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Product Lifecycle Management: a crative approach?
An analysis of the Launch and Promotion Coordination at LU Benelux
2 Author: Berre van den Akker
Student number: 1333291
University of Groningen. Faculty of Economics & Business Msc Operations & Supply Chains First supervisor: Dr. N.D. van Foreest Second supervisor: Drs. A.J.J. Braaksma
Company: LU General Biscuits Location: Herentals (Belgium) Company supervisor: V. Eyckmans
3 MANAGEMENT SUMMARY
This research is performed at LU General Biscuits; a multinational company in the market for biscuits and cereal snacks, with famous brands like Prince and TUC. LU General Biscuits is a subsidiary company of Kraft Foods. The subject of this research is a specific part of the supply chain department at LU Benelux: the Launch & Promotion Coordination (LPC). The Launch & Promotion Coordination concerns a team that is initiated by the supply chain department in order to coordinate product data and tasks during the execution of projects that concern changes on or around a product.
The work of the LPC-team consists of four core tasks: - Concentration of information
- Providing knowledge and structure - Regulating the flow of information
- Taking away some of the workload of Marketing & Sales
The LPC-team works with a specific information system that is designed to support the work of the team and other actors involved in the different projects: X-act/P-act.
Through interviews and observations different actors involved with LPC have indicated that it doesn’t function up to its full potential: improvements to the effectiveness of LPC are desired. Since the LPC at LU Benelux resembles to the business approach Product Lifecycle Management (PLM), it is decided to use PLM in order to investigate how the effectiveness of the Launch and Promotion Coordination at LU Benelux can be improved. This has resulted in the following research question:
Which factors can contribute to the improvement of the effectiveness of the Product Lifecycle Management at LU Benelux?
As a theoretical part of this research a literature study on the topic of PLM is performed. For the empirical part observations and interviews are used to gain information on the Launch and Promotion Coordination at LU Benelux.
The theoretical framework explores the four main elements of PLM: information, people, processes and technology. It shows which factors are important in order to optimise the information, people, processes and technology of PLM. These factors are summarized in the table below.
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As a result this research shows that the current way of working at LU Benelux, with the LPC-team and the related X-act/P-act system, has brought many improvements to all four factors information, people, processes and technology. However, it also shown that the effectiveness of the Launch and Promotion Coordination at LU Benelux is not optimal yet. The most significant improvement can be made by adjusting the technology, the current X-act/P-act system. In order to become more effective, the LPC-team requires an information system that reflects the right processes, is more user-friendly, better compatible to other systems and provides better management information. Besides adjusting the technology, LU Benelux can also improve the effectiveness of the Launch and Promotion Coordination by better training of employees, a better collaboration between different departments and by reviewing (and if necessary adjusting) the processes as they are defined now.
Knowledge management -How product, process and project knowledge are organized
System vs people - The way the balance between knowledge in the organization and knowledge in a system is established Uniformity - How ad hoc, duplicative and inconsistent information is prevented
Capabilities - How people's experience, education & training and support are employed Organization - The way the interdepartmental integration and authority level are handled Defining - How processes are defined in the organization
Re-engineering - How processes are re-enigineered for a digital environment Integrating - How processes are integrated throughout the organization
Open - The extent to which the technology is open and harmonizable with other business systems Usable - How the technology reflects the processes, is embedded in the organization and is reliable Balanced - The extent to which the development of the PLM organization and the PLM system are balanced People
Processes
5 TABLE OF CONTENTS MANAGEMENT SUMMARY ... 3 CHAPTER 1 - Introduction ... 7 1.1 Kraft Foods ... 7 1.2 LU General Biscuits ... 7
1.3 Launch and Promotion Coordination ... 8
1.4 Information system ... 12
1.5 Research motive ... 12
1.6 Research outline... 14
CHAPTER 2 – Research introduction ... 15
2.1 Problem statement ... 15 2.2 Goal ... 16 2.3 Research question ... 17 2.4 Methodology ... 18 2.4.1 Theoretical part ... 18 2.4.2 Empirical part ... 18 2.4.3 Research Outline ... 19
CHAPTER 3 – Theoretical framework ... 21
3.1 Product Lifecycle Management... 21
3.2 Information ... 23
3.3 People ... 25
3.4 Processes ... 27
3.5 Technology ... 28
3.6 Conclusion theoretical framework ... 30
6 4.3 People ... 36 4.3.1 Capabilities ... 37 4.3.2 Organization ... 38 4.3.3 Diagnosis ... 39 4.4 Processes ... 40 4.4.1 Defining processes... 40 4.4.2 Re-engineering processes ... 42 4.4.3 Integrating processes ... 42 4.4.4 Diagnosis ... 42 4.5 Technology ... 42 4.5.1 Open technology ... 43 4.5.2 Usable technology ... 43 4.5.3 Balanced technology ... 45 4.5.4 Diagnosis ... 45 4.6 Conclusion analysis ... 46 CHAPTER 5 – Conclusion ... 48
5.1 Conclusion & Recommendations ... 48
5.2 Limitations & Further research ... 50
REFERENCES ... 51
Appendix I – Interviews LPC-team ... 53
7 CHAPTER 1 - Introduction
This chapter provides an introduction of the organization where this research takes place: LU General Biscuits Benelux. The first paragraph will focus on the position of LU General Biscuits as a subsidiary company of Kraft Foods. In the second paragraph the organization of LU Benelux is described in more detail. Paragraph 1.3, 1.4 and 1.5 provide an insight on the specific part of the supply chain department that is subject to this research: the Launch and Promotion Coordination. Finally §1.6 will provide an overview of the next chapters.
1.1 Kraft Foods
This research is performed at LU General Biscuits, which is a multinational company in the market for biscuits and cereal snacks, with famous brands like Prince and TUC. LU General Biscuits is a subsidiary company of Kraft Foods since November 2007. Before the acquisition by Kraft Foods, LU was part of the Danone Group. Kraft Foods is currently the worlds 2nd largest food and beverage company, with total revenues of 41.9 billion dollars. In its day-to-day operations Kraft is divided geographically. LU General Biscuits is part of Kraft Foods Europe. This European part of Kraft Foods is divided in five categories: biscuits, coffee, chocolate, cheese & dairy and local brands. These European businesses combined place Kraft Foods in the top 3 of food and beverage companies in Europe, with net revenues of 9.7 billion dollars and employing more than 18.000 people in 17 countries. LU General Biscuits belongs to the Kraft Europe Biscuits category. Other famous Kraft brands include Cote d’Or, Milka and Philadelphia.
1.2 LU General Biscuits
As already stated in the previous paragraph LU General Biscuits is a multinational company in the market for biscuits and cereal snacks. It has its headquarters in Paris and production sites in Belgium, France, Spain, Italy, Czech Republic and Poland. In addition to the production in its own factories, LU has also outsourced production to other companies. The LU products (including the famous brands of Prince, TUC, Bastogne and LIGA) are sold in many European countries and are also exported to the USA, Canada, South Africa and Middle Eastern countries.
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Sourcing & Supplier Development Supply Chain
Marketing & Sales Netherlands Marketing Belgium Industrial Finance Sales Belgium Human Resources General Manager
Figure 1: Organizational structure of LU Benelux
A brief overview of the organizational structure of LU Benelux can be found in Figure 1. The focus of this research will lie on the supply chain department (highlighted in pink).
The supply chain department of LU Belgium (shown in Figure 2) roughly consists of four parts:
The front-side of the (internal) supply chain: the order handling team, that receives orders from the customers (e.g. supermarkets)
The back-side of the (internal) supply chain: forecasting, (import) planning and co-packing (the last is especially important in Belgium)
Logistics: transportation and warehousing
The Launch and Promotion Coordination: a team that coordinates all changes / irregularities on the products
Supply Chain Director
S&OP Benelux Master Data
Management Logistics Customer Service NL Sales Administration
Launch & Promotion
Coordination Forecasting Planning
Commercial
Administration Customer Service BE Figure 2: Supply Chain department of LU Benelux
1.3 Launch and Promotion Coordination
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data and tasks during the execution of projects that concern changes on or around a product. Examples of such projects are product developments, packaging changes and promotions. These projects are often initiated by the Marketing and/or Sales department in order to improve the product or increase sales numbers. Besides the Marketing/Sales department projects can be started by the Regulatory department (due to changes in the law alternations to the product or packaging might be necessary), the Technical Quality department (modification of the production line can require changes on the product) or the Purchasing department (changes in suppliers must be administrated throughout the entire internal supply chain). An overview of the different projects that are coordinated by the LPC-team can be found in Table 1. Although almost all these projects concern innovations (on a large or small scale), in the terminology of LU Benelux an innovation concerns the introduction of a completely new development (including product, recipe and packaging).
Project Goal (main) Initiator Occurrence 20061
Occurrence 2007
Occurrence 2008 Change Pack Modification of an existing
pack Marketing / Sales / Cessions / R&D / Regulatory 83 (27%) 123 (29%) 137 (34%)
Innovation Introduction of a new development (product, packaging, recipe) Marketing / Sales 24 (8%) 20 (5%) 15 (4%)
Promotion Promotion campaign e.g. in stores, on packs or on coupons Sales / Marketing 116 (39%) 173 (42%) 167 (42%)
Renovation Improvement of an existing product, packaging or recipe
Marketing / Production 18 (6%) 11 (3%) 7 (2%) Roll-Out Introduction of a product/promotion which is already used on a different market (other country)
Marketing / Sales 28 (9%) 37 (9%) 31 (8%)
Stop Stop of an SKU and its specific raws & packs
Marketing / Sales 2 (1%) 14 (3%) 21 (5%) Productivity / Change supplier Modification of an existing product, recipe, supplier or packaging for productivity reasons Purchasing 2 (1%) 8 (2%) 5 (1%)
Miscellaneous Simple changes that don’t fit in one of the previous flows (e.g. changes in DLUO, palletisation or codes) Production / R&D / Cessions 28 (9%) 31 (8%) 18 (4%) Total 301 (100%) 417 (100%) 401 (100%)
Table 1: Projects that are coordinated by the Launch and Promotion Coordination at LU Benelux (terminology deduced from LPC)
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When such a project is started it requires data or action from different actors inside and outside the organization in order to be executed. For example in the case of a packaging change it is necessary to collect data on how much stock of the current packaging is available (Planning department), on the amount of time it will take to change the packaging design (Design agency and Printer) and on the new code(s) that is (are) necessary for the new packaging (Industrial Control department). In addition to that different actions must be taken in order to execute the project: the current packaging must be fully used or destroyed (Planning department), the new packaging must be designed and approved (Design agency and Marketing) and the new packaging must be checked on technical issues (is it ok for use in production, done by the R&D pack department) and legal issues (does the pack meet all the necessary requirements, done by the Regulatory department). This concerns a simplified example, but it shows that different actors are involved in the execution of these types of projects. In general there are three main actors that are involved in these types of projects at LU Benelux. First of all the other departments at LU Benelux, for example Planning, R&D, Supply Chain and Regulatory need to be consulted when product changes are made. Secondly the LU production sites in other countries are involved when the product is not made in the ‘own’ factory in Herentals or the other way around when the Marketing/Sales department of another country wants to apply changes on a product that is made in Herentals. Finally external parties are engaged, for example suppliers or Design agencies.
The LPC-team forms the link between the initiator of a project (as explained before this is often somebody from the Marketing/Sales department) and all other actors that are involved in the projects that are started. The role of LPC is to coordinate an entire project, to make sure all the necessary data is collected and available and all necessary tasks are executed. LPC is an ‘independent’ team, meaning it is not connected to any of the different actors that are involved in the execution of the projects. They work on behalf of the supply chain department to coordinate the different projects in the most effective and efficient way.
In practice this means that the project initiator deliberates with a member of the LPC-team about the project that he/she wishes to carry out. When all requirements of the project are clear the LPC-team member takes over the coordination of the project, which includes the following aspects:
- Check on feasibility of the project: it must be checked whether the projects can be done within the limits of time and costs.
- Maintaining the project and product information: the project information must be spread and updated, so all involved actors have the most up-to-date information. During the different projects the product information can change (for example by a new packaging code or adjustments to the Bill Of Material). It is the responsibility of the LPC to administrate these changes and to keep the different data sources updated.
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- Feedback on the initiator of the project: the initiator remains responsible for the project, so a close collaboration is required.
These actions that are taken by the team are used to achieve the four main tasks of the work of the LPC-team. These tasks will be referred to as the core tasks of LPC and they form the reason why LU Benelux has added the LPC-team as an extra link in the execution of projects:
1. Concentration of information. It is the responsibility of the LPC-team to ensure the concentration of information on products and change projects in one central place, instead of information scattering around the organization. By doing so, a central and univocal point of information can be established. 2. Providing knowledge and structure. The second core task of the Launch and Promotion Coordination is
to provide knowledge and structure on the execution of projects. By optimising the execution of all projects over the years, the LPC-team has established a step-by-step guideline on every different type of project (as presented in Table 1), so they can be executed as efficient and effective as possible. The knowledge on the content of previous projects and the structure of future projects is especially valuable since employees at the Marketing/Sales department tend to shift frequently, so it provides important knowledge to new employees that are required to execute different projects for the first time.
3. Regulating the flow of information. The LPC-team is responsible for the regulation of the flow of information between the project initiator and all other actors in the execution of projects. This can best be illustrated by an example. Every Marketeer is focussed on the execution of their own project(s), which they often prefer to complete sooner rather than later, because for example time to market is crucial. Therefore they often require information or action with high priority from other departments or external actors. However, there are more projects running at the same time, which also need priority according to the concerning Marketeer. For other departments or external actors it is impossible to prioritize every project and to put constant pressure on the tasks they are performing. Here the LPC-team comes in. Since this LPC-team has the overview of which projects are running and with which deadlines, they are in a better position to estimate which projects truly needs priority and which can be executed according to a standard time schedule. This can prevent a continuous harassment of the actors in a project by different demanding project initiators without any structure.
4. Taking away some of the workload of Marketing and Sales. Because of the three points mentioned above, the LPC-team takes away some of the workload of the Marketing and Sales department.
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on the specific project. An innovation of a completely new product range can take up to a year, while a simple promotion or a change in ‘use before date’ can be accomplished in two months.
All LU products are divided amongst the members of the LPC-team. Every LPC-member is responsible for the projects on their own group of products. On average each team member works on 20-25 projects at the same time, where it is tried to maintain a balance between complex and ‘easy’ projects.
1.4 Information system
The LPC-team works with a specific information system that is designed to support the work of the team and other actors involved in the different projects. It exists of two parts: X-act and P-act. Both systems work in a similar way. They concern a workflow system which provides different flows of tasks that need to be completed to execute the project, depending on the type of project (see Table 1) that is started. Every type of project comes with its own flow which is then specified in more detail, depending on the requirements of the projects (e.g. type of packaging, production site). This results in a total of almost 50 different flows that can be used. Based on the specific flow the system generates different tasks that need to be fulfilled in order to finish the project. Some tasks can be done simultaneously, others depend on the execution of previous tasks. The tasks are divided throughout different departments within the organization, for example Industrial Control (to compose the Bill of Materials), Technical Quality (to verify the technical aspects of the packaging) and Regulatory (to check the ingredients on the packaging). Tasks can also be assigned to external partners, like a design agency (to supply a new packaging design). In practice this means that the actors in a specific project receive an email that their task is due, which refers them to the system (X-act/P-act).
The two different parts of the system (X-act and P-act) can be seen as two different stages. A project starts in the X-act phase, where information is gathered to study the feasibility of a project (for example information on stock levels or ingredient changes). In the X-act phase it should be possible to cancel a project without costs. When the X-act phase is finished, the project is transferred to the P-act phase, where the actual execution of the project starts. There the tasks do not concern information gathering, but actions that need to be taken (for example product testing or packaging design).
Besides the coordination of the different projects, the X-act and P-act system also serves as an archive. This archive contains the information of all previously performed projects. It is used to recover product information (for example which promotional actions have been done on a certain product before), but also to serve as a basis for new projects, so similar projects don’t have to be started from scratch every time.
1.5 Research motive
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out. In other words the Launch and Promotion Coordination serves its purpose and LU Benelux plans to keep using this (or a similar) system in the future.
However, interviews and observations have shown that both the LPC-team and the Marketing/Sales department feel like LPC doesn’t function up to its full potential. The goal of LPC, which is to coordinate the different projects in the most effective way, is not achieved optimally: improvements to the effectiveness of LPC are desired. Different actors that are involved with LPC (both the LPC-team and employees from the Marketing/Sales department) have expressed some discontent about the following three main points that influence the effectiveness of LPC: people, processes and technology (the denomination of these topics is deduced from Grieves, 2006).
People
This first point concerns all the different actors that are involved with and affected by LPC and the execution of the different projects (as described in §1.3). All these people are expected to contribute their part (by executing tasks or providing information) to the completion of a project. However, many of these people are not fully aware of the specific information system and certain work methods and procedures that come with LPC. This lack of embedment of the required knowledge keeps LPC from an optimal performance because it takes more time and effort to collect all information and to execute all tasks that are required.
Processes
This point concerns all the processes that arise by the work of LPC and the execution of different projects. These processes concern the ‘flows’ as described in §1.4: the processes indicate who does what at which time in order to complete the project. Currently these processes do not all run efficiently; extra time and effort is constantly required in order to clarify who does what at which time. A point that relates to this is the fact that the scope of the work of the LPC-team is unclear. It is not always obvious to other actors involved what the exact tasks and responsibilities of the LPC-team are and what not. As a result tasks are not executed or executed twice, because it’s not clear who does what (and what not), and extra time and effort is required in order to make this clear.
Technology
The third point concerns the technology that supports the work of LPC (the X-act/P-act system). Currently this system is not used thoroughly and adequately by all involved actors. Different actors have indicated to experience difficulties using the information system properly. As a result it occurs that people work around the system, which causes unclarity with the other actors involved and because of that a waste of time and effort.
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to achieve the best result. However, currently this integration is not optimal: the three points are not aligned effectively, which causes inefficiencies.
1.6 Research outline
As already indicated, the inefficiencies in the three points mentioned before (people, process & technology) and their integration form the basis of the discontent that exists at LU Benelux regarding the Launch and Promotion Coordination. Therefore these three points and their integration will be the main topics that are investigated in this research, in order to optimize LPC at LU Benelux by improving its effectiveness.
Besides the discontent about LPC there is an additional reason to review the Launch and Promotion Coordination at LU Benelux at this moment. Because of the take-over of LU General Biscuits by Kraft Foods Europe in 2007 Kraft Foods has presented the plans for the new organizational structure of the Benelux section in June 2009. Although details of these plans still need to be determined, it is clear that changes will be made in the supply chain department and, more specific, in the Launch and Promotion Coordination. An analysis of the current situation can help to make possible improvements in the future.
15 CHAPTER 2 – Research introduction
In this chapter the performed research is clarified. The first two paragraphs provide the problem statement, the goal and the relevance of this research. Subsequently the research question, the sub-questions and the conceptual model are stated in §2.3 and finally the methodology of the research is described in §2.4.
2.1 Problem statement
The work of the Launch and Promotion Coordination at LU Benelux, as described in the previous chapter, can be compared to what in the literature is referred to as Product Lifecycle Management. This Product Lifecycle Management (PLM) is a relatively new business approach that has emerged in the late 90’s from expanded Product Data Management. Product Lifecycle Management concerns the management of product related information throughout the entire lifecycle of a product, from introduction through production and use to the disposal of a product. Key to PLM is that it is made up of people, processes and technology and that these elements are optimised and integrated through product information (Grieves, 2006). In this context it can be stated that the Launch and Promotion Coordination is the LU Benelux ‘version’ of PLM. Product Lifecycle Management will therefore be used in this research to investigate whether and how the effectiveness of the Launch and Promotion Coordination at LU Benelux can be optimised.
A more detailed introduction of PLM will be presented in the theoretical framework (chapter 3), but an important aspect of PLM is the fact that it is an explicit approach of a process that is already handled by organizations implicitly. Although organizations may not have applied PLM in specific, they have always managed products across their lifecycles implicitly, by managing new product introductions and activities to extend the life of a product. Not doing this in an explicit, continuous way can, as Stark (2005) describes, cause the following inefficiencies: decisions aren’t co-ordinated, risks aren’t fully analyzed, information gets lost, customer requirements are misinterpreted, time is wasted and key relationships are ignored. Although the implicit system seems to work, much can be gained by implementing PLM. It is claimed that by using PLM to explicitly manage product data across the product lifecycle, efficiency, effectiveness and control throughout the entire product lifecycle can be improved (Stark, 2005).
The extent to which PLM is implemented can be assessed by a framework that resembles to a Maturity Model. Such a model refers to the different stages an organization goes through during the development of new processes, management systems or technologies. The PLM Maturity Model consists of five levels, each with its own specific criteria (Saaksvuori & Immonen, 2002 – Grieves, 2006 – Schuh, 2008):
1. Initial: the importance of PLM is recognized, but work is done on an ad hoc (case-by-case) basis.
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3. Defined: PLM processes are defined, formalized and documented, which make the work easier for new employees, however there is no end-to-end PLM process, but only local optimization.
4. Managed: the PLM processes are managed, monitored and measured, which provides a more uniform PLM employment and constant improvement.
5. Optimized: continuous improvement and benchmarking are used to refine the PLM employment to the optimal level.
Here the optimized level is the highest achievable level. A higher maturity level enables more improvements to the efficiency of PLM (Grieves, 2008).
As can be deduced from the previous chapter, the PLM application at LU Benelux can be classified as a defined level (level 3). However, the organization aims to improve the current PLM employment and to reach level 4 and subsequently 5 in order to gain as much effectiveness as possible.
2.2 Goal
The goal of this research is to examine which factors can contribute to an improvement of the effectiveness of the Product Lifecycle Management at LU Benelux. As already explained in §1.5, LU Benelux is dealing with three main issues regarding their Product Lifecycle Management: the people, processes and technology. Therefore this research will focus on these three areas. The results of this research are relevant from both a managerial and an academic point of view.
Managerial
The results of this research will provide a practical recommendation to LPC concerning the improvements that can be made regarding their Product Lifecycle Management. These recommendations can be taken into account during the establishment of the new organizational structure that will arise as a result of the take-over by Kraft Foods. The results of this research can help the PLM at LU Benelux to reach its full potential and they provide a basis for the PLM at LU Benelux to reach the next level of implementation.
Academic
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the practical application of PLM in these industries. By giving an insight in the factors that contribute to a successful application of PLM in the consumer goods industry, this research is a valuable addition to the current literature.
2.3 Research question
The goal of this research results in the following research question:
Which factors can contribute to the improvement of the effectiveness of the Product Lifecycle Management at LU Benelux?
The following sub-questions are composed in order to answer the main research question:
- What is Product Lifecycle Management?
- Which factors are important in order to optimize the people, processes and the technology of PLM? - How do these factors apply in practice at LU Benelux and how does this affect the effectiveness of the
Launch and Promotion Coordination?
In order to clarify this research a conceptual model is presented in Figure 3 below. The model shows that Product Lifecycle Management influences the effectiveness of the Launch and Promotion Coordination. As indicated before (§1.5 and §2.1) PLM can be indicated by the variables people, processes and technology. Therefore these variables are included in the conceptual model. In §1.3 the four core tasks of the Launch and Promotion Coordination are described. These four tasks are used as indicators of the effectiveness of LPC. Therefore these four factors are also included in the conceptual model.
Figure 3: Conceptual model Product Lifecycle
Management
Effectiveness of the Launch and Promotion Coordination
Technology Processes
People Concentration of information
Providing knowledge and structure
Regulating the flow of information
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Overall the conceptual model shows that this research is aimed to investigate how the variables of PLM (people, processes and technology) influence the effectiveness of LPC at LU Benelux (measured by the four core tasks of LPC).
The next paragraph will focus on the methodology that is used to answer the sub-questions and, consequently, the research question.
2.4 Methodology
In order to answer the sub-questions and by that the research question, this research consists of a theoretical part and an empirical part.
2.4.1 Theoretical part
In the theoretical part a literature study on the topic of Product Lifecycle Management will be performed to gain a more in-depth understanding of the factors that contribute to an optimal effectiveness of PLM. This theoretical framework will focus on the three areas that are mentioned before: the people, processes and the technology of PLM.
2.4.2 Empirical part
For the empirical part observations and interviews are used to gain the necessary information on how Product Lifecycle Management is employed at LU Benelux. The observations concern participative observations at the LPC-team and the interviews were done with the main actors of PLM at LU Benelux: the LPC-team and the Marketing/Sales department.
Observations
At the LPC-team at LU Benelux observations were done to get a general overview of the work of the LPC-team and the people, processes and technology that are involved in Product Lifecycle Management at LU Benelux. These observations concern participative observations in the role of a member of the LPC-team (Baarda et al., 2005) and have served as input to the interview questions. During the observations the following internal documents were collected and used as input to this research:
19 Interviews
The interviews were done in order to get a more in-depth understanding of the PLM employment at LU Benelux. In total ten interviews are conducted. An overview of the interviewees and their function can be found in Table 2.
Interviewees Function
1-4 Members of the LPC-team
5 Sales Belgium
6-7 Marketing Belgium
8-10 Marketing the Netherlands
Table 2: Overview of the interviewees
Four interviews were held with the members of the LPC-team since their daily work is devoted to PLM at LU Benelux. To get a more broad impression on the performance of the current PLM, the main actors in the PLM process are also interviewed. In this case the main actors are the Marketing and Sales department, because they are the main initiators of the different projects and their work also depends on it. Both employees from Belgium and the Netherlands are interviewed, since both countries are part of the scope of LPC. In Belgium the execution of almost all Sales projects are handled by one person. This person is included in the interviews. The Marketing projects are handled by the different Marketing managers. From a total of 6 Marketeers that regularly work with LPC, two are interviewed for this research. In the Netherlands all PLM projects are handled by Marketing managers, not by Sales. From a total of 7 Marketeers in the Netherlands that work regularly with LPC, three are interviewed for this research.
All interviews were done by means of a semi-structured interview. Based on information from the observations general questions and topics are identified and used in the interview. The interview questions can be found in Appendix I (interviews with the LPC-team) and Appendix II (interviews with Marketing/Sales). These appendices also show the full text of the interviews.
2.4.3 Research Outline
This research is executed in a number of different steps, which are shown in Figure 4 below.
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21 CHAPTER 3 – Theoretical framework
In this chapter a theoretical framework is presented that provides a background on the factors that contribute to an improvement of the people, processes and technology within Product Lifecycle Management. In order to place these factors in the right perspective, first a theoretical introduction on PLM, its definition and benefits, is given. The second paragraph discusses the subject of product information, which is an important element of PLM. The next three paragraphs focus on the three topics that are subject to this research: people, processes and technology. In these paragraphs the characteristics are discussed that are important to improve PLM at an organization. Every paragraph is introduced by the sub-question (as stated in §2.3) that will be answered in that specific paragraph. The paragraphs will conclude with an overview of the characteristics that are discussed in the paragraph, which form the basis for the analysis of the Launch and Promotion Coordination at LU Benelux in chapter 4.
3.1 Product Lifecycle Management
This paragraph will answer the first sub-question, as stated in §2.3: What is Product Lifecycle Management? In order to clarify what Product Lifecycle Management is, first the concept of the product lifecycle will be explained. The product lifecycle is a well-known concept in the marketing literature (Levitt, 1966), which shows that a product runs through different stages in its life: introduction, growth, maturity and saturation/decline. Every stage in the lifecycle is accompanied by its own specific characteristics in terms of costs, volumes and demand. Levitt (1966) explains that a company should try to plan a series of actions to be employed at various stages in a product’s life so sales and profit curves are constantly sustained, instead of following their usual slope. By deploying such activities (which can for example exist of product changes or promotional actions) the profitability of the product is optimised in every stage of the lifecycle and the total life of the product is extended.
Product Lifecycle Management is aimed at managing these activities throughout the lifecycle of a product in the most efficient and effective way. It must be clear that in this research Product Lifecycle Management does not involve the decision making on how to optimize profitability throughout the lifecycle. This decision (whether a new introduction, promotion or change is necessary for a product) is not made by PLM, but based on marketing and/or sales tools. In this research PLM concerns the process that starts after this decision is made.
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Saaksvuori & Immonen, 2002 – Stark, 2005). In addition to that, almost without exception, the employment of PLM is associated with an information system developed to manage product data and to support PLM (Saaksvuori & Immonen, 2002).
An important aspect of PLM is product information2. As Grieves (2006) states PLM trades product information for wasted time, energy and material; information is the tool that is used by PLM to optimize and integrate the people, processes and technology. Therefore, as Grieves (2006) states, PLM is an information-driven approach. A second important aspect of PLM, which is related to the product information, is its cross-functionality. The product information that is created and used in different functional areas is brought together by PLM. As Stark (2005) describes in doing this PLM relies heavily on the support throughout the different functions in the organization: PLM is a cross-functional approach.
By employing PLM an organization can achieve several benefits. The effective integration and use of product information is important to many aspects of an organization: sales, marketing, production, planning, customers and suppliers. All these disciplines benefit from detailed, timely knowledge of what products are being designed and produced (CIMdata, 2002). As Stark (2005) describes, this can lead to improve the effectiveness, efficiency and control throughout the entire product lifecycle. This is firstly supported by the ability of PLM to increase revenues by extending the life of a product and reducing the time and cost to market. Secondly PLM provides better and more complete information, which enables a company to prevent unnecessary costs.
As described in the CIMdata report (2002) PLM also improves individual’s performance by guiding and facilitating their tasks through well-defined business processes and workflows. The report also states that PLM has a positive effect on the effectiveness and efficiency of processes, by supporting and encouraging work in a more structured manner and providing the right information at the right time, to the right people.
Although there are many advantages to the implementation of PLM, as Saaksvuori & Immonen (2002) state it is difficult to convert benefits of a PLM system directly into euros or dollars. According to Alemanni (2008) the benefits of PLM can be divided into short-term and long-term benefits. The short-term benefits concern reductions in the time spent on daily activities and an improvement of the way of working. The long-term benefits are, depending on the nature of the product, only measurable after several years of PLM and concern strategic benefits like improved gross margin, improved competitive position and reduction of time to market (Alemanni, 2008). Finally PLM makes it possible to manage product data better (Stark, 2005).
Based on the information above, with regard to the first sub-question, as stated in the beginning of this paragraph “What is Product Lifecycle Management?” it can be stated that in this research the following definition of PLM will be used: Product Lifecycle Management is a cross-functional and information-driven approach that consists of people, processes and technology and that is used to manage a product and its related
2
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information throughout all stages in its life, from design, production, use and maintenance to final disposal. PLM provides benefits that contribute to an improvement of the effectiveness, efficiency and control throughout the product lifecycle.
As already described in the introduction of this chapter, the following paragraphs will focus on the factors that are important in order to optimize PLM. From the introduction of PLM in this paragraph it can be seen that product information is an important element of PLM, since PLM aims to organize product information in such a way that people, processes and technology can be optimized and integrated. In order to do so, the product information must be managed optimally. Therefore the next paragraph will focus on information within PLM and the factors that are important in order to manage it optimally, before the topics of people, processes and technology are discussed.
3.2 Information
The second sub-question that is stated in §2.3 is Which factors are important in order to optimize the people, processes and technology of PLM?. Before the three topics of people, processes and technology are discussed in the following paragraphs, this paragraph will focus on the subject information. As described in the previous paragraph, information is an important element of PLM and because it is important in both people, processes and technology it will be discussed separately in this paragraph. Therefore this paragraph aims to answer the following question: Which characteristics are important in order to optimize the information within Product Lifecycle Management?
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Obtaining and storing knowledge can be done by embedding knowledge management in the PLM organization: process, product and project knowledge can be gained and/or retained by people internal and external to the organization. The downside of this knowledge is that it is not freely available (people need to bring the effort of sharing the knowledge) and that it is tied to a specific person. Losing this person automatically means the loss of knowledge. Another way of handling knowledge is by means of the PLM information system. Such a system can acquire and retain explicit, codified knowledge, which can be easily be accessed and stored. According to Ebert & De Man (2008) a workflow management system can function as such a facilitator for effective knowledge management within PLM. Although it might seem necessary to store all knowledge in an accessible and permanent system, personal knowledge will always be necessary to provide context and analysis (Ebert & De Man, 2008). Therefore it can be concluded that the handling of knowledge management within an organization should be considered in order to optimize PLM. There should be a balance between knowledge management by the organization and by the information system. An optimal balance will provide accessible product, process and project knowledge for all actors involved in PLM, with the availability of the required interpretation of that knowledge.
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most effective and efficient Product Lifecycle Management, the waste of time, energy and material that may come from such inefficient organization of information must be prevented.
Answering the sub-question as stated in the beginning of this paragraph, based on the information in this paragraph, a few characteristics of information that are important in order to support PLM as effectively as possible can be indicated. Besides simply collecting and distributing information a PLM employment should facilitate knowledge management in order bring together product, process and project knowledge optimally. In order to achieve a good PLM employment is it important to balance the knowledge that is stored within the organization and within the information system. With regard to product information the PLM employment should facilitate a structured sharing of information between the different functional areas. In addition to that ad hoc, duplicative and inconsistent knowledge should be prevented.
Now this paragraph has clarified the important factors in the management of information within PLM, the next three paragraphs will focus on the factors that are important in the topics of people, processes and technology regarding PLM.
3.3 People
This paragraph will be used to answer (a part of) the third sub-question, as stated in §2.3: Which factors are important in order to optimize the people within PLM?
Of the three components of PLM - people, processes and technology – people are often indicated as the leading factor (Grieves, 2006). Competent and motivated people are necessary to drive the processes, supported by technology. This is supported by the statement of McCarter et al. (2005) that regardless of the advanced technology it is the people that operate the flow of information and resources that the technology facilitates. McCarter et al. (2005) also emphasize that although organizations acknowledge the importance of people, it is often a somewhat neglected factor. Often organizations invest much more in the latest technology than in their people. This paragraph focuses on the characteristics of people that are important in order to improve Product Lifecycle Management at an organization.
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experience on the field of PLM is by education and training. Training is used to teach people what to do, education to teach why they do it (Grieves, 2006). According to Kakehi et al. (2009) there are three important aspects in the education of PLM. Firstly the people must learn about all the information flows and business processes in PLM in order to get a broad overview of PLM and their own role in it all. Secondly the people must understand the work contents and business information in each process, so situations can be evaluated and judged and decision making gets more effective. Finally people must be able to apply their knowledge and skills (both theory and practice) to their business environments. As a last component of capabilities Grieves (2006) mentions the support that an individual gets during the execution of his tasks. Especially when people don’t use processes or systems frequently, adequate support is necessary in order to prevent wasted time in searching and relearning. When people don’t get this support they will become inefficient and frustrated with PLM.
Besides the capabilities Grieves (2006) mentions the organizational aspects as important characteristics of people. An organization should be structured in such a way that the flow of information across functional areas is stimulated. People from different functional areas should not be strictly separated, but should be able to exchange information easily at any moment. As already described in §3.1 working across departments (cross-functionality) is an important aspect of PLM. This is referred to by Kahn (1996) as interdepartmental integration. According to Kahn interdepartmental integration consists of the two distinct processes of interaction and collaboration. Interaction is defined as the structural nature of cross-departmental activities, which includes regulated communication methods like routine meetings, planned conference calls, telephone calls and the flow of standard documentation. Collaboration is described as the unstructured nature of interdepartmental relationships, where two or more departments work together and have mutual understanding, with a common vision, shared resources and collective goals. Here the activities are less tangible and less regulated compared to those of interaction. The research of Kahn (1996) shows that a department’s collaboration with another department has a positive relation to product management performance. On the contrary a department’s interaction with another department has shown no relation, or a negative one, to product management performance. Therefore it can be stated that in order to facilitate cross-functionality of PLM an organization should focus on establishing a strong interdepartmental collaboration rather than the interaction between departments.
With regard to the organizational aspects, Grieves (2006) states that the exchange of information is also determined by the level of authority in the organization. If the decisions about sharing information are made relatively high in the organization, people will be afraid to overstep their boundaries and will tend to keep information to themselves. An organization should enable people to make decisions based on the project at hand and to let them share information in order to achieve the best results.
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this paragraph. It is important to manage people’s capabilities by improving their experience, education & training and the support they are given. Additionally the PLM employment is supported by structuring the organizational aspects in such a way that the flow of information between functional areas is stimulated. This cross-functionality can best be enabled by supporting interdepartmental collaboration rather than just interdepartmental interaction. Finally a low authority level can allow people to share information more easily.
3.4 Processes
This paragraph focuses on the characteristics of processes that are important within PLM. It will answer (a part of) the third sub-question, as stated in §2.3: Which factors are important in order to optimize the processes within PLM?
As Ming et al. (2005) explain, the entire product lifecycle consists of a set of processes, which are functions or tasks to create, transform or deliver products. These processes may be specific to a product, a project or to the organization and can for example include different processes like contract review, purchasing, quality assurance, product modification and training processes (Stark, 2005). The better these processes are defined, the better they can be optimized in order to increase efficiency in a systematic way (Grieves, 2006). When processes are defined optimally they can be documented and standardized, which can help to improve the PLM processes. Ungan (2006) uses the definition of standardization as the degree to which work rules, policies, and operating procedures are formalized and followed. He states that standardization and documentation of a process leads to consistency, which increases efficiency and makes control more easy. As a first step in defining the processes, it is essential that organization have a deep understanding of the actual processes. In addition the processes should not be tacit but must be explicitly defined (Grieves, 2006). According to Ungan (2006) defining the processes includes clearly spelling out the intended purpose of a process and determining the boundaries of the process. In addition the process can be broken down into steps, in order to identify the inputs, customers, suppliers, output and tasks that are necessary for every step of the process. Besides explicitly defining the processes, they must be re-engineered for a digital environment and they must be integrated throughout the entire organization, across functional areas (Grieves, 2006).
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Based on the information in this paragraph the sub-question as stated above can be answered. With regard to the processes within PLM it is key that the processes are defined explicitly. In doing so it is important to clarify the purpose, boundaries, inputs, outputs, customers and suppliers of the process. In addition the necessary trust, communication and interaction must be present to convert tacit process knowledge to explicit process knowledge. In defining the processes a metadata scheme of the process knowledge should be taken into account and the used terms should be clear, so interpretation differences can be avoided. When defining the processes is done, they should be integrated across the organization and be re-engineered to a digital environment.
3.5 Technology
This paragraph focuses on (a part of) the third sub-question, as stated in §2.3: Which factors are important in order to optimize the technology of PLM?
As already pointed out earlier in this chapter, PLM is almost always associated with an information system that manages product data. The PLM information system is ideally an information processing system that integrates the functions of the whole organization, through connecting, integrating and controlling the organization’s business processes and manufactured products by means of product data (Saaksvuori & Immonen, 2002). As stated, this is the description of an ideal PLM system. In practice it is almost impossible to achieve one such extensive system that includes all these functionalities. The technology supporting PLM results from the interaction and integration of already existing business systems like ERP (enterprise resource planning), PDM (product data management), CAD (computer aided design) and CRM (customer relationship management) (Schuh, 2008). These business systems all control different types of product information and processes, originating from different phases in the product lifecycle. The PLM system is the overall portal into such product information and processes, providing collaboration and integration in order to achieve one central point of information (CIMdata, 2002). Multiple software vendors offer specific PLM systems, which all have their own specific configurations and can be modified according the organization’s needs. However, with regard to the different existing business systems, an important feature of the PLM system is that it is open and should be able to harmonize with the other systems (Grieves, 2006).
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product information. In order to achieve this, it is important that people can rely on the technology, so people can trust their valuable information to such a system (Grieves, 2006).
In the previous paragraphs PLM is described as a management system and a business approach. These terms indicate that although technology is a crucial element of PLM, it is not just a software application that can be installed. In order for the PLM information system to function, it must have a solid basis in the organization (its people and its processes). The information system is an addition to PLM in the organization, which enables people to perform their processes more efficiently (Grieves, 2006). The relation between the PLM system and the PLM organization is shown very clearly in the matrix of Grieves (2006) in Figure 5 below. This matrix shows the impact of a low/highly developed PLM system against a low/highly developed PLM organization.
Figure 5: The PLM organization/system matrix (Grieves, 2006 p.130)
As can be seen from Figure 5, just having a PLM system without the development of PLM in the organization gives limited results and a low return on investment. A highly developed PLM organization on the contrary can still offer good results without a highly developed PLM system, only less efficient. Naturally the optimal result can be achieved when both the PLM organization and the PLM system are highly developed (Grieves, 2006).
Based on the information above, a few characteristics of technology that are important in order to support PLM as effectively as possible can be demonstrated, thereby answering the sub-question as stated in the beginning of this paragraph. As this paragraph indicates the PLM information system works as a portal to bring together information from existing business systems, therefore it is important that the technology is open and able to harmonize with the other business systems. Furthermore the technology must be usable: people should be able to work with the technology and easily embed it in their daily routine. Finally there must be a good balance between the development of PLM in the organization (people and processes) and the PLM information system. Both should be developed optimally in order to achieve the best results.
30 3.6 Conclusion theoretical framework
The goal of this theoretical framework was to clarify what Product Lifecycle Management actually entails and which factors are important in order to optimize the people, processes and the technology of PLM, thereby answering the first two sub-questions as stated in §2.3.
As pointed out in §3.1 Product Lifecycle Management is a cross-functional and information-driven business approach that aims to manage a product and its related information throughout its lifecycle in the most efficient and effective way. By employing PLM various short- and long-term benefits can be achieved, which can include the extension of a product’s life, the prevention of unnecessary costs and the improvement of individual’s performance, the effectiveness and efficiency of processes, the daily way of working and the management of product data. With regard to the motive of this research, as described in §1.5, this study will mainly focus on the last mentioned benefits, the improvements that PLM can achieve and less on the extension of a product’s life and the prevention of unnecessary costs, since the Launch and Promotion Coordination at LU Benelux has less impact on the latter.
The second part of this chapter has focused on answering the second sub-question "Which factors are important in order to optimize the people, processes and the technology of PLM?”. As described in §3.2, by exploring the existing literature on Product Lifecycle Management the subject of ‘information’ has appeared to be important in PLM. Information is the basic element that is used within PLM to optimise and integrate the people, processes and technology. Based on the presented theoretical framework the conceptual model, as presented in §2.3, can be adjusted by integrating the element ‘information’ in the model.
Figure 6: Adjusted conceptual model Product Lifecycle
Management
Effectiveness of the Launch and Promotion Coordination Concentration of information
Providing knowledge and structure
Regulating the flow of information
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As shown in Figure 6, information is added to the conceptual model as the element that brings together the people, processes and technology within PLM, making it the fourth variable of Product Lifecycle Management. This chapter has investigated which factors, besides information, are important in order to optimize the people, processes and technology of Product Lifecycle Management, thereby answering the second sub-question. Every variable and the factors that influence them are discussed in the previous chapter. An overview of the variables and influencing factors is presented in Table 4.
Table 4: Overview of the factors that influence the four variables of PLM
The overview in Table 4 will be used in order to answer the third sub-question as stated in §2.3: “How do these factors apply in practice at LU Benelux and how does this affect the effectiveness of the Launch and Promotion Coordination?” The characteristics that in this chapter are found to influence the optimization of the information, people, processes and technology of PLM will be used to analyze the situation at the LPC-team of LU Benelux. The next chapter will describe how these characteristics are handled in practice by LU Benelux. In addition it is analyzed how they influence the effectiveness of LPC by linking the characteristics to the four core tasks of LPC (as described in §1.3).
Knowledge management -How product, process and project knowledge are organized
System vs people - The way the balance between knowledge in the organization and knowledge in a system is established Uniformity - How ad hoc, duplicative and inconsistent information is prevented
Capabilities - How people's experience, education & training and support are employed Organization - The way the interdepartmental integration and authority level are handled Defining - How processes are defined in the organization
Re-engineering - How processes are re-enigineered for a digital environment Integrating - How processes are integrated throughout the organization
Open - The extent to which the technology is open and harmonizable with other business systems Usable - How the technology reflects the processes, is embedded in the organization and is reliable Balanced - The extent to which the development of the PLM organization and the PLM system are balanced People
Processes
32 CHAPTER 4 – Analysis
This chapter concerns the analysis of this research in order to answer the third sub-question: How do these factors apply in practice at LU Benelux and how does this affect the effectiveness of the Launch and Promotion Coordination? Here the characteristics of the information, people, processes and technology of PLM (as described in the previous chapter) are used to evaluate the effectiveness of the Launch and Promotion Coordination at LU Benelux. In paragraph 4.2, 4.3, 4.4 and 4.5 it is described how these characteristics are applied at LU Benelux and subsequently it is indicated how these characteristics affect the four core tasks of LPC (as described in §1.3). The first paragraph of this chapter describes how the necessary information for this analysis is collected and used.
4.1 Methodology
As described in §2.4, the information necessary for this research is collected by observations and interviews at LU Benelux. In order to analyze the information that is deduced from the interviews, a method for the analysis of qualitative data as described by Baarda et al. (2005) is used. First the irrelevant text (off-topic information) is removed and with regard to the anonymity of the interviewees the answers to the first questions (that concern the personal background of the interviewees) are removed or adjusted. Because some of this information is relevant (e.g. the function of the interviewees and their experience), the answers are converted to general information. Three general job descriptions (LPC, Trade Marketeer (B/NL) and Brand Marketeer (B/NL)) and three general experience descriptions (less than 1 year, 1-3 years, more than 3 years) are used. Subsequently the interview text is divided into fragments, where every fragment covers one topic. The next step in the analysis is the labeling of the different fragments. In order to get a better overview of the information every fragment is labeled to one of the four main topics information, people, processes and technology. This labeling is done based on the interview questions. Every interview question is related to one (or sometimes two) of the topics of information, people, processes and technology. The fragments that arise from the answers to the interview questions are assigned to the associated topic. Which interview question (and thereby which fragment) relates to which topic can be found in Appendix I and II. Although the labeling method as described is leading, it can occur that an answer to a certain questions contains one or more fragments that are not related to the assigned topic (for example because the respondent has interpreted the question differently). In this case the fragments are labeled to a different topic.
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general, other) in order to create a clear overview of the available data. This data-matrix can also be found in Appendix I and Appendix II. A fragment can appear more than once, when it is applicable to multiple labels. The fragments in the data-matrix are numbered in order to be able to differentiate between the different interviews and to give the clearest overview as possible. Every fragment is indicated by two or three numbers. The first number indicates the interview from which the fragment originates. The second number indicates the interview question that has lead to the fragment. A third number is used if one answer contains multiple fragments (e.g. 3.4.2 is the second fragment in the answer to question 4 in interview 3). All the interviews are presented in Dutch. Therefore in order to keep the information from the interviews as original as possible and to prevent any translation mistakes, the interviews in the Appendices are also shown in Dutch.
The next four paragraphs will focus on the same topics that are discussed in the theoretical framework in the previous chapter: information, people, processes and technology. For every topic the theoretical frame work has identified the characteristics that are important regarding PLM (shown in Table 4). This chapter will describe for every characteristic mentioned how it is organized at LU Benelux and how this organization is perceived by the interviewees. This description is based on the information that is collected by the observations and interviews. In Appendix I and Appendix II the interview text that has served as input for this analysis is shown per topic (information, people, processes and technology), so per topic it can be seen which interview fragments are used for the analysis.
Additionally the influence of the way the characteristic is handled at LU Benelux on the effectiveness of the Launch and Promotion Coordination is discussed, by the four core tasks of LPC: concentration of information, providing knowledge and structure, regulating the flow of information and taking on workload of Marketing/Sales (as described in §1.3). This makes it possible to draw conclusions on how the information, people, processes and technology of PLM are organized at LU Benelux and how this affects the effectiveness of LPC at LU Benelux. Based on this analysis the next chapter will discuss which factors can be improved in order to optimize the PLM employment at LU Benelux.
4.2 Information
