The Extension of Product Lifecycle Management into Sourcing

							The Extension of Product Lifecycle Management into Sourcing

Contributed by Peter Bambridge, Research Director, Gartner, (Peter.Bambridge@gartner.com) 21 October, 2009


In the current challenging economic climate, many organizations have chosen to limit their investments in new
systems and in moving away from large scale platform approaches, are focusing more on shorter projects which
will deliver tangible ROI in months rather than years. But despite tighter budgets, one area which has seen recent
increased investment is solutions that are designed to help drive profitable growth through product innovation
and cost effective sourcing.

Business pressures to deliver more new product designs on a regular basis to consumers at ever decreasing price
points, in an attempt to retain customer loyalty, have lead to an increased focus upon time to market, reducing
design and sourcing costs and increasing flexibility to respond to changing opportunities. This has led many apparel
retailers and manufacturers to look again at their sourcing and product lifecycle management (PLM) solutions.

Other current trends, such as the move to globalization, also have impacted this strategy. This has driven a need to
standardize processes and information exchange across the supply network, and driven increased adoption of
collaborative platforms supporting broad communities of users. By providing increased visibility throughout the
supply chain and driving supply chain execution/logistics, this broader community of users can all benefit. The
more advanced approach aligns these capabilities with the PLM and sourcing solutions identified above, to deliver
an end-to-end enterprise solution that combines accelerating time to market with responsive global trade
management and the desired cost efficiencies.

The scope of PLM and Sourcing

The scope of functionality traditionally covered by PLM and sourcing solutions in apparel footwear and accessories
(AFA) has as many definitions as there are solution vendors addressing the market. Recent Gartner research
identified more than 70 vendors with solutions in this and related areas, and studied in detail 21 leading solutions
which broadly addressed the key business needs.

Part of the reason for this variety of approach is the differences between owned label and branded merchandise
requirements, and how the solutions are positioned to address the needs of both retailers and manufacturers. In a
large part, it also reflects the type of vendors and their own history.

The main modules identified by this research as being required to provide a complete PLM solution covered the
following functional areas:

        Product management
        Material management
        Concept management
        Storyboarding
        Line and commercial planning
        Sourcing
        Vendor management
        Quality assurance management
        Collaboration
        Critical path management/workflow
        PLM & sourcing analytics
The end-to-end business processes required to successfully manage AFA product innovation from idea to shelf
require more than just the traditional PDM type of solution, or even PLM; they also require extensive sourcing
capabilities. Sourcing, like PLM, is a loose term which is interpreted differently by vendor organizations with their
own perspectives and products to sell. However, only selected existing PLM vendors address the needs of sourcing
within their solution footprint. A few vendors have partnered to address these requirements, rather than extend
their own solutions. Tight integration between the business processes of sourcing and PLM are required to ensure
reduced time to market.

The following diagram shows the high level business processes that the modules in PLM and sourcing solutions
address and how they relate to strategic levels and the high level phases of the product life cycle:




The sourcing and vendor management aspects of the PLM solution set is often less mature than some other
modules. Organizations in the AFA sector must consider sourcing requirements, as well as traditional product
development requirements, when selecting potential PLM solutions. When deciding to combine sourcing solutions
and PLM solutions from different vendors, organizations need to bear in mind the time and complexity required to
ensure effective integration. Selecting a single vendor for both PLM and sourcing can significantly reduce project
risk, and implementation timescales, as well as ensuring a consistent user interface and as a result user experience.
Sourcing and PLM Solution Providers

Some of the PLM solution vendors are also providers of sourcing solutions for the AFA industry. Recent research
identified that an increasing number of PLM solutions now include sourcing modules within the scope of their AFA
PLM solutions, however, these typically limit sourcing functionality to early stage vendor capability and selection,
rather than full scope including global order management. Some PLM vendors offer similar capabilities through
partnerships with free-standing sourcing solutions that integrate to their PLM platform. In addition, there are a
group of sourcing vendors who have extended their solutions to also provide PLM capabilities.

The main types of PLM/Sourcing approaches and a few example vendors are a follows:

         Sourcing vendors with PLM modules (such as ecVision, Core Solutions and TradeStone)
         PLM vendors with sourcing modules (such as PTC and Siemens PLM)
         PLM vendors with sourcing partnerships (such as Dassault Systemes ENOVIA working with Zymmetry)
         ERP vendors with PLM/Sourcing solutions (such as Lawson, New Generation Computing and SAP)


The selection of which type of sourcing solution is most appropriate for a given organization will depend upon
many factors. The key factors include: the degree of fit to the business requirements, the need for tight integration
between PLM and sourcing to speed time to market, the PLM/ERP system currently in use/planned for adoption,
the integration requirements to other operational systems, and the balance of best of breed vs. a single vendor
policy.

Business Benefits of combining PLM and Sourcing

The key business drivers of tighter integration between PLM and Sourcing solutions are enabling faster time to
market, enhancing visibility across the entire supply chain, gaining tighter control on costs throughout the process
and improving the agility of the business to respond to changes in consumer demand.

The end-to-end business process gets a product from the initial idea stage through to delivery to the retail
environment. By combining all aspects of the PLM design, innovation and sourcing processes, this encompasses
the entire trading network that enables the enterprise. As a result, efficiency gains can have a real impact on the
financial performance at each stage in the chain.

This end-to-end systems integration is essential to delivering the shorter cycle times of fast fashion and to being
agile and responsive enough to market changes to take advantage of opportunities as they develop, while
providing the visibility across the entire trading network.

Organizations looking to thrive in these increasingly challenging trading conditions are adopting this sort of
approach by combining the strengths of integrated PLM with the cost effectiveness of global sourcing. Those
organizations looking to focus on one area alone cannot realize the maximum potential benefits and synergies
available.

Organizations looking to optimize their performance need to ensure that their PLM and sourcing strategy is tightly
integrated, and enabled by a consistent platform that can realize these potential benefits.

Gartner is continuing its program of research on this and related themes, and looks forward to continuing to work
with retailers, manufacturers and vendors in this developing field. For further information please refer to
Gartner.com, or directly to Peter Bambridge at: peter.bambridge@gartrner.com
About Peter Bambridge

Peter Bambridge is a Director of Research in Gartner Industry Advisory Services, focused on the consumer goods
industries in the manufacturing vertical. He is responsible for analyzing the business and technology market, as
well as identifying growth and opportunity areas. Key topics that he covers include product life cycle management
(PLM), sales and marketing, merchandising and supply chain issues.

Mr. Bambridge has more than 25 years of experience in the IT industry. Before joining Gartner, he ran the
European business for Freeborders, driving the growth of both the PLM business in the apparel sector and the
offshore application development business. Prior to this, Mr. Bambridge drove business development in the retail
and consumer goods industry with a variety of leading technology and service vendors, including Novell, G4
Analytics, Deloitte Consulting, i2 Technologies, Oracle, Intactix and Comshare. Mr. Bambridge also worked in retail
for Marks and Spencer, in stores and at head office in the IT group.

Mr Bambridge is a Fellow of the Institute of Sales and Marketing Management and is a Professional member of the
British Computer Society. He holds a B.Sc. (Honours), Nuclear Engineering, from Queen Mary College, London
University.

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