RISKS IN PLM PLANNING

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1 8th International DAAAM Baltic Conference "INDUSTRIAL ENGINEERING April 2012, Tallinn, Estonia RISKS IN PLM PLANNING Čechová, L.; Horejc, J. Abstract: This paper deals with risk that can occur during planning of the technical system, i.e. the first phase of the product life cycle. Article also contains division of this phase into individual steps, description of all these steps and assignment risks to each step. Key words: Risk, risk management, PLM, planning. 1. INTRODUCTION Risk management is an important activity of every progressive thinking organization. Risk management during product life cycle enables in time prediction of risks that can occur during each phase. The company can decide on basis of this prediction, either run the risk and continue in the PLM or stop it, because the risk is too high. Risk management allows further reductions of risk`s likelihood and its impact in individual phases. 3 Product lifecycle Each product has limited life time. During this time it passes through several phases. Sequence of theses phases makes up the product lifecycle PLM. The lifecycle can be seen from several points of view such as marketing view, in terms of execution, in terms of impact on the environment and others. In terms of risk management the most considered is the view in terms of transformation processes. For this reason the following model used by prof. Hosnedl is applied in my work. This model is also suitable for usage, because it defines five operators that influence all phases of PLM. These operators are: human system, technical system, environment, information system, management system. These operators can be considered as resources of risk causes. 2. Risks The concept of risk is always connected with uncertainty in not meeting the objectives. If it is possible to define the likelihood of not meeting the objectives and its impact, than it is risk. There is no united definition of risk in available literature. For example Czech standard CSN defines risk as an effect of uncertainty on objectives. There are generally two types of risk: threat risk having only negative effect, opportunity risk having both negative and positive effect. Fig. 1. Product Lifecycle

2 4. Risk Management in Planning Concept of the product is formed during pre-production stages (especially planning). Therefore it is necessary to pay sufficient attention to this phase - create and collect as many documents and find as many risks for deciding about this concept. Approximately 10 to 20% of total number of risks occur during pre-production stages covering 80-90% of potential impacts. 4.1 Planning As shown in the PLM, model planning is the first phase of product lifecycle. The starting point for planning is the vision of the company that reflects the mission of the company. An analysis of the company has to be made based on this vision its strengths and weaknesses, and analysis of company's environment opportunities and threats. After this analysis complex strategy should be created. This strategy consists of several sub strategies for example business and technical or manufacturing strategy. Based on these sub strategies product planning can begin Technical System Planning Technical system planning must be based on business, technical and economical inputs resulting from the company's strategy. First step of technical system planning is the definition of the product. In this step basic parameters, basic functions, target markets, customers, competitors and possible barriers of the product should be established. Next step is to specify the financial assignment. This step includes: estimation of sales of the product and their volume, investments needed for product developing and manufacturing, determining of maximum total costs, maximum production costs, price estimation, total revenues assumption and creation of cost management plans. Technical system planning should also include time specification. In time specification should be defined: prediction of total time needed, forecasts of time product will be set on market, setting of intermediate milestones and schedule of the management plan. In addition to financial and time specifications planning has to include staffing assignments. In this step project manager, number of team members and structure of the team should be determined. After the definition of the product, financial, personnel and time specification is necessary to approve the concept to the leadership of the company. After approval of the concept a team should be created and PLM can continue in other pre-production stages design and technical and organizational preparation of production. 4.3 Risks in Planning For identification of all risks in planning it is useful to proceed in individual steps of planning mentioned above and causes that are based on operators from chosen product lifecycle. After the modification of these operators there are 8 groups of causes of risks: causes of risks due to inputs, causes of risks due to transformation processes, causes of risks due to human system, causes of risks due to material- technical system, causes of risks due to information system, causes of risks due to management system, causes of risks due to feedbacks, causes of risks due to outputs. First group of risks causes are causes due to inputs. These are financial, human, material, energy and information inputs. This group can be divided into: causes of risks due to prime inputs, causes of risks due to supportive inputs, causes of risks due to undesirable inputs. Further group of causes of risks is transformation process. Transformation processes can be divided into major,

3 supportive and undesirables. Subgroups are thus: causes of risks due to prime transformation process, causes of risks due to supportive transformation process, causes of risks due to undesirable transformation process. Risks rising from human system can occur as a result of the decision of a human not to accept the technical system. It can be on basis of human s inner values, of threat human's health or claims to the senses of man. Subgroups of causes due to human system are: causes of risk due to general and specific human values, causes of risk due to threat to human's health (safety, hygiene and ergonomics), causes of risks due to human senses and perception (hearing, smell, touch, taste, knowledge...), causes of risks due to human behavior and decision making. Risks relating to the material-technical system may occur from the technical suitability of the available technology or technical means, working environment and labor means. Subgroups of risks causes are thus: causes of risks due to technology, causes of risks due to technical means, causes of risks due to working environment, causes of risks due to material item. Another area of risk is information system. Risks due to technical information, trade and economic, regulatory and informal information occur here. Subgroups of causes risks are thus: causes of risk due to technical information, causes of risk due to commercial and economic information, causes of risks due to regulations, causes of risks due to informal information. Risks are present also in the management system. The causes of the risk in management system can be broken down into: causes of risk due to general environment, causes of risk due to field environment, causes of the risk due to management system (planning system, management...), causes of risk due to behavior and influence from management decisions causes of risks due to company's general values. Risks may occur on the basis of poor feedbacks. They are: causes of risks due to prime feedbacks, causes of risks due to secondary feedbacks. The last group of causes of risk is outputs. They are financial, human, material, energy and information outputs. Subgroups are: causes of risks due to the main outputs, causes of risks due to supportive outputs, causes of risks due to undesirable outputs. By linking these two areas (individual steps in planning phase and causes of risk) arises map of all risks that may occur during the planning Risks in the individual steps of planning Some causes of risks may occur during all phases of product life cycle, some are specific for individual phase. Causes of risks that may occur during all phases of product life cycle are shown below. Fig. 2. Causes of risks that can occur during all phases of product life cycle

4 It is always all subgroups of causes of risks mentioned above. Causes of risks that are specific for individual phases are described below. Largest number of causes of risks can occur during planning. That is because during planning has to be all threats considered. In additional to the causes of risks that can occur during all phases of product life cycle are that some causes of risks due to human system, material technical system, information system and management system. Next step of planning is financial specification. Here can occur, besides causes of risks that can occur during all phases, some specific subgroups of causes of risks due human system, information system and management system. These specific causes are described in picture below. Fig. 4. Causes of risks in financial specification Third step of planning is time specification. Moreover can during this step occur some causes of risks due to human system, information system and management system. Specific causes are shown in picture below. Fig. 3. Causes of risks in definition of the product

5 Second-to-last step of planning is approval of the concept. Specific causes of risks are shown in following picture. Fig. 5. Causes of risks in time specification Following step of planning is specification of stuffing assignments. Here can further occur some of causes of risks due to human system, information system and management system. Specific causes are shown in picture below. Fig. 6. Causes of risks in approval of the concept Final step of planning is creation of a team. In this step can occur only 6 causes of risks. These are described in the picture. Fig. 6. Causes of risks in specification of stuffing assignments Fig. 7. Causes of risks in creation of team

6 5.Conclusion Assigning individual causes of risks to each step of planning, i.e. the first phase of product life cycle, arises a integrated system. This integrated system helps to identify all risks that might occur during individual steps of technical system planning. This process is systematic therefore prevent forgetting some risks better. If it were possible to assign to each cause of risk its likelihood and size of its impact, it would possible to determine risk of each step. The risk is determined by multiplying these two indicators. The risk throughout the planning phase is simple sum of risks of individual steps. This indicator can help companies to decide, either run the risk and continue life cycle of the product, or stop it, because the risk is too high. Comparing this index in more variants of the same project also allows deciding which variant is less dangerous for the company. 6. Acknowledgment This paper was created with the subsidy of the project CZ.1.07/2.3.00/ under Ministry of Education of the Czech Republic. The name of this project is "Highly professional research team focused on the topic of Product Lifecycle Management and Digital Factory". This paper was supported by Internal Grant Agency of University of West Bohemia. Project No. SGS Multidisciplinary Design Optimization and Operation of production system in digital factory environment. 7. References [2] Dvorak, J.: (2011) Risk Management of Technical Products in Their Life Cycle, Sbornik prispevku - Soutezni prehlidka studentskych a doktorskych praci FST Eds.: P. Zitek, ISBN , Pilsen [3] Hnilica, J.; Fotr, J. (2009). Aplikovana analyza rizik ve financnim managementu a investicnim rozhodovani, Grada Publishing, ISBN , Praha [4] Merna, T.; Al-Thani, F., Risk management, Computer Press, ISBN , Brno, 2007 [5] Idt. CSN 31000:2009 Czech vision of International Standard ISO 31000:2009 Risk Management Principles and Guidelines, Praha [6] Korecký, M.; Trkovský, V., Managemetn rizik projektů, Grada Publishing, ADDITIONAL DATA ABOUT AUTHORS 1) Lenka Čechová, Ing., Ph.D. student Jan Horejc, Doc. Ing. Ph.D., tutor 2) RISKS IN PLM PLANNING 3) Lenka Čechová, Ph.D. student, Západočeská univerzita v Plzni, Univerzitní 8, 30614, Plzeň, Česká republika, cechovalenka@centrum.cz, osoba=6110, Doc. Ing. Jan Horejc Ph.D., tutor, Západočeská univerzita v Plzni, Univerzitní 8, 30614, Plzeň, Česká republika, horejc@kpv.zcu.cz, ) Lenka Čechová Západočeská univerita v Plzni, Univerzitní 8, Plzeň [1]Crouhy, D.; Galai, D. & Mark, R., The Essentials of Risk Management, McGraw-Hill, ISBN , New York,1991