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PLANO, Texas, October 21, 2008 – Siemens PLM Software, a business unit of the Siemens Industry Automation Division and a leading global provider of product lifecycle management (PLM) software and services, today responded to the findings of a series of Industry Sector Insight reports unveiled by Aberdeen Group. The reports were based on the findings of benchmark research entitled Product Innovation Agenda 2010, which identifies best practices for creating innovation and developing it into profitable products. The study found that improving product development efficiency was a top strategy to accomplish this goal. To further this research, Aberdeen looked at product development strategies of five vertical industries and examined key themes for each industry.
Released in October 2008 and spanning Aerospace & Defense, Automotive, Consumer Packaged Goods, High Tech & Electronics and Machinery industries, the research identified key strategic initiatives and challenges specific to each industry and how manufacturers can best implement product development strategies in order to bring innovative products to market ahead of the competition.
“The Aberdeen reports reveal that balancing product performance and streamlining product development processes represent significant challenges for manufacturers across all industries,” said Leif Pedersen, vice president, industry marketing, Siemens PLM Software. “Faced with burgeoning pressures to lower product development and lifecycle costs, manufacturers need to streamline and promote product development efficiencies across their organization and transform innovation into a formal repeatable process in order to drive growth and deliver innovative products to market ahead of the competition.”
“Our research reveals that improving product profitability is on the top of the executive agenda for almost every industry. However, this is complicated with every industry reporting top challenges that cut into profitability such as shorter market windows and increasing customer cost pressures,” said Michelle Boucher, research analyst, Product Innovation and Engineering Practice, Aberdeen Group. “To achieve their profitability goals while addressing the challenges, manufacturers across all industries need to adopt Best-in-Class product development practices that will enable them to promote product innovation, drive profitability and lower product development costs.”
A summary of the Aberdeen Sector Insight report findings follows.
Product development for A&D OEMs and suppliers require heavy investments of money and time before products can be brought to market. In addition, extremely long certification phases can lead to product release delays. The report finds that A&D companies are focused on improving product profitability by continually streamlining product development. The study finds that A&D companies report greater attention to streamlining and promoting efficiency in product development than in product innovation. Aberdeen projects the highest product development growth area for A&D companies is in implementing lean product development concepts, which is expected to rise from 33 percent today to 78 percent in 2010, a 136 percent growth rate.
As these companies look to deliver products to market ahead of competitors, A&D OEMs and suppliers will need to centralize or coordinate innovation decision-making and establish a Product Lifecycle Management platform that seamlessly bridges the gap among all members of their extended enterprise.
Faced with burgeoning price pressures from customers and sales, automotive manufacturers report a greater focus on lowering product development costs than other industries. The report finds that automotive manufacturers expect to realize their cost targets through a significant increase in the use of digital simulation. According to Aberdeen, digital simulation and prototyping of manufacturing processes for automotive companies will grow from 25 percent in 2008 to 85 percent in 2010, a dramatic 240 percent growth rate. By looking for ways to predict product behavior virtually, automakers can often resolve issues before bearing the cost of building physical prototypes.
To improve product development efficiencies, automotive companies will need to consider boosting PLM investments, adopting open innovation strategies, leveraging existing information assets for knowledge capture and reuse, and extending visibility to the impact of engineering decisions.
In this highly competitive sector, companies struggle to bring innovative products to market in an effort to secure premium pricing at the shelf. But new products are typically matched very quickly by competitors, placing ongoing pressure on product costs. Therefore it is no surprise that CPG companies report a greater focus on cost reduction than other industries. Consequently, CPG companies are especially focused on improving the efficiency in which they bring new innovations to market. The report finds that CPG manufacturers are more likely than those in other industries to measure innovation with performance metrics, adopt an open innovation process, and identify a C-level executive responsible for product innovation. Aberdeen projects the highest planned product development growth area for CPG manufacturers is with the use of formal product development metrics, increasing from 24 percent today to 74 percent by 2010, a 208 percent growth rate.
To address product cost issues, promote organizational productivity and shorten product development cycles, CPG companies must boost PLM investments. This will facilitate greater visibility to the impact of design decisions on cost and manufacturability, and enterprise-wide implementation of lean concepts to product development.
HT&E companies are more focused on protecting and improving the value of their product intellectual property (IP) than other industries. The report finds that the challenge of protecting IP is reported twice as often by high tech manufacturers than other industries. The top product innovation growth area reported by HT&E companies is the measurement of innovation performance with formal metrics, which is expected to grow from 28 percent today to 71 percent in 2010, a 154 percent growth rate. This will help improve product development success rates, reduce costs, and more predictably deliver innovation as performance gains visibility.
To capitalize on promoting efficiency and shortening product development cycles, HT&E manufacturers need to focus on boosting PLM investments, adopting lean and open innovation, leveraging existing information assets for knowledge capture and reuse, and maximizing value out of their product IP.
Similar to other industries, machinery manufacturers face increasing customer cost pressures while needing to deliver products on shorter schedules without compromising quality standards. The report finds that machinery manufacturers are especially focused on reducing lifecycle costs and need to accelerate time to market without compromising quality. The top product development capability growth area for machinery companies is improvement of knowledge capture and re-use, which is expected to grow from 27 percent today to 70 percent in 2010, a 159 percent growth rate. One-third of machinery companies are placing emphasis on decreasing lifecycle cost, about 25 percent more frequently than across all other manufacturing industries. To address this challenge, machinery manufacturers need to improve downstream visibility to manufacturing and supply chain impacts, continue organizational shifts toward innovation leadership, implement lean product development and establish PLM.
Aberdeen Group examined how more than 230 enterprises develop new innovations with higher profitability. To gain an understanding of how manufacturers successfully manage product innovation, development, design and engineering, respondents were benchmarked according to their performance across five key performance indicators and divided among three performance categories: Best-in-Class (top 20 percent of performers); Laggard organizations (bottom 30 percent) and the Industry Average (the remaining 50 percent). These measures included the percent of products meeting targets for product launch, product cost, product development budget, revenue and lifecycle costs.
As companies look increasingly toward improving product profitability, they must continually look to address the issues of shortening time to market windows, decreasing development costs and protecting the value of intellectual property. For more information about how Siemens PLM Software is helping customers address these issues and transform their process of innovation with product lifecycle management software solutions, please visit http://www.plm.automation.siemens.com/en_us/industries/index.shtml.
Full reports can be found at the following links:
Siemens PLM Software, a business unit of the Siemens Industry Automation Division, is a leading global provider of product lifecycle management (PLM) software and services with 5.5 million licensed seats and 51,000 customers worldwide. Headquartered in Plano, Texas, Siemens PLM Software’s open enterprise solutions enable a world where organizations and their partners collaborate through Global Innovation Networks to deliver world-class products and services. For more information on Siemens PLM Software products and services, visit www.siemens.com/plm.
The Siemens Industry Automation Division (Nuremberg), a division of the Siemens Industry Sector, is a worldwide leader in the fields of automation systems, low-voltage switchgear and industrial software. Its portfolio ranges from standard products for the manufacturing and process industry to solutions for whole industries and systems that encompass the automation of entire automobile production facilities and chemical plants. As a leading software supplier, Industry Automation optimizes the entire value added chain of manufacturers – from product design and development to production, sales and a wide range of maintenance services.
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