Category Archives: Product Management

The Arena Solution

The effectiveness of your Product Lifecycle Management (PLM) solution and its ability to manage the information associated with the entire lifecycle of a product from conception, through design and manufacture, to service and disposal, can be the difference between costly inefficiency and profitable efficiency. However, the complexity and cost associated with many traditional PLM solutions often puts these solutions out of reach of most small and mid-size companies. That’s why the on-demand PLM solution from Arena deserves due consideration from any product manufacturer looking to increase their efficiency and productivity and why sourcing and procurement professionals should be familiar with it, and its benefits, since the greatest cost reductions result when sourcing is involved in product development from day one.

Arena, founded in 2000 by ex-manufacturing executives who needed an easy to use, affordable, and quick-to-implement PLM solution that could take advantage of the internet as a delivery mechanism to allow for collaboration both within and beyond their four walls, is different from traditional PLM providers in that it is easy to implement, easier to use, and accessible to all of your partners, to whatever extent you want it to be.

Whereas a typical behind-the-firewall PLM solution is often challenging even for trained power-users, as expensive as SAP (comparative speaking), and significantly complex and time-consuming to implement (with implementation and configuration cycles of six months to two years not uncommon – and sometimes only for basic functionality), small to mid-size users of Arena can often be up and running in a day, with the most complex implementation maxing out at about a month.

Arena also has all the traditional benefits of an on-demand solution – including no large up front cash outlay, economies of scale, free upgrades, rapid responsiveness, and collaboration in addition to an ultra-configurable fine-grained security model, cirriculum-based on-demand training, and multiple role support to allow you to buy just the capabilities you need for each user. This makes the application very secure as you can control, right down to the domain and IP address, who has access to what and when the information expires and ultra-deletes, very useable as a user can access just the training resources she needs when she needs them, and makes the application very affordable as a company only has to pay for full access for the users that need it.

Furthermore, Arena is a very stable company with over 300 customers from garage shop operations all the way up to entire divisions of companies like Xerox. Many of these companies use the application across departments and with suppliers and partners distributed all over the globe. And when you factor in that they do a quarterly analysis on application usage on a customer-by-customer basis to determine not only what customers are using what features but what customers are not using the capabilities they paid for, so that they can contact those customers and find out what they need to improve either in the application, the training materials, or the customer support, you know that they’re not going anywhere.

Arena is particularly suited to the mid-market that they’re focussed on. Their on-demand model allows them to offer a flexible pricing model that can support three guys in a garage all the way up to large mid-market companies and their focus on the Product Information Management (PIM) aspect of PLM allows them to offer a PLM for mere mortals solution that anyone can (learn to) use. So if your mid-market company is looking for a PLM solution, make sure that the candidate solutions are those that can also be used by sourcing professionals like you and consider pushing to have Arena added to that list. After all, when it comes to on-demand, there just aren’t that many PLM providers, and fewer still that built their solution on-demand from the ground up. In the former category, I believe there’s PTC’s Windchill solution, which is resold by IBM, and Oracle‘s hosted Agile solution (which isn’t really true SaaS), but in the latter category, and I’ll admit I’m not an expert in the PLM space, I don’t know of any other on-demand PLM solutions that were built to be on-demand SaaS from the ground up.

The Top Three VI: Straight to the Bottom Line

Today I’m thrilled to bring you a guest post from Doug Smock, editorial director of Global CPO (.com) and co-author of On-Demand Supply Management and Straight to the Bottom Line.

First I’d like to thank Michael for the invitation to participate in the blogathan. I’ve spent most of the last three years since I left Purchasing magazine writing two books about what I consider to be the biggest issues in the procurement world, and have already vented my spleen about such critical issues as CEO involvement/buy-in as well as world-class metrics (since 99.9% of all procurement departments I’ve visited have terrible metrics).

For this, I’d like to touch briefly on the need in American companies for greater cross-functional collaboration between procurement and engineering. The primary goals need to be reduction of specifications’ complexity, introduction of new ideas throughout the supply base, better understanding of “could” costs, improved management of products through their entire lifecycle, and dramatically improved product quality and user-friendliness.

When I first joined the staff of Purchasing magazine in 1977, we used to run a special issue called Value Engineering in which we ran reports of how teams of purchasing and engineering professionals met to reduce costs or improve performance of existing, or even brand new, products. I once visited Buell Motorcycles in East Troy, WI, and saw how product development began with a talk by founder Erik Buell on his vision for a new sports bike: the cost target, speed, look, and feel. Engineers and purchasing professionals then broke into platform teams and met with key supplier partners to develop components. One team replaced a 21-part front section of assembled metal pieces with a sleek-looking, stronger and cheaper single made through an outsourced metal molding process. When I returned to Purchasing as Chief Editor in 2000, I couldn’t really understand why the Value Engineering issue had disappeared. It also seemed to disappear at many companies in the blitz of wonders related to dotcomism.

That’s a shame because what suppliers bring to the table is incredibly powerful in this process. I saw it recently in the newly designed Cabrio and Duet line of laundry products from Whirlpool, where suppliers proposed solutions to technical problems that internal engineering teams felt were irresolvable. I hate to kick a dog when it’s down, but this to me is the most lamentable of all of the problems with the American automobile industry. Bob Lutz, currently chairman of GM North America and former head of Chrysler, once famously commented: “I was amazed (and a bit appalled) at the lack of functional integration at the companies I worked for.”

I know the blogs focus a lot on software, but I’d like to see a little more emphasis on blocking and tackling at the company level.

Editor’s note. Bold was introduced to help draw out Doug’s key ideas. Also, our blogs do occasionally tackle more than just software, and two posts in particular I’d like to point out are Jason Busch’s “Selling the Value of Procurement to the Business”* on Spend Matters [WayBackMachine] and Tim Minahan’s “Selling Supply Management to the C-Suite: Make it Personal” on Supply Excellence [WayBackMachine]. Also, keep your eyes on the eSourcing Wiki [WayBackMachine]. More content is on its way, including a wiki on perfecting your pitch for a procurement project to pointmen.

* All posts prior to 2012 were removed in the Spend Matters site refresh in June, 2023.

Understanding UGS

During my whirlwind Dallas tour, I met with UGS the day before Siemens publicly announced the acquisition, which took the media world by storm. (See Jason’s “UGS and Siemens”* post on Spend Matters, for example.) Not wanting my post to get lost in the shuffle, or confused with yet another analysis of what the takeover means for UGS, I decided to wait a while before moving forward with a post.

My goal was to understand how UGS, who I’d primarily associated with Product Lifecycle Management, was going to take the sourcing and spend management world by storm … which I assumed to be their intent once they signed on as a Spend Matters sponsor.

UGS believes that sourcing, or at least sourcing of direct goods, is really an extension of PLM and that an integrated collaborative environment where everyone has access to the same information, and the same world view, is the ultimate key to sourcing success. This is why they acquired eBreviate, a former player in the e-Sourcing space known for their e-RFX and e-Auction capabilities. And this is why they are working hard to integrate all of the sourcing tools that they acquired from eBrieviate into their TeamCenter for SRM (Supplier Relationship Management) solution. (The basic e-RFX and Auction tools have already been integrated.)

In their solution, a part specification sits in their TeamCenter solution. It might be designed in the TeamCenter solution, or in one of the design tools that UGS provides (which integrated with TeamCenter). When it’s time to source materials, the sourcing professionals can log into their TeamCenter application which integrates with the design team’s TeamCenter application and allows the sourcing professional, in one window, to access the specifications and demands. From here, they can run reports, access templates to build an eRFX, access other e-Sourcing tools, and run analysis on current and historical data. They can then publish the e-RFX and receive responses through the tool for analysis. Once they receive responses, cost information can be fed back into the system and the design team can choose to re-design the part, or change the specifications. Furthermore, once an award has been made, the system can be used to collaborate with the suppliers to identify cost-saving design improvements.

Considering that product cost management is a difficult process (just read Eric Hill’s guest posts over on Spend Matters: “What’s the Nature of Your Business?”*, “The Fourth F153″*, “Product Cost Models: An Introduction”*, “What Product Cost Models Are Not — Mythbusting”*, “The Fundamental Dimensions of a Cost Model”*, “eBay and BoB: Cost Model Methodology Cost Modeling Part 1 of 3″*, “The Oracle of Delphi: Empirical Statistical Models Cost Model Methodology Part 2 of 3″*, “Elementary My Dear Watson: Mechanistic Models Cost Modeling Methodology Part 3 of 3″*) that involves systems engineering, requirements, procurement, design, bill of materials, processing costs, service and warranty costs, etc. etc. etc., having one system that everyone in the organization involved with the life-cycle of a part can use to get a common viewpoint could prove to be quite invaluable.

Now I have to admit I do not know how useful or viable their solution is outside of the manufacturing and engineering sectors, but given the size of that marketplace, the dearth of advanced sourcing solutions for the space, the fact that almost every advanced sourcing solution is different (but then again, almost every approach is focussed on a different problem), they definitely have a large potential market in this space alone, and for now, I’m sure that’s more than enough.

So grab your board and keep an eye on the water. I’m sure they’ll be making waves before the year is over. And for those of you in a manufacturing design company, they might just be the waves you want to surf.

* All posts prior to 2012 were removed in the Spend Matters site refresh in June, 2023.

Enterprise Manufacturing Intelligence

Informance (merged with QlickiT, acquired by Catalyst IT) just released their Enterprise Manufacturing Intelligence Solution for manufacturing companies eager to accelerate improvement initiatives, drive operating strategies, and obtain actionable insight for operational performance.

According to their press release, their EMI solution delivers the top-three critical capabilities required to drive better business decisions:

  • multi-site performance analysis
  • enterprise visibility of production financial performance
  • data aggregation from multiple plant facilities

The solution consists of two modules:

  • Informance Manufacturing Strategist
    • What if Scenario AnalysisEvaluate strategies and the impact on KPIs based on real time data.
    • Bi-Directional Information FlowAllows for the development of strategies and day-to-day operating tactics.
    • Real-Time Performance MonitoringA solid foundation for closed-loop process improvement.
  • Informance Enterprise Alerts
    • Proactive NotificationsAutomatic warnings if the enterprise is in danger of missing a metric at any level – facility, asset, or resource.
    • Dashboard MonitoringManage issues globally from a single access point.

According to Informance, this allows your enterprise to:

  • Unlock Capacity
  • Increase Productivity without additional Capital Investment
  • Reduce Inventory and Labor Costs
  • Decrease Working Capital

since it can now

  • accelerate, sustain, and benchmark operational performance initiatives such as lean manufacturing, Six Sigma, and TPM,
  • drive operating strategies at the executive level into execution tactics at the plant level, and
  • provide intelligence in the form of actionable insight from actual data.

So what is Enterprise Manufacturing Intelligence? According to Informance, it is a strategic decision support system providing real-time visibility and a consolidated view into your entire manufacturing operations with powerful analytics, exception-based alerting capabilities, and integration to enterprise systems to give corporate decision makers control over all aspects of your manufacturing operations.

Whether or not you choose to define Enterprise Manufacturing Intelligence, or EMI, this way is up to you. What I can tell you is that these capabilities are important, since inefficient operations can cost you a lot of money. That’s why I’ve invited Sudy Bharadwaj, CMO & VP of Solutions Consulting, formerly of Aberdeen, to explain to us precisely what Informance EMI is and how it can help your manufacturing organization, or your contract manufacturer, increase productivity and save money.

Don’t Buck the Brand

A few months ago, CPO Agenda published an article entitled Backing the Brand that stated aligning procurement and supply strategy with brand building and marketing is vital for long term success. A couple of weeks ago, the Frasers/PMAC Newsletter published the article Wising up to Marketing Costs that stated that marketing seems to be one of the final frontiers in strategic sourcing and that some companies are using sound strategies to save millions of dollars on marketing, without missing deadlines or diluting the creative intent. In other words, not only can the logic work with the magic, as outlined in my Magic & Logic Posts (Part I and Part II), but that Procurement can Back the Brand profitably.

Backing the Brand states that a successful brand can

  • differentiate a product or service
  • enhance a product’s competitiveness
  • influence the price-elasticity of demand
  • ease the introduction of new products and services
  • create customer recognition and loyalty
  • enhance leverage over upstream and downstream supply chain partners
  • create long term shareholder value

In addition, it states that even though procurement and supply chain may not always dictate a successful advantage on their own, it is clear that differentiation and customer retention might be impaired if they are not aligned with marketing and brand strategies and that only those organizations that can institutionalize continuous cross-functional implementation of a linked brand and sourcing strategy are likely to be successful in the future.

The article then goes on to offer five steps to successful alignment, as well as three case studies of organizations that have succeeded in successfully linking procurement and marketing and three organizations that have failed, but like other articles extolling the virtues of a procurement and marketing partnership, it skips over the simple first steps to success.

That’s where the article Wising up to Marketing Costs comes into play. It describes how your procurement department can make use of a category specialist model for buying and outsource acquisition of marketing categories such as print management that not only costs large organizations millions of dollars annually, but often costs those same organizations in excess of a million dollars of unnecessary spend. It also describes how the deployment of eProcurement solutions can save you money while giving Marketing the speed and flexibility they require.

So Back the Brand – and be the only department in your organization to have a double impact on the balance sheet. Make Charles proud.