PLM Metrics Phase IIIDeveloping a PLM Balanced Scorecard
Final Report for PLM Advisory BoardApril 30, 2009
Dr. Lisa Ncube
Introduction
Measuring the impact of PLM
◦ How well are we PLMing?
◦ Can we enhance the traceability of our PLM investments?
Metrics Framework
Key Metrics
Strategy
&
Initiatives
Definition of Success
Key Performance
Indicators
PLM
Processes
Assessment & Analysis
InfluenceExecute
Implementing a Performance Measurement System
The Balanced Scorecard for PLM
Basic Design Of A Balanced ScorecardPerformance System
Vision&
Strategy
Customers/CitizensMeasure Target InitiativeObjective Customers
Measure Target InitiativeObjectiveLearning & GrowthLearning
&Growth
Objective Measure Target InitiativeBudget
Financial
Measure Target InitiativeInternal Business Process
Objective Internal BusinessProcesses
Source: Kaplan & Norton
PLM Balanced Scorecard
Business Processes
PLM Strategy Map: PLM Objectives
IncreaseNetworkCapacity
Reduce production rework &
inventory scrap
ReduceProcurement
Steps
Reduce product unit/dev
costs
OrganizationalCapacity & Outcomes
Financial Inputs/Results
Reduce change related admin
overhead
Manage increased product
complexity
Plug gaps in current business
processes
LowerWait Time
Customer Outputs
Enhance cooperation w/ supply
chain partners
Increase product quality
Reduce Time-to-market
LowerCycle Time
Improve customer
satisfaction
Increase market share
Increase revenue
•Outcomes metrics: Strategic & Effectiveness•Results, impacts
• Output metrics: Tactical & Efficiency
• Products and services produced
• Process metrics• Activities, efforts,
workflow
• Input metrics• Resources,
including cost and workforce; Financial Results
Financial Processes
Organizational CapacityCustomers
Are We Doing The Right Things?(What?)
Are We Doing Things Right?(How?)
Balanced Scorecard Performance Measures
Customers
Internal Business
Processes
Financial / Results
OrganizationCapacity
Achievement of Strategic ResultsBusiness Impacts
Changes in Process Efficiency
Changes in Employee Knowledge, Skills, Attitudes, Behavior, and Abilities
Production Efficiency/Effectiveness Measures
Infrastructure Capacity Gain Measures
Return on Investment (Product Effectiveness)Or
Input Measures (Resource Adequacy)
Measurement Categories
Identifying Metrics for the BSCGGI (Goldense Group Inc)Metrics Categories
Planning (lead) – strategic, measure progress being made toward objective (performance driver)
Proactive – tactical, used after approval of product concept
Predictive – predict final outcomes Reactive (lag) – achievement of an objective
(output/outcome measure) accounts for what has happened
Financials
0102030405060708090
Manufacturing cashexpense per
product/project
Mfg eng cash expensecost per
product/project
Plan/design cashexpense cost perproduct/project
Mfg eng capital costper product/project
Mfg dev cost perproject/product
Plan/design cost perproduct/project
Plan/design dev costper product/project
Manufactruing eng devcost per
project/product
Cash expense cost perproduct/project
Mfg capital cost perproduct/project
Used
Not used
Used/important
Process
0102030405060708090
100
Cost permanufacturing error
Capital cost perproject/product
Cost permanufacturing eng
error
Cost per plan &design errors
Dev cost perproject/productParts re-used
Business processesre-engineered
Time formanufactuing
Time formanufacturingengineering
Used
Not used
Used/important
Outputs
0102030405060708090
100
Post-production designchanges Suppliers meeting
requirementsTime for product plan& design
Eng change orders
Plan & design errors
Manufacturing engerrors
Pre-production designchanges
Product prototypes
Time-to-market fornew productsTime-to-market for
product improvementsManufacturing errorsInventory
Time for break-even
RFP's won
Revenue from newproducts
Personnel output
Cost of tooldesign/redesign
Responses to RFP's
New customers
New productscustomers
Used
Not used
Used/important
Short-Term Outcomes
0102030405060708090
100 Market share
Overall revenue
Time to developnew ideas
Hours of mfndowntime
Apps, OS, & DBMSintegrated
Newfunctions/features
Documentation of"disposal"
Documentation of"support"
Product failures
Product recalls
Simulatedprototypes
Simulated tests
Used
Not used
Used/important
Medium-term Outcomes
0102030405060708090
100
Collaborativeresearch
Liability lawsuits
New industryinitiatives
Product ideasevaluated
New products
Warranty claims
Used
Not used
Used/important
Long-term Outcomes
010203040506070
Reallocationmfg eng
processs time
Reallocationmfg process
time
Reallocationplan & designprocess time
UsedNot usedUsed/important
Putting it all together
Performance-Based Measurement System
METRICS
Program 3
Initiatives
Program 5
Program 4
$ xx M
$ xx M
$ xx M
$ xx M
$ xx M
$ xx M
$ xx M
$ xx MProgram 1
Program 2 $ xx M
$ xx M
InfrastructureOther Indirects
$ xx MProgram 6
Objectives/Targets
StrategicGoals
Goal 1
Goal 2
Goal 3
Goal 4
Goal 5
Adapted from: Rohm, 2002
F
C
O
P
MEASURING PLM ROI "(T - E) + R = ALE
"T" is the cost of new PLM initiative. "E" is the dollar savings recovered from existing
initiatives. "R" is the cost of non-PLM initiatives (). "ALE" is the Annual Loss Expectancy yield (the
amount of money you will lose due to PLM and PLM initiatives).
To determine the return on PLM investment, divide the expected annual loss (ALE) by total revenues realized after implementing the new PLM solution..."
ReferencesA Balancing Act: Developing and Using Balanced Scorecard Performance Systems, Howard Rohm, Perform, June 2002Bridges, W., Managing Transitions: Making the most of change Perseus Books Group. Jackson, Tennessee, 2003, pp 4-7.Building & Implementing A Balanced Scorecard: Nine Steps to SuccessTM, Howard Rohm, U.S. Foundation for Performance MeasurementCIMdata, PDM to PLM: Growth of AN Industry. A CIMdata Report, March 2003, 4.CIMdata, PLM and ERP Integration: Business efficiency and value. A CIMdata Report, March 2003, 8.CIMdata, Product Lifecycle Management. A CIMdata Report, June 2006, 1.Deming, E., The New Economics For Industry, Government, Education. Massachusetts Institute of Technology Press. Cambridge,
Massachusetts, 1993. Engardio, P., Chindia. McGraw-Hill Co. Inc. New York, 2007, pp 37, 181.Friedman, T.L., The World Is Flat. Farrar, Straus and Giroux 2006, pp 1-488.Gould, L.S., The ABCs of PLM. Automotive Design & Production, December 2003, 50-52.Grieves, M., Product Lifecycle Management: Driving the Next Generation of Lean Thinking The McGraw-Hill Co., Inc. New York, 2006,
pp 95-120.How To Measure Performance: A Handbook of Techniques and Tools, Performance-Based Management Special Interest Group, U.S.
Department of EnergyIBM, Integral Powertrain: Driving down the time and cost of powertrain engineering with PLM. IBM Eurocoordination. Paris, France,
2004, pp 2-7.Keeping Score, Mark Graham Brown, Quality ResourcesOperational Performance Measurement: Increasing Total Productivity, Will Kaydos, Saint Lucie PressPerformance Drivers, Niles-Goram Olve, Jan Roy and Magnus Wetter, WileyReid, T.R., The United States of Europe: The new superpower and the end of American supremacy. Penguin Books, New York, 2004, pp
100-102.Stark, J., Product Lifecycle Management: 21st century Paradigm for Product Realisation (Springer 2004).Symmonds, M., PLM Metrics. (Seattle, Washington: Boeing Technology 2005), 4.The Balanced Scorecard, Robert Kaplan & David Norton, Harvard Business School Press The Strategy-Focused Organization, Robert Kaplan & David Norton, Harvard Business School PressUGS, Best Practice Brief. Retrieved from www.ugs.com, 15 February 2007, 1.
AcknowledgmentsThe author wish to acknowledge the support: Center for Product Lifecycle Management Excellence, Purdue University, “PLM Metrics Project” Center for Advanced Manufacturing, Purdue University, “PLM Metrics Project” Department of Organizational Leadership and Supervision, Purdue University