Source and Ship : How can PLM help?
As the economy takes a turn, or atleast as it looks like – newer business models and global equations will be attempted by everyone. With Gen – Y taking control of businesses around the globe, one of the newer business models that will take off very soon is “Source and Ship”. As the Chinese premier mentioned in his opening day speech of the “New Champions 2010” – only $1 reaches China in a $8 pair of socks even when it is being manufactured in China. The rest goes elsewhere.
With this level of economy equation, quite a few new models are to be delivered and will be the name of the game. Let’s name it for the time being as “Source and Ship(SAS)”. Source and Ship is not a new concept but it is the reverse of outsourcing. We could call it the reverse outsourcing as well. While outsourcing is controlled by the customer to the vendor, SAS is to be driven by the vendor. A vendor defines product A in Brazil, Russia, India or China (BRIC) and puts it out for sale. A customer who has the reach to the consumers of this product sources this from the vendor and packages it to the customer. The traditional model was defined in such a way where the IP lies with the brand while certain parts were being supplied by vendors. Then came the outsourced manufacturing to bring in the cost leverage with certain minor aspects of IP(Process) outsourced. With the change in intellectual demographics of the world, the design and manufacturing being sourced(instead of outsourced) is a very near possibility
The following figure clearly mentions the difference between the traditional, the outsourced model as against a Source and Ship model
Engineering plays a critical role in any product’s success. If an iPhone, Blackberry or Android has created a wave with their list of features, accessories, compatible applications and newer versions compatibility – a mammoth engineering innovation goes on behind the scenes to make this happen. When such critical engineering shifts from one place to another (as shown in the figure above), the need for systemic approach plays a critical role.
This change in ownership of critical information will is going to present a drastic change in the way business applications(likes of ERP) and engineering applications(likes of PLM) operate within the manufacturer and the supplier organizations. Here is a brief look at the way, PLM could operate in this space and how organizations that are planning to move in this direction could leverage PLM effectively to be ahead of the curve and take advantage of the situation.
Engineering Source:
Suppliers will start C2M as a reality with their extended services and the source of Engineering will move from the manufacturers to the suppliers. While this looks simple, the required infrastructure from both the manufacturers and the suppliers in this space will require a major revamp. Engineering and Supply chain will have a huge effect with the source change and controls on supply chain to control extensive Engineering data.
Collaboration:
With traditional manufacturing scenario shown above, the IP was completely handled by the manufacturer with collaboration limited to a particular part of system in the entire product. This was shared with select suppliers who were absolutely unaware of the end product into which this system was being commissioned. A higher level of collaboration was required in the outsourced model with increased back and forth communication across the board for a seamless integration of product development and manufacturing. Now with the source and ship model and the engineering source shift expected to drive the change – social product development will be a critical piece in the puzzle that will make this a reality. How would it be to develop a product using facebook? More engineering brains can quickly look at a product from anywhere across the globe.
Product Data:
Any product data contains multifold data – Engineering, Manufacturing, Process, Service information, Cost information with different views of the product within and external to the organization. With the change in the development model and business model – the crux of information that is created, updated and purged across the ecosystem will have a major change. This will add a huge amount of data into the supplier’s organization and the manufacturer will also have the choice of working with competing suppliers in the same space to make the right decision.
PLM
PLM which plays a critical role with Engineering and Product Data also holds the key for the source of Collaboration. PLM, traditionally, has been very rigid to use and have brought in flexibility with time and customer’s changing requirements. With a drastic change as mentioned above, PLM in collaboration with BPM can provide the required flexibility that can help organizations achieve the level of ease of operations and contain the IP within.
A follow up blog is on the way to show how an integration between BPM and PLM can help organizations.
