Innovation and regulatory demands spur growth of product life-cycle management
The Food and Drug Administration's decision last week to require food makers to disclose the amount of trans fats in their products is going to set manufacturers scrambling to revise the formulas of some of their best-selling munchies by January 2006, when the labeling law goes into effect. They might do well to follow the lead of RPM International Inc., a holding company for chemicals manufacturers that has learned a thing or two about how to revise product formulas most efficiently when faced with new regulations.
RPM International, whose companies make products such as Rust-Oleum paint and Dap caulking, faces hundreds of thousands of dollars in potential fees, thanks to a levy California imposed this month on products that release volatile organic compounds into the air. RPM is using product life-cycle management (known as PLM) software from Formation Systems Inc. as it revamps formulas to reduce gradually the amount of volatile organic compounds its products emit, and so reduce the company's liability. By centralizing all product data, "we can immediately run a report to see who uses what and how much," CIO Paul Hoogenboom says. PLM software supports collaboration among product designers, sourcing professionals, and engineering and manufacturing staff for cost-analysis of replacement materials, optimizing new formulas, and automating purchase approvals to make sure altered products get to market fast.
ARC Advisory Group expects the market for PLM software and services to grow from $6.3 billion this year to $14.1 billion in 2007. Automotive and other discrete manufacturers have been using PLM variations for years to help introduce products, with a heavy emphasis on computer-aided design and product-data management (see "Revving Up," April 1, 2002). The leaders in the PLM market, EDS and IBM, in conjunction with its partner Dassault Systemes, sold about $3 billion worth of PLM software and related products last year, mainly to the auto industry.
The pressure to cut costs, innovate based on customer demands, reduce time to market, and adhere to a changing slate of regulations is broadening the appeal of PLM technology to more industries, particularly heavily regulated ones such as consumer packaged goods, pharmaceuticals, and life sciences. Those industries were responsible for about 15% of all PLM license revenue last year. They're attracted by PLM software's ability to link together all the people (including customers and suppliers), databases, and processes required not only to design, build, and deploy products but to maintain and improve them, as well. For instance, such software lets companies loop in post-sales data or updates on the latest government mandates.
Product life-cycle management applications tuned to vertical markets are on their way. Formation Systems last week disclosed a partnership with Accelrys, a Pharmacopeia Inc. subsidiary that makes research software. They plan to develop a PLM package aimed at pharmaceuticals companies. This week, Agile Software Inc. will launch a vertical suite of PLM technology aimed at helping medical-device makers improve processes for securing FDA approvals and addressing document-compliance issues. Agile plans suites for pharmaceuticals and consumer packaged-goods companies later this year.
The enterprise resource planning vendors won't be left out. Oracle says life sciences is one of four markets it's focusing on with its first full-featured PLM product, introduced last month. SAP sees a tremendous opportunity for PLM technology among process manufacturers and, by year's end, plans an application built on top of its NetWeaver integration technology to blend data from other enterprise systems with product data, says Stephan Schindewols, VP of PLM.
EDS added to its automotive and aerospace TeamCenter PLM line in the spring with a process-manufacturing offering for the consumer packaged-goods industry, while MatrixOne Inc. unveiled Specification Central for consumer packaged-goods, medical-device, and life-sciences companies. Procter & Gamble Co. had a hand in the development of both those products.
Building A Mobile Business MindsetAmong 688 respondents, 46% have deployed mobile apps, with an additional 24% planning to in the next year. Soon all apps will look like mobile apps – and it's past time for those with no plans to get cracking.
Join us for a roundup of the top stories on InformationWeek.com for the week of December 14, 2014. Be here for the show and for the incredible Friday Afternoon Conversation that runs beside the program.