Speed-to-Market

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SPEED-TO-MARKET

The hallmark characteristic of the Internet since its expansion into the personal and commercial realms is speed: instantaneous communication via e-mail, chat rooms, and instant messaging. In business those who were among the first to establish a quality presence on the Web were usually the ones who won and kept customers. As the Internet has grown, new Web-based collaborative applications have been developed that enable businesses, both electronic and traditional, to cut the time and cost of developing products and getting them to market. They not only give firms a natural competitive advantage; more and more customers actively seek out partner-firms who are committed to getting products to market faster. At the same time, they foster—even require—a degree of collaboration between co-workers and businesses hitherto rare. In the view of some experts, these tools are just the beginning of a revolution in how companies develop, design, and market their products.

The new electronic tools have been called Product Lifecycle Management (PLM) or Collaborative Commerce. They are designed to accelerate the movement of products to market using Web-based systems that form virtual workplaces. Collaboration is the key. The systems make it possible to share, manipulate, communicate and cooperate on data within and across organizations. They make every aspect of a project available to everyone working on it, such as members of teams working together on a particular design, or between a manufacturing business and its contractors, or for suppliers providing "in-time" service to retailers. They can be applied to virtually all phases of business: project management, product design, supply chain management and materials sourcing, and inventory control. They can be used by traditional as well as e-businesses.

One way a collaborative PML technology might increase a product's speed to market is to streamline a company's design process. The design phase in a complex project involves collaboration among numerous members of a company, as well as with staff of a contracting organization or suppliers. PML software places the work in one virtual space, rather than chopping it up into parts and distributing them to isolated, individual workstations. All engineers and marketing people have access to the same, most current information. Contracting firms are able to monitor a project's progress. The savings in time and money have a sizable impact on the costs of the final product. Forrester Research Inc. estimates that the design phase can determine as much as 70 to 80 percent of a product's cost over its life cycle.

Such systems offer a plethora of advantages to companies that implement them:

Project data is always accessible. Everyone involved, even members of different companies or organizations participating in the project, have immediate access to plans. Team members no longer lack a crucial design element just because it is stored away in the computer—or head—of a worker who is out of the office. PML technology enables companies to build a comprehensive vault of data from the beginning of a project to its end, outlasting the presence of individual workers.
Project data is always complete and up-to-date. Engineers, for example no longer waste time working on designs that have been made obsolete by other parts of the design process. Clients can track product specifications and offer timely input that reaches everyone. Some PML systems also permit the history of changes in a design to be tracked.
Communication time is reduced. Suppliers can track inventory levels at their clients sites and take an active role in assuring that levels are always sufficient. Unanswered e-mail or phone calls no loner result in costly delays. Planners can sometimes hold real-time meetings in the virtual space of a PML system.

Studies show that the PML systems are extremely effective, in particular with complex systems. A study of manufacturers who used the technology by Sextant Research showed that tool changes were cut by 80 percent, inventory of finished goods by 60 percent, floor space taken up by raw materials by 25 percent, and unplanned weekend overtime by 75 percent. They also speed the movement of a product to market. Profits on a mobile phone, for example, can be boosted by as much as 50 percent if it hits the market a month ahead of schedule. Hence companies that utilize PML are extremely attractive to customers. Some analysts believe that PML may soon become a prerequisite to doing business in sectors like manufacturing.

A study by AMR Research predicted revenues in the PLM market would increase from $1.2 billion in 2000 to about $8 billion by 2005. Seventy-two percent of manufacturing executives surveyed by Forrester Research were convinced it would be critical to their success in the immediate future. As a result, a number of software and database manufacturers are diving into the area, including giants such as SAP AG and Oracle Corporation as well as smaller, more specialized firms like Alventive Inc., NexPrise Inc., Parametric.

Despite the undoubted benefits, there are also challenges to be met by users. Data security is critical to new product planning and marketing strategies, particularly so when they are done on networks that permit access from multiple organizations. The PML systems themselves will have to evolve in flexible frameworks that permit easy exchange of information between multiple computer systems. Another challenge will be getting engineers—used to working autonomously and without outside interference—to accept input from outside. On a broader scale, companies will be forced to implement significant changes to many internal processes, such as product design and inventory management.