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— July 12, 2006

Product Lifecycle Management Challenges: From Solution Evaluation to Kickoff
From Technology Evaluation/Sukumar Subaban Tondalodinee, Dr. Shobhalatham Gurran, Dr. Satyamaravana Bachala
Once a product lifecycle management (PLM) system vendor is selected, the company should consider how to manage the entire implementation. The following gives some idea of how to manage this important issue.

I) Scope of work and establishing a steering committee: Sign a scope of work (SOW) document with the vendor which describes all the items that are to be covered during implementation of the PLM System. Provide the PLM system document, and all other information to the finalized vendor. Involve senior members of the organization in preparing the SOW document. Define the scope with mutual understanding.

Establish a steering committee with consultants from the vendor company and senior members of the organization (as well as with stakeholders of the new PLM system). Formulate the strategy for implementation, and chalk out a milestone-driven plan. The SOW document needs to clearly indicate milestones which signify some remarkable achievement, and which will also stand as payment gates (meaning that payments to the vendor should be linked with these milestones). The steering committee should meet at regular intervals to resolve any issues, and its decisions should be final.

II) Infrastructure and installations: Once the SOW is prepared, the implementation will be kicked off. The steering committee contains a certain set of people who will lead various teams which will fulfill certain responsibilities. The various functionalities are the infrastructure group, the implementation group, and the quality group.

The infrastructure group will team up with various sections of the enterprise to procure the required infrastructure (such as the server machine, client machine, and file servers), and to identify and procure resources which can work on the implementation internally. If need be, they initiate the recruitment with the responsible human resources (HR) department, and form various teams.

The implementation group will be led by senior functional and technical managers who will drive the implementation by arranging the training required for the resources identified by the infrastructure group. It will also form a project plan for implementation.

The quality group will contain a highly experienced quality head, with a team which is well-versed in ensuring the software quality of new systems. They will assist the development through timely testing and by implementing the industry-accepted procedures to deliver quality systems.

Once the new system is installed, the next step is to perform a gap analysis and prepare a mapping document.

Gap analysis and mapping document preparation: Any software will have good features. After all, that's what impressed in the first place and led to the decision to buy it. But keep in mind that it is impossible to get everything out of the box. There should be rigorous study to understand the new system, its benefits, and the implementation procedure.

Since a PLM system document is already available, there is clear description of what is expected of the new system and what the current process is. Map the solutions available in the new system to the requirements. There should be mapping against each feature, and explicitly stated when a feature is non-available. If a feature is available through a different process, this also need to explained. This will raise questions of whether this different process is best practice in the industry, and also of the organizational benefits should this new process be followed.

However, if a requirement is so important to the organization that it cannot be ignored, it should be explained why compromise is viable, and the effort required to implement the compromise needs to be assessed, if possible.

Once the mapping document is prepared, it will pave the way for identifying what features are not available in the system, and it will also illustrate the level of complexity involved in meeting these requirements. This mapping document will be presented to the steering committee. This committee will discuss and arrive at the list of customizations, ranked by priority.

1. Identifying customizations: The steering committee will have the mapping document validated through the input of the respective teams. These teams should explain the necessity of requirements if they are not available, and the possibility of changing any process as per the design provided in the new PLM system, to avoid customization. It is always better to avoid customizing new systems too much because it leads to loopholes, and the cohesiveness of the system will be reduced. There can also be related problems when there is an upgrade, or if the vendor releases new versions with enhanced features. Thus, only the most required features lacking in the new PLM system will be identified for customization.

2. Assigning priority: Careful evaluation will limit customization. However, before a decision is taken about customizing for some feature, its importance and criticality need to be evaluated. Some features, though important, may not be required immediately. An enterprise should identify the immediate requirements that might be show-stoppers for a new PLM system implementation. Those requirements which are less important can be implemented at a later stage. It is always better to give ranking to these customizations, and to assign an end date for implementation for each of these items.

Once the process of implementing the new software system is in place, it is always better to obtain technical training for the resources within the organization, to avoid over-reliance on the vendor. Usually, this will be part of the purchase agreement. This will improve the organization's capability to solve many small issues that might arise after implementation.

Selection of the team: The selection of the team is an important first step. One needs to see what kind of core software the vendor is using in the PLM system (such as Java, .Net, C++, and so on). Organizational resources experienced in that technology should be selected. This will ensure that learning happens faster. Once they start learning about the new system, they need to have some practical exposure, and should be involved in the customizations identified.

Scheduling the training: It is always good to plan things well in advance. Once a team is identified, obtain the consent of each selected member, and then free the trainees from all other assignments in order to minimize distractions.

As per the SOW, the development should be milestone-based. At the end of each milestone achievement, a summary report need to be submitted to give information regarding key issues that may have come up, along with solutions to them. It should also identify potential risks that might hamper the implementation, so that a mitigation plan can be prepared. This will give the steering committee enough time to find ways to mitigate the risk. At the end of each milestone, the feedback of all the resources related to that milestone needs to be obtained, and analysis has to be performed about the expected results and the degree to which they are satisfactory. If some milestone has not yielded the results it was supposed to deliver, it should be not “closed” until proper steps are taken to ensure that the output of each milestone implementation is satisfactory.

Once all the milestones are reached, the system is fully developed. The following phases will have to be followed to obtain full-fledged implementation.

Testing and adherence to quality: The quality phase consists of thorough system testing, acceptance testing, and stress testing. As modern PLM systems are web-based and used by multiple clients, the guidelines available in our article Guidelines for Performance Testing of Multi-client Systems (word document) can be followed. These guidelines explain how to ensure that the performance of new systems will be satisfactory, and enable the final rollout to go without any major issues.

User training: Once the system is found to meet quality standards, then the new PLM system can be considered ready to replace the old system. This is the stage when users need to be trained. Some real data for any one product can be used for training on the final PLM software system. As PLM systems guide all the processes of product development, from design to market, this kind of data will be useful for training various users in different departments. The training process should include audio-visual tools, and every user needs to stay focused, and train in a systematic and proper way. At the end of each day, there should be a question-and-answer session, where all the users are encouraged to raise any questions that they do not understand. They need to be allowed to create data of their own, and to work on various modules which are related to their work. It is best to frame some kind of tests which will identify the level of user understanding about the new system. This will raise the confidence level of users.

Legacy data migration: Once users are trained, the stage is reached for transferring the legacy data from the old system to the new. There needs to be a “no-improvement period” for the old system (a no-improvement period is the time during which no new data creation or data modification is allowed). The data migration should use techniques like programming and simulation to facilitate smooth and fast data migration. Once the data migration is complete, the new system is ready for launch.

Kickoff: When all the data is available in the new PLM system and users are well-trained, the retirement of the old system can be announced, thus opening the new PLM system for users.

Initially, there might be erroneous entries or transactions, and there should be some sort of support available for undoing the transactions. Critical processes need to be carefully watched to see that erroneous entries do not cause any major damage.

Users who are performing well using the new systems need to be rewarded. The major benefits of the new PLM system need to be posted on an intranet or bulletin board in order to raise morale and motivate staff to use PLM system.

In this series we have identified various challenges that may come up during PLM implementation, and tried to provide possible ways of overcoming these challenges. We discussed how to motivate employees with respect to the new PLM system, how PLM software can be selected by making a PLM system document, how to use team meetings, brain-storming sessions, and the like, and how to use a scorecard for each vendor. Once the vendor is selected, the infrastructure and other initial procedures can be handled. We have discussed the preparation of a SOW, which clearly states the milestones for payment and provides a strategy of implementation.

During the implementation phase, we discussed various issues about how to map existing processes to the PLM software features, and how to arrive at a list of customizations and their prioritization. Then we discussed how a team can be selected, and the importance of training resources on the new PLM software. Further to this, we discussed how the data can be migrated from legacy systems to the new PLM system.
We do believe that this will help chief information officers (CIOs), design, manufacturing, and production engineers, and all those who play a crucial role in PLM system implementation.

In future, companies will be forced to release products practically every other day, due to fierce global competition, and the significance of PLM implementation will thus increase, along with demand. PLM implementation will need to be more rigorous, and methodologies such as rapid application development (RAD) and extreme programming (XP) might be followed to achieve this.
http://www.technology-evaluation.com/

A New Study Points to RFID's Value in Retail Supply Chain Operations
From Deloitte Consulting LLP/Chris Hook
As radio-frequency identification (RFID) takes hold at some of the nation's largest retailers and government agencies, many have speculated about its positive impact on inventory management and out-of-stocks in a retail environment. But there has been little research that proves RFID is working.

That's changing. A new, comprehensive study on the impact of electronic product codes (EPCs) on merchandise availability in functioning Wal-Mart stores has demonstrated a substantial reason to consider RFID and wireless solutions. Commissioned by Wal-Mart, but performed independently by the University of Arkansas, the study's initial findings report a 16 percent reduction in out-of-stocks. The study also shows that out-of-stock items with EPCs were replenished three times faster than comparable items using proven and widely deployed bar code technology. Wal-Mart also experienced a meaningful reduction in manually created orders, resulting in a reduction of excess inventory.

What do these results mean for retailers and suppliers considering RFID solutions? We asked Chris Hook, a senior manager and co-leader of our Wireless & Sensor Solutions team, to comment on the study and its potential impact on retailers and suppliers.

This independent study is the first of its kind to analyze the impact of EPCs on merchandise availability in a functioning retail environment. What is the impact of these findings on retailers and suppliers?

What's evident as a result of the study is that there was significant improvement in out-of-stocks and inventory management when using RFID tags at the case and pallet level. This offers two things to the retail community: It provides a clear, precise methodology for looking at out-of-stocks, and it demonstrates to other retailers that Wal-Mart-the world's largest retailer with a very refined supply chain-is always looking for continued business process improvement. And now, as a result of the study, RFID systems have demonstrated that they deliver significant improvement in operations.

This is a strong indicator for other retailers who may have been sitting on the sidelines, watching what Wal-Mart is doing. From the supplier's point of view, if retailers are improving out-of-stocks, whatever the reason for those out-of-stocks, it's clearly beneficial to participate in the RFID program. And at the end of the day, it's beneficial for the consumer. Obviously, it's frustrating to go into a store and be unable to buy what you want when you want it.

For suppliers or retailers looking to create their own business case for an RFID or wireless initiative, how should they proceed?

The most important thing a company can do is understand its own performance, as it exists today, and the cost for achieving that performance. For example, if a company is spending a lot of money on a particular issue—such as out-of-stocks-to achieve a high level of performance, the question to ask is: Could we lower the cost of achieving that same performance metric with RFID?

Ultimately, what RFID offers is the opportunity to obtain better quality data on the movement of goods, on which to make better quality decisions about inventory management. And, as Wal-Mart has demonstrated, if a company is able to achieve automatic identification and data capture on the movement of goods at the pallet and case level, there is a strong likelihood that it will achieve improved inventory control for less cost.

This study, along with RFID mandates from retail and government agencies, has increased the visibility of RFID and the concept of “pervasive computing.” Can you describe pervasive computing and the impact it is having on businesses and consumers?

The idea behind pervasive computing is that companies can have qualified information, any time, anywhere, derived from a range of peripheral devices (data sources) and delivered to client devices (for example a hand-held computer used in a warehouse). This requires sustained wireless communications activity between the distributed sensing and receiving devices, which enables remote communication both in respect to data capture and information delivery. For example, a sensing device placed on a control valve in a chemical plant allows the valve to be remotely managed by providing a status report to a receiving device; actions might be taken autonomously by a software application, and alerts can be provided to a human being for additional actions. Pervasive computing is computing “at the edge”; it uses devices in the periphery of systems that are capturing data for communication with other devices and humans.

Pervasive computing is having an effect on the consumer as well. Consider the ExxonMobil Speedpass. It's a relatively elementary RFID tag system that provides secure identification and means of payment for gas and other services. This is just one way consumers are benefiting from pervasive computing, and this idea will continue to advance toward pervasive computing's ultimate goal: qualified information any time, anywhere.

Given the large upfront costs often associated with RFID implementations, how can a company ensure they're deriving value from their wireless and sensor solutions?

There must be a robust business case. There must be a considered, documented understanding of the opportunities for improvement. And companies must answer the question: How can we deploy the necessary infrastructure, or, as we more commonly see, how can we leverage the existing infrastructure in a way that shows satisfactory return on investment and capital, and works in accordance with business performance metrics?

In the past five years, there have been a number of key events that have led us toward pervasive computing. The Internet has become much more robust, we have vastly improved accessibility to the Internet through wireless peripheral devices, and there has been substantial growth in the deployment of local area wireless networks. In light of this growth, companies should examine their existing wireless networks and determine how best to leverage them to take advantage of new peripheral sensing and receiving technologies. The point is to avoid building something new if you can build off what you already have.

What do you see as some of the likely trends in pervasive computing over the next 5 to 10 years?

Unquestionably, there is a trend toward increasing communication between wireless input and output devices, both on a specimen site and via the Internet between peripherals in distributed locations. Processing power in peripheral components will continue to increase. Research and experimental work will be commercialized, providing extraordinary levels of integration between sensing and computing functions in miniaturized peripheral components, along with expansion to the types of parameters or elements that can be sensed. And of course, improvement in quality and robustness of network services will continue, and devices will get smaller, lighter, cheaper, faster and richer in terms of their sensing and capture capabilities. On the delivery side, people are beginning to understand the need and opportunities to push processing to the edge while retaining the ability to propagate optimized processing rules to peripheral devices through the use of a flexible “rules engine.” This will translate into smarter periphery devices that make use of a flexible architecture that can be modified so that information is exchanged instead of just raw data.

How is Deloitte Consulting LLP helping clients venture into RFID, and wireless “sense and respond” systems?

RFID in its many guises is just part of the overall technology space of “wireless and sensor systems,” which clients seek to deploy for business process efficiency improvement and a range of other reasons.
This is a very dynamic marketplace. There is significant complexity to consider from a technology and business process standpoint. What Deloitte Consulting offers is an intimate awareness of this space-the software, tools, business process methodology and pervasive computing devices-which can help guide clients through the maze, starting with a strategic assessment. Once we have a clear understanding of the existing situation and goals for improvement, we can build a road map for execution that contains clear deliverables and metrics against which progress can be measured.

Learn more about Wireless & Sensor Solutions, and how we can help your business capture the full value of these opportunities.
http://www.deloitte.com/

Supply Chain Consortium Suggests Ways to Cut Transportation Costs
From Tompkins Assocates
Rising fuel costs are eating away at retailers' and manufacturers' profits and driving up the price of goods for their customers. At the same time, today's shorter delivery lead times and reduced inventories demand a higher level of transportation service throughout the supply chain.

Although organizations cannot control fuel prices, they can cut transportation costs by ensuring that they have the most effective carrier sourcing process and rates possible. A recent Supply Chain Consortium benchmarking and best practices survey of 100 top retailers and retail suppliers found that nearly a third were off target concerning their carrier shipping rates. For instance, 82% of shippers using ocean transportation reported that their rates were better than other shippers with similar volume and service requirements. Since only 50% of shippers can realistically have better than average rates, this means that 32% of those asked were overly optimistic about their sourcing successes.

A few other key findings of the Carrier Sourcing Strategies and Tools report based on the survey include:

1. Bid methodologies should be flexible and offer carriers the opportunity to propose solutions that best fit their capabilities and network.

2. Collect the data needed by carriers to aggressively bid on your freight. Leverage the characteristics of your freight that are attractive to carriers.

3. Build trusting relationships with carriers. For incumbent carriers, measure performance in an open and equitable fashion.

4. Understand that shippers achieve higher levels of service and better supply chain integration by focusing on core carrier programs.

5. Keep in mind that ocean and air transportation propose unique challenges in developing carrier relationships.
http://www.tompkinsinc.com/

Supply Chain Evolution: Survival of the Fittest
From OPSdesign Consulting/ Lawrence Dean Shemesh
There has been much debate in the logistics community about the lifespan of supply chain networks under the pressure of rapidly changing global markets. Some experts have gone as far as saying that very few networks are good for more than about twelve months.

While the notion that few networks are serviceable for more than a year is broadly accurate, the real question is how to balance the turbulence of the marketplace and still provide sufficient foresight for service/cost planning. Issues of agility, flexibility, scalability and adaptation to a changing business environment (including rising fuel costs) must be considered. Most supply chain practitioners would agree that a one-year planning horizon provides very limited opportunity for an acceptable return-on-investment in the processes, systems, infrastructure, and people needed for operational efficiency.

While some might interpret this phenomenon as a catalyst for the use of “flexible” third-party logistics providers (3PLs), these operators are equally impaired by the lack of economic horizon visibility since “flexible” 3PL contracts are by nature short-term and expensive. After all, third-party logistics operators are equally reliant on forecast/cost models as their customers.

Evolutionary change in the supply chain is inevitable and corporate Darwinism is a fact; only the fittest of organizations will survive. The reality is that the rate of change has increased exponentially in recent years. As a result, time is in fact, currency in today's supply chain theater. Organizations that ignore change are doomed to perish rapidly. Those that react to change will find themselves managing crisis', fighting fires, and withering slowly. Companies that plan for change will smooth operational turbulence and mitigate risk. And those with the foresight to drive change will achieve strategic advantage and tactical superiority.

There is no such thing as an optimized supply chain. The entire exercise is akin to aiming at a moving target and as a result, we must focus our efforts on finding balance between value, quality, service, cost, risk, and a myriad of other factors. The object is not necessarily to be “optimized”; for this is a far too lofty and costly goal. You simply need to be closer to being optimized than your competitors. The gap between your current supply chain performance and that which is possible is the weapon that a savvy competitor will turn against you. The relative magnitude of your Operations Performance Gap (OPG)™ in comparison to that of your competition is, therefore, a concise indicator of your vulnerability.

Maintaining such equilibrium does require a commitment to continuous improvement and periodic evaluation of the supply chain efficacy is certainly one of the fundamental requirements. As part of this ongoing effort, perhaps the most important element is sensitivity testing of the key variables in the model. What if fuel prices rise? What if a shift from LTL to parcel shipment occurs? What if order profiles change? What if cubic velocity by SKU migrates? Only by modeling the answers to such questions (independently and in aggregate) can some of the fog be cleared from the crystal ball.
http://www,opsdesign.com

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