Creating and Updating Complex BOMs

Agile Software makes software that helps companies create and update complex bills of materials. This is a small niche, but one that delivers very high ROI. Agile dominates the niche in high-tech, but is a marginal player in industries like automotive where a similar ROI is available.

The Product

In many industries, the work of creating a new product falls to two separate engineering groups: the design engineers and the industrial engineers. Design engineers create the design for a product (think drawing!). Industrial engineers take the drawing and figure out two things: how it will be made and what components it will be made out of.

Essentially, the design engineers think it up, and the industrial engineers make it manufacturable. Or, to put it another way, the design engineers come up with a prototype, and the industrial engineers come up with an end product that they can be made at a certain rate of speed, for a certain cost.

Agile Software makes software that supports the work of industrial engineers. The software helps the engineer create a list of components (called a bill of materials) and a method of manufacture (called a routing) from the drawing or prototype. It helps them figure out how they’re going to get the components. And it helps them manage the bill and routing whenever there are changes.

The Agile software consists of a core bill of materials manager plus support for interaction with the manager. The interaction comes in three forms:

• The bill of materials is created. For this, Agile has the Design Integration Server, which allows you to import the design from most CAD systems and use it to create the bill of materials. It also has a list of authorized component vendors, which can be used for sourcing.
• The bill of materials is changed. For this, Agile has software that supports the internal Change Control Board and change initiated by partners.
• The bill of materials system is integrated with other systems, such as an internal ERP system. For this, has systems for integrating with internal ERP software, for broadcasting change out to the supply chain, and for integrating with external systems.

Agile calls its suite of products Agile Anywhere, which accurately reflects the products’ B2B orientation. Though the product was originally written to support internal change management, it has been rewritten so as to serve an extended manufacturing chain. The modules themselves are in HTML, JavaScript, and Java (on the server), so that all information is accessible via browser. All BOM information is in principle available to suppliers; in addition, suppliers can participate in the change processes, even initiating change. Agile also has several different software facilities for broadcasting changes to suppliers and for integrating supplier servers with their BOM server.

Value

Anyone who has worked with products that change frequently has an intuitive feel for the kind of havoc that frequent product change wreaks. The value of Agile is in lessening that havoc.

Broadly speaking, if Agile is installed correctly and insightfully, a company should see the following benefits over what they had when they used Excel and an ERP system:

• Reduced time to market. The total time it takes to introduce a new product or get changes from conception to consumer should go down.
• Reduced industrial engineering cost. The amount of effort involved in performing mechanical tasks, such as assigning part numbers, should go down, and time spent on things like reconciling simultaneous, but conflicting changes should go down.
• Reduced obsolescence. A major cost of frequent change is that there are old products or old parts left over after the change is made. Accurate management of that change makes ordering more accurate, which reduces inventory.

Within an organization, the cost all three (long time to market, high process cost, and high cost of obsolescence) can be significant barriers to success. Within industries where this is true, being in the top quartile in component engineering can produce significant competitive advantage, and all those other "soft" benefits that software vendors are so fond of.

Assessment

POSITIVE: The underlying design of the product shows a very good understanding of the processes involved in making new products manufacturable. Each step in the process has been addressed by what appears to be serviceable functionality. The attention to extended business processes (Agile Anywhere) is particularly noteworthy for companies that must manage an extended supply chain.

Many manufacturers would instinctively think that they can get along with just an ERP system; however, when there are several changes per day in a BOM, the extra effort involved in running a separate system is dwarfed by the effort saved by having a management system that works.

NEGATIVE: Companies in many industries with high obsolescence and frequent product change feel the need for a BOM manager, but Agile has not had the impact in these industries that it has had in high-tech electronics. We therefore believe that adaptability to other industries is an issue.

The product is most useful when there is a well-defined workflow for creating and modifying products that is supported by its software; if the fit is poor, it will not be helpful.

The product may end up requiring integration with multiple systems. We have not assessed the integration tools, but they should be looked at with care.

In order to do collaborative BOM management, it is important to have a supplier dashboard, which can give information about the supplier, its personnel, its products, etc. The dashboard is particularly necessary when the workflow manager needs to move processes between companies. Agile’s product in this area is not as strong as some of its nominal competitors (see below).

BOTTOM LINE: Companies that use Excel and ERP to manage frequent product changes have a good chance of getting positive ROI from Agile’s software.

A longer version of this report is also available.

For other PLM company assessments, see our archive.