In Stay Sharp Episode 111, The Three Factors That Drive Business Value in PLM, co-hosts Jonathan Scott and Juliann Grant are joined by industry expert and returning guest Oleg Shilovitsky. Oleg has more than 25 years of experience developing software systems, including multiple PLM and PDM platforms, which means he’s the ideal guest to discuss something many manufacturers seem to struggle with: how PLM systems and practices actually drive business value.
What Are Companies Looking for in PLM?
The first thing Oleg makes clear is that the driver of software or platform purchases is organizations with problems. Manufacturers don’t go out looking for a software to bring value to their company, he says, “It starts with the problem, then people are looking at how to solve those problems.” This is a universal truth that doesn’t depend on the size or type of the company—small and large organizations alike are looking for solutions to problems, but they work very differently. Smaller companies are typically moving very quickly, working with somewhat messy processes, and mostly focused on simple survival.
Large organizations, on the other hand, will have big, long, entrenched processes for making decisions, because they can’t afford to buy something that doesn’t work. “That’s why they want to ensure that while they’re making decision, they’re deciding for the right things because they’re turning a large organization around,” Oleg says. “It’s like turning a big ship. You start turning it in January. Hopefully for the next January, you turn it in the right place.” The large organizations are going to be much more articulate about proving the value of a new system—though value is critical to companies of any size.
What Oleg has taken away from his work with many different companies—large, small, and in-between—is that companies are trying to do the same basic three things. Value gets assigned to PLM based on how it helps manufacturers control product cost, contribute to revenue, and address risk related to making the product. Oleg adds, “Those three, at least in my experience working with different companies, have always proven to be right and also to provide the solid foundation to speak about values to any organization.”
The Three Goals: Cost, Revenue, and Risk
Oleg points out that regardless of a company’s size, costs always sit in the intersection of two silos: design/engineering and procurement. A lot of data, variations, and details are required to ensure your organization is buying the right supplies. “Fundamentally the problem is I don’t know what I don’t know,” he says. “That’s the problem now: to have a system to collect all these pieces of information about different configuration, cost, suppliers, and everything else. It’s a lot of data.”
Jonathan admits one of the reasons PLM struggles “is they don’t often enough talk about how PLM helps drive revenue.” The bottom line is that PLM systems do so by providing access to product data, and Oleg explains three ways that occurs: helping manufacturers decide what to build, giving them the information they need at the right time to make a sale, and optimizing their organization’s processes. Jonathan agrees, “The revenue connection for PLM, and digital tech like that, is information sells. Having the information that the customer wants can make the sale or close the deal. That’s that value connection when people say, well, how’s this really going to help me?”
Mitigating risk is another situation where manufacturers can’t know what they can’t know—or what’s ahead. Risk, Oleg notes, is “everything that can make you miss the delivery time, quality, cost.” These may be minor complications or large ones, such as a health pandemic, ships stuck in the Suez Canal, weather changes, and war—all of which we’ve seen in the last five years. PLM systems bring value because they can collect the data required to actually calculate those risks. And the better the data you have access to, the better your organization will perform. He adds, “When you have a system that control and organize these dependencies and can derive intelligence out of these dependencies, this is the PLM system I want to use.”
Learn More About How PLM Drives Value
The full podcast contains more discussion and details on a variety of topics, including how viewing a restaurant as a mini manufacturing factory can help explain PLM, what types of use cases Oleg has seen for each PLM value goal, how PLM can help you sell a product based on the parts you have in stock, and more.
Be sure to check out Stay Sharp Episode 111: The Three Factors That Drive Business Value in PLM and join us each week for a new podcast.
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