In most companies today, product development & engineering (PD&E) and supply chain are two different worlds, each with their own rules, their own way of operation and their own approaches. I remember a meeting with a client a couple years ago, where probing about how product development and manufacturing communicate to optimize the design of a product for manufacturing, and was told in no uncertain terms that the company had a product development, an engineering and a manufacturing department, and that each was independent.
Beyond the organizational debates, it is critical for organizations to have PD&E and Supply Chain working closer together. As patil, Bath and Ragsdell point out in an article titled "Accelerated Product development and Supply Chain Management", the three key components influencing the profitability of manufacturing organizations are quality, cost and delivery. It is by taking a holistic view that these objectives can be addressed.
PD&E should lead the product lifecycle, from concept development to end-of-life, being responsible not only to bring the concept to market (New Product Introduction), but also to manage all engineering changes along the lifecycle of the product. Gaining feedback from services (both for products under warranty and for others), the PD&E team can improve the quality of the product, and with it the experience of the customer.
Supply Chain on the other hand is responsible for the cash-to-cash cycle, from the order to the delivery of the product. They handle the manufacturing (outsourced or not), the supply of components/ingredients, the delivery of the product through the chosen distribution channels and the services/reverse logistics.
Not only do information flows need to be exchanged between the two key business processes, but decisions taken in one have major impact in the other. Many years ago, companies started to focus on "design for manufacturing (DfM)", now a newer term; "design for supply chain" is in vogue. But in practice, how much is implemented? That's the real question.
PD&E teams are creative and focused on innovation, while Supply Chain teams focus mainly on operations, ensuring the predictability of their eco-system. A different type of individuals can be found in each organization. This results in mis-understandings. Conflicts are difficult to settle and final decisions may have to be taken high up the hierarchy.
Developing an understanding of how the other party operates is critical for developing a more integrated approach. Years ago, when implementing their DfM program, HP used to establish combined teams (product development & manufacturing) that took the product from concept to market. That team then lead the manufacturing for the first 6 months of production, gaining an understanding of the implications of decisions taken in the design process. This helped us in those days foster the link between the two processes.
But the human aspect is not the only one. The product lifecycle process is mainly articulated around a PLM system, while the cash-to-cash process runs on an ERP system. Both systems are different in nature and integrating them is difficult. Often the introduction of the new product is the breakpoint. That is where the BOM and associated information is transferred from the PLM system to the ERP one. But that does not resolve the post NPI engineering changes, so building a bridge between PLM and ERP is a real need. SAP has done that with their SAP PLM module, but this one is not popular in the discrete manufacturing world. So, the problem remains.
One additional level of complexity is the increased involvement of suppliers in both the product lifecycle and cash-to-cash processes. Being it due to manufacturing outsourcing, or to optimize the utilization of specific components or technologies, one is now confronted not only with the integration of PLM and ERP, but also with the linkage of the supplier (and his systems) in the information flow. We believe that, moving forward, the latter will be addressed through community clouds, as described elsewhere on this blog.
There is space for a true PLM/ERP integration ant to my knowledge, this has not been solved yet in a satisfactory way. There is still room for improvement.
