What Is Product Lifecycle Management (PLM)?
Product lifecycle management (PLM) refers to the handling of a good as it moves through the typical stages of its product life: development and introduction, growth, maturity/stability, and decline.
This handling involves both the manufacturing of the good and the marketing of it. The concept of product life cycle helps inform business decision-making, from pricing and promotion to expansion or cost-cutting.
- Product lifecycle management (PLM) handles a firm's approach to the various phases of a product's development through to its ultimate decline.
- PLM involves all stages, including the development and manufacturing of a product, to its marketing and customer segmentation.
- The main benefits of PLM include shortening product development times, knowing when to ramp up or reduce manufacturing efforts, and how to focus marketing efforts.
Understanding Product Lifecycle Management (PLM)
Effective product life cycle management brings together the many companies, departments, and employees involved with the product's production to streamline their activities, with the ultimate goal of producing a product that outperforms its competitors, is highly profitable, and lasts as long as consumer demand and technology permit. It goes well beyond just setting up a bill of materials (BOM).
PLM systems help organizations cope with the increasing complexity and engineering challenges of developing new products. They can be considered one of the four cornerstones of a manufacturing corporation's information technology structure, the others being the management of communications with their clients (customer relationship management [CRM]), their dealings with suppliers (supply chain management [SCM]), and their resources within the enterprise (enterprise resource planning [ERP]).
Identifying which stage of its life cycle a product is in determines how it will be marketed. A new product (one in the introduction stage), for example, needs to be explained, while a mature product needs to be differentiated. PLM can affect more fundamental elements of a product, too. Even after it reaches maturity, a product can still grow—especially if it is updated or augmented in some way.
Benefits of Product Lifecycle Management
Sound product lifecycle management has many benefits, such as getting the product to market faster, putting a higher quality product on the market, improving product safety, increasing sales opportunities, and reducing errors and waste. Specialized computer software is available to assist with PLM through functions such as document management, design integration, and process management.
Other benefits include:
- Improved product quality and reliability
- Reduced prototyping costs
- More accurate and timely requests for quote (RFQ), i.e., solicitations from suppliers
- Quick identification of sales opportunities and revenue contributions
- Savings through the reuse of original data
- A framework for product optimization
- Reduced waste
- Improved ability to manage seasonal fluctuation
- Improved forecasting to reduce material costs
- Maximized supply chain collaboration
A History of Product Lifecycle Management (PLM)
The concept of a product having stages of life (and the need to manage them) arose as early as 1931. Around 1957, an employee of Booz Allen Hamilton, the advertising agency, theorized a five-step life cycle for goods, beginning with the introduction phase, rising through growth and maturity, and eventually hitting saturation and decline.
PLM developed as a manufacturing and marketing tool for businesses seeking to maximize the advantage of bringing new products to the market first.
One of the first recorded applications of modern PLM occurred with American Motors Corporation (AMC) in 1985. Looking for a way to speed up its product development process to better compete against its larger competitors in 1985—while lacking their larger budgets—AMC decided to emphasize bolstering the product lifecycle of its prime products (particularly Jeeps). Following that strategy, after introducing its compact Jeep Cherokee, the vehicle that launched the modern sport utility vehicle (SUV) market, AMC began development of a new model that eventually debuted as the Jeep Grand Cherokee.
The first part in its quest for faster product development was the advent of computer-aided design (CAD) software systems that made engineers more productive. The second part of this effort was the new communication system that allowed conflicts to be resolved faster, as well as reducing costly engineering changes because all drawings and documents were in a central database.
The product data management was so effective that after AMC was purchased by Chrysler, the system was expanded throughout the enterprise, connecting everyone involved in designing and building products. By adopting PLM technology, Chrysler was able to become the auto industry's lowest-cost producer by the mid-1990s.