Part of the problem (until now) was no PLM software vendors were designing products for the process industry. Where discrete manufacturers have a plethora of vendors to choose from, process industry players, such as specialty chemical manufacturers or the food & beverage industry, have pretty much been on their own.
"It's a bit of hodge podge of solutions that companies are using today and there really has not been a lot of solutions available to the process industry," said ARC Advisory Group Analyst, John Moore.
The Paper Chase
To date, processors have relied mainly on paper-based systems such as StageGate, a product development and tracking methodology, or home-grown solutions that cover only limited aspects of the product development/management process, said Andy Michuda, Sopheon's CEO. By implementing PLM, the goal is to get new products to market faster, in more controlled fashion that cuts down on wasted development costs and increases the percentage of revenues from new products.
"The big trend and change we see is ... people are recognizing they have to innovate and get new products to market in order to break the trend of revenue flow in their financial metrics," he said. "In order to accomplish that, they have to fundamentally change the way they do business."
In the food & beverage industry, where innovation is constant, 78% of all new products fail, said Michuda. To cut down on this number and focus more efforts on products with a greater chance of success, companies are using PLM to trim new product development projects from hundreds, in some cases, to just the few with the most potential.
While market penetration is still very, very small at less than five percent, according to Moore, processors are expected to turn to PLM in the coming years in greater and greater numbers not only to help them develop new products faster but to set up global recipe repositories accessible world wide.
"If we were to look at the process industry verses the discrete manufacturing industry, recipe management is like their product structure," said Amann. "They have a recipe of what the materials are and how they're going to blend them that really defines what their product is."
Implementing global recipe repositories will enable change management to formulations to occur in a centralized environment instead the somewhat ad-hoc manner in which it occurs today, said Dwight Klappich, vice president of the Enterprise Applications Group at META Group.
Trial & Error
"Today they're doing it manually or they'll have multiple systems," he said. "The key thing that PLM is going to allow you to do is to more rapidly cycle through what today tends to be a trial-and-error process. That's one of the key benefits, is centralizing and putting in control mechanisms"
Also, in the case of specialty chemical processors where tweaking recipes leads to new products and customers are always putting in orders for new types of chemical combinations, having formulas and past trials (and errors) in a central recipe repository would allow makers to handle new product requests more efficiently by calling up past experience. This doesn't really happen today, said Bruce Hudson, a program director at META Group.
"So, you sub-optimize your production based on the inability to collaborate and share information on existing product lines," he said.
This gets expensive and, with most cost cutting already down to the bone at most companies regardless of industry, beefing up the bottom line can only come from new products that actually sell, better facilities management and process controls, and a greater degree of collaboration and visibility into the way things are done that ultimately leads to a more flexible and responsive enterprise, Hudson said.
"When people have cut their costs so much what do you do next?," agreed Klappich. "Well, you stop making bad products. Not only are you getting good products to market faster but you want to get the ones that have economic viability, you want to get them to market faster. And this is where PLM really plays a big role. PLM, at its core, is the ultimate content management system for the company. Enterprise content management (ECM) is one thing, but PLM is truly the content backbone of the organization."