Scrap Early New Product Excel BOMs to Accelerate Sourcing

Posted: 01/15/2020 - 00:00
Scrap Early New Product Excel BOMs to Accelerate Sourcing

Let’s face it — many of our company’s functions still operate largely in silos as we batch our work together to then throw it over the wall to the next team in the value chain. Much lip service has been dedicated to catchy buzzwords like “agile” and “collaborative new product development.” Unfortunately, these newer ways of working together remain largely untapped.

As sourcing professionals, this leaves us to receive a flood of drawings from engineering once parts are officially released. In a perfect world we still have plenty of time to competitively bid parts as outlined in our predetermined waterfall Gantt chart. The harsh reality is competition and our evermore technology-infused products are delaying the release of technical specifications while pulling our launch deadlines ahead.

We all know what happens next. We create a Microsoft Excel bill of material (BOM) that morphs over time into the spreadsheet of all spreadsheets. Historically, this approach has worked relatively well for simple products, but these tighter timelines, more complex products and a growing desire to collaborate cross functionally are forming fissures in our home-grown tools. We need a better tool for organizing messy, early-new-product commercial data.

Today, sourcing professionals are embracing this opportunity to accelerate new product launches by deploying Automated Plan for Every Part (PFEP) cloud software to bridge the technology gap between Product Lifecycle Management (PLM) and Enterprise Resource Planning (ERP) systems. Further, internal and external enterprise benefits are also being realized, which include streamlined communication, more productive teams and less rework.

What is Automated Plan for Every Part software?

PFEP is an expanded “commercial bill of material” that has been an industry best practice for decades to track such information as part costs, lead times and supplier data in one large spreadsheet. Typically, PFEPs are 35 columns of data across. Thus, for a 100-line item BOM, one’s PFEP can equate to 3,500 data inputs that need to be manually inputted. Although PFEP is a wonderful tool, it’s often quickly abandoned due to the immense individual manual maintenance effort required. 

There is a better way. Automated PFEP software allows you to toss your Excel BOM in the scrap heap while speeding your time to market. It gives you one central source of commercial data, i.e., a “launch playbook,” to accelerate your launch.

Select automated PFEP software lets multiple team members work at the same time via “controlled crowdsourcing” technology that is built into the features. This multiuser read/write capability is a key enabler for speed because it eliminates the need for one team member to maintain PFEP. Instead, global sourcing and additional cross functional team members can view, input and edit data in real time. The net result is no surprise; you are able to take a hatchet to your new product launch timeline.

What results should you expect?

Deploying automated PFEP software can lead to enhanced people productivity, reduced human errors and enhanced reporting visibility, which can accelerate new product launches.

There is a strong argument that you should also include estimates for the opportunity cost of lost revenues as a result of product delays into your business case. Lastly, you may want to add the opportunity cost of future cost savings. As your team’s time is freed up from internal data tracking and follow up, they will be able to focus on more strategic initiatives, such as supplier negotiations, which can further reduce new product costs.

The “back of the envelop” payback analysis of increasing your team productivity by 2x is compelling. Focus on the core quantitative return on investment for simpler analysis and only add more qualitative opportunity cost and cost avoidances to embolden your business case.

Additionally, based on personal experience and survey results of more than 100 sourcing professionals, you should see reduced product costs up to 10%, reduced product timelines up to 30% and reduced launch risk up to 25%. Automated PFEP software should save you money with a payback period of less than a year.

In part II, we’ll look at eight ways to accelerate sourcing with automated PFEP software.


About The Author

William Crane's picture

William Crane is the CEO of IndustryStaran Ann Arbor, Michigan-based supply chain software company that empowers leaders to enhance supply performance more quickly for greater company agility, profitability and impact.