In the first part of this series, we introduced the semi-radical opinion that PLM fell short of its hype. The truth is PLM software has served companies well when the focus was on product cost and product development efficiency, offering great capabilities in managing bills of material and change processes.
However, the customer was never a key part of the PLM equation.
To see why, let’s dig into PLM’s origin story. PLM evolved from PDM (Product Data Management), which itself was a necessary invention to deal with file proliferation from engineering teams’ use of Computer Aided Design (CAD).
PLM advanced matters with its increased scope on the product’s definition: how should engineering changes be marshaled through the organization? From which vendors/suppliers should we purchase our components and raw materials? What’s our direct material spend represented by a particular bill of materials?
Leading companies today understand that customers are king, and want to deliver to them a better experience. But, when it comes to making the customer a focus while building, selling, and servicing products, traditional PLM leaves a lot to be desired. Why? PLM has had its proverbial hands full solving problems in the back office (engineering, quality, and manufacturing) that it never made its way to the front office.
PLM’s strength is optimizing the “inside-out” processes that mean little to buyers. Instead, buyers care about the full product experience, which traditional PLM struggles to impact.
To illustrate this, let’s list some typical customers of different types of product companies.
Each of these customers has their own wants and needs. Here are a few examples:
How PLM Swings & Misses
As you’d expect, much of the buying criteria is focused on price and performance. But there are many criteria that are less tangible, but equally important: the delight of product ownership and use, the emotional equity that comes from supporting a company with shared values, and so on.
Collectively, these factors describe the product “experience,” which is becoming increasingly as valued as a product’s price and feature set.
Let’s take a look at how well PLM supports product companies as they aim to satisfy some of these key customer requirements.
Requirement #1: Price
Typically component costs come from an Enterprise Resource Planning (ERP) system. These can be reflected inside PLM and “rolled up” for a specific product BOM to report on the product’s aggregate direct material cost. While this information alone does not constitute a complete picture of the end product’s cost structure, it is useful for ultimately informing the customer-facing product price.
Requirement #2: Feature Set/Configurability
This criteria is especially important for corporate buyers of ETO (engineer-to-order) or (configure-to-order) goods or systems which are purchased to be embedded in the end product sold by the OEM. The challenge for the product company is to provide the right product at the contracted price.
But because of the intensely cross functional nature inherent in this form of product development (sales iterates with the customer on requirements, sales and engineering collaborate on the project), PLM hasn’t done well. For one, it has lacked access to details about the original prospect inquiry, which is typically captured as an opportunity on a CRM (Customer Relationship Management) system. Secondly, the complexity of navigating PLM systems hasn’t fostered quick collaboration cycles needed to develop accurate and timely customer quotes.
Requirement #3: Quality & Service
Some PLM systems have embedded quality capabilities. Their focus however tends to be on tracking inbound component quality (i.e., issues related to purchased components) for remediation. Importantly, they miss the product quality issues that are surfaced directly by the customer. Tracking and dispositioning those issues—some of which may rise to the level of an adverse event (i.e. unintended consequences caused by a medical device)—have major implications of patient safety, regulatory compliance, and corporate risk.
Additionally, service represents an important customer touchpoint. Consider the typical multiyear lifespan of industrial equipment. Some PLM and QMS systems talk of “closing the loop”—but without a complete view of the actual customer asset, the record of customer-sourced cases and issues, and lacking a unified platform for resolving said issues via engineering, traditional PLM is only partially addressing the customers’ requirement for high-quality products and service.
Requirement #4: Buying Experience
Traditional PLM systems focus on fit, form, and function of a product, but neglect the commercial aspects, potentially delaying introduction of new products to sales channels. This is a lost opportunity because consumers and business buyers hunger for rich product experiences when shopping for and evaluating products.
In a recent survey conducted by Propel of 2,000 US consumers, 58% have recently switched from a brand they used to love to its competitor. Almost half (47%) said they were enticed by an enhanced product experience, such as the availability of accessories, an online community, or how-to videos.
Requirement #5: Environmental Impact & Sustainability
In today's market, sustainable development practices matter tremendously as consumers and business buyers are opting for environmentally-conscious products. But since a company’s environmental and sustainability performance is generally captured in disconnected data sources not easily reported on by PLM, it becomes a missed opportunity for securing new markets and appealing to new customers.
In short, PLM does well on the criteria most directly related to the cost and quality of the product. It doesn’t do much to address the experience that the product creates with the customer.
Here’s Where PVM Comes In
Product value management (PVM) platforms connect commercial and product teams to optimize decision making, drive process efficiencies, and—perhaps most importantly—engage customers with compelling products and experiences. Learn more about Propel’s PVM solution here.
Stay tuned for Part 3 of this ongoing series exploring “Where (Traditional) PLM Dropped the Ball.”
Meanwhile, here’s a question for the reader: where else do you think traditional PLM has dropped the ball? Comment on our LinkedIn post to let us know.