In his Propulsion 2023 session entitled “PLM and the Future of Manufacturing,” Forrester’s VP and Principal Analyst George Lawrie, drew a distinction between “East Coast” and “West Coast” manufacturing, and by extension, PLM. Now, we know of great beefs between the coasts: Hip-Hop, sports, and my favorite of all, different styles of India Pale Ale.
But are there really coast-specific varieties of manufacturing and PLM? Let’s dig in.
To start, George discerns between asset-intensive and asset-light manufacturing. He characterizes the former as vertically integrated in which companies have captive manufacturing operations and engage in production activities like casting and milling. By contrast, West Coast manufacturing emphasizes creating products using existing components primarily through a heavy reliance on relationships with suppliers and contract manufacturers.
Specifically, George says: “Asset intensive is what we are used to. People who heat things up, drill things, cast things—you need a lot of equipment. But there's also asset-light manufacturing. Think about consumer electronics or what's happening with life science devices. You're normally working with contract manufacturers.”
Lawrie notes this asset-light or “West Coast” form of manufacturing is growing at a remarkable pace compared to its East Coast counterpart.
West Coast Approach: Fast-Paced & Outsourced
The West Coast approach to manufacturing is characterized by a heavy reliance on sourced components and the use of contract manufacturers. This model is often seen in industries like high-tech, medtech, and consumer electronics, where rapid innovation and time-to-market are crucial.
West Coast Strengths:
Flexibility: By relying on sourced components, companies can quickly adapt to changing market demands without the need for significant capital investment in manufacturing infrastructure.
Cost Efficiency: Contract manufacturers, especially those in regions with lower labor costs, can produce products at a fraction of the cost it might take for a company to manufacture in-house.
Scalability: Companies can easily scale up or down based on demand without the constraints of fixed manufacturing assets.
Focus on Core Competencies: By outsourcing manufacturing, companies can concentrate on design, branding, and marketing—areas that might provide them with a competitive edge.
West Coast Weaknesses:
Quality Control: Relying on third-party manufacturers can sometimes lead to inconsistencies in product quality.
Intellectual Property Risks: Sharing designs and other proprietary information with external parties can expose companies to IP theft or unauthorized replication.
Supply Chain Vulnerabilities: A heavy reliance on external suppliers can lead to disruptions, especially in times of global crises or geopolitical tensions.
East Coast Approach: Captive & Long-Term
The East Coast approach is deeply rooted in engineering and captive manufacturing. This model is prevalent in industries like aerospace, automotive, and heavy machinery, where long-term product support is paramount.
East Coast Strengths:
Quality Assurance: With in-house manufacturing, companies have direct control over the entire production process, ensuring consistent quality.
Intellectual Property Protection: Keeping the entire lifecycle in-house minimizes the risk of IP breaches.
Customization: An engineering-heavy approach allows for deep customization and the ability to cater to specific client needs or niche markets.
Long-term Support: With a deep understanding of the product and its components, companies can offer extensive long-term support and maintenance.
East Coast Weaknesses:
Higher Initial Investment: Setting up captive manufacturing facilities requires significant capital expenditure.
Less Flexibility: Changing or adapting production processes in captive facilities can be more time-consuming and costly compared to the West Coast model.
Potential for Overhead Costs: Maintaining in-house manufacturing facilities, especially during downtimes, can lead to higher overhead costs.
On Which Coast Does Each PLM Belong?
To this end, are there analogous flavors of PLM best suited to these types of manufacturing? Well, there is certainly a way to segment PLM offerings according to George’s observations.
Let’s consider if there are distinctions embodied by West Coast and East Coast models. While both aim to manage the entire lifecycle of a product from inception to retirement, their methodologies and focus areas differ significantly:
East Coast PLM Offerings
- Born from Product Data Management (PDM) which arose from the need to manage the proliferation of files created by Mechanical Computer-Aided Design (CAD) systems
- Favors engineering-centered processes and methodologies, such as (3D CAD) Model-Based systems engineering.
- Predominantly deployed on-premise, though many vendors have begun transitioning to cloud-based deployment models
West Coast PLM Offerings
- Born from a need to represent highly collaborative needs across partnering companies
- Favors enterprise-spanning processes and methodologies, such as Project Management and Supplier Collaboration
- Predominantly deployed via the cloud, with a notable exception—Agile PLM
Neither approach alone may suffice. Lawrie describes how manufacturing trends will stretch PLM solution providers:
“Will we end up with an offshore nearshore and onshore combination? Yes, probably. And to do that, we're going to have to be able to support both types of PLM and the companies that we work with, some of which do one kind, some of which do another kind, and some of which are doing some kind of hybridization.”
This shift will require the support of different types of product lifecycle management (PLM) systems to accommodate companies specializing in different manufacturing approaches or hybrids thereof. This will fuel the growth of cloud-native PLM solutions that are easy to configure, intuitive to use, and can be quickly deployed anywhere in the world.
Conclusion: Is One Approach Better?
The choice between the West Coast and East Coast PLM approaches isn't a matter of one being universally better than the other. Instead, it depends on the specific needs, goals, and constraints of a company.
For businesses that prioritize rapid innovation, flexibility, and cost-efficiency, the West Coast model might be more suitable. This approach allows companies to quickly respond to market changes and capitalize on emerging trends.
On the other hand, companies that emphasize product reliability, quality, and long-term support might find the East Coast approach more aligned with their objectives. This model offers greater control over the product lifecycle, ensuring that every product meets the company's stringent standards.
Ultimately, the best PLM approach is the one that aligns with a company's strategic goals, industry requirements, and customer expectations. As the business landscape continues to evolve, companies will likely also find value in hybrid models that combine the strengths of both approaches.
Learn how Propel Software fits into the West Coach manufacturing model with its focus on rapid go-to-market and digital innovation. Explore the solution here.
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