Arena Solutions, a provider of on-demand product lifecycle management (PLM) software for manufacturers of all sizes, has announced results from a companion study it conducted with 400 suppliers and contract manufacturers (CMs) to determine, from the suppliers’ point of view, concerns related to outsourcing practices with their original equipment manufacturer (OEM) customers. The study indicates that CMs blame poor communication with manufacturers for 79 percent of new product introduction (NPI) delays and 30 percent of product compliance issues (e.g. RoHS and WEEE), causing over 90 percent of suppliers to incur cost impacts that ultimately drive up outsourcing-related costs for manufacturers. A majority of suppliers said they see their customers who use PLM software to manage their design through manufacturing process experience fewer errors, improve cycle time, and lower outsourcing costs.

Perception among suppliers is that more effective collaboration with their OEM customers is critically important to address problems including coordinating NPI, managing and communicating product changes, and communicating product information, (e.g. RoHS status), across organizational and geographic boundaries. A majority of suppliers responded that these problems create hard-dollar impacts, such as increases in inventory or unplanned rework and expenses, and often result in the need to increase charges to the OEM, raising the overall cost of outsourcing. Suppliers in this study noted that only 40 percent of the OEMs they work with are using PLM, leading to a high percentage of manual and time-consuming processes such as phone calls, faxes, and emails, and spreadsheets being used for communication, resulting in a high occurrence of errors. Suppliers clearly see PLM software as a positive solution, with nearly seven of out of ten saying PLM leads to improved NPI, and six of ten noting PLM improves change management processes and compliance.

"We learned so much about the challenges of manufacturing outsourcing from surveying OEMs earlier this fall, we decided to follow up with a similar study to get the supplier perspective," said Michael Topolovac, chief executive officer, Arena Solutions. "What we gathered is that from the suppliers’ point of view, companies that are using PLM simply perform better, especially in terms of change management, NPI, and compliance. When these issues are managed with PLM software, OEMs and suppliers can achieve lower costs and allow outsourcing to provide all the benefits a company might expect."