Digital Transformation

How the entire company benefits from PLM

The advantages of a PLM system beyond product development

The transformation pressure on manufacturing companies is increasing. They need to optimize their core business while simultaneously driving their digital transformation, enabling them to quickly react to changing market conditions and new customer requirements. Particularly for companies with complex product portfolios, it is essential to accurately calculate costs from the initial customer inquiry to order completion, coordinate manufacturing and development across locations, and involve numerous suppliers while always keeping an eye on target achievement.

An integrated PLM system helps companies master these challenges and set the course for long-term competitive success. With suitable function modules and interfaces, it supports them to align processes across departments for maximum efficiency, grasp complex interdependencies faster, and significantly reduce the time to market of their products.

Discover the specific added value that a PLM system provides to your company beyond the development department:

Product cost management

With integrated product cost management, product costs are calculated quickly and reliably during development. Pricing is optimized while costs are kept within budget.

Reliable sales planning is crucial for product development. In order to offer competitive products, companies need to know as early as possible what these will cost and are allowed to cost. If prices exceed the market average, they must offer convincing arguments to potential customers as to why. To achieve decent contribution margins, however, prices cannot be too low either. When conditions change – for example, due to fluctuating material costs or altered manufacturing processes resulting from new customer demands – this often leads to problems. This is because key metrics are usually calculated in separate IT systems in the controlling or accounting departments – outside product development, where 80% of the product costs are determined. Information synchronization and exchange are not digitally harmonized, making them time-consuming and error-prone. Under these conditions, meeting project budgets can be compared to navigating by sight in thick fog.

With the help of integrated product cost management, companies can accurately calculate product development costs in early development stages. When selecting a PLM system, a product costing module with easily adaptable calculation schemes should therefore be a factor to consider. This allows you to calculate various product lines at the same time and adhere to project budgets by capturing costs during development.

To enable the costing of product variants, colleagues outside product development should have direct access to the engineering bill of materials as well. A PLM system with its role-based access management concept allows just that. With this approach, companies set the course early on to achieve the desired profit margin. By analyzing different sales volumes, they determine the optimal price and increase product profitability.

The following areas in the company benefit from integrated cost management:

Controlling: A product costing module integrated into the PLM system allows the controlling department to directly access calculation schemes as well as product cost calculations from development and set relevant directives. This helps you ensure product profitability and contribution margins, increase cost-effectiveness, and steer your company with precision.

Sales: The quick and reliable calculation of variants, for example, for requested material alternatives, accelerates the quotation phase. Your sales team can provide quotes on short notice – and thus quickly increase revenue.

Procurement, materials management, and logistics: Keep larger quantities of frequently requested and used parts in stock to reduce procurement costs. Additionally, materials management can proactively stock alternative materials in appropriate quantities with regard to increasing sustainability aspects.

Product development: Control and break down costs to determine project profitability based on actual needs rather than fictitious specifications from the ERP system. This allows you to plan project costs realistically and adhere to budgets. Simultaneous cost tracking within the project enables you to document expected work efforts directly in the work breakdown structure and compare them with the cost breakdown. By utilizing project cost reports, your team always stays on top of things.

Requirements and variant management

Effective requirements and variant management sets the foundation to implement customer requirements faster, configure variants in no time, and bring innovations to market sooner.

Customer requirements are constantly increasing in both their quantity and the level of detail of their specifications. As the number of product variants grows, so does product complexity. Without requirements management along the entire product lifecycle, rapid and efficient development is hardly possible – let alone the use of suitable methods to support interdisciplinary collaboration, such as MBSE.

The increasing variant diversity also raises the risk of compromising the cost-effectiveness of procurement, manufacturing, and quality assurance. This is because, in conventional approaches, small batch sizes do not allow for economies of scale and the corresponding cost reductions.

PLM Software with integrated requirements management enables faster and more accurate product development in accordance with customer requirements. Requirements can be documented throughout the entire lifecycle and captured and edited more easily. The relationships between requirements are visualized in the digital product model and the degree of fulfillment can be permanently tracked. Additionally, PLM-supported requirements management provides the foundation for Model-based Systems Engineering (MBSE) for interdisciplinary teamwork.

Integrated variant management enables companies to strategically align their product portfolios and minimize the effort for variant configuration. With feature- and rule-based variability models, they can build platforms and product systems, limit variant diversity, reduce proliferation, and manage their portfolio in an efficient and cost-effective way. Additionally, the digital data and process organization of the PLM system facilitates largely automatic documentation, which significantly simplifies the fulfillment of compliance requirements.

Departments beyond development that benefit from PLM with integrated requirements and variant management:

Sales, product management, and product development: Sales can respond more quickly to customer inquiries and capture new or modified requirements directly in the PLM system. Product management and product development can easily process these requirements and simultaneously track their implementation, reducing lead times and increasing innovation productivity.

Variant management enables the targeted development of product portfolios tailored to market demand. Across departments, the company thus combines customer orientation with efficient value creation – for example, by leveraging intelligent process patterns and delivery strategies like CTO+ (Configure-to-Order in conjunction with Engineer-to-Order).

The platform approach and product systems set the foundation for a cost-effective and efficient portfolio. Furthermore, a PLM system ensures alignment with the company’s strategy and compliance with sustainability goals. It enables them to develop their products with cost-effectiveness in mind – even from batch size 1 – and implement innovations for new market opportunities or business fields faster. This is enabled by intuitive configuration options and reusing existing variability models stored in the PLM system.

Effectively limiting variant diversity: The interaction between maximum BOM (also known as 150% BOM) and sets of rules prevents the creation of uneconomical variants. Through a PLM system with integrated variant management, the portfolio can be managed in a clear and structured way.

Support for product, quality, and compliance management: Thanks to automatically recorded comprehensive documentation, design decisions can be accurately traced back even years later. This makes it easier to meet compliance requirements with clients and authorities.

Procurement, materials management, and logistics: Frequently used components are stocked in various material alternatives and in larger quantities, reducing procurement costs. This enables companies to increase cost-effectiveness, shorten delivery times, and increase customer satisfaction.

Conclusion: A PLM system benefits the entire company!

PLM systems ensure end-to-end data availability along the digital thread. They enhance collaboration within product development and across departments, all the way to supplier chains. A PLM system as a central database (in the sense of a “Single Source of Truth”) with modern IT-supported collaboration tools significantly shortens time to market, reduces efforts in the quotation process, and simplifies compliance with customer and regulatory requirements.

Companies looking to manage the complexity of their product portfolio with a PLM system do not necessarily have to put up with high administrative efforts. Cloud-based Software-as-a-Service (SaaS) solutions provide preconfigured and standardized function modules out of the box. A user-friendly no-code environment allows the specialized departments to set up the software themselves without requiring any specialized IT knowledge. Furthermore, companies relieve their IT department from efforts that traditionally come with installing and maintaining dedicated hardware infrastructure. Updates and backups are performed automatically, eliminating the need for manual interactions. Extensive cloud security technologies provide reliable protection against cyberattacks and prevent unauthorized access to sensitive data.

Benefits of SaaS PLM at a glance:

Building and managing complex product portfolios
Systematic product cost management during development
Comprehensive requirements management throughout the product lifecycle
Rule-based variant management
Implementation of methods to support effective interdisciplinary collaboration in complex projects
Fast response times
Reduced workload for internal IT department (in times when IT specialists are scarce)
High availability and IT security

Take advantage of cloud-based PLM software now: CIM Database Cloud is the solution for end-to-end digital product development. With “Innovate”, you bring innovations to market faster and manage your product portfolio with ease.

Asset Administration Shell as a catalyst of Industry 4.0

“Country of poets and thinkers” or ” Country of ideas”: Germany is proud of its writers, scientists, researchers, and engineers. And of its meticulous bureaucracy, which aims for absolute precision in statements or indications. Combined, this often results in awkward word creation when naming technical terms. A current example of this is the “Verwaltungsschale” (literally: administration shell), whose innovative potential and central relevance for Industry 4.0 are not immediately apparent.

What is an Asset Administration Shell?

“Verwaltungsschale” is not a dusty administrative authority, but the very German translation of the English term “Asset Administration Shell” (AAS). The AAS is a standardized complete digital description of an asset. An asset is basically anything that can be connected as part of an Industrie 4.0 solution (for example, plants, machines, products as well as their individual components). It contains all information and enables the exchange and interaction between different assets, systems, and organizations in a networked industry. Therefore, it is pretty much the opposite of a sluggish authority and currently the buzzword in digital transformation.

As with many new topics, definitions of AAS vary and are quite broad. From very specific like the Asset Administration Shell as an implementation of the digital twin for Industry 4.0 to the loose description of AAS as a data plug or integration plug for digital ecosystems.

I prefer the representation of the AAS as a metamodel for self-describing an asset. With this metamodel, further models can be generated to provide collected information. Through the use of software, these models are then “brought to life” and are made available to others via interfaces.

Concept and usage of the Asset Administration Shell

As a digital representation of an asset, the AAS provides information or functions related to a specific context through its submodels. Examples include digital nameplates, technical documents, the component or asset structure, simulation models, time series data, or sustainability-relevant information such as the carbon footprint. The information is generated along the various phases of the lifecycle, and it depends on the specific value network which asset information is of importance. Thus, submodels are initially created in certain lifecycle phases, specified and elaborated in subsequent phases, and enriched or updated with information in the further process. Thereby, the AAS refers to either a very generic (type) or a very concrete (instance) representation of an asset.

As assets change over time (as-defined, as-designed, as-ordered, as-built, as-maintained), so does the Asset Administration Shell. Thus, multiple AASs can exist for the same asset over the lifecycle. In order to utilize the information in the AAS within its value network, it needs to be accessible. Access is usually given via the Internet or via the cloud (repository-deployed AAS). In intelligent systems, the management shell can also be part of the asset itself (asset-deployed AAS).

Information can be exchanged in various ways. Either via files, so-called AASX files (AAS type 1), via a server-client interaction such as RestAPI (AAS type 2) or via peer-to-peer interaction (AAS type 3), in which the AASs communicate independently using the so-called I4.0 language and perform tasks cooperatively.

While type 1 and 2 take a passive role in the value network and are more likely to be used with repository-held AAS, type 3 describes an active participation in the value network and is more likely to be used with asset-held AAS running smart products.

Common standards connect!

No matter what type of Asset Administration Shell you choose: Important is that the recipient and the provider speak the same language. To achieve this, the exchange of concrete information must be standardized. Considering the amount of different industries, scenarios, assets, and functions, this is an immense number of submodels that need to be standardized. Organizations and associations such as the Industrial Digital Twin Association (IDTA), formed by research institutes, industrial companies, and software providers, are tackling this mammoth task. The rapidly growing number of members as well as the lively exchange at trade fairs and conferences among each other illustrate the potential for the industry. It is important not to leave SMEs behind, but to involve them in the standardization work in the best possible way.

Conclusion

The Asset Administration Shell is at the core of successful Industrie 4.0 scenarios. It enables manufacturer-independent interoperability and simplifies the integration of all types of assets into a collaborative value network. It increases efficiency within production processes by providing complete transparency of the real-time status of each asset. And it also offers a comprehensive security concept to protect the data. Within a very short time, the AAS has thus transformed from a theoretical construct to a real application in practice. Together with partners from research and industry, we are working within the ESCOM and Flex4Res research projects to make it usable on an industrial scale.

AAS in practice

In CONTACT Elements for IoT, you can create, manage and share asset administration shells. Our blog post ‘The asset administration shell in practice’ explains how companies benefit from this.

With the digitization roadmap to a truly digital company

The digitization of business processes has received remarkable attention in recent years. On the one hand, the Corona pandemic ruthlessly exposed digital gaps, and on the other hand, in view of the political, social and ecological changes, companies are being called upon more than ever to act in a more agile and sustainable way. Motivation is high enough and progress in digitization is becoming more and more visible. However, implementation is usually less based on a digitization roadmap that shows the milestones and waypoints to the goal, but rather on a salami tactic.

Digitalization in small bites poses risks

When I talk to representatives of medium-sized companies about digitization, the answer is often: Yes, we do it all the time! Examples include actions such as the creation of policies to increase the use of Office software features throughout the company, the introduction of a ticket system, or the use of a requirements management tool in product development.

This reflects a common practice of carrying out digitization projects on a divisional or departmental basis, in relation to individual tasks or sub-processes. At first glance, it often seems attractive to plan and implement projects from a departmental or site perspective, because the coordination effort is lower and department-specific solutions can supposedly be implemented quickly.

In principle, implementing demanding projects in manageable steps is a sensible approach. So does generating benefits quickly and making digitization progress continuously visible. However, the fragmented approach also carries risks: This is when the target image of digitization is unclear and the path to achieving it is not adequately described. Here, there is a realistic risk of not achieving essential goals of digitization projects. For example, not exploiting the potential of new, digital business models and thus not driving forward the digital transformation of the company. Or not using the company-wide and cross-company data treasures if the focus is only on local optimization.

The benefits of a digitization roadmap

To put it up front: With a digitization roadmap, companies can minimize the above-mentioned risks with little effort. It provides a reliable, medium-term guideline for all digitization activities in the company, aligned with a clear target image. With its different perspectives on the topic of digitization, it addresses the specialist departments, IT and management. The digitization roadmap should contain some essential information:

What is the company’s level of digitization?
The basis of the digitization roadmap is an inventory of the current level of digitization in the company. For this purpose, the existing target images, requirements, and activities in the various corporate divisions and hierarchies are reviewed. Common maturity models help to assess the company’s level of digitization.
What is the target scenario?
Once the status quo has been established, a clear, coordinated target scenario for digitization can be drawn up. The target scenario contains an overview of the future digitally end-to-end business processes as well as the future application architecture and the necessary information services.
Which sub steps are necessary?
Once the goal is clear, the next step is to define and describe the necessary subprojects. In order to prioritize the subprojects in a meaningful way, the required internal and external resources and the possible project risks are estimated. The information previously obtained from the inventory is also used to extrapolate the benefit and business potential of the individual digitization subprojects. This makes it possible to calculate business cases for the planned projects.
The project team and management are thus able to decide on the subprojects and their prioritization according to objective cost/benefit criteria, resource availability and other company-specific parameters. In this way, today’s digitization bites become defined, evaluated subprojects within an overarching context.
What is the business case?
The high degree of concretization of digitization activities, especially of the relevant business case, is an essential basis for reliable financing of digitization projects. For example, special IT project financiers offer flexible top-up leasing that adjusts the leasing rates to the expected increase in benefits. Or even the financing of internal personnel resources. With such financing models, digitization then even succeeds without any restrictions on liquidity.

Conclusion

In the past, only individual projects were often launched. Currently, however, more and more of our customers are taking advantage of strategic planning with digitization roadmaps. With little effort, they offer a reliable orientation for the digital transformation with a clear target picture, concrete business case and alternative financing options.