While implementing a Product Lifecycle Management (PLM) solution may improve efficiencies and help shorten the development cycle, there are capabilities and benefits that exist far beyond product development. Companies can – and should – leverage the information within a PLM solution and use it in downstream supply chain systems. Doing so provides capabilities to promote better collaboration with suppliers, improve social compliance measures and extend overall visibility.
A number of PLM software vendors already include some level of supply chain functionality in their solutions. Functional capabilities that lend themselves well to extending information that exists in PLM solutions include:
- Production and logistics tracking
- Social and environmental compliance
- Product quality
To facilitate this, a new twist on a proven concept has become more prevalent over the last few years: the Supply Chain Control Tower. The basic concept of the Supply Chain Control Tower is to receive and manage data from different systems and enable identification and management of supply chain disruptions before and as they arise. The concept of the Supply Chain Control Tower is to bring all information into a central hub for better visibility. Similar to an air traffic control tower that manages aircraft on the ground and through controlled airspace, the Supply Chain Control Tower manages all of the information regarding the production and delivery of a product.
As an example, let’s consider a retailer who develops a new blouse. At adoption, the new product information is sent from the PLM system to the Control Tower. A sticking point for some companies is confidence that the raw materials have been purchased from the supplier’s mill and are on schedule to arrive at the factory on time. A Control Tower could signal whether the “Raw Material Purchase” event has happened within a pre-defined, required number of days after the “PO Create Date.” The Control Tower could continue to monitor the blouse’s subsequent production tracking events (e.g., Raw Materials Received, Sewing Complete) and provide notification of any exceptions.
By leveraging the information in a PLM solution to feed a Supply Chain Control Tower, the same product information is managed from the pre-development process through DC / store receipt, including production and transit milestones. This full cycle visibility allows a company to minimize the risk of not meeting demand by addressing and resolving supply chain disruptions with their partners sooner and more effectively.
PLM can also help a company with verifying and managing social compliance audits with their suppliers. Typically, these audits are performed on a yearly basis, but in reality, it is a non-stop evaluation process.
At any time, there may be an event that could force a company to update their compliance rating for a factory. This rating and the audit date should be entered into or sent to a PLM solution, allowing the sourcing and production teams to identify their compliant suppliers and those that need additional effort to become compliant. Additionally, by recording the audit date, it will inform overseas teams when a supplier and / or factory should be recertified. This will minimize the risk that a product will be developed with a non-compliant supplier / factory.
While audits and social compliance verification typically occur prior to product development with a supplier, there are instances where a supplier may fail these audits or re-audits after the product has already been developed. Using PLM data to identify which suppliers have been verified as compliant, downstream systems will have immediate visibility to any non-compliant suppliers that may have current transactions in their system.
An additional benefit of allowing the development team to have visibility to certified suppliers is to improve product quality. Suppliers that have passed the social compliance standard are more likely than those that have not passed to have a positive and safe work environment. When workers are treated properly, the workforce is happier and more stable, thereby reducing employee turnover. A more tenured workforce is traditionally better trained and produces a higher quality product than newer workers who may be less experienced and have less training.
Companies measuring the on-time delivery of orders, monitoring social compliance and overseeing a quality management program, have the necessary information to create a supplier scorecard within the PLM solution. On a supplier scorecard, a rating system is created for each category based on predefined criteria on which a supplier can be rated. Data to determine these ratings would come from a PLM solution and other downstream systems.
An important benefit of a supplier scorecard is to use it as a tool to collaboratively work with suppliers. If a supplier is rated “unacceptable” in a category, the supplier can be assisted in creating a corrective action plan to improve their performance. For example, let’s say that a supplier’s quality rating is consistently below the acceptable level. Further investigation identifies an issue with fit samples consistently being out of tolerance. Using this information, a company can assist the supplier in developing a plan to improve production consistency. Another example is if the supplier has been inconsistent with on-time purchase order deliveries. The sourcing team can review the orders and determine if the late deliveries include products that were added late, not allowing for sufficient production time, or if the supplier continually misses the same production-tracking event. Once a cause is determined, the sourcing team can assist the supplier in developing a plan to correct the issue. By creating the scorecard in PLM, production and sourcing teams can easily review supplier ratings and use the scorecard to strengthen supplier relationships by advising and assisting them with performance improvements.
To summarize, Supplier collaboration, social compliance and scorecards are excellent capabilities that are natural extensions of your PLM investment. Leveraging the Supply Chain Control Tower with supplier scorecards, companies can be in a much better position to track and measure production and quickly respond to exceptions. These capabilities enable companies to be better prepared to handle issues as they arise and proactively minimize the risk of future supply chain disruptions and ultimately promote better collaboration throughout the supply chain.