PLM as the Enterprise Backbone Part 3: Working Smart with the Supply Chain

Hi, last time you heard from me I blogged about the link between Product Portfolio and Program Management and PLM as the enterprise backbone. Today I’d like to focus on another “vertebrae,” issues tied to the supply chain. There are two points I’d like to present:

1. PLM establishes supplier leverage and gives visibility to all part volumes by supplier.

When integrated to the product development system, direct materials sourcing and extended enterprise collaboration enhances a manufacturer’s negotiation leverage for new and existing supplier contracts, and helps resolve supplier and partner performance and design issues. Sourcing, commodity and acquisition integration programs can be globally managed to the latest product attributes and designs. Spend can be more effectively aggregated to the preferred suppliers, optimizing volume pricing, reducing both parts proliferation and material and service costs. By identifying sourced components based on part-reuse and product and manufacturing platform alignment, manufacturers can reduce inventory levels and respond with greater agility to shifts in demand. It streamlines the process of identifying alternate or functionally equivalent parts when standard parts are not available.

There are other benefits such as standardization, allowing every participant in the quoting process (the manufacturer, customer, suppliers and partners) to manage the same version of the product definition, including revisions and program changes. PLM also facilitates cost analysis and supplier negotiations.

Negotiations with preferred suppliers go beyond obtaining best prices and favorable terms. When run on a PLM backbone these otherwise standardized processes become avenues for harnessing supplier innovation and design alternatives, allowing manufacturers to address market needs quickly and efficiently. Suppliers become true partners by not just providing components and services, but by also proposing new technologies and solutions to meet market requirements.

2. You can employ PLM to manage a global dispersed set of engineering centers and partners.

Oftentimes corporations not only have globally dispersed engineering, research and development centers, but equally dispersed partners, alliances and supply-chains. Maintaining a single system of record in a PLM architecture provides the means for a company to maintain visibility, flexibility and real-time 24/7 management of its global strategies and business development initiatives.

Supplier Collaboration on a Global Network
Supplier Collaboration on a Global Network

Establishing PLM as a key enterprise backbone sets competitive capabilities for new product programs by assuring the alignment of engineering to established platform and sourcing strategies. The cost and quality advantages of reusing existing and standard parts, coupled with the ability to negotiate new program costs, based on a manufacturer’s total purchasing volume with a supplier, increases the ability to control cost, quality and timing requirements of the new product programs. These sourcing and supplier collaboration competencies are critical for companies to establish and maintain performance improvements capabilities. This helps companies to apply their engineering resources more uniquely on resolving market requirements and revenue opportunities, and less time on resolving design and quality issues with their suppliers.

So leveraged these ways, PLM gives visibility to a company’s total spend exposure by supplier, and identifies the preferred parts by supplier, as well as enhances the ability to collaborate and resolve design issues in key areas of new technologies.

In my next article in this PLM as the Enterprise Backbone series, I will address the ability of PLM to mitigate the risks of regulatory compliance and environmental challenges.