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PLM Metrics Phase III Developing a PLM Balanced Scorecard Final Report for PLM Advisory Board April 30, 2009 Dr. Lisa Ncube

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Page 1: PLM Metrics Phase III Developing a PLM Balanced …...PLM Metrics Phase III Developing a PLM Balanced Scorecard Final Report for PLM Advisory Board April 30, 2009 Dr. Lisa Ncube Business

PLM Metrics Phase IIIDeveloping a PLM Balanced Scorecard

Final Report for PLM Advisory BoardApril 30, 2009

Dr. Lisa Ncube

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Introduction

Measuring the impact of PLM

◦ How well are we PLMing?

◦ Can we enhance the traceability of our PLM investments?

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Metrics Framework

Key Metrics

Strategy

&

Initiatives

Definition of Success

Key Performance

Indicators

PLM

Processes

Assessment & Analysis

InfluenceExecute

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Implementing a Performance Measurement System

The Balanced Scorecard for PLM

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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

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PLM Balanced Scorecard

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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

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•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?)

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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

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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

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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

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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

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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

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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

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Medium-term Outcomes

0102030405060708090

100

Collaborativeresearch

Liability lawsuits

New industryinitiatives

Product ideasevaluated

New products

Warranty claims

Used

Not used

Used/important

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Long-term Outcomes

010203040506070

Reallocationmfg eng

processs time

Reallocationmfg process

time

Reallocationplan & designprocess time

UsedNot usedUsed/important

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Putting it all together

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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

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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..."

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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.

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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