In this article, originally featured in the WhichPLM Annual Review 2014, Chris McCann explains how you can leverage PLM to get ahead of the curve and survive in a volatile age. A long-time advisor to the WhichPLM team, Chris has spent fifteen years working to drive sustainability and responsible sourcing programs for Fortune 500 companies, the United Nations, national governments and multi-stakeholder initiatives.
‘The Longest Day’. Released in 1962, nominated for five Oscars (the film won two), with a stellar cast including John Wayne, Robert Mitchum, Richard Burton, Sean Connery. A black and white film, but one that even 50 years on is invariably included in listings of the top 100 movies of all time. If you want a sense of the colossal forces brought to bear in the closing years of WW2, this is the film for you. I also believe it has a lesson to teach the readers of this publication.
There’s a scene, maybe two hours into the movie, where a black-bearded, more than eccentric Capt. Colin Maud (played by Kenneth Moore) is on Normandy’s Sword beach, shillelagh in one hand and the leash of his bulldog Winston in the other. As Beach Master, he is to guide the massive supply lines from ship to shore, helpfully pointing out “the war’s that way!” as the camera pans out to include the thousands of tanks, trucks, jeeps and men that are making their way deeper into occupied France.
It was W. Edwards Deming, one of the great post-war management consultants, who pointed out that the first challenge to overcome when addressing change is in recognising that there is in fact a need for change – something tangible that we can strive toward (“The war’s that way!”). Deming’s theories are as relevant today as they were when Wayne and company set out to recreate the D-Day landings. Organisations still often fail because of an over-emphasis on achieving short-term profit (one of Deming’s ‘7 Deadly Diseases’), or because they neglect long-range planning (his ‘Lesser Category of Obstacles’). And in an increasingly complex world, short-sightedness or a failure to be aware of one’s environment can be fatal.
During my career I’ve worked for and witnessed the collapse of two major UK retail companies – both over a century old – each of which failed to understand that their reality was changing and that they too needed change to remain relevant. First class travel, expansive expenses, silver service and deep pile carpets at HQ – none of this guaranteed survival, or survived the inevitable fall.
70 years on from D-Day, it seems that we in the 21st Century are witnessing global challenges and trends that will demand an equally colossal focus of energy and resource if they are to be effectively met. Most notably, these include Population Growth (9.5 billion people by 2050, compared to 7.1 billion today and 3.4 billion in 1967, the year of my birth), Climate Change (it’s happening, whether you’re in the man-made camp or not), Resource Depletion (including fossil fuels), and threats to Food Security (in part arising from pressures created by the preceding three horsemen).
Scaremongering? Maybe there is greater danger in refusing to acknowledge a changing landscape and its implications. Although it’s true that some will capitalise on these themes for their own ends (sometimes distorting the message in the process), more and more voices support the view that the research and the analysis are sound. Apocalyptic? It depends, I think, on the degree to which action is taken. I’m reminded of Deming’s words, when he said:
“It is not necessary to change. Survival is not mandatory.”
And he spoke with some experience: many in Japan credit Deming as the inspiration for what has become known as the post-war Japanese economic miracle.
There have been reams of books, articles and theses written dealing with the subjects at hand. In June 2010 I was asked to peer review a White Paper, jointly produced by Lloyd’s 360 Risk Insight Program and Chatham House, entitled “Sustainable Energy Security: Strategic Risks and Opportunities for Business”. Contributors included Alstom, Anglo American plc, BP, E.ON-UK, Gaz de France, Shell, and Statoil amongst others, and it was a sobering experience. The four years that have since passed have not lessened its impact, nor its message. As Richard Ward, Lloyd’s CEO, outlined in his foreword,
“…we have entered a period of deep uncertainty in how we will source energy for power, heat and mobility, and how much we will have to pay for it. Is this any different from the normal volatility of the oil or gas markets? Yes, it is. Today, a number of pressures are combining: constraints on ‘easy to access’ oil; the environmental and political urgency of reducing carbon
dioxide emissions; and a sharp rise in energy demand from the Asian economies, particularly China. All of this means that the current generation of business leaders – and their successors – are going to have to find a new energy paradigm…we can expect dramatic changes: prices are likely to rise, with some commentators suggesting oil may reach $200 a barrel.”
The subject matter expertise of the contributors, the seniority of the paper’s sponsors, and the conclusions reached in the report should give any reader pause for thought. In short, authors Froggatt and Lahn state:
- We are heading towards a global oil supply crunch and price spike.
- Businesses which prepare for and take advantage of the new energy reality will prosper – failure to do so could be catastrophic.
- Market dynamics and environmental factors mean business can no longer rely on low cost traditional energy sources.
- Business must address energy-related risks to supply chains and the increasing vulnerability of ‘just-in-time’ models.
Ultra-deepwater drilling (witness the disaster that was Deepwater Horizon), the controversial practice of hydraulic fracturing (‘fracking’), the suggestion that the Ukraine (a natural gas chokepoint) is the latest pawn in a new version of The Great Game – the casual observer should ask whether there is a relationship between these activities and the uncertainty that Richard Ward has voiced, and note the prescience of Froggatt and Lahn’s words.
But how does this apply to us? In practice, the very nature of modern retailing anchors us tightly to global shifts such as Froggatt and Lahn describe. In an environment where demand for improved margin brands is increasing, retailers are continuing to migrate their supply chains to low cost countries, which can bring associated risks. All too often we have seen the results of using low cost production sites, employing low cost resources, and of cutting corners in ways that result in disasters for the workforce and for the local population. Witness the 2012 Tazreen Fashion tragedy, where 117 workers died, and which led to thousands of workers demanding improvements in health and safety practices. Consider also the impact that unsustainable practices have had on the Aral Sea in Central Asia, which is now almost empty as a direct result of intense cotton production under the former Soviet Union, and has become a poster child for the negative environmental and social impacts of blinkered commercial activity.
All of the above points to the fact that businesses do not operate in a vacuum – the reality faced by consumers, employees and society at large sooner or later becomes a reality to be faced by corporate interests. What are the implications, then, for Product Lifecycle Management (PLM) projects, users and vendors? A word of caution here- as Niels Bohr famously said:
“Prediction is very difficult, especially if it’s about the future”
A host of stakeholders are increasingly demanding that business organisations address a range of issues that traditionally may not have been viewed as within their sphere of influence. From product safety to human rights in supply chains. From establishing collection, recycling and recovery targets for electrical goods, to ensuring that animal rights are respected in the production of clothing. And aside from the drive to meet societal expectations, organisations are increasingly becoming aware that there are often persuasive commercial arguments for operating responsibly. As we saw earlier, for retailers operating on razor thin margins and utilising extended supply chains, the prospect of oil prices doubling over the next few years is enough to make any trader contemplate ‘sustainability’ in a different light. The business that accepts there are real risks to be addressed – and real opportunities to be sought – is already ahead of the curve. Whether change comes incrementally or as short, sharp corrections may be immaterial – it is the direction of travel that is key, or to put it differently, “the war’s that way”.
PLM tools may offer opportunities to retailers, brands, vendors and factories alike who seek to build greater resilience into their products, their supply chains and their business overall. Since PLM can track the product from concept to ex-factory delivery it is well-suited, not only for collating a growing and varied mass of certifications and compliance requirements, but also for initiating and coordinating those requirements through the use of workflow lifecycle status updates and messaging. Critical regulatory requirements can be linked to a product category, type, age or size range that can then trigger processes that will help to avoid unnecessary non-compliance risk to the business or its supply chain partners. The Higg Index (apparel and footwear), REACH (chemicals), WEEE (electric and electronic equipment), product safety (such as CPSIA), and others – what may be a plethora of unrelated data points are, through PLM, structured such that they become valuable information delivered in a timely fashion.
Beyond tracking compliance, however, PLM has the potential to offer a great deal more. Since not only the product but the components of that product form the basis of the PLM package, it should be possible to use PLM as a primary tool for driving implementation of a range of sustainability initiatives. For example, consider the value in understanding not only a product’s cost breakdown, but also the geographical origin of its component parts, raw inputs (energy, water), distances travelled and so on. Such data would provide an organisation with greater flexibility in making decisions that support external carbon reduction commitments, or assist in driving sourcing and product development strategies geared to minimising costs in an environment of rising energy costs. Data collection, root cause analysis, impact assessments- all become possible, and significantly augment human rights, environmental and other such programs because PLM is concerned with the details surrounding a product, and knowledge of detail facilitates change.
Improvement initiatives are often multi-stakeholder, of course, and as such effective collaboration is imperative. Brands, retailers, agents, vendors, factories, raw material suppliers, label & packaging, testing companies, auditors – PLM enables partners to share dynamic data, 24/7. Supply chain partners can agree and measure key performance indicators, eliminating silos and enhancing creativity. Business processes may be improved, supply chains reengineered – sustainability programs no longer an ‘add on’ managed by a separate team of Corporate Social Responsibility specialists, but a business program benefiting multiple stakeholders.
Through all this, PLM also becomes an effective tool for training and communication, and for creating those stories that enable all parties to understand where progress is being made, and then to communicate this to consumers whose expectations are becoming increasingly stringent with each passing year. Properly chosen and implemented, PLM becomes a ‘one stop shop’, a vehicle for change that increases an organisation’s ability to effectively address a wider set of stakeholder expectations, including those outside the supply chain (e.g. consumers, investors, regulatory bodies, NGO groups and so on). Indeed PLM eventually allows the organisation to partner with trusted stakeholders, conceivably even those who are the beneficiaries of improvement initiatives, providing them with the means to actively participate in and create their own successes.
Product Lifecycle Management has much to offer those who would weather the changes that risk sweeping away the unprepared. And indeed, it seems to me that PLM offers a real opportunity to its adherents to get ahead of the curve.