When Does a Company Need to Start Using A PLM System?

Product Lifecycle Management (PLM) systems are integral to managing a product's lifecycle from inception through engineering design and manufacture to service and disposal. However, knowing when to implement a PLM system can be a challenge for growing companies. This article will explore five critical milestones (figure 1) in a company's growth that may indicate the need for a PLM system and four things to look for at each milestone.

Figure 1: Critical growth milestones for a product-based company

Milestone 1: Increase in Product Complexity

The Evolution of Complexity

As a company matures and expands, its products inevitably become more intricate. This evolution is a natural consequence of growth. Initially, a startup might offer a simple product with just a handful of components. However, as demand increases and the company gains market share, the product line diversifies. New features, variants, and customizations emerge, leading to a proliferation of components and subsystems.

At this critical juncture, a company faces a pivotal milestone: the increase in product complexity. This phase marks a shift from simplicity to multifaceted designs, necessitating a strategic approach to manage the growing intricacy and the entrance of PLM.

The Challenges of Complexity

Managing complex products presents several challenges. First and foremost, the sheer number of product components or variants escalates. Engineers must grapple with intricate assemblies, intricate supply chains, and intricate manufacturing processes. Each additional component introduces potential points of failure, compatibility issues, and maintenance complexities.

Moreover, product data management has become a formidable task. Different departments—such as design, engineering, procurement, and quality control—need seamless access to accurate and up-to-date information. Inefficient data handling can lead to errors, delays, and costly rework.

Suppliers also play a crucial role in this phase. Tracking and managing suppliers across a diverse product portfolio can strain resources. Ensuring timely deliveries, quality control, and compliance with specifications becomes increasingly intricate.

Lastly, the time-to-market expands due to the intricate product development processes. Iterative design cycles, rigorous testing, and coordination among cross-functional teams elongate the product development timeline. Balancing innovation with efficiency becomes a delicate act.

Navigating Complexity Successfully

To thrive during this milestone, companies must adopt robust strategies. Implementing a comprehensive PLM system is essential. This system streamlines data sharing, facilitates collaboration, and ensures consistency across departments. It acts as a central repository for product information, enabling efficient decision-making and reducing errors.

Additionally, investing in supplier relationship management tools helps track supplier performance, monitor compliance, and optimize sourcing. Collaborating closely with suppliers fosters transparency and agility.

Lastly, embracing modular design principles can mitigate complexity. Breaking down products into manageable modules simplifies maintenance, accelerates development, and enhances scalability.

What to look for:

1. An increase in the number of product components or variants.
2. Difficulty in managing product data across different departments.
3. Challenges in tracking and managing suppliers.
4. Increased time-to-market due to complex product development processes.

The increase in product complexity is both a challenge and an opportunity. Companies that navigate this phase successfully position themselves for sustained growth and innovation. By watching for the checklist points —product components, data management, supplier challenges, and time-to-market—organizations can thrive amidst intricate landscapes.

Milestone 2: Expansion into New Markets

Entering new markets often requires adapting existing products to meet different regulatory standards or customer preferences. A survey by PwC found that 75% of private-company chief executives consider innovation as a top growth strategy. As a company matures and solidifies its position, the allure of new markets beckons. Whether it’s crossing borders or venturing into uncharted territories, expansion represents a bold leap. There are critical indicators and requirements during this milestone:

Geographical Ambitions: Companies eyeing growth often strategize to enter new geographical markets. These could be neighboring countries, distant continents, or emerging economies. The decision to expand hinges on market research, feasibility studies, and a keen understanding of local dynamics. The allure lies in untapped customer bases, increased revenue streams, and global visibility.

Navigating Regulatory Labyrinths: Adapting products to meet different regulatory standards becomes paramount. Each market has its unique compliance requirements—be it safety certifications, labeling norms, or environmental mandates. Companies must meticulously align their offerings with local laws while maintaining consistency across their product portfolio.

Variations and Customizations: Managing product variations for diverse markets presents challenges. A product that resonates in one region may need tweaks elsewhere. Cultural preferences, language nuances, and consumer behaviors all come into play. Companies must strike a delicate balance: tailoring products without compromising core features or diluting brand identity.

Cross-Functional Coordination: Global product development teams collaborate across time zones and cultural boundaries. Seamless communication is vital. Engineers, designers, marketers, and supply chain experts must harmonize their efforts. Regular sync-ups, virtual meetings, and shared platforms bridge the geographical gaps. PLM is a key unlock for orchestrating these co-ordinations.

Localization Strategies: Beyond language translation, localization involves deeper cultural adaptation. Marketing campaigns, packaging, and user interfaces must resonate with local sensibilities. A misstep can alienate customers or even lead to product rejection. Companies invest in cultural intelligence and hire regional experts to navigate this intricate dance.

Risk Mitigation: Entering new markets carries risks—currency fluctuations, political instability, and unforeseen challenges. Robust risk management strategies are essential. Hedging against currency volatility, diversifying suppliers, and understanding geopolitical landscapes safeguard against turbulence.

What to look for:

1. Plans to expand into new geographical markets.
2. The need to adapt products to meet different regulatory standards.
3. Difficulty in managing product variations for different markets.
4. Challenges in coordinating global product development teams.

Expansion into new markets weaves a rich tapestry. It’s a blend of ambition, adaptability, and agility. Companies that master this phase unlock fresh revenue streams, enhance their global footprint, and embrace diversity. As they navigate regulatory mazes and coordinate global teams, they emerge stronger, their products resonating across borders. The journey continues—a symphony of growth notes echoing worldwide.

Milestone 3: Increase in Regulatory Compliance Requirements

As companies grow, they often face increased regulatory compliance requirements, especially in industries like healthcare, automotive, and aerospace. The cost of non-compliance is 2.65 times the cost of compliance according to a study by Ponemon Institute. Industries such as healthcare, automotive, and aerospace operate within stringent regulatory frameworks. Here are the key steps along the way:

Heightened Scrutiny: Growth often attracts regulatory attention. Whether it’s scaling operations, entering new markets, or diversifying product lines, companies find themselves under the microscope. Regulators assess adherence to safety, quality, and ethical standards. Non-compliance can lead to fines, reputational damage, and even legal repercussions. It is critical to control information and documentation securely and centrally at this point. A PLM system is now crucial for day-to-day operations.

Data Management Dilemmas: Tracking compliance data becomes intricate. Companies must maintain records of certifications, safety tests, and adherence to industry-specific norms. The challenge lies in organizing this information across departments, ensuring accuracy, and demonstrating due diligence during audits. This exponential load increase in both data management and the need for data integrity demonstrates the need for a PLM system.

Audit Trails and Document Control: Robust audit trails are essential. Every decision, process change, or product modification must be traceable. Document control—versioning, access permissions, and secure storage—ensures transparency. Companies invest in digital tools to manage this intricate web of documentation by this phase.

The cost of non-compliance looms large. Here’s the equation:

Financial Impact: Fines, penalties, and legal fees eat into profits. Non-compliance disrupts operations, delays product launches, and tarnishes brand reputation. The price tag extends beyond monetary losses—it affects investor confidence and stakeholder trust.

Operational Burden: Managing compliance drains resources. Dedicated teams monitor regulations, interpret updates, and implement changes. The intricate dance between legal experts, engineers, and quality control personnel ensures alignment with evolving standards.

Innovation Trade-Off: Striking a balance between compliance and innovation is delicate. Rigidity stifles creativity, while laxity risks violations. Companies must navigate this tightrope, adapting products without compromising safety or integrity.

What to look for:

1. Increased regulatory scrutiny due to company growth or entry into regulated industries.
2. Difficulty in managing and tracking compliance data.
3. The need for robust audit trails and document control.
4. Challenges in maintaining up-to-date knowledge of regulatory changes.
5. The increase in regulatory compliance requirements is both a challenge and an opportunity. Companies that embrace compliance as a strategic advantage thrive.
6. It is recommended that by this phase, companies invest in integrated compliance management systems such as PLM. These platforms streamline data, automate alerts, and provide real-time visibility. Audit readiness becomes seamless.
7. As companies navigate this intricate terrain, they safeguard their growth trajectory. Compliance isn’t a burden—it’s the compass that steers them toward sustainable success.

Milestone 4: Need for Improved Collaboration

Growth often leads to an increase in the number of stakeholders involved in product development, necessitating improved collaboration tools. According to McKinsey, companies that prioritize collaboration and have an inclusive and sustainable mindset towards it are 2.4 times as likely to be profitable and to outperform competitors. As organizations expand, the intricate dance of teamwork becomes even more crucial. As a company grows, its product development ecosystem blossoms. New departments, teams, and external partners add to the complexity. Here’s what to watch for:

Multiplying Departments: Growth often begets complexity. Departments multiply—engineering, design, marketing, supply chain, quality assurance—all collaborating to shape products. The once-cohesive team now spans across functions, geographies, and time zones.

Data Flow Challenges: Managing and sharing product data across this expanding network becomes intricate. Version control, access permissions, and real-time updates are the notes in this collaborative score. Missteps can lead to confusion, delays, and costly rework.

Real-Time Harmonization: The need for real-time collaboration tools crescendos. Virtual whiteboards, shared documents, and video conferencing bridge gaps. Engineers in different continents discuss designs, marketers align messaging, and supply chain experts synchronize production schedules.

Improved collaboration isn’t just about internal teams—it extends to external stakeholders. Here’s where the complexity deepens even further:

Supplier Choreography: Coordinating with suppliers is a delicate dance. Timely component deliveries, quality assurance checks, and cost negotiations harmonize the supply chain. Misaligned steps disrupt production rhythms.

Customer Insights Ensemble: Engaging with customers enriches collaboration. Feedback loops—surveys, focus groups, and user testing—fine-tune products. The voice of the end-user resonates across departments, shaping features and enhancements.

What to look for:

1. An increase in the number of departments or teams involved in product development.
2. Difficulty in managing and sharing product data across teams.
3. The need for real-time collaboration tools.
4. Challenges in coordinating with external stakeholders like suppliers and customers.

Improved collaboration isn’t a mere tool—it’s the heartbeat of growth. Companies that prioritize cross-functional harmony thrive at this point in their lifecycle, and a PLM system is a competitive advantage.

Using a PLM as a unified platform means investing in collaboration hubs—integrated systems where teams collaborate. Real-time chats, shared calendars, and project management tools orchestrate seamless collaboration.

Milestone 5: Increase in Product Portfolio

As companies grow, they often expand their product portfolio. Managing multiple products simultaneously can be a challenge without a robust PLM system. A study by BCG found that innovation-leading companies with a well-managed and balanced product portfolio outperform their competitors by 4 times with their innovation output as a percentage of sales (7% to 27%). A growing company often finds its product portfolio blossoming; new offerings sprout up—variants, extensions, and entirely fresh lines. Important markers for this phase are:

Product Proliferation: As revenue streams widen, so does the product spectrum. Companies introduce new SKUs, features, and configurations. The once-simple lineup now spans diverse categories, catering to varying customer needs. This expansion fuels growth but also introduces complexity. A company’s PLM will need to handle exponentially more complexity and combinations.

Data Tangle: Managing and tracking product data across this expanding canvas becomes intricate. Each product has its lifecycle—design, development, manufacturing, marketing, and support. Keeping tabs on specifications, revisions, and compliance requirements demands a robust PLM system. Without efficient tools, chaos looms.

Balancing a burgeoning product portfolio requires finesse. Here’s where the work builds for companies at this phase:

Portfolio Optimization: Not all products contribute equally. Some are stars, others steady performers, and a few laggards. Rationalizing the portfolio involves pruning underperformers, streamlining variants, and aligning offerings with strategic goals. A PLM system needs to indicate which ones are one. The goal isn’t just quantity—it’s quality and relevance. 

Customer-Centric Approach: Amid the cacophony of SKUs, the customer’s voice must resonate. What do they truly value? Which products solve their pain points? Companies that listen, iterate, and tailor offerings based on customer feedback thrive. It’s not about having more—it’s about having what matters, and a PLM system needs to reflect what matters to the customer throughout this phase.

What to look for:

1. An increase in the number of products or product lines.
2. Difficulty in managing and tracking product data across multiple products.
3. The need for tools to manage product portfolios effectively.
4. Challenges in aligning product development with strategic business goals.

A robust PLM system is essential. It centralizes data, streamlines workflows, and ensures consistency. From concept to retirement, PLM tools should orchestrate the entire product portfolio.

Conclusion

In summary, the article highlights five pivotal milestones in a company’s growth that signal the need for a Product Lifecycle Management system. First, as a company expands, product complexity escalates due to increased components, suppliers, and development processes. Second, venturing into new markets necessitates adapting existing products to meet diverse regulatory standards and customer preferences. Third, growing companies face heightened regulatory compliance requirements, particularly in sectors like healthcare, automotive, and aerospace. Fourth, improved collaboration tools become essential as the number of stakeholders involved in product development grows. Finally, managing an expanding product portfolio without a robust PLM system poses challenges.

By closely monitoring these milestones and their associated challenges, companies can make informed decisions about implementing a PLM system. Such a strategic move centralizes data, streamlines workflows, and ensures consistency, ultimately addressing the hurdles encountered at each growth stage.