Think Southwest Airlines and the Ford Mustang Mach-E
Every now and then, the market hands us amazing examples of what happens when companies fail to keep up with the technologies that are strategic to their competitiveness simply because C-level management does not see it as a strategic business issue. This is something that should be of particular interest to manufacturers of increasingly complex products where there is a reliance on PLM systems. Now, I understand that getting C-level attention is easier said than done but here are few examples that could help you to get there in a way that may be transformational to your organization’s competitiveness.
Putting off what you should be doing today
One example is the recent Southwest Airlines meltdown which apparently was 100% due to a purposeful delaying of technology upgrades, as explained here in great detail. According to this report, the bottom line is that the executives knew all along that the manual part of the pilot and crew assignment process was stretched to the limit. However, the company was quite profitable, so the management adopted a strategy best expressed by Vivian Leigh in Gone With The Wind here (sorry, I couldn’t resist). The latest reports indicate that this will cost them over $1 billion while their competitors weathered the storm quite well.
While Southwest does not use a PLM system, what happened to them has interesting parallels for PLM users, where upgrades tend to be avoided because of the cost, disruption, time, resources, and the inability to move customizations to newer versions of the system. In addition, PLM solutions are managed by IT departments and are often viewed as a less strategic cost. There are two consequences of that for PLM: the company keeps increasing its technical debt (customizations implemented on the old rev) and is unable to embrace new technologies and methodologies (ex: MBSE or pervasive simulation) in a common and in-context digital thread across the entire engineering V model. In other words, while the company thinks it is saving money by skimping on the PLM upgrades, its ability to compete decreases in a way that may be quite difficult to correct. If left unaddressed, it will negatively impact the best-laid plans for Digital Transformation, which should be of great concern to C-level management.
The unknown-unknowns and arrogance of over-confidence
Another example is Ford’s flagship product: the Mustang Mach-E. Until a few days ago, I perceived it as a technological marvel. And yet! Here is an article that reports what Ford CEO Jim Farley recently disclosed during a shareholder’s meeting: among other things, they didn’t know that the wiring harness is 1.6 kilometers longer than it needed to be, that they underinvested in braking technology to save on the battery size, and that the car is 70 pounds heavier than it had to be due to a misguided battery selection. As a result of this they left about $2 billion of profit on the table. Ouch! According to the article Farley said that “As with any transformation of this magnitude, certain parts are moving faster than I expected and other parts are taking longer.” Contrast that with this Munro Live YouTube teardown of Tesla S (the relevant segment is between 13:00 and 14:02). Munro says that: “The integration on these cars is just to die for. To do this, you’d have to have the suspension guys, the pneumatics and hydraulics guys, the electronics guys, the structural guys – everybody would have to be involved in every decision.” Aside from this male-dominated view of engineering (so wrong!), he is correct in highlighting the strategic role of cross-domain collaboration in the context of top-down Systems Thinking. My uneducated guess? That’s apparently what Ford teams are still learning how to do. That’s not surprising because traditional cars were designed with much outsourcing based on hand-me-down requirements and integration of pre-designed and pre-packaged sub-systems. This process does not lend itself to optimizing the entire system via the collaboration of the various engineering teams.
To be able to have a Systems Thinking driven cross-domain collaboration methodology in place you need two things: a digital thread and a collaboration platform capable of generating views in-context from that digital thread. In-context means that the views show what the specific participants of the collaboration can relate to as opposed to the underlying raw data which may be incomprehensible to them (ex: SysML model as expressed in a specific MBSE tool). That’s where PLM-managed tool-agnostic digital thread comes in at least as far as the system of record (i.e., the digital thread) is concerned. But because this digital thread now must provide traceability to the newest data structures, including system models and simulation studies, the PLM platform used to manage it must be able to express it. That’s where the importance of keeping up with the latest technologies in PLM platforms comes in. If your PLM version is five years old, you don’t stand a chance because that version was never architected to manage a digital thread that goes beyond a mechanical BOM. Same with the collaborative capabilities – they may simply not be there.
The emerging PLM technologies makes them essential to enablement of competitive strategies for the ever-increasing complex products and the related increasingly complex services built around these products. Think of the digital thread, digital transformation, and hyper-optimization of processes and design methodologies across domains, companies, and supply chain. That connection between the strategy and the enabling technology is what Southwest disregarded when underinvesting in their resource management system and Ford under-appreciated when pivoting to the EV market. This is now a C-level issue. The challenge is in finding ways to get C-level attention regarding that new role of PLM since in most organizations the term PLM is pigeonholed to its old role as an IT managed system-of-record primarily for mechanical engineers. That’s why I used the examples of Southwest and Ford because they speak in $s lost, opportunities delayed, and competitors racing ahead because that’s what C-level management wants to understand. Now figure out how to connect that with the criticality of embracing MBSE, pervasive simulation, AI, generative design, cross-domain collaboration, cross-domain optimization, meaning investment in core technologies, and you just may get your funding for the next generation of a PLM platform. The 2023 slowdown provides an excellent opportunity to reevaluate where you are vs. where you should be in a way that will result in that C-level attention.
Learn more about Aras Enterprise SaaS and the benefits of Systems Thinking.