Is a PDM/PLM system worth for me as a subcontractor?

19 August 2019

Written by René Hol and Valerija Olsevska

Front runner subcontractors in Europe have moved from traditional contract manufacturing to a business model of being a strategic partner for key customers – OEM-ers. The new business strategy has a high impact on the relationship with the customer and on the business processes and IT-systems. The strategic customers are managed as a program. New activities like co-engineering, supply chain management and product version change control have become core.

During the evolution from a contract manufacturer to a strategic subcontracting partner the issue will raise one day: do we need a PDM/PLM software system to manage our product data (i.e. the customer’s product data). In the beginning with first strategic customers, the subcontractor often decides to use the access possibilities to the customer’s PDM/CAD environment. The result is that the engineers and manufacturing engineers potentially have to work in a variety of systems. Besides the customer’s PDM system the company is using their ERP-system to manage stocks and supply chains of customer independent items. These are items like raw materials and picking goods.

Why to consider own PDM/PLM? What is the business case for that? There are several drivers.

  1. Fluent processes and waste minimization. One driver is to stop the proliferation of all kinds of processes and used systems. The efficiency losses are often high. Having your own PDM and standardizing the interface with your customers lead to harmonized and efficient processes in the company.
  2. Leveraged core technology and standardized product components. During the development towards a strategic subcontractor, companies becomes aware about their technology competitive edge. Having this standardized and stored in your own systems, and build product applications on top of that, the company gains power. It lifts sales opportunities, pricing levels, cost reduction and customer intimacy. At the same time the ‘technology in your own system’ helps to defend your IP better.
  3. Quick respond to product changes. Product change management and control is a heavy process which leads to headaches in many companies and a lot of handwork, by-passes, parallel systems (Excel), etc. Having their own PDM-system the change management procedures can be standardized, which mean a huge efficiency jump.
  4. Synergy with ERP. The fourth reason might be the practical need to fill gaps of the ERP-system. Many companies face the limits of ERP in terms of product master data management, including Bill-of-Material, routing and serial/batch control. A growing number of companies are using a PDM-system to professionalize the product master data management. Efficiency gains, as well as a reduction of failure costs are the result.

Understanding the value statements for a PDM/PLM investment business case, opens the door to think about: ‘which system is best for me’. There are many ways to approach PDM package selection, but these methods are outside the scope of this blog. An important requirement in the package selection is the interface/integration with customer’s PDM. Here we see serious developments in terms of standards; often sector specific – like Automotive, or Aerospace & Defence – but more and more also overall open standards like OSLC.

Our final advice, the introduction of a PDM/PLM system is a logical consequence of the strategic move of the company towards partnership with your customer. This means that the PDM-system is a core business application. It does not only touch engineering. Many processes are affected by PDM like sales, supply chain management, warranty and after sales service. So, you cannot drop PDM package selection on the engineer’s desk. CxO level should be involved and need to make their agenda free for meetings/demos with candidate software vendors.

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