Why you need efficient Product Lifecycle Management for successful sustainability strategy
Corporate sustainability is nowadays facing a drastic shift towards a more data-driven culture (finally!). Current trends and incoming regulations no longer accept any kind of sustainability-related claims without having a strong and reliable data backup.
This shift has been supported by an impressive flow of academic research and the deployment of numerous platforms in the last few years that have focused on fulfilling this new need. It makes it more accessible and easier for companies or other stakeholders to calculate their emissions and environmental impact. This fast-moving trend is also driven by increasingly critical consumers, who demand more transparency and severe accountability for companies accused of greenwashing.
These demands are being backed and reinforced by the ongoing tsunami of new legislation coming from the EU, which is set to be fully implemented in a few years. Just to name a few, the CSRD and the ESPR will deeply impact most companies, especially in the production industry.
Big companies need to adjust their ways of working and actively look for the right data to understand how to effectively reduce their impact. They need to prepare, be proactive, and act fast as this transition will require a lot of resilience and massive investments.
Our experience helping major product manufacturers improve their product lifecycle management (PLM) has taught us that most companies are far from ready to comply with the new regulations. They are barely starting to understand how an improved PLM ability and effective data management and data governance can support their sustainability strategies. It all starts with "fixing the base" of your product data to make a true sustainable transformation possible.
What is a PLM system?
We usually summarize what a PLM system is by its four pillars: People, Data, Processes and Tools. Some variations include technology instead of tools.
The objective of a PLM system is to have full control of your Product Lifecycle including all product individuals’ lifecycle and usage. It enables companies to develop a cradle-to-grave vision of their products, supported by the implementation of digital technologies.
If you need a small introduction to PLM, check out our article on the topic.
A PLM system to close the product data loop
The main pains faced by our clients with PLM
Our consultancy work starts by analysing the gaps and needs of our clients. We often see similar patterns. The product lifecycle management is often a manual process and thus extremely time-consuming, due to:
Disconnected systems: We see employees entering the same data in multiple systems introducing a huge risk of human error.
Scattered product data: e-BOM, m-BOM, designs, customers, etc. for one product individual can be in different systems where information at the component level is not always available; making accurate analysis and reporting nearly impossible.
Multiple sources of truth: when the same data is replicated manually into multiple systems, the chances of that data reflecting accurately in all systems are very low, leading to inconsistent data quality that produces for example outdated and likely faulty designs.
These issues make any work related to product data difficult and inefficient, including calculating the environmental footprint or developing circular initiatives. Here are a few examples of how these pains impact our clients’ sustainability strategies:
Life Cycle Assessments
Producing a Life Cycle Assessment (LCA) for a new product can take months, requiring the LCA manager to manually collect the data needed by contacting all the different functions involved, including employees in the plants to get the information related to the manufacturing processes. If an LCA assessment is performed manually and takes months, it has very little chance of influencing the design phase. Then it will simply become informative documentation instead of playing an active role in reducing the product’s carbon footprint.
But now, imagine you could simulate the LCA for a new product in just a few clicks in your PLM tool. As all the product data lies in there and is always up to date thanks to the implementation of a single source of truth and a model-based engineering system. Then, your LCA could influence your new product development process by integrating relevant environmental requirements from the start.
Circular business models
Setting up a proper PLM system will help you close the product data loop. It will enable the product development team to have a vision of the full lifecycle of their products, from cradle to grave. This is the main reason why scaling up any circular business model without an efficient PLM system seems hopeless. Most circular business models are data-driven business models, requiring good quality product data from all the phases of a product lifecycle: what it is made of, how and where it was built, how many times it was repaired or reused, how it is used, how it is disposed of, etc.
Today, one of the clients we are currently collaborating with, is working on implementing a "take-back program" to remanufacture part of its product offer. However, they are facing a great challenge to remanufacture the entire product, reuse the old components and replace the existing non-functional components because their product data at the component level is essentially missing. They are not able to track multiple life cycles for their products and components. They would also need to know if a component is still suitable for the production line and if it still meets the compliance and quality specifications.
The biggest obstacle when it comes to collecting product data lies in the use phase. Regardless of the challenge, the use phase is critical to the successful implementation of business models that aim to establish Product-as-a-Service. Reaping the benefits of usage data requires constantly connected products that take into consideration multiple factors. To learn more about this topic, read our blog post on the value of KPIs.
If you want to implement a circular business model, you will not only need more product data but also a deep reorganization. Working on your PLM is also the opportunity to review the other pillars of a PLM system as they will need to be adapted to circular business models: your processes and your people.
To give you a concrete example: One of our clients realized that repaired products were not sold by the sales team. The sales team was incentivized by the margin they could get when selling the products. However, the cost of repaired products was higher than the cost of new products as the system was adding a cost for every action on the product. Moreover, repaired products are usually sold at a discount price. Then, the sales team was not interested in selling these products and they were thrown away – as financially it was more interesting.
Circular business model and its phases
Digital product passport
One of our clients once summarized the importance of having an efficient PLM system: "If we don't do this, we can forget about Digital Product Passport (DPP)." We cannot agree more.
The Digital Product Passport is part of the Ecodesign Sustainable Product Regulation (ESPR). It is a digital representation of a physical product through an identifier, sharing key product information that are essential for products’ sustainability and circularity. When implemented, it will increase the transparency for the consumers and enable circular business models. Most industries will have to implement DPP in a few years.
Of course, deploying a DPP will require collaborating along the value chain and collecting data that you may not have today. Most of the data is already somewhere in your systems and investing in your PLM system will enable you to store and manage all the external and internal product data needed to comply with the DPP requirements. Even though the actual implementation of the DPP is still a couple of years away, the question of how to internally manage the changes needed must be answered now.
Key takeaways
We understand this can sound like an overwhelming transformation to take on, from any angle you see it. But regardless of where you are in your PLM journey, we cannot stress it enough: you must include your sustainability team. In the same way you don't doubt to include your product development team, your quality team and your sales team. The circularity transformation is happening today, and we all need to be a part of it.