In today's global economic climate, companies around the world — from large OEMs (original equipment manufacturers) to mid-market manufacturers — face enormous challenges. It is easy to write off the problems of mid-market companies as comparatively insignificant. After all, they're smaller; doesn't that mean their problems are smaller too?
In reality, today's mid-market companies' face the same challenges as large OEMs, and they face them with fewer resources, less money and less ability to absorb risk. In addition, they have to deal with the increased competition in the mid-market, the increasing demand for a shorter product lifecycle, the pressure to develop more complex products than in the past, the management of multiple parallel projects and being part of the supply chain.
The Evolving Role of the OEM
The position of mid-market companies within the supply chain has undergone dramatic changes. OEMs, which may or may not be mid-market companies themselves, require increasingly more value, efficiency and sheer output from mid-market suppliers, and tend to deal with only the highest-level core and competitive competencies internally. For instance, in some industries, approximately 65 percent of final product development is outsourced to mid-market suppliers. Given such increased demands, suppliers need to differentiate themselves competitively by bringing specific knowledge and innovation to their products and to their relationships with the OEMs — it's a matter of survival. If OEMs don't see the results they need as quickly as required, they'll gladly replace one supplier with another, or possibly shrink the supply chain altogether. Add to that the unpredictability of other suppliers' actions (which affect the entire chain), and it's clear that PLM isn't a luxury — it's a necessity.
The role of the OEM is changing. Ten years ago, the OEM controlled the entire supply chain and maintained all the specifics of product development in-house. Suppliers were part of an indelible hierarchy, with efficiency viewed as happenstance, not as an overarching value. As time went by and technology advanced, OEMs saw the benefit of collaborating with tier-one suppliers who were responsible for major product components. This trend hasn't slowed — it has progressed from involving the traditional supply chain hierarchy to networks of suppliers.
The consequence of this change is that OEMs can no longer dictate the systems and methodologies used by their suppliers, as they are connected to multiple OEMs and to other companies. In the future we will undoubtedly see more and more networks of suppliers exchanging intellectual property with multiple OEMs across industries and with each other.
PLM Adoption in the Mid-market
For the large OEMs of the world the use of product lifecycle management (PLM) is practically a standard. However, in the mid-market — the segment that contains the vast majority of the world's manufacturers — the use of PLM is not as prevalent.
In order to succeed and thrive, high-tech/industrial mid-market suppliers have to innovate and develop new products faster (with a target time-to-market projection of three to six months for the high-tech industry) and streamline operations and communications. They need to achieve global development excellence and increase efficiency by leveraging core competencies of the value chain and ensure on-time, on-cost and good-quality product delivery. They must also integrate regulatory compliance into product lifecycle processes to reduce business risk and sell products in global markets.