Analysis tools can help management identify the points in the process where errors are being introduced, which is the first step in eliminating such errors. It also can provide senior managers with information that would enable them to avoid repeating mistakes, such as using a low-quality supplier, and begin to provide the womb-to-tomb track-and-trace needed to eliminate costs and reduce time-to-market. This information can also support better business decisions in general, including decisions on time-to-market, cost of manufacture, and subcontracting, and significantly boost both the top and bottom lines (e.g., cash flow, new revenue streams).

User Action: Currently, the greatest potential for positive impact on manufacturing exists in eliminating errors as early in the product life cycle as possible and engaging in collaboration with manufacturing service providers. To achieve this, manufacturers should first concentrate on capturing as complete and accurate an information set in the BOM as possible, as early as possible--including building in collaboration, starting at the concept stage of the life cycle. Extra effort in institutionalizing collaboration at this stage will shorten the design cycle significantly and provide a mechanism for concept BOMs before any significant costs are incurred.

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Second, users must integrate information across PLM processes, loosely coupling with trading partners to positively reduce errors (including CAD, CAM, ERP, and supply chain systems), both in-house and along the supply chain, through the manufacturer's suppliers to their suppliers.

Third, manufacturers should leverage the data mining capabilities of the PLM platform to enable senior management, up to the CxO level, to gain visibility into product development and manufacturing processes.

These improvements will have three major positive impacts on operations. First, they will potentially save large amounts of money in the critical engineering change order (the highest cost in manufacturing) by catching errors as early as possible in the process. This, in itself, will create strategic advantage for a company seeking to lower product costs and improve quality. These are the twin advantages that enabled Japanese auto makers to capture a large share of the North American and European markets in the 1980s.

Second, better business decisions by senior management and greater manufacturing flexibility to respond to market changes and opportunities will be enabled. For instance, by eliminating most errors early in the design process, a manufacturer can decrease time-to-market, enabling it to be first with new products designed to meet emerging market needs.

Third, productivity will increase. By intercepting errors early, and leveraging collaboration with trading partners, manufacturers will save time throughout the product life cycle. This essentially increases the organization's capacity at a low cost--a fraction of the cost of increasing the manufacturer's design group or adding new production lines. Senior management can apply the potential for better business analysis to identify ways to leverage this extra capacity to produce more and increase profits.

Could a better BOM improve your productivity? TalkBack below or e-mail us

Increasing Bill-of-Materials Accuracy: "Killer App" for Supply Chain Integration
First published September 13, 2002
By Joanne Friedman, Janelle Hill, David Folger, David Cearley, and Jack Gold

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