Delivering on customer expectations is one of the top three concerns of manufacturers, according to a recent IDC and UPS research study of more than 100 operational professionals. Whether B2B or B2C, customers expect more customized products and want those products to be of the highest quality, and delivered in a way and at a time that is tailored to their needs.
Product lifecycle management (PLM) is a tool that can help companies to meet or exceed their customer’s expectations. PLM is the process of managing a product through all five phases of the product lifecycle: ideation, design, realization, usage, and retirement. The goal is, of course, to do it intelligently and efficiently, so that the product is profitable. Businesses use PLM to help improve time to market, boost productivity, cut costs, and drive higher quality.
If done correctly—especially when integrated with efficient supply chain management and logistics—PLM can help companies to meet high customer expectations.
“Customers are saying to businesses: you must be more flexible—that translates into: you need a more flexible PLM, a more flexible supply chain, and a more flexible interface to work with them,” says John Stark, an international PLM consultant and author of several books on the topic, including Product Lifecycle Management: The Devil is in the Details.
Availability is on most customers’ minds. “Consumers expect that upon the day of a product launch, they have access to inventory,” says Tamarra Jenkin, a regional director in the Customer Solutions division at UPS, which provides global supply chain and logistics consulting services to companies of all sizes. “B2B customers, especially manufacturers, need all the components to come together perfectly, at the right time and the right place, at the right price. PLM in conjunction with supply chain management helps them accomplish this.”
What's more, customer expectations can and should be deeply integrated into the PLM process. By providing a very valuable “feedback loop” in which quality issues and customer feature and function preferences can be fed back into product development, customer expectations can drive and shape new generations of products and processes.
“Customer value needs to be considered at the very start of the PLM cycle—not in the usage stage, not in the design phase,” said Dr. Michael Grieves, executive director for the Center for Advanced Manufacturing and Innovative Design at Florida Tech, and author of two books on PLM, including Virtually Perfect: Driving Innovation and Lean Products through Product Lifecycle Management. “And to understand customer value, you need to have mechanisms in place to tie what you’ve learned by the end of the product lifecycle, back to the beginning of it.”
Data Is Key to Giving Customers What They Expect
To understand how expectations impact businesses’ relationships with their customers, IDC and UPS surveyed the opinions and behavior of 2,000 B2B customers and consumers, as well as conducted in-depth interviews.
The top three attributes that customers said they expect from companies are transparency, accountability, and “to be heard.” PLM—and supply chain management and logistics—are intimately tied to these things.
Data is key to providing this. Indeed, data is the lifeblood of any PLM system. But in many businesses, there’s the so-called knowledge deficit. Without PLM, companies often don't have the right data. They don’t know what variants or versions of products they have, or which components they can combine in a product or get from alternative suppliers. They don’t know what’s in inventory at what distribution center, and what can be shipped to customers or when, and at what cost.
Without this visibility into their own systems, companies can’t provide it to customers. If an auto parts retailer doesn’t know how much inventory is in its various distribution centers, how can it tell consumers located around the country when they will receive the seat covers they’ve purchased online?
Finally, there’s the expectation that customers will “be heard”: with PLM, businesses can offer B2B and B2C customers a wider range of customized products, for example an alternate component, such as wire nuts, that will fit into a high-speed assembly machine. “A PLM system helps you be more flexible at giving customers what they want,” says Stark.
Connecting PLM to Best Practices in Supply Chain and Logistics
Perhaps the most critical factor in leveraging PLM effectively to meet customer expectations is in supply chain and logistics. To that end, “best-in-class companies want to bring supply chain and transportation into the PLM discussion as early as possible,” says Jenkin. “Taking the full supply chain into consideration upstream can influence packaging design that maximizes transportation efficiency, and it can help ensure that the ideal amount of product is placed in the optimal locations for the launch, taking sales forecasts and consumer geography into account. Designing flexible replenishment models then ensures appropriate inventory levels across at all locations in the days after the launch.”
Another example of this advance planning entails preparing for the end of the product’s lifecycle, particularly returns, recalls and liquidation. Is there a “reuse” plan for your product, parts or materials? A third-party logistics provider such as UPS may have this specialized expertise, or may help your operations team liquidate valuable or salvageable components.
One potential problem is that PLM and supply chain/logistics management can be performed by separate organizations. This can cause serious problems. Stark recalls a European elevator company in one division was responsible for PLM, and another for getting the right parts to the field service organization. Engineers would make a significant change in elevator design that got entered into the PLM system, but the word wouldn’t get out to parts inventory and supply chain professionals. The result: service technicians were putting wrong parts into motors. “Then, of course, they had to go back and correct it, costing them time and money and annoying the customers,” recalls Stark. “Bringing PLM and supply chain together is essential.”
PLM, when closely coupled with expertise in logistics and supply chain management, can help companies to meet and even exceed high customer expectations. Such an approach can ensure that inventory is in the right place at the right time. It can help businesses place the right distribution centers in the right geographies. And it can aid in understanding how to manage logistics when a product turns out to be more successful in one market than in others. Even in today’s fast-moving markets, PLM can help ensure consistent success.
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