Increased visibility and collaboration across internal and external value chains open the door to innovation and growth for small to mid-sized manufacturers

Not long ago, most manufacturing processes took place within the four walls of the company – making visibility and control relatively easy. Now because of outsourcing and the move toward lean manufacturing, increasing numbers of manufacturers do business within extended value chains — a trend that is likely to continue.

Today, you are either a collaborator or you’re not in the picture at all. And because relationships are dynamic and changeable, value chain synchronization is essential. This is especially true for small to mid-sized manufacturers (SMBs), 60 percent of whom currently do business within global supply chains. SMBs must anticipate demand, adapt quickly to changing market conditions, and function as a lean, highly coordinated unit within a larger value chain. Key ingredients for success are collaboration and visibility.

SMBs are engaged in a delicate balancing act – dealing with multiple supply chains with varying demands for responsiveness and flexibility. They face increasing levels of uncertainty – plans are suddenly changed and they are expected to perform miracles to meet entirely new demands on super aggressive schedules. Every day, they face a host of perplexing questions:

• Will key partners be able to share designs and part compliance information?
• Will you have enough time to make required design changes?
• Will suppliers deliver materials or parts on time on spec and on budget?
• Do you fit in with standard OEM practices and processes?
• Can you track compliance with governmental regulation?

When it comes to the value chain, SMBs are all too often left in the dark. They often lack visibility into key processes and pre-tested designs. They lack automatic workflows and processes. And they face persistent supply chain disconnects. In order to meet the dual goals of revenue growth and cost control, SMBs need something like Superman’s X-ray vision – the ability to peer into the value chain and see all relevant information about their products. This is especially true for companies seeking to provide information access to members of their own internal value chains.

Synchronization leads to innovation in the value chain

Industry analysts say that a majority of SMBs continue to rely on paper-based processes. Eighty percent have no process or workflow automation. Instead, they rely on spreadsheets and e-mail to manage data. While SMBs have been reluctant to implement expensive and complex software solutions, this is changing.

Value chain innovators are 78% more likely to use sophisticated technology and sourcing tools, and they invest 189% more than the laggards in technology that connects them with strategic partners and suppliers. Such companies capture four times the information about their overall spending than the average company, enabling them to sense and respond to opportunities more effectively, according to industry experts. In addition, these companies see more than a 30% reduction in finished goods inventory and a 25% improvement in on-time delivery according to AMR Research, Inc. (Boston)

The most aggressive SMBs – the true innovators – use product lifecycle management, or PLM, solutions to achieve synchronization by giving key players access and visibility into the product information they need to manage processes across the value chain.

Why PLM as opposed to traditional ERP or supply chain solutions? For one thing, PLM is primarily focused on products, the major obsession of SMBs. Unlike Superman, they don’t have to see everything. Rather, they need to be able to communicate the most relevant product information across the supply chain.

Another advantage of PLM solutions is that they allow companies to proactively identify and resolve potential supply chain issues before they happen, thereby significantly lowering costs while improving customer responsiveness. In today’s highly competitive global markets, product-focused companies must generate growth through continuous product innovation. If you do not play a decisive role in innovation, your status within the supply chain may be marginalized. To ensure survival, you must dramatically improve your ability to manage the resources and processes used to develop, manufacture, deliver and support products.

The Business Opportunity

To meet today’s value chain challenges, SMBs must adopt a new, more proactive approach to supply chain management. Since innovation (rather than invention) now drives business, everything manufacturing companies do must become innovation focused. SMBs need a vision of more efficient value chain collaboration. When supported by the right technologies, this vision will result in lower costs, reduced time-to-market, and more product and process innovation.

For example, Siemens PLM Software has leveraged its proven track record in a number of industries to provide functionality that is critical for SMBs in modular, yet integrated and affordable PLM solutions. These solutions provide industry standard best practice workflows and processes that allow for easy access to information on a timely basis, while allowing for rapid deployment with a minimum of customization.

These solutions enable you to extend the collaborative capabilities of your value chain to fully realize knowledge management. Suppliers, business allies, and trusted customers – as well as your own marketing, manufacturing, and support organizations – can quickly join a collaborative innovation network that includes your concept designers and engineering specialists. Everyone who has a significant stake in your value chain is able to suggest innovations, voice their concerns, and actively participate in your automated business processes, thus enhancing knowledge management across the enterprise. This dynamic collaborative innovation network dramatically enhances your ability to accelerate your take-to-market cycle, improve product quality, and slash costs.

Siemens PLM Software empowers SMB business users with tools that provide all the information they need to innovate, optimize new product development, and grow profitability. All key product workflows are fully automated and new functionality can be easily added.

With Siemens PLM Software, SMBs have a single source of comprehensive product and manufacturing knowledge for everything from product definition to release. These solutions also help SMBs who want to participate in a larger global enterprise value chain by enabling them to rapidly respond to customer requests for changes and to track revisions. Through PLM, small to mid-sized manufacturers can start down the road to more innovation, enhancing value chain visibility while improving their business in multiple ways. As an integrated, information-driven approach, PLM:

• Connects global suppliers to meet cost, quality, and availability requirements
• Tracks compliance with OEM mandated practices, as well as governmental regulations
• Supports an environment for global product development
• Puts business-critical information at your fingertips
• Unifies people, information and processes
• Minimizes errors, and improves agility and responsiveness

Read the next article in this series: Build Core Strength Through Better Data Management