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M A R K E T S P O T L I G H T
The Convergence of Supply Chain and Product
Life-Cycle Management
June 2016
By Simon Ellis
Sponsored by Inspirage
Products in all industries, discrete and process manufacturing alike, have typically been conceived,
designed, and developed separately from the supply chain. Although long an informed party in the
innovation process, the supply chains' active role has been largely limited to providing the materials
and/or parts required to make the product — not to provide the demand signals that enable
manufacturers to better meet customer's needs and certainly not to be a design and innovation
partner. But times are changing, and manufacturers are broadening the scope of how they innovate,
develop, and bring products to market. Suppliers in many industries are closely involved with OEMs
as innovators and design partners, not just providers of material and parts. Examples of this include
the close working relationships many high-tech manufacturers have with automotive companies, such
as Samsung and BMW, Apple and Ford, and Panasonic and Tesla. Another example includes
chemical company Dow and its relationship with Ford for carbon fiber composite material innovation.
Still other examples include the relationships consumer goods supply chains have with fragrance
companies. In all of these instances, the supply chain is a full partner in both the development and
implementation of new products and a facilitator for speed to market.
Introduction
Manufacturing companies are under enormous pressure to innovate faster and more effectively. In a
survey conducted by IDC Manufacturing Insights in 2015, the top business priority reported by
respondents was better product innovation (63%) and the top challenge was to accelerate new
product time to market/success rate. When almost 40% of new products introduced to market fail to
meet the expectations held for them and a greater volume of new products is required, there's no
doubting the importance. While there are many reasons for the failure of new products in the market
and the efforts to address them equally varied, one headline is that the supply chain for many
manufacturers is now very much intertwined with the product and demand chains.
Beyond the volume and speed of new products required to feed business growth, the following are
some of the additional trends that we see driving this convergence of the supply chain with product
life-cycle management (PLM):
 Product complexity. Discrete manufactured products have more software within them and need
to be modeled and developed on a systems engineering platform; process manufactured
products have material, compliance, and quality complexity to address, as well as the challenge
of finding the right, profitable product portfolio mix.
 Dynamic demand. Customer demand is increasingly volatile with the mass customization and
personalization of products, so a platform must be in place that can adequately sense and
respond to demand.

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 Increased number of external design partners. Increasingly, manufacturers work with more
partners, suppliers, and even customers to make better products, so they need an open platform
to enable easy collaboration and open innovation.
 Global expansion and competition. Manufacturers are expanding into new, local markets and
face tough competition so they must be able to design and develop products quickly to suit
unique needs.
 Continued customer engagement. Highly successful product companies no longer see their
relationship end with the customer at the point of purchase. Continued engagement through
online, connected platforms and complementary products drive customer allegiance to a brand.
An open platform that is continually engaged and communicating with customers along with an
ability to react to innovation and supply triggers will be critical to this continued customer
engagement.
The Networked Supply Chain
At a high level, some level of supply chain/PLM integration has been true at some manufacturers on
a collaborate-as-necessary basis, but the level of integration is reaching more deeply and more
broadly where engineers, R&D, supply chain, and manufacturing work more closely and regularly
together. We refer to this as the networked supply chain (see Figure 1).

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FIGURE 1
The Networked Supply Chain
Source: IDC Manufacturing Insights, 2016
We believe that the supply chain will sit at the center of three lobes — demand aware, supply visible,
and innovation connected. The ubiquitous connectivity and the analytics-enabled customer, supplier,
and consumer allow us to do things today that were not previously possible. Point-to-point
relationships must give way to dynamic networks where latency and cost are not tolerable:
 While many manufacturing companies are demand driven, many are not — at least, not in the
sense that consumption of an item in the marketplace triggers the manufacture of a replacement.
But all businesses must be demand aware and be building downstream demand signals into their
business forecasting process. The business must understand demand and be aware of potential
demand shifts.
 At IDC Manufacturing Insights, we have argued for some years now about the importance of
supply chain resiliency, particularly the ability of the supply side of the organization to respond to

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unanticipated business changes. Just as the old saying was that, "you cannot improve what you
don't measure," we would suggest that "you cannot respond to something you don't see."
Consequentially, the notion of supply visible is central to the future supply chain — and not just to
tier 1 supply.
 The notion of innovation connected is the third element we believe will both take from and inform
the process of developing new products and the key role that the supply chain must play. In years
past, research and development was the key generator of new ideas, which clearly is no longer
true. With a network of diverse sources for potential innovation, companies that do not leverage
these diverse sources will not be successful in the longer term.
Managing these three "lobes" as true networks (where customers, resellers, and consumers are part
of the demand arm; suppliers and logistics service providers are part of the supply arm; and everyone
is part of the innovation arm) enables speed, efficiency, and insight in ways not previously possible.
We see tantalizing hints of the power of the business network and believe the future supply chain will
fully embrace these lobes.
Next-Gen PLM: The Product Innovation Platform
If you were to peer inside the "innovation connected" section in the networked supply chain graphic
(refer back to Figure 1), you would find an extended view of the product value chain, including a
critical, close connection with suppliers. At IDC Manufacturing Insights, we see this natural
broadening and melding of the value chain leading many companies to think not only of an extended
supply chain where supply chain planning, design, and execution benefit from a connection to
demand signals and innovation but also a move to the next generation of PLM. This next-gen view
extends outward from the engineering or R&D workgroup to internal partners in design, marketing,
sales, manufacturing, and service, as well as externally to suppliers, partners, and academia — also
known as a product innovation platform (see Figure 2).

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FIGURE 2
The Product Innovation Platform
Source: IDC Manufacturing Insights, 2016
The product innovation platform is PLM integrated with manufacturing for concurrent engineering,
modeling, MES analytics, and quality; supply chain for planning and collaboration; customers,
partners, and extended development team members for open innovation and product improvement;
and service for better-quality products and an excellent customer experience.
The Future of the Supply Chain
It is easy to talk with enthusiasm about "disruptive" technologies, and many of the trends we have
discussed in this report will be disruptive. But which trends are likely to be the ones that transform the
supply chain? The ubiquitous connectivity and the analytics-enabled customer, supplier, and
consumer allow us to do things today that were not previously possible. Point-to-point relationships
must give way to dynamic networks where latency and cost are not tolerable.
The connection between supply chain and product that occurs in a product innovation platform
provides the open, inclusive decision-making environment required to achieve that perfect balance of
vitality and stability manufacturers need to be successful — that is, new innovation and existing,
profitable products. Not only can you have your finger on the pulse of customer demand with this
architecture in place but you also have the existing set of product and institutional knowledge built up
over the years to draw from. Instead of individual groups making disparate decisions based on the
same data, decisions can be made collaboratively, across product development team discipline:
engineering, marketing, sales, supply chain, manufacturing, and service. Manufacturers cannot
achieve this necessary wide view with a PLM system that is only utilized by design and engineering.

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The benefits to be reaped by manufacturers are many by taking this networked, extended value chain
approach to designing, developing, sourcing, sensing, manufacturing, and servicing products. IDC
Manufacturing Insights anticipates that, with a product innovation platform, new product launch
success rates will improve, speed to market and service response rates will increase, and customer
satisfaction rates will improve. Closely integrating the supply chain with product innovation and
demand signals, we think, will lead to superior financial performance, better service performance,
more effective product innovation, and less system disruption.
Conclusion
Innovation and competitive advantage is not just driven through superior products but through the
way those products are delivered, marketed, supported, and expanded upon. By connecting the
innovation and design of products in PLM with innovation in the ability to make, deliver, and support
them, an organization can maximize productivity and customer allegiance.
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