TU-E2020

Advanced Operations Management (3-5 cr) Product Life Cycle and Fleet Management

Timo Seppälä (Tero Hurskainen)

What is Product and Service Lifecycle

Management – P(S)LM?

“PLM is the business activity of managing a company’s products and services all the way across the lifecycle in the most effective way. PLM is a joined-up paradigm. It joins up many previously separate and independent processes, disciplines, functions and applications – each of which, though addressing the same product, had its own vocabulary, rules, cultures and language”

(John Stark, 2005)

PLM

Product and Service Lifecycle

Management Requirements Management

Project Management

Product Management

Sourcing

Supplier Relationship Management

Process Integration across Value Chains

Full Lifecycle support

ICT Systems support

P(S)LM Evolution

PDM Product Data Management Bill of Material

Engineering Change

CAD Vaulting

Document Management

CAD Integrations

ICT Systems Integrations (ERP)

Ex

tern

al In

vo

lve

me

nt/

Nu

mb

er

of

Us

ers

Process Coverage/Functionality

CAD

Vaulting

CAD Vaulting CAD file handling

2D & 3D Viewing / Markup

Simple Change Management

P(S)LM

PLM and Fleet Information – The Single Source of

Truth CRM / CEM

system Financial

system ERP

system

EAI

Project

Task

Engineering

PLM – Information Backbone Assignee

Product

Structure Delivery

Contract Maintenanc

e

Project system

xxx

xxx

xxx

CAD system

xx

x

xxx xxx

O&M system

xx

x

xxx xxx

x

x

x x

x

x

x

x

x

x

x

x x

x

x

x

x

x

What is Fleet Management?

“Fleet management is the function that oversees, coordinates and facilitates various assets and related activities over the product and service life cycles.

“Fleet management underpins and supports especially after sales related activities through the management of the assets that are used.”

What is Product and Service Lifecycle

Management – P(S)LM?

Source: http://www.bbc.co.uk/schools/gcsebitesize/design/graphics/evaluationictrev3.shtml/

Product and Service Life Cycle Management / R&D Process Perspective

Product Program Management – The

Elcoteq Way

Product Program Management – The

Elcoteq Way

Product Program Management – The

Elcoteq Way

Project Engineer &

Build Mgr

Program Assistant

Chief Engineer

1

Electronics

6-12

Testing, (HW)6-12

SW5-40

Mechanics2-6

Quality

1

Documentation

1

R&D

Project Manager

1

Technical Support

5

Approval Team

2

Field test team10-20

Documentation1-2

Regulatory Approvals

& field testing Mgr

1

Tester Development

2-5

Line Design

1-3

Pre Production

& Proto Materials12

NPI

Target Factory 1

Team15-25

Target Factory 215-25

NPI Projects Mgr

1

Commodity Managers

5-10

Quality Engineer

1

Sourcing Project Mgr

1

Quality Mgr

1

After Market Service

Support Project

0-1

Logistics Development

1-2

Logistics Project Mgr

0-1

Development Team

2-5

IM Project Manager

0-1

Program Manager

1

Product Program Management – The

Elcoteq Way

Product Life Cycle Management – The

Toyota Way

PDM Define

ERP Execute

Time

Cost of change

Concept Design Manufacturing

’Front Load the Product

Development Process to

Explore Alternatives

Thoroughly’

Ability to

effect

design

’Establish Customer-

Defined Value to Separate

Value-Added from Waste’

’Fully Integrate

Suppliers into the

Product Development

System’

’Adapt Technology to Fit Your People and Process’

’Create Leveled Product

Development Process Flow’

’Utilize Rigorous

Standardization to Reduce

Variation and Create Flexibility

and Predictable Outcomes’

’Build in Learning and Continuous

Improvement’

High

Low

In Service

PLM Plan, Collaborate

Product and Service Life Cycle Management / Process View / Case Technia

PLM Capabilities

Product Development Process

Planning Concept

Development

System

Level Design Detail Design

Testing &

Refinement

Production

Ramp-up

Plan / Source / Make / Deliver / Enable

After Sales Service

Sales & Marketing

Product Development Process

Concept

Generation

Preliminary

Design

Evaluation

and

Improvement

Concept

Screening

Prototyping

and Final

Design

Source: Slack, 2011 p. 72

Sales & Marketing

• Strategic product and service portfolio management

• Market analytics and business opportunity analysis

– Requirements Management

• Customer relationship, Account and new Sales

management

– New Sales and Opportunity Screening

• Program and project management

PLM Capabilities and Systems

Development – V-model

Customer

Requirements

Product

Specifications

Product

Architecture

BOM Management

Part Development

4. Bill of Material definition

3. Define product architecture and

manufacturing features

1. Define the Customer need

2. Derive product specifications

from customer need

UAT

Validation

System

testing

Unit

testing

Test cases

Test runs Qualification

5. Verification and validation with

test cases and test runs

P(S)LM Capabilities

Product Development Process

Planning Concept

Development

System

Level Design Detail Design

Testing &

Refinement

Production

Ramp-up

Plan / Source / Make / Deliver / Enable

After Sales Service

Sales & Marketing

Planning

• Design

– Product platforms and new technologies

• Manufacturing

– Identify production constraints

– Set supply chain strategies for new products & service platforms

and technologies

Identify Production Constraints

• Review plans

• Simulate

• Case Patria

Aerostructures:

– A380 spoiler

– Not enough

manufacturing

capacity

– New composite

factory built based

on production

simulations

– Autoclaves

discovered as

bottlenecks

Supplier Management

Product Quality Plans

Manage Supplier

Information

Supplier Supplier

Supplier Supplier

Monitor Supplier

Add New Supplier

Remove Existing Supplier

Supplier

Development

Supplier

Development Project

Supplier

Supplier

project

members

Supplier

parts sourcing

selection

The Sourcing Process

2015-11-02 21

Supplier Process

Review RFQ

Review Response

Send RFQ to Supplier

Cancel

RFQ

Award Business

Create RFQ

Enter Quotation

Data

Review Quotation

Submit Quotation

Concept Development

• Marketing – Collect customer needs

– Check requirement backlog

– Identify competing products

• Design – Feasibility studies

– Industrial design concepts

– Experimental prototypes

• Manufacturing – Estimate manufacturing costs

– Production feasibility – simulate

System Level Design

• Marketing

– Plan for product options

– Set target sales price points

• Design

– Generate Product architectures

– Define subsystems and interfaces

– Refine industrial design

• Manufacturing

– Identify supplier key components

– Make / buy analysis

– Final assembly scheme

– Target manufacturing costs

Detail Design

Product Development Process

Planning Concept

Development

System Level

Design Detail Design

Testing &

Refinement

Production

Ramp-up

Plan / Source / Make / Deliver / Enable

After Sales Service

Sales & Marketing

• Marketing

– Marketing plan

• Design

– Detailed product structure (EBOM)

– Material selections

– Complete industrial design

• Manufacturing

– Define production processes

– Design tooling

– Define Quality Assurance process

– Long lead time tools & items

Item, Materials, Product and Service

parts Management

• The very basis “unit” for P(S)LM is the item

• Items are used to create physical product structures,

Engineering Bill of Materials

New Part Request and Development Process – High

Tech

2015-11-02 26

Start

Assess

Process Review

Complete

ECO

• Capture request for new part development

• Define the targeted part specifications

• Evaluate feasibility of such part

• Identify an existing part which fits the technical

specifications

• Cost evaluation

• Supplier selection and collaboration

• Manage detailed specifications produced for

each activity

• Test activity

• Regulatory compliance

• Mockup definition

• Introduction of the new released part in the products BOM

• Ramp up in production

• Initiate and manage the Approval process

Part Definition and Part Classification

Outdoor Bolt for the US Market

Cost

Weight

Length

Diameter

Make / Buy

Outdoor Instructions

US Pricing

US Marketing Text

Part

Mechanical Part

Bolt

Cost

Weight

Length

Diameter

Make / Buy

Type Hierarchy

Attributes

Classification Tree

US Market

EU Market

Usage

Outdoor Usage

Market

Indoor Usage

EU Marketing Text

EU Pricing

Outdoor Instructions

Indoor Instructions

US Pricing

US Marketing Text

Attributes

Sourcing / Component Engineering

Component ID: N04806602

Description: Control Unit

State: Release

MEP ID: N04811971

Description: Control Unit

State: Release

MFG CODE: E292911

Info Text: SINAMICS G120

CU240S

Manufacturer

Equivalent

Part

Company Name: Siemens

ID: M1002901

Manufacturin

g

Responsibilit

y

Drawing

Data Sheet Part

Specification 3D CAD model for

DMU and fitting

design

Product Structure Definition

GPS Complete

Front Cover

Back Cover

PCB

Display

Label

Packaging Material

Software

Software

Authoring tools PLM SYSTEM

MC

AD

su

bsyste

m

EC

AD

su

bsyste

m

SW

su

bsyste

m

code.ex

e

Com

modity

com

ponents

Part

reuse

Released Parts

New Part Introductions

Build structure

Integration / Interface

30

Product

Cylinder

Needle

Syringe

Plunger

Supplier A

Needle

A

Needle

C

Plunger

B

Plunger

C

Cylinder B

Cylinder C

Supplier B

Supplier C

Syringe

1

Needle

A Plunger

B Cylinder C

Syringe

2

Cylinder B

Needle

C Plunger

C

Manufacturers and Product Structure

Bill of Material in Apparel

Process Structure

Manufacturing Engineering

• Design engineering creates

the product structure

• Process engineering creates

the process structure and:

– Allocates product structure to

process structure

– Allocates resources to

process structure based on

manufacturing plant

Product Bulk Stabilizing xxx

A 40,60 20 C – 25 C 2h

X

Product Definition

34

Product

Productio

n Process

Process

Step

“NaOH” Process

Step

“Stabilize”

Process

Step

“yyy”

Production Process

Formula

Specificatio

n

Ingredient

“NaOH”

Ingredient

“BODE”

Ingredient

“HA”

Formula BOM

Equipme

nt

“Kärl

60L”

Production

Line

Equipme

nt

“Blender” Equipme

nt

“Mixer”

Production Line Mechanical BOM

Operation

“BULK”

Operation

“Xxx”

Mechanical

BOM

Part

“Syringe”

Part

“Needle”

Part

“Cyclinder

”

My document view

User Document Management

2 November 2015 35

Common

Document

Library

Folder

Folder

Folder

Project

Folder

Folder

Doc

Doc

Doc

Product

Part

Part

Part

Part

Part

Materials Compliance View of a Product

Testing & Refinement

• Marketing

– Promotion and launch materials

– Facilitate field testing

• Design

– Reliability testing

– Performance testing

– Regulatory approvals

– Design changes

• Manufacturing

– Supplier ramp-up

– Refine fabrication and assembly processes

– Refine Quality Assurance processes

PLM Capabilities and Systems

Development – V-model

Customer

Requirements

Product

Specifications

Product

Architecture

BOM Management

Part Development

4. Bill of Material definition

3. Define product architecture and

manufacturing features

1. Define the Customer need

2. Derive product specifications

from customer need

UAT

Validation

System

testing

Unit

testing

Test cases

Test runs Qualification

5. Verification and validation with

test cases and test runs

Production Ramp-up • Marketing

– Place early production

with key customers

• Design

– Evaluate early production

output

• Manufacturing

– Begin operation of entire

production system

Change Management

ECO

ECR Engineering Change Request

ECO Engineering Change Order

MCO Manufacturing Change Order

MECO Manufacturing Engineering Change Order

DCR Deviation Change Request

EC Engineering Change

ECR

Issue

EC

Feature Require

ment

MCO

MECO

DCR

Item management

Product management

Simple Release to ERP via ECO

EBOM

PLM ERP

ECO

. . . . . .

Integration

Making one or more MBOMs from an

EBOM

EBOM

PLM ERP Integration

MBOM - Plant 1

Plant Specific

changes

MBOM - Plant 2

Plant Specific

changes

Create MBOM

Create MBOM

Scenario 3 – Using MCOs to update

MBOMs

EBOM

PLM ERP Integration

MBOM - Plant 1

MBOM - Plant 2

MCO

MCO

ECO

. . . . . .

Phantom parts

Kit parts

MCO MCO

MCO

Scenario 4 – Lead and Parallel plants

EBOM

PLM ERP Integration

MCO ECO

. . . . . .

MBOM - Parallel Plant 1

MBOM - Lead Plant

MBOM - Parallel Plant 2

PLM Capabilities

Product Development Process

Planning

Concept

Developme

nt

System

Level

Design

Detail

Design

Testing &

Refinement

Production

Ramp-up

Plan / Source / Make / Deliver / Enable

After Sales Service

Marketing

46

Three time horizons of Plan

• Long term – Providing strategic resources and capacity to meet long-term

demand – Choice of strategic locations depending on the markets – Development and utilization of production process technology – Long term planning with supply

• Medium term – Matching supply with demand – Medium term planning with supply

• Short term – Scheduling of resources – Tracking resource usage & status and labor utilization – Tracking customer/production orders and materials usage – Managing exceptions – Short term scheduling with supply

Vis

ibil

ity t

hro

ug

h E

nte

rpri

se

re

so

urc

e p

lan

nin

g (

ER

P)

Make

• Make-to-stock … Serial manufacturing – no engineering

• Assemble-to-order … Some engineering may be

required

• Make-to-order – … Bit more engineering may be

required

• Engineer to Order – most engineering work takes place

in delivery projects

PLM Capabilities

Product Development Process

Planning

Concept

Developme

nt

System

Level

Design

Detail

Design

Testing &

Refinement

Production

Ramp-up

Plan / Source / Make / Deliver / Enable

After Sales Service

Marketing

After Sales Service

• Service operations are based on installed base

• For manufacturing company service typically represents large portion of business. Some examples, % of sales in 2013: – Kone 46%

– Konecranes 42%

– Outotec 26%

– Wärtsilä 40%

• Service typically has higher margin than CAPEX

• Service vs CAPEX: – Service products can be sold separately or together with CAPEX products

– Some companies see that there is just service, CAPEX is irrelevant

• Spare parts are the most common service business

• Spare parts available for customers:

– Spare Parts

– Spare Part Kits

– Spare Part Sets

– Spare Part Assemblies

• Warranty initially ties customer to OEM

• Ease of operation keeps the customer after warranty period

After Sales Service

• Service

– Technical services

– Upgrades

– Maintenance contracts

• Operate & Maintain / Enterprise Asset Management

– OEM operates delivered products for customer

– All spare part and technical services through OEM

• Example Konecranes 2013:

– Maintenance contract for 433.501 items, value 178,2 M€

– 3993 service technicians, total 6151

After Sales Service

TU-E2020

ADVANCED OPERATIONS

MANAGEMENT Product and Service Life Cycle Management / Economics Perspective

ELINKEINOELÄMÄN TUTKIMUSLAITOS THE RESEARCH INSTITUTE OF THE FINNISH ECONOMY 53

Volumes: Manufacturing and service life

0

50

100

150

200

250

300

19

82

19

83

19

84

19

85

19

86

19

87

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

20

20

Pie

ces

Year

Manufacturing life (Pieces sold annually) Service life (Pieces serviced annually)

ELINKEINOELÄMÄN TUTKIMUSLAITOS THE RESEARCH INSTITUTE OF THE FINNISH ECONOMY 54

The distribution of the total added value

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014e 2016e 2018e 2020e

Shar

e o

f To

tal V

alu

e A

dee

d

Year

Services 54%

Manufacturing 46%

ELINKEINOELÄMÄN TUTKIMUSLAITOS THE RESEARCH INSTITUTE OF THE FINNISH ECONOMY

Distribution of added value from manufacturing

55

17%

21%

37%

1% 3%

21%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Distribution

Logistics

Headquarter

Manufacturing

1 tier Suppliers

Suppliers ofmaterial inputs

53%

10%

9%

5%

23%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Other

Asia

North America

Eu 27

Finland

The share of value added from manufacturing is 46% of the total value added

ELINKEINOELÄMÄN TUTKIMUSLAITOS THE RESEARCH INSTITUTE OF THE FINNISH ECONOMY

Distribution of added value from services

56

11%

33%

0% 12%

6%

38%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Distribution

Logistics

Headquarter

Manufacturing

1 tier Suppliers

Suppliers ofmaterial inputs

13%

30%

22%

2%

33%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Other

Asia

North America

Eu 27

Finland

The share of value added from services is 54% of the total value added