When Hitachi Global Storage Technologies (San Jose, CA) opened for business in 2003, it was a startup unlike any other. For one thing, with over 20,000 employees, it was a huge operation formed when Hitachi Ltd. (Tokyo) purchased IBM Corp.'s hard drive business. For another thing, unlike most startups (which have a clean slate in terms of technology infrastructure), Hitachi GST was struggling to cope with five years of product data from a variety of inherited IBM legacy systems.
Prior to the spin-off from IBM, the hard drive product data had been housed in IBM product data management (PDM) systems. Hitachi GST management wanted to move from PDM to product lifecycle management (PLM) -- installing a single source of product data -- to reduce the amount of time it took to release a product change into production and improve overall speed and quality. But that move would mean not only migrating the more than 150,000 historical CAD designs on three different platforms, but also straightening out the disparate business processes that had developed at the company's five major sites in the United States and Japan.
PLM MIGRATION
"We had lots of disparate data types, including three or four different CAD systems," says Jon Burton, global Agile PLM manager for Hitachi GST. "We knew in order to be a strategic organization, we would have to have more robust product lifecycle capabilities. That's when we knew we had to move away from PDM." Hitachi GST implemented PLM software from Agile Software Corp. (San Jose, CA) beginning in March 2003 to create an enterprise-wide product data system of record.
Manufacturers of all types and sizes have found PLM helps them increase product profitability and reduce time-to-market. PLM systems provide a single, enterprise-wide view of the product record, from concept to design to production to service/support to warranty to phase-out, enabling changes to be managed more easily. Potential payoffs of having an enterprise product record include accelerated time-to-market, reduced materials costs and enhanced regulatory compliance.
Speed is PLM's ultimate promise. According to a recent report from Deloitte & Touche, titled "Product Lifecycle Management in Increasingly Dynamic and Complex Supply Chains," product lifecycles are shrinking as global competition accelerates the race to get new products to market. There are shorter windows of opportunity to command premium pricing and profits, and PLM software, judiciously applied, can speed time-to-market 20 to 60%, according to the report.
"Companies do not have as many opportunities to fail with a new product as they used to have. They used to have a lot more at-bats," says Sarvesh Jagannivas, director of electronics and high-tech marketing for Agile, whose company has 10,000 customers worldwide thanks to its recent acquisition of Cimmetry. "With constrained cost structures, people have to come up with very innovative new products and get them to market quickly."
TWO-STEP APPROACH
Even prior to the Cimmetry acquisition -- which boosted Agile's customer base exponentially from its previous 1,200 -- Agile was strong in high tech, Hitachi GST's sector, says Jagannivas. "We help high-tech manufacturers take a portfolio approach of managing the profitability of their products. These companies have to make sure they are designing for manufacturability, sourceability, regulatory compliance and, above all, time-to-market." Being the first to market a product in high tech carries a profit and revenue premium of between 25 to 50%.
Speed was indeed a priority in early 2003 when Hitachi GST was formed. Company management wanted to have the enterprise-wide product data system in place in just one year. The first phase of the project, data migration, began in March 2003 after the project team selected Agile. EDS' UGS subsidiary (now a seperate company, UGS Corp.) had been on the shortlist, but Agile's range of capabilities gave it the edge, according to Burton.
During data migration, the overriding concern of the 40-person project team was just to move the product data into the single PLM system rather than fix less-than-ideal business processes. "We identified existing processes and mirrored them in the new system, just so we could keep business going," says Burton. That phase was completed late in 2003.
During that phase, Agile programmers built a connection between the multiple CAD systems used by Hitachi GST engineers and the product data. "Traditionally, the engineers had to jump back and forth between all the different CAD applications," says Burton. Hitachi GST elected to standardize on Dassault Systemes (Paris) CATIA, so Agile created a solution that allowed the engineers to view 3D drawings and make changes in their native CATIA environment without needing to open multiple CAD applications. Agile Engineering is now the single interface to Hitachi GST's engineering community, which saves time and money and boosts productivity. Agile Engineering provides a collaborative workspace for Hitachi GST engineers in disparate locations to share mechanical and electrical designs.
In early 2004, Hitachi GST began the arduous task of redoing its business processes across its five major sites of operation (San Jose, two sites in Japan, one in China and one in the Philippines) as well as its far-flung contract manufacturing facilities. This massive undertaking was a change management nightmare as many of the processes had been in place for at least 20 years (as part of IBM's disk drive business). "We wondered, 'Can you really standardize processes across the world?' It was a struggle to gather all the information and try to build a process that would meet everyone's needs," recalls Burton.
The key to change management, he believes, is to show real value from the earliest stages of the project, backed by highly visible executive sponsorship. "You have to show enough value that they're willing to compromise. You have to communicate that this is for the greater good," he says.
Essentially, the pitch boiled down to ease of use. "The legacy IBM system had 40 fields. We said, 'Wouldn't it be better to have 20 than 40?'" recalls Burton. But old habits die hard, especially when they have been entrenched for so long. Burton and his fellow managers logged many miles trekking from the West Coast to the Asia Pacific region to carry their message that the move to PLM was right for the company. The overall executive sponsor, Ryo Suzuki, based in Japan, was instrumental in reinforcing that message. "It was truly a global project team," says Burton. Agile developers and project managers were based at each of the Hitachi locations while the work was ongoing.
Incidentally, in the Asia/Pacific region Agile is coming on strong, though North America and Europe remain its top two markets, according to Bruce Richardson, vice president at AMR Research (Boston). It has "several dozen" high-tech customers in Japan and Taiwan, and China is another hot spot, he says.
One of the most important process changes at Hitachi GST involved releasing manufacturing changes into production. Under the old process, if an engineer needed to make a change to a product in production, the only approval required was from that engineer's manager. Under the new process, a peer layer of approval was added. So a fellow engineer, along with the manager, has to review and approve the change before it goes to production. This ensures production can handle the requested change, reducing errors before the fact. It might seem counterintuitive to cut time out of the process by adding another layer of approval, but that is exactly what happened.
"The engineers understand what they're looking at. They know exactly how the change should be implemented," says Burton. That is not necessarily true for the manager, who in most cases is not an engineer. Adding a peer review layer helps ensure any glitches are taken care of well before production is involved. "Otherwise, a line engineer will have to identify the problem. At that point, they're actually doing the assembly and they have to stop the production line. Adding one additional step reduces 10 steps down the line," Burton says.
This process tweak has paid off handsomely. Where it used to take seven days from the time an engineer would identify an issue to the time the change got sent through manufacturing, it now takes five days or less. This goes directly to cycle time improvement. "The longer it takes a change to get into a product, the more time it takes to release the product to the customer," says Burton. Scrap and rework costs are reduced under the new process, too. Going forward, as the organization becomes more used to the new process, he expects change cycle time to be reduced 50%, to just over three days.
CHANGE FOR THE GOOD
Hitachi GST has completed its business process reengineering (BPR) effort for its headquarters location and two sites in Japan, and two more sites are due to be finished by this summer. Over 90% of the company's product data is now on the Agile Product Collaboration platform, and there are 1,500 Agile users company-wide. Hitachi GST has seen performance increases just from consolidating the disparate PDM systems, and Burton is now beginning to quantify the real benefits of the move to PLM. His group is looking into deepening its investment in Agile software with the possible deployment of the Agile Product Portfolio Management module to improve product development decisions from an enterprise perspective.
"PLM is about truly managing the product design from conception through production and through to warranty and end-of-life. This is a very robust and deep-rooted system that adds value at each phase," says Burton.