Case Study: L&Ts Product Lifecycle Management

L&T: Smaller lifecycle, better profit

L&T's Heavy Engineering Division manufactures customized industrial-grade machinery for global clients. In order to gain more business from demanding customers it had to reduce the time to deliver the finished goods from 16 months to 10 months. It implemented Product Lifecycle Management to achieve this. A look at the strategies used by the company. by Soutiman Das Gupta and Minu Sirsalewala Larsen and Toubro Limited's (L&T's) Heavy Engineering Division (HED) manufactures industrial-grade equipment for various process industries like petrochemical, fertilizing, and other manufacturing companies. These products are typically customized for every client. Every piece of equipment in each order is built on unique specifications, and the company has a large number of worldwide clients placing orders every year. In a nutshell
The company Larsen and Toubro Limited's (L&T's) Heavy Engineering Division manufactures industrial-grade equipment for various process industries. These products are customized for every client and each equipment is built on unique specifications for its global clients. The need To keep pace with global needs, the company had to reduce the product lifecycle time (the time between receiving an order, and making the delivery of the finished product) and introduce better workflow and smoother operations. The solution The company deployed a iBaan Product Lifecycle Management application to fulfil its needs. The benefits L&T has significantly reduced its product lifecycle time (by 30 percent). There is a higher turnover rate from its production centers, and the company shoes significantly better response to business pressures. Larsen & Toubro (Heavy Engineering Division)

In order to reduce the product lifecycle time (the time between receiving an order, and making the delivery of the finished product) and introduce better workflow and smoother operations, the company deployed a Product Lifecycle Management tool from Baan. "L&T now enjoys 30 percent betterment in delivery performance, rise in export content by 60 per cent, higher turnover rate from our production centers, and significantly better response to business pressures," explained B. J. Shenoy. Shenoy is the Joint General Manager, and Head of Pressure Vessels & Special Equipment SBU (Strategic Business Unit) of the Heavy Engineering Division, at L&T in Mumbai. Customization for profit The company takes care to customize every product according to the specifications of its customers. Every product is unique with an individual design like an 'engineer to order' business. Timely delivery is very important to many of its customers. And being able to bring products to market more quickly was the key for L&T to increase profitability. Globalization spurs the change In the early 90s, after the economy opened up and the company began to attract clientele from other developed and developing countries. This called for a radical change in the style of manufacturing, operations, and conducting business. Since these clients expected world-class products with no room for consideration, and expected timely completion, the company felt the need to manage the product lifecycle better. Before the open economy, L&T's clients, which were mostly Indian companies, allowed products to be delivered within 16 months. But after the economy opened up, the company realized that most international companies expected delivery within 12 months. Efficiency at the enterprise level To achieve a shorter delivery cycle, all the business departments in the company, which was based out of Powai (Mumbai), began activities aimed to promote efficiency in the delivery cycle. And the departments created customized software tools and applications to manage their businesses. "This resulted in the decrease of the delivery cycle to around 12-14 months," said Shenoy. "But our customers' expectations began to grow and they expected delivery within 10 or 11 months." The company realized that increasing efficiency in each department provides considerable help, but to achieve better, it must look towards increasing the efficiency of the enterprise as a whole. "Instead of seeking optimization of processes in individual departments, we had to seek optimization of processes in the enterprise," explained Shenoy.
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L&T felt that effective Product Lifecycle Management (PLM) could help increase engineering productivity, cut product development timelines, and reduce change cycles. L&T's objectives The main aim of the PLM solution was to manage the entire product lifecycle. It also had to reduce delivery periods and shorten the fabrication cycle-time. The company needed to have a comprehensive system that reached across its extended enterprise of customers and partners to collate data from 7,000 drawings, 50,000 documents, schedules, purchase orders, O&M manuals, and applications like AutoCAD and Office. It also wanted to enable its executives to approve versions, routings, specifications, and to authorize actions throughout the product lifecycle. "The number of drawings and documents were growing at a rate of 900 and 15,000 per annum respectively. There were a lot of data islands with redundant and duplicate data. Data volumes were creating problems with ownership. Different functions were using different terminology and were referencing the same data differently. Archiving and retrieving data was also a big problem," explained Shenoy. In order to improve CRM, the company wanted to customize progress reports, speed up internal processes, and enable the customer to demand online status and project management for their orders. Many customers asked for changes to be made in the product even though the order was placed a few months ago. The PLM solution had to provide the customer information regarding the impact of changes, like delay of job completion and the need to re-procure high lead-time items. "A complication was that we work across multiple manufacturing sites (Mumbai and HaziraGujrat) and perform multi-time manufacturing, which requires complex networking," added B.J. Shenoy. "And different levels of people required different levels of access to documents. The system needed to allow security levels for access to data like purchase orders and authorization to amend drawings." Choosing the enterprise application In late-1997 L&T evaluated 14 vendors including SAP, Oracle, and QAD. L&T's Electrical Business Group was already using a few modules of SAP at that time. In mid-1998, the company decided to use iBaan PLM. The selection criteria comprised three main factors 1) The solution had to be able to integrate with AutoCAD with no separate data transfer steps and live link with drawings. 2) The solution had to allow direct data entry into enterprise application without customization and independent drawing preparation. 3) The solution had to allow ease of import and export of data from the existing enterprise

applications running with easy synchronization, and without data re-entry. The company also performed a package-based BPR deployed simultaneously with the PLM solution and went live with iBaan PLM in October 1999. Deploying the solution The implementation was done in three phases and PWC was the consulting partner. In the first phase the Document Management system was implemented and iBaan PLM was used to store, search, retrieve, and archive all the documents. In the second phase, the company implemented workflow and version control, with the help of an automated engineering change cycle. In the third phase, the items in product document management were linked to the Baan product. iBaan at L&T L&T's iBaan for PLM helps to enhance internal and external collaboration throughout a product's lifecycle. The lifecycle includes the stages of initial concept and design, procurement, fabrication, project management, distribution, and after-sales. The solution allows the company to focus on its product management and positions it better to deal efficiently with specialized orders across multiple sites throughout the configuration process. iBaan now works with a range of other enterprise applications including the Baan Enterprise system and iBaan Supply Chain Scheduler to help users automate the scheduling process, drawing making process through AutoCAD, BOM & hierarchy generation via AutoCADObjectARX, and Product Knowledge Management applications. 800 nationwide users work on this solution. "For the first time, L&T is able to support its manufacturing staff by maintaining a closedloop system that can help them manage all aspects of a product's lifecycle within one virtual, yet comprehensive environment. Now users across the extended enterprise are able to share and link product information across the value chain," explained Shenoy. The solution connects all the authorized users across the extended enterprise and not just the workstations. Performance related to delivery has increased by over 30 percent and export content has risen by 60 per cent. The production centers have also experienced a higher turnover rate "Not only has the solution helped to significantly improve the quality of our manufacturing and design process, but the company now has an electronic database for all our documents and drawings," said Shenoy. Earlier the documents and drawings were manually filed on paper, and were very tedious and difficult to retrieve. "The process is much easier now as authorized users across the extended enterprise can easily retrieve newly-stored files for immediate reference and authorization," added Shenoy.