Driving Product Profitability with PLM

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Driving Product Profitability with PLM

• Steven Young
• Director, Agile Product Marketing

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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."
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NorCal OAUG 2009 Training
Drive Product Profitability
Move Towards Enterprise PLM
Manage Product Cost Risk
Leverage Oracle Agile PLM
Customer Success
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Drive Product Profitability
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Wall Streets Message
6 Months Ago
Today

• Innovation
• Premium Products
• Revenue Generation
• Rising Demand
• Supply Chain Speed
• Labor Creativity
• Supply Shortages
• Scaling Up

• Waste Reduction
• Value Products
• Cost Reduction
• Flat or Falling Demand
• Supply Chain Efficiency
• Labor Productivity
• Excess Supply
• Scaling Down

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Enterprise Architecture Design Chain, Supply
Chain and Demand Chain
Demand
Supply
Operational Excellence
Integrations to ERP, Mfg, Sourcing, Planning,
Logistics, Order Mgmt
Integrations to CRM, Demand Planning, Channels,
Service Systems, Pricing
Product Innovation
Enterprise intelligence
80 of your Supply Chain decisions are tied
during Design time
Refer to AMR Demand Driven Supply Network Model
for Details
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Its not just Supply-Side anymore Shift to
Value Chain Focus for Differentiation (Supply,
Demand, Product)
Leader
Operational Excellence Perfect Order, Cycle
Times, Total SCM Cost
Laggard
Laggard
Leader
Innovation Excellence Time to Value, Return on RD
Source AMR, May 2008
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The Bridge to the 21st Century. . .
Source Adapted from AMR Maturity Curve and
Gartner Maturity Model
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Next Generation Enterprise PLM Capabilities
Predictable Open Innovation
Integrated Manufacturing Service
Traceability of Customer Needs
Demand Driven Product Planning
Solutions
Web 2.0/ Enterprise 2.0
Service Oriented Architecture
Information-Analytics Driven Architecture
Technology
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Move Towards Enterprise PLM
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Look At The Complete LifecycleEnterprise PLM
System Should Be Comprehensive
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Needs/Requirements
Service and Maintenance
Product Design and Prototyping
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• Market Analytics
• Portfolio Mgmt
• Ideation Mgmt
• Requirements Mgmt
• ETO

• CAD Applications
• Design Data Mgmt
• PDM
• Visualization
• Prototype Mfg and Simulation

• Integration from Service request systems
• Service BOM
• Integration to Maintenance and Repair system

Enterprise Product Data Model Change Mgmt and
Workflows Governance, Quality and
Compliance Secure Collaboration and
Visibility Analytics and Reporting
Launch and Ramp-up
Fulfillment execution Simulation
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• Direct Material Sourcing
• ERP Enablement
• Collaborative Product Process Planning
• Integration to Manufacturing Execution
• Integration to Shop floor

Sales and Marketing Modeling

• Product Mapping and Transformation to fulfillment
  model
• Pricing and Promotions
• Integration to Demand, Supply Chain Planning and
  Logistics

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• Product Sales Configurations
• Physical, Service, Content and Financial bundling
• CRM Enablement
• Multi Channel Commerce

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Multi-Enterprise Collaboration
Tier 3
Tier 2
Demand
SUPPLY
Tier 1
Distributors
Outsourced Mfg
OEM
Retailer
Suppliers
3PLs
3PLs
Customers
Upstream Suppliers
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

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PLM Across the Enterprise Maximize Product
Profitability
Product Life Cycle Cash Flow
Cash Flow
Reduced product recalls
Improved regulatory compliance
3 - 20 decrease in COGS
5 - 60 reduction in time to market
10 - 40 increase in RD ops efficiency
Up to 60 faster process cycle times
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Manage Product Cost Risk
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2009 PLM Business Imperatives
Ensure Product Quality Compliance
Accelerate Product Innovation
Manage Product Cost Risk
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Manage Product Cost RiskProfit Leaks
Realized Margin
Proliferation
Supply Risk
Time
Scrap Rework
Cost
Manufacturing building to wrong revisions of
products
Up to 30 of all new designs, parts
suppliers already exist
Critical suppliers shutting down product lines or
going out of business
Product Changes Take 14-21 Days
80 of cost structure and supply risk locked In
early during design
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Manage Product Risk and CostPLM 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
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Maximize Reuse RationalizationPLM Best
Practice Approaches
Capability
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

• 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

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Design for Cost SupplyPLM Best Practice
Approaches
Capability
Value

• Reduce Direct Material Costs by 2-5
• Improve Product Margins at Launch by 5-15
• Ensure continuity of supply
• Speeds new product introduction sourcing cycles
  by 90

• Part, design and supplier scorecarding
• BOM grading analysis
• Target cost/margin mgmt
• Identify resolve supply risk
• New Product Introduction Cost Management
• Multi-Tiered Co-Sourcing

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Reduce Scrap, Rework, PrototypesPLM Best
Practice Approaches
Capability
Value

• Synchronize product definition and changes across
  design, sourcing, and manufacturing
• Collaborate to reduce number of prototype spins
• Manage product end-of-life timing
• Design products to meet quality and regulatory
  compliance requirements
• Time product revisions to optimize for parts
  inventory on hand

• Reduce the scrap and rework costs arising from
• Discarded parts inventory
• Poor product quality
• Product non-compliance
• Wrong revision builds
• Reduce end-of-life processing costs
• Reduce development manufacturing costs for
  prototypes
• Reduce Warranty Service Costs

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Improve Productivity Cycle TimesPLM Best
Practice Approaches
Capability
Value

• 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

• Improve the productivity of engineering,
  sourcing, quality and compliance personnel
• Optimize RD resource utilization
• Minimize losses from non-compliance
• Minimize losses from poor product quality

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Enable Globalization OutsourcingPLM Best
Practice Approaches
Capability
Value

• 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

• 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

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Leverage Oracle Agile PLM
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Acquisition Of Best-in-Class Companies
Oracle FY 2005
Oracle FY 2006
Oracle FY 2007
Oracle FY 2008
4 Acquisitions
17 Acquisitions
14 Acquisitions
8 Acquisitions
Note Includes acquisitions of Covansys and
Hexaware operations acquisition of Mantas and
Castek IP through majority-owned i-flex solutions
company
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Oracles Application Strategy
Complete
Open
Integrated
Comprehensive Industry Portfolio
Standards-Based Architecture
Designed toWork Together
More Value Less Complexity
More Flexibility Less Cost
More Choice Less Risk
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Oracle Agile PLM

• 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,
  best-in-class solution for Process
• Global Specification Mgmt
• Nutritional labeling and packaging
• Supplier collaboration and sourcing
• AutoVue 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

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Product Data Fragmentation
SUPPLIERS
ARTWORK
OUTSOURCED
DESIGN
PARTNERS
CAD
CAD
Quark
Quark
Adobe
Adobe
SCM
SCM
ERP
ERP
CUSTOMERS
Design
Design
BOMS Parts Data
REGULATORY
Samples
Briefs
Briefs
BODIES
Package
Package
Designs
Designs
Submission
Submission
Value Chain
Value Chain
Artwork
Files
Artwork
Files
Formulas
Files
Formulas
Files
Enterprise
Enterprise
Documents Items
Audits
Ideas
Audits
Specifica
Specifica
LEGAL CA
MARKETING
tions
tions
CAD
CAD
Models
Models
Notes
Notes
EDMS
EDMS
Access
Access
Project
Project
Excel
Excel
PROCUREMENT
RD
(EUROPE)
RD
PRODUCTION
ERP
ERP
RD
(ASIA)
Excel
Excel
Recipe
Recipe
(US)
Mgmt
Mgmt
CAD
CAD
MES
MES
SCM
SCM
ERP
ERP
Spec
Spec
MCAD
MCAD
DB
DB
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Oracle Enterprise Product RecordSecure, Real
Time, and Accessible

• Customer Information
• Requirements
• Configurations
• Quality Issues

• Portfolio Information
• Programs
• Schedules
• Resources
• Deliverables

• Compliance Information
• Regulatory
• Standards
• Audits

• Design Information
• Schematics Drawings
• Specifications
• Digital Assets
• Design Reviews

• Service Information
• Corrective Actions
• Field instructions
• Service BOMs

• Purchasing Information
• Pricing
• Part/BOM Costs
• Price History

• Manufacturing Information
• Bills of Materials
• Mfg. Instructions
• Formulations
• Changes Revisions

• Supplier Information
• Approved Vendors
• Preference/Status
• Availability

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PLM Connects the Global Product Network
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Increased Product Network Complexity
Product Complexity Product Proliferation Shorter
Product Lifecycles More NPIs Higher Quality
Requirements Regulatory Compliance Cost
Considerations Mechatronics
Supply Chain Complexity Single Plant Separate
Multi-site Multi-site, Vertically
integrated Supplier Collaboration Few Outsourced
Mfg partners Global Outsourced Mfg partners
Design Network Complexity Central located design
team Global design teams Outsourced Design
partners
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Oracle Agile PLM
Agile Product Collaboration
Engineering, Operations Supply Chain
Enterprise product record visibility, management
collaboration
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Improved Decisions - Right Products Faster
Decision Support
Business Process Workflow Stage Gate Execution
Business Ready Best Practice Applications
Product Record
Enterprise PLM - Secure collaboration across
global product network
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Agile PLM Strengths

• Business Ready Applications
• Out-of-the-Box, Configurable Applications
• Fastest Time-To-Implement Lowest Overall TCO

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• Broadest Enterprise PLM Solution Footprint
• Broadest footprint, strongest adoption outside
  mechanical engineering
• Supply chain, electronics, cost, quality,
  compliance, portfolio, decision support

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• Industry Domain Expertise Best Practices
• 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

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• CAD ERP Agnostic 100 (Enterprise) PLM
  Focused
• MCAD, ECAD, SW Integration Breadth CAD ERP
  agnostic approach

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• Product Network Built Proven
• Built for collaboration across enterprise
  product network since inception
• Mature, out-of-the-box network capabilities 100s
  of live product network customers

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Customer Success
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Enterprise PLM Customers
GSK
Cisco
Apple
Tyson Foods
Coca Cola
Philip Morris International
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Agile PLM Customer Success Managing Product Cost
Risk

• Global leader in secure electronic payment
  technologies, offering advanced secure electronic
  transaction solutions
• Saves about 10,000,000 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 ProCurve is the worlds 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

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VeriFone Inc. Saves 10 Million a Year By
Eliminating Rework, Automating Processes

• COMPANY OVERVIEW
• VeriFone Inc. is a leader in secure electronic
  payment technologies, 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
• CHALLENGES/OPPORTUNITIES
• 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

CUSTOMER PERSPECTIVE The typical product change
process took 20 to 35 days, preventing us from
getting to market as quickly as we wanted. With
Oracles Agile Product Lifecycle Management, we
have reduced turnaround time to just one to two
days. Ipolani Tano, Vice President and CIO

• RESULTS
• Saves about 10 Million a year by eliminating
  rework
• Reduced costly rework by collaborating with CMs
  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
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PLM Customer SuccessEvidence Validating Each
Business Imperative
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Key Takeaways
Summary Constantly squeezed by our customers
for cost reductions 1,750 users 1,100
employees (marketing, RD, technical service,
support) and 650 contract manufacturers Reductio
n in ECO time from 30 days to 2 days Eliminated
400,000 in distribution costs Decreased rework
costs by 10 Million Achieved ROI in 7 months
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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

• Worlds leading supplier of blood processing
  systems
• Realized US1.9 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

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Harris Achieves a 360-degree View of the Product
Record with Agile PLM

• COMPANY OVERVIEW
• Harris Corporation (Harris) is an international
  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
• CHALLENGES/OPPORTUNITIES
• 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

CUSTOMER PERSPECTIVE Oracles 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. Janice Lindsay, Vice
President, Strategic Sourcing, Harris Corporation

• 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
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Closing Thoughts

• Beyond Engineering Innovation
• Enterprise Platform
• Quantifiable Results
• Strategic v. Commodity
• Industry Opportunities

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Agile Training
Uncovering Hidden Costs - PCM
VeriFone Case Study - PCM
Reduce Cost of Product Changes
Best Practices Deploying Global PLM
PLM EBusiness Integration
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