire Inventory Every 5 Days gives you feeling how large global companies are managing supply chain and contrac manufacturing. . I think, the number is impressive. Here is a very interesting passage:
Gartner’s Supply Chain Top 25 table rates companies on their return on assets, their inventory turn metric, revenue growth, and votes by analysts and peers. Overall, Apple sits right at the top of the table, with a composite score 40% higher than Amazon, which sits in second place.McDonald’s is the only company in the world that turns over its inventory faster than Apple, and let’s face it, that’s largely because most of its stock doesn’t last five days. But its quite incredible when you consider how many countries Apple serves, and how many products it offers, that it doesn’t stockpile certain goods.
So, the question I want to ask today is what will bring a big change in supply chain space? I was reading blog article written by Allan Behrens’ of Taxal – On the topic of Cloud… “where to now the channel”? No surprise to me, Allan sees a cloud as a main disrupter in a supply chain. Here is a quote:
I for one believe that the Cloud era heralds significant change in the IT industry… and in the dynamics of its supply chain. The question is not ‘if’, but ‘how much’ and ‘when’. Discussions with software and hardware companies reflect widely varying sentiments on what and how to deliver; moreover fear (of reducing margins), uncertainty (of product and supplier intentions) and doubt (of customer take-up) are amongst the issues that constrain many partners’ deeper involvement in Cloud opportunities.
The question is not “if”, but “when” the cloud will disrupt supply chain. At the same time, in order to disrupt the supply chain with the cloud solutions, we need to pass a long way alongside of development of cloud information infrastructure and technology. Security and information sharing needs to be improved. However, the most important transformation is about people’s mind. Sharing information culture is still in a very early stage. Yes, we can share photos via Facebook. A decade ago, the modern way to share our private information online would be shocking. Some kind of similar transformation must happen in all aspects of business information sharing.
PLM has a weak point in cloud-based supply chain
One of trends in manufacturing is a rise of cloud-based supply chain management systems. Manufacturing Trends to watch in 2015 article written by Jeff Moad at Manufacturing Leadership Community speaks about this trend.
The Rise of Cloud-based Supply Chains. As the manufacturing landscape becomes more interconnected and interdependent, requiring close cooperative links with multiple supply chain partners in multiple locations for materials, parts production and the support of new multi-channel services, companies will increasingly adopt cloud and more predictive web-based supply chain software to help manage and swiftly reconfigure their networks to gain real-time visibility, cut time-to-market, and respond faster to customer changes and potentially disruptive political and natural risks.
So, manufacturing eco-system is changing. And one of the keys is interconnected manufacturing landscape. It gives an interesting opportunity for software vendors thinking about cloud software as a platform, rather than a bunch of servers hosted elsewhere. At the same time, it raises many questions about how new generation of enterprise software will handle modern people and organization paradigm. One of the challenges for many PLM products and platforms is related to their ability to manage multiple organizations in distributed networks. Which can be a weak point for many of them to capture cloud-based supply chain opportunity.
Modern PLM software can embrace new paradigm of interconnected and interdependent manufacturing environment. This is quite different from traditional environments of OEMs and suppliers. The ability to manage distributed processes will become critical and can be one of the future differentiators for some PLM vendors. It looks like born in the cloud PLM technologies can gain some advantages here.
Will future PLM order parts for makers?
Globalization of manufacturing and lower cost of operation and supply chain components is empowering individuals and small innovative manufacturing shops.
Have you heard about “makers”? If you are in manufacturing business, you probably should pay attention to that. You may hear about “makers movement” these days as a new industrial revolution changing the way people are making stuff. I can recommend you Chris Anderson’s book to read more about that.
New digital technologies are going to change the way we design and manufacturing products. It appears today largely as a new group of manufacturing entrepreneurs, startup companies and small manufacturing firms. PLM vendors are not very successful in providing solutions for SME companies. Historically it was a tough call for PLM vendors. It was too competitive and confusing with major PLM business – large OEMs and suppliers. With new manufacturing eco-system, the situation is getting very interesting. One of the objectives of PLM is to help company to innovate and delivery new products fast. It sounds like a very compelling reason for new manufacturing startups. Read my earlier blog – Why Kickstarter projects need PLM? This is an opportunity for new PLM solutions.
However, it looks like something that PLM vendors are missing for the moment – PLM and Manufacturing Startups: Potential Mismatch? We have a complexity of new manufacturing products, multiplied by a complexity of new type of manufacturing processes. It looks like an existing enterprise software doesn’t fit very well a new and growing eco-system of manufacturing companies.
Let me take an example of PLM and ERP system breakdown. The traditional split between PLM and ERP is usually presented as “innovation vs. transactions”. PLM system is responsible for engineering part of the business and takes hands off from ordering by moving business process to ERP. This is works well for traditional manufacturing companies. However, PLM v ERP interplay is a very challenging and complicated process in every company. Would it be the same for new type of manufacturing entrepreneurs? This is a good question to ask… I’m pretty sure that new manufacturing companies can question a need to have multiple systems- they will be looking for some sort of intelligent online solutions that can easy interplay together and cover both engineering and manufacturing piece.
My attention was caught by Fortune article – In B2B e-commerce, Alibaba has solved the one problem Amazon can’t. Read the article. I found it very interesting. It is not about PLM. However, I captured a passage that speaks about B2B and supply chain communication.
But there is one true giant in the category: Alibaba, the Chinese retail darling that last week revealed plans for a $21.12 billion initial public offering, which has dominated in B2B e-commerce. I was reminded of this over the weekend while listening to Planet Money’s entertaining explainer of the Alibaba wholesale market. Through Alibaba.com and 1688.com, the company provides to people everywhere access to the Chinese supply chain. This means tinkerers, builders, entrepreneurs, and small businesses can order custom motors and parts from Chinese factories without having to travel there, find a scout, and forge a relationship with a manufacturer before doing business. It opens up the world of international suppliers to people who wouldn’t normally have access to it. They can buy in bulk through Alibaba, which acts as a trusted third party, vouching for the transaction.
It made me think about a potential of PLM software to get connected to online e-commerce systems to process orders and even more- optimizing product design and engineering solution based on that. It probably sounds crazy. However, who knows… Many things that we knew as a separate parts in the past, now unified as a single products. Think about iPhone, which replaced many existing devices. Today’s Apple Watch and Apple Pay announcements are hinting about future transformation of well-known habits. There are some other examples as well.
I like to quote Mark Andreessen for the conclusion – “Software is eating the world”. There are lot of traditional system breakdown that are going to be transformed and disappear in the future. What looks like a right split between product innovation (PLM) and order-transaction (ERP) today, can be challenged in the future. So, who knows? Maybe tomorrow PLM systems will order parts from Amazon B2B e-commerce web services?
(c) Can Stock Photo