Insert Picture Here Driving Product Profitability with PLM
<Insert Picture Here> Driving Product Profitability with PLM Steven Young Director, Agile Product Marketing
Safe Harbor Statement "THE FOLLOWING IS INTENDED TO OUTLINE OUR GENERAL PRODUCT DIRECTION. IT IS INTENDED FOR INFORMATION PURPOSES ONLY, AND MAY NOT BE INCORPORATED INTO ANY CONTRACT. IT IS NOT A COMMITMENT TO DELIVER ANY MATERIAL, CODE, OR FUNCTIONALITY, AND SHOULD NOT BE RELIED UPON IN MAKING PURCHASING DECISION. THE DEVELOPMENT, RELEASE, AND TIMING OF ANY FEATURES OR FUNCTIONALITY DESCRIBED FOR ORACLE'S PRODUCTS REMAINS AT THE SOLE DISCRETION OF ORACLE. "
Nor. Cal OAUG 2009 Training Drive Product Profitability Move Towards Enterprise PLM Manage Product Cost & Risk Leverage Oracle Agile PLM Customer Success 3
Drive Product Profitability
Wall Street’s Message 6 Months Ago… Today… • Innovation • Waste Reduction • Premium Products • Value Products • Revenue Generation • Cost Reduction • Rising Demand • Flat or Falling Demand • Supply Chain Speed • Supply Chain Efficiency • Labor Creativity • Labor Productivity • Supply Shortages • Excess Supply • Scaling Up • Scaling Down
Enterprise Architecture Design Chain, Supply Chain and Demand Chain Demand Supply Operational Excellence Integrations to CRM, Demand Planning, Channels, Service Systems, Pricing Product Innovation Integrations to ERP, Mfg, Sourcing, Planning, Logistics, Order Mgmt Enterprise intelligence 80% of your Supply Chain decisions are tied during Design time *Refer to AMR Demand Driven Supply Network Model for Details
It’s not just Supply-Side anymore … Shift to Value Chain Focus for Differentiation (Supply, Demand, Product) Leader Demand Perfect Order, Cycle Times, Total SCM Cost Operational Excellence Supply Product Demand Supply Winners Product Higher Cash Flow, Profits, P/E • Integrated Demand, Supply, Product Networks • Real-Time Information Driven Demand • Value Chain Focused Demand Product Supply Product Laggard Innovation Excellence Time to Value, Return on R&D Leader Source: AMR, May 2008
The Bridge to the 21 st Century. . . Next Generation PLM Engineering design systems: Design vaults in each engineering organization and system Mostly document mgmt Product Data Mgmt: Item and BOM management in a centralized system Workflow based Change mgmt No Outside Access PLM: Multi-enterprise collaboration Web based stage gate project mgmt Integrated Sourcing Enterprise PLM Integrated PLM to rest of enterprise architecture – ERP, CRM, SCM Enterprise Compliance and Quality Systems Social PLM – open innovation So. A based PLM services Integrated Product and Process capabilities Driving Product Profitability Source: Adapted from AMR Maturity Curve and Gartner Maturity Model
Next Generation Enterprise PLM Capabilities Integrated Manufacturing & Service Solutions Service Oriented Architecture Technology Demand Driven Product Planning Traceability of Customer Needs Information-Analytics Driven Architecture Predictable & Open Innovation Web 2. 0/ Enterprise 2. 0
<Insert Picture Here> Move Towards Enterprise PLM
Look At The Complete Lifecycle Enterprise PLM System Should Be Comprehensive 1 6 Service and Maintenance • Integration from Service request systems • Service BOM • Integration to Maintenance and Repair system 5 Fulfillment execution & Simulation • Product Mapping and Transformation to fulfillment model • Pricing and Promotions • Integration to Demand, Supply Chain Planning and Logistics Needs/Requirements • Market Analytics • Portfolio Mgmt • Ideation Mgmt 2 Product Design and Prototyping • CAD Applications • Requirements Mgmt • Design Data Mgmt • ETO • PDM • Visualization Enterprise Product Data Model Change Mgmt and Workflows Governance, Quality and Compliance Secure Collaboration and Visibility Analytics and Reporting 4 Sales and Marketing Modeling • Product Sales Configurations • Physical, Service, Content and Financial bundling • CRM Enablement • Multi Channel Commerce • Prototype Mfg and Simulation 3 Launch and Rampup • Direct Material Sourcing • ERP Enablement • Collaborative Product & Process Planning • Integration to Manufacturing Execution • Integration to Shop floor
Multi-Enterprise Collaboration Tier 3 Tier 2 Demand SUPPLY Tier 1 Distributors Outsourced Mfg OEM Retailer Suppliers Customers 3 PL’s Time, Cost, Quality & Compliance Leaks • • • Poor Quality & Excess WIP High Material & Supply Costs Lengthy ECO Approval Process Error Prone Order Processing Regulatory non-compliance Conflicting Demand Signals Upstream Suppliers
PLM Across the Enterprise Maximize Product Profitability Product Life Cycle Cash Flow 4 Ramp to volume Reduce product & compliance costs, improve quality 6 New Products & Categories 3 Get to market faster 5 2 Brand Extensions Time 1 10% - 40% increase in R&D ops efficiency Increase new product success rate 5% - 60% reduction in time to market Up to 60% faster process cycle times 3% - 20% decrease in COGS Improved regulatory compliance Reduced product recalls
Manage Product Cost & Risk
2009 PLM Business Imperatives Ensure Product Quality & Compliance Accelerate Product Innovation Manage Product Cost & Risk #1
Manage Product Cost & Risk “Profit Leaks” Planned Margin Proliferation Up to 30% of all new designs, parts & suppliers already exist Cost Scrap & Rework Time Manufacturing building to wrong revisions of products 80%+ of cost structure and supply risk locked In early during design Product Changes Take 14 -21 Days Supply Risk Critical suppliers shutting down product lines or going out of business Realized Margin
Manage Product Risk and Cost PLM Best Practice Approaches Product Lifecycle Management Initiatives Maximize reuse and rationalization Design for cost & supply risk Reduce scrap, rework, and prototype spins Improve productivity and cycle time Enable globalization and outsourcing
Maximize Reuse & Rationalization PLM Best Practice Approaches Capability • Part, Design and Supplier Classification and Search • Design structure & BOM mgmt. • CAD library management • Globalized preferred part and supplier management • New part, design, & supplier sourcing and introduction Value • Reduce Unnecessary New Part and Supplier Adds by 10 -30% • Avoid introduction costs • Reduce inventory costs • Increase Preferred Part and Supplier Usage • Increase purchasing leverage • Increase quality and continuity of supply • Improve Engineering Productivity by 10 -15% • Find & reuse existing preferred parts & designs
Design for Cost & Supply PLM Best Practice Approaches Capability Value • Part, design and supplier • Reduce Direct Material • BOM grading & analysis • Improve Product Margins at scorecarding • Target cost/margin mgmt • Identify & resolve supply risk • New Product Introduction Cost Management • Multi-Tiered Co-Sourcing Costs by 2 -5% Launch by 5 -15% • Ensure continuity of supply • Speeds new product introduction sourcing cycles by 90%
Reduce Scrap, Rework, & Prototypes PLM Best Practice Approaches Capability Value • Synchronize product definition and changes across design, sourcing, and manufacturing • Reduce the scrap and rework costs arising from • Collaborate to reduce number of prototype spins • Poor product quality • Manage product end-of-life timing • Wrong revision builds • Design products to meet quality and regulatory compliance requirements • Time product revisions to optimize for parts inventory on hand • Discarded parts inventory • Product non-compliance • Reduce end-of-life processing costs • Reduce development & manufacturing costs for prototypes • Reduce Warranty & Service Costs
Improve Productivity & Cycle Times PLM Best Practice Approaches Capability • Streamline new product operations across functions – design, supply chain, manufacturing, quality, and regulatory affairs • Make product record readily available and actionable • Speed product changes through workflows and automation • Enable multi-discipline engineering collaboration • Design for quality & compliance Value • Improve the productivity of engineering, sourcing, quality and compliance personnel • Optimize R&D resource utilization • Minimize losses from noncompliance • Minimize losses from poor product quality
Enable Globalization & Outsourcing PLM Best Practice Approaches Capability • Collaborate across global teams and outsourced partners • Continue to get early and forward visibility into product costs and supply risks • Secure product data across outsourced partners and global teams through roles privileges • Design, source, & build globally Value • Enable the outsourced business model – eliminate large capital expenses and fixed costs • Reduce direct material spend through visibility into part costs • Reduce the costs and risk of intellectual property theft
Leverage Oracle Agile PLM
Acquisition Of Best-in-Class Companies Oracle FY 2005 4 Acquisitions Oracle FY 2006 17 Acquisitions Oracle FY 2007 14 Acquisitions Oracle FY 2008 8 Acquisitions Note: Includes acquisitions of Covansys and Hexaware operations; acquisition of Mantas and Castek IP through majority-owned i-flex solutions company
Oracle’s Application Strategy Complete Open Integrated Comprehensive Industry Portfolio Standards-Based Architecture Designed to Work Together More Value Less Complexity More Choice Less Risk More Flexibility Less Cost
Oracle Agile PLM - Industry leading, best-in-class solution for Discrete. • Product Collaboration • Engineering Collaboration • Product Compliance, Quality and Cost Mgmt • Product Project and Portfolio Mgmt Agile PLM for Process – Industry leading, bestin-class solution for Process • Global Specification Mgmt • Nutritional labeling and packaging • Supplier collaboration and sourcing Auto. Vue Enterprise Visualization – Industry leading collaborative visualization solution Agile PLM Business Intelligence Product Hub – complementary PIM/MDM solution to Agile PLM for master data mgmt and governance, multi-channel commerce enablement Product Configurator AIA Integrations – Open Standard based integration framework and out of box Process Integration Packs
Product Data Fragmentation SUPPLIERS ARTWORK DESIGN CAD Quark OUTSOURCED PARTNERS Adobe SCM ERP CUSTOMERS BOMS & Samples Parts Data Design Briefs REGULATORY BODIES Package Designs Submission Artwork Files Enterprise Documents Ideas & Items MARKETING Project Audits Specifica tions LEGAL & CA CAD Models Notes Excel PROCUREMENT R&D (EUROPE) Excel Value Chain Files Formulas Recipe Mgmt R&D (ASIA) PRODUCTION R&D (US) CAD MCAD Spec DB ERP SCM ERP MES Access EDMS
Oracle Enterprise Product Record Secure, Real Time, and Accessible Customer Information Compliance Information - Regulatory - Standards - Audits - Requirements - Configurations - Quality Issues Portfolio Information - Programs Schedules Resources Deliverables Design Information - Service Information - Corrective Actions - Field instructions - Service BOMs Purchasing Information Manufacturing Information - Bills of Materials Mfg. Instructions Formulations Changes & Revisions Schematics & Drawings Specifications Digital Assets Design Reviews Supplier Information - Approved Vendors - Preference/Status - Availability - Pricing - Part/BOM Costs - Price History
PLM Connects the Global Product Network CONTRACT DESIGN CONCEPT OTHER PCM RFQ QUOTE PRODUCT CHANGE PHYSICAL DESIGN PACKAGE OEM CUSTOMER PCM OTHER FORECAST RFQ QUOTE PRODUCT CHANGE ORDER PCM INVENTORY INFO ORDER DEMAND CHANGES CARRIER NPI RFQ QUOTE ORDER FORECAST ODM / EMS ORDER FORECAST COMPONENT MANUFACTURER (IDM / FABLESS) PCM RFQ QUOTE PRODUCT CHANGE ORDER RFQ QUOTE OTHER FORECAST RFQ QUOTE NPI PRODUCT CHANGE COLLABORATION DISTRIBUTION CHANNEL ASSEMBLY SUBSIDIARY / JOINT VENTURE PCM RFQ QUOTE CONTRACT DESIGN NPI PRODUCT CHANGE ORDER REPAIR CENTER FOUNDRY ORDER PCM FORECAST RFQ QUOTE NPI RFQ QUOTE PRODUCT CHANGE NPI ORDER PRODUCT CHANGE ORDER FORECAST PCM RFQ QUOTE FORECAST NPI ORDER FOR FACT RFQ QUOTE PRODUCT CHANGE PCM ORDER CARRIER ORDER PCM FORECAST OEM PRODUCT CHANGE NPI ORDER PCM ORDER FORECAST RFQ QUOTE ORDER COMPONENT DISTRIBUTOR ASSEMBLY, TEST, PACKAGING
Increased Product Network Complexity Product Complexity Supply Chain Complexity Single Plant Separate Multi-site, Vertically integrated Supplier Collaboration Few Outsourced Mfg partners Global Outsourced Mfg partners Product Proliferation Shorter Product Lifecycles More NPIs Higher Quality Requirements Regulatory Compliance Cost Considerations Mechatronics Design Network Complexity Central located design team Global design teams Outsourced Design partners
Oracle Agile PLM Compliance Office Agile Product Governance & Compliance Executives & Program Office Agile Product Portfolio Management Integrated product, program, resource & portfolio management Agile Engineering Collaboration Engineering desktop integration & collaboration Product & program compliance against standards & regulatory requirements Cross-Enterprise Agile Enterprise Visualization Quality Professionals Native document collaborative visualization across the global enterprise Agile Quality Management Closed-loop product quality management across the extended enterprise Development & Engineering Procurement Professionals Agile Product Cost Management Product sourcing and lifecycle cost & risk management Engineering, Operations & Supply Chain Agile Product Collaboration Enterprise product record visibility, management & collaboration
Improved Decisions - Right Products Faster Decision Support Agile PLM Complexity Business Process Workflow & Stage Gate Execution Business Ready “Best Practice” Applications Product Record Enterprise PLM - Secure collaboration across global product network
Agile PLM Strengths 1 2 • Business Ready Applications • Out-of-the-Box, Configurable Applications • Fastest Time-To-Implement & Lowest Overall TCO • Broadest Enterprise PLM Solution Footprint • Broadest footprint, strongest adoption outside mechanical engineering • Supply chain, electronics, cost, quality, compliance, portfolio, decision support • Industry Domain Expertise & Best Practices 3 4 5 6 • PLM market leader with focus & presence across key EHT segments (computers, communications, consumer electronics, semiconductor, EMS/ODM) • Deep domain expertise & best practices developed working with 800+ EHT customers • Customer Success • Best track record for customer success & referenceability in PLM • Fastest TTV, Lowest TCO, Lowest Risk • CAD & ERP Agnostic; 100% (Enterprise) PLM Focused • MCAD, ECAD, SW Integration Breadth; CAD & ERP agnostic approach • Product Network Built & Proven • Built for collaboration across enterprise & product network sinception • Mature, out-of-the-box network capabilities; 100 s of live ‘product network’ customers
Customer Success
Enterprise PLM Customers GSK Cisco Apple Coca Cola Philip Morris International Tyson Foods
Agile PLM Customer Success: Managing Product Cost & Risk • Global leader in secure electronic payment technologies, offering advanced secure electronic transaction solutions • Saves about $10, 000 a year by eliminating rework, reduced ECO review cycle time from • ~30 days to just 1 to 2 days, reduced manual distribution costs by $400, 000 Estimated ROI to be 18 mos. , but actual ROI under 7 mos. • HP Pro. Curve is the world’s #2 networking company • Reduced direct material cost by $970, 000 a year due to improved CM cost review process • Achieves $630, 000 in year on year savings – 10% improvement in 2. 5% annual direct material savings during CM cost review process • Saves $400, 000 a year in labor efficiency, reduced ECO cycle time by 50% (from 2 weeks to 1) • Preferred semiconductor supplier of efficient power solutions to customers in the power supply, automotive, communication, computer, digital and consumer, medical, industrial, and military/aerospace markets Eliminated 6 contactors which saves $400, 000 a year, reduced IT Support Costs by $200, 000 a year, reduced Change Cycle time from 20 days to 20 minutes, digests acquisitions 3 times faster • • Leading global supplier of a range of technology products and solutions for the semiconductor • • market Reduced material part cost by 10%, reduced scrap and rework cost by 10% Saved $675, 000 by consolidating IT systems • Reduced rework cost by 50% • Reduced rework & errors • Eliminated cost of multiple systems
Veri. Fone Inc. Saves $10 Million a Year By Eliminating Rework, Automating Processes COMPANY OVERVIEW • Veri. Fone Inc. is a leader in secure electronic payment technologies, CUSTOMER PERSPECTIVE offering advanced secure electronic transaction solutions including hardware and a full range of services for debit, credit, checks, and smart cards. • Industry: High Technology Segment: Computer Peripherals • Revenue: US$ 1 Billion Employees: 2, 300 “The typical product change process took 20 to 35 days, preventing us from getting to market as quickly as we wanted. With Oracle’s Agile Product Lifecycle Management, we have reduced turnaround time to just one to two days. ” CHALLENGES/OPPORTUNITIES Ipolani Tano, Vice President and CIO • Lack of collaboration among 15 dispersed engineering teams • A paper-based system of copying, mailing, and physically storing • • • product documentation drained money and resources. Manual processes to create items, BOM, and ECO were labor intensive, costly, slow and ineffective ECO review cycle time was lengthy (2+ weeks) and there was no visibility into the process to address stalls Data exchange with factory & suppliers was manual, labor intensive, which slowed design changes & resulted in a high rate of errors Limited factory visibility to pending design changes caused costly rework No real partnerships with contract manufacturers nor suppliers due to lack of collaboration No visibility to supplier part obsolescence nor preferred status/allocation on part shortages SOLUTIONS Implemented Agile Product Lifecycle Management • Agile Product Collaboration • Agile Product Cost Management • Agile Product Governance and Compliance • Agile PLM Data Mart 3. 0 and Agile PLM Dashboards RESULTS • Saves about $10 Million a year by eliminating rework • Reduced costly rework by collaborating with CM’s earlier about product changes • Reduced ECO review cycle time from 20 to 30 days to just 1 to 2 days • Reduced manual distribution costs by $400, 000 • Estimated ROI 18 mos, but actual ROI under 7 mos. • Improved companywide efficiency and performance by automating data management, streamlining processes, eliminating shipments, and reducing headcount • Built visibility into products to make informed strategic decisions about cost, market launch, etc. • Eliminated price variance among suppliers • Improved ability to analyze costs of both suppliers and CMs - reduced CM overcharges to avg. 5% markup November 2008
PLM Customer Success Evidence Validating Each Business Imperative Today’s Imperatives 1. Cut rework cost by 50% PLAY VIDEO Manage Product Cost and Risk 2. 3. Saved $1. 9 million in costs the first year Ensure Product Quality & Ipolani Tano Compliance Vice President & CIO Accelerate Product Innovation Slashed inventory from $36 M to <$1 M in a year Saved $400, 000 in distribution costs and $10 million by eliminating reworka year in Saved $100, 000 just warranty costs
Key Takeaways Summary: “Constantly squeezed by our customers for cost reductions” “ 1, 750 users – 1, 100 employees (marketing, R&D, technical service, support) and 650 contract manufacturers” “Reduction in ECO time from 30 days to 2 days” “Eliminated $400, 000 in distribution costs” Ipolani Tano “Decreased rework costs by $10 Million” Vice President & CIO “Achieved ROI in 7 months”
Agile PLM Customer Success: Managing Product Cost & Risk • Leading international communications and information technology (IT) company serving government & commercial markets • Ensured strict compliance with industry standards and government regulations in over 150 • countries Consolidated supplier base to collaborate more effectively • Leading supplier of consumer products such as scissors, knives, and garden tools. They are • • classified into four divisions: crafts, garden, house wares, and outdoor recreation Reduced design errors by 70%, while reducing new product development time From 25 Months to 15 Months Improved data search and management efficiency by 80%, enabling better decision making • World’s leading supplier of blood processing systems • Realized US$1. 9 million cost savings in FY 2005, improved professional resource efficiency by 25% by reducing ECO cycle time Reduced change package cycle times by more than 30 days, increased the number of documents under control by more than 30% § • Leading provider of technology-based learning platforms worldwide • Increased gross margins from 8 to 10 points, decreased inventory from $200 million down to about $52 million, cut air freight charges from $5 million a year to less than $500, 000 a year • Reduced charge backs from $12 million to $400, 000, slashed excess and obsolete inventory from $36 million a year down to less than $1 million a year • Reduced part cost by consolidation • Improved visibility into product quality • Reduced complexity, ensured accuracy
Harris Achieves a 360 -degree View of the Product Record with Agile PLM COMPANY OVERVIEW • Harris Corporation (Harris) is an international CUSTOMER PERSPECTIVE CHALLENGES/OPPORTUNITIES Janice Lindsay, Vice President, Strategic Sourcing, Harris Corporation communications and information technology (IT) company serving government & commercial markets in over 150 countries. Harris provides a wide range of products and services for commercial and government communications markets such as wireless, broadcast, and government • Industry: Communication Equipment / High Tech Manufacturing / Aerospace & Defense • Employees: 13, 000 • Revenue: US$ 5. 3 billion • Harris had too many suppliers and found it difficult to manage the large supplier base and work closely with its vendors to align strategy, roadmap, and resources around a common goal • Increase collaboration for over 7000 Engineers • Strategy is the right item, right supplier the first time • Take the opportunity to revolutionize and transform Harris’ supply chain SOLUTIONS • Harris has successfully deployed all Agile PLM modules across the entire Enterprise “Oracle’s Agile Product Lifecycle Management applications give us a 360 -degree view, helping us to use suppliers with higher quality ratings, so we have fewer challenges in the field. ” RESULTS • Cut Engineering Change Time in Half to Accelerate Time to Market • Ensures compliance with industry standards and government regulations, reducing product risk • Consolidates supplier base to collaborate more effectively, minimizing cost November 2008
Closing Thoughts … • • • Beyond Engineering & Innovation Enterprise Platform Quantifiable Results Strategic v. Commodity Industry Opportunities
Agile Training Uncovering Hidden Costs - PCM Veri. Fone Case Study - PCM Reduce Cost of Product Changes Best Practices Deploying Global PLM & EBusiness Integration 43
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