In Episode 48 of Razorleaf’s Stay Sharp podcast, Managing the Product Life Cycle Beyond PLM, co-hosts Jen Ferello and Jonathan Scott are joined by Patrick Hillberg, a speaker, author, and professor. Patrick spent decades designing, developing, and leading teams in PLM, digitalization, and advanced manufacturing processes, and his passion is the need to develop a workforce for the (currently underway) Fourth Industrial Revolution. A previous conversation about PLM the practice versus PLM technology/systems serves as a springboard for this podcast episode, as the trio discusses gaps between PLM activity and what PLM systems support, the concept of externalities and their impact on products, and the idea that simplifying products and processes might actually deliver more value to society.
Why Externalities Matter to Manufacturing
In economics, externalities are the costs or benefits to a third-party who is not involved in the creation or use of the product. If the spillover to a third-party is a cost to them—impacting their lives negatively—it’s a negative externality. If the spillover is a benefit to the third-party, that’s a positive externality. A key example of an externality that everyone understands is the recent pandemic. Patrick recommends a 2014 book on systemic risk, The Butterfly Defect, noting that it discusses “a variety of systemic risks that can occur, one of which is supply chain, one of which is pandemics. And those two things definitely overlapped in 2020.”
Patrick has seen the idea of small impacts magnified into big effects play out in simulations he uses in his college courses, as well as in the real world, where unanticipated externalities throw manufacturing and supply chain processes for a loop. In the case of his in-class simulation exercise, after a huge increase in demand one week, a few months down the line, the simulated manufacturer typically ends up with eight to 10 times the inventory required. In the case of the real-world pandemic and integrated circuits (IC), auto manufacturers reduced their IC orders dramatically, only to have to shutter manufacturing plants for months because of an IC deficit—after they’d been diverted to other industries.
Why We Need to Shorten Supply Chains
Externalities impact supply chains, and the length and/or complexity of supply chains end up magnifying the impact by the time they reach the manufacturer. Jonathan brings the discussion back to the idea of managing product lifecycles, saying, it’s “about thinking of these other things that are not necessarily what the technology in the PLM space gives us today. It’s about zooming out and saying, what really matters in getting our value delivered to stakeholders? PLM technology maybe covers this much, but here are the other things we do or need to do to deliver that value.”
Patrick agrees the bottom line is value to society, and suggests the way to bring value to society is to localize manufacturing, to reach the goal of 90% of what people consume being manufactured within a thousand kilometers of where they consume it. He explains, “As the global economy expanded after World War II, we started localizing efficiency regionally. We started building regional efficiencies on how to manufacture things and then started shipping those things around the world—because shipping was less expensive than building up the capabilities to manufacture worldwide. But what we saw in COVID and, what I think is just going to continue to get worse and worse, as far as climate change, is that the ability to ship components worldwide is highly risky.”
Minimizing the amount of transportation of goods that has to happen in turn minimizes the systemic risk posed by climate change. Digital twins, Patrick notes, can be critical for this shift in operational thinking. He says, “This to me gets into unrecognized value on digital twins, where we create digital twins of our factories. So not just thinking about digital twins of our products, but thinking about digital twins of our factories and remoting those factories out around the world.”
Consider Simplification
Patrick has a caution for manufacturers that are engaged in digital transformations, expansion of product complexity and manufacturing complexity, and more and more systems and process integrations: sometimes simpler might be better. “We’re adding more and more complexity to these things where there’s much more simple means by which we can accomplish the job to be done,” he says. “Are we just adding technology onto an overwhelmed system to try not to be overwhelmed?” As Jonathan puts it, we need to move toward the practice of measuring the ultimate cost of all the complexity we’ve built into our processes.
Learn More About Managing the Product Lifecycle
The full podcast contains more discussion and details on a variety of topics, including where PLM systems and technology aren’t doing enough to support the full product lifecycle, more examples of how supply chains have been affected by externalities, Patrick’s ideas for simpler solutions to autonomous vehicles, and more.
Check out the full conversation in Stay Sharp Episode 48: Managing the Product Life Cycle Beyond PLM, and join us each week for a new podcast.
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