Inefficiencies in Formula 1 Expose the Importance of Adopting Comprehensive PLM Solutions for SMEs

F1 teams can spend up to US$135 million per year to design, develop, and manufacture cars valued in the vicinity of US$15 million. Out of the 10 constructors in 2023, four fell within the Small and Medium Enterprise (SME) manufacturer definition with an Annual Recurring Revenue (ARR) below US$500 million and less than 500 employees (Williams, Alfa Romeo (now Sauber), Haas, and Alpha Tauri (now RB Racing). Low adoption rates of Product Lifecycle Management (PLM) software by SME manufacturers is commonplace, with SMEs accounting for only 17% of total PLM spending in 2023 (see ABI Research’s Product Lifecycle Management market data (MD-PLM-102)). However, SMEs are realizing the gains of PLM adoption with a Compound Annual Growth Rate (CAGR) that outpaces both large manufacturers’ adoption and the overall market at 19%.

While Excel is a valuable tool for many businesses, SME manufacturers require a robust, yet cheap solution to maintain product integrity and promote collaboration among all facets of operation. Excel does not perform to the same degree as PLM software today, with critical issues such as data silos, incorrect allocation of data, and integration with external enterprise software being the largest causes of time and revenue loss. For Williams Racing and other SME manufacturers, this has been a difficult hurdle to cross, leading to inefficiencies across the board from design through rollout.

PLM software has been revamped with the Software-as-a-Service (SaaS) business model boom and has been integral for the increase in adoption rates by SME manufacturers. With a SaaS deployment, PLM software offers subscription-based licensing, rather than traditional perpetual or long-term purchases, along with role-based seats for specialized use among engineers, operators, line managers, and executives that significantly lower the purchasing cost. Additionally, a SaaS deployment and the use of cloud collaboration relieves the pain points caused by Excel and alternative software used to track product data. Primarily, data inputs do not have to be added retroactively after alterations in Computer-Aided Design (CAD) software. Real-time updates to Bill of Material (BOM), supplier details, contract manufacturers, lead times, and prices are available when operating on cloud-enabled PLM software. When switching from an Excel, handwritten, or no product lifecycle solution, SaaS PLM provides manufacturers with faster design iterations, quicker time to market, enhanced collaboration and product visibility, regulation, and compliance oversight, as well as the ability to scale when operations exceed expected output.

SaaS PLM operates best when multiple data streams are being consolidated into a single repository of information. Data streams coming from factory line IoT devices and applications such as CAD, Manufacturing Execution System (MES), Enterprise Resource Planning (ERP), and Supply Chain Management (SCM) need to be incorporated into a singular domain to eliminate data silos and provide full transparency into product development. With SaaS PLM, SME manufacturers have an inexpensive alternative to Excel that enhances collaboration, reduces time-consuming inventory searches, and speeds time to market for new products.

In order to benefit from SaaS PLM, manufacturers must first outline exactly what is required from the solution. Simply using Out-of-the-Box (OOTB) PLM software from vendors such as Autodesk, Dassault Systèmes, PTC, or Siemens, is not an advisable course of action as PLM software needs to be customized for specific business and industry requirements. SaaS PLM can be specialized in numerous ways such as altering external software integrations, system architecture for data consolidation, and User Interface (UI) changes for optimized worker performance. To maximize the value of SaaS PLM, ABI Research recommends that SME manufacturers of discrete products such as Williams Racing prioritize the following:

• Alleviate Current Problems: Identify where in the product development process problems and inefficiencies occur. Siloed data and information gaps are often problems that slow down product development and new product introductions. PLM software unifies product data in one platform, ensuring everyone is on the same workflow to accelerate development cycles.
• Quantify Return on Investment (ROI): Calculate time loss in re-engineering already worked on designs, using previous part designs, locating product BOMs, and accessing supplier information. These are typical factors that negatively impact employee work speed for companies not using PLM software. Beyond saving time, PLM software derives value through cost-saving activities such as reducing the incorrect purchasing of materials, ensuring product quality, and eliminating recalls due to infringement of regulation and compliance mandates.
• Engage Users: Speak internally with department leads such as engineering, manufacturing, Information Technology (IT), and marketing for perspective on how current operations function across the teams. It may be the case that PLM software can foster more collaboration and enhance Key Performance Indicators (KPI) across the board.
• Identify Industry Position: Examine competitors within an industry to see what standard operating procedure looks like regarding software adoption. PLM software is widely used in specific industries such as automotive, aerospace, and electronics manufacturing, making PLM software adoption a necessity if operating in one of these fields. If operating in industries that have lower adoption rates such as consumer goods and chemical manufacturing, being a first mover may increase the overall value of PLM software.