PLM encompasses the development and management of a product, from its conception as an idea, through its design and manufacture, to the final disposal, recycling or re-manufacture stage.
Successful PLM relies upon high levels of collaboration. It integrates people, data, processes and business systems using an organisation-wide product information backbone. A major part of PLM involves the co-ordination and management of product definition data. This includes managing engineering changes and the release status of components; the configuration of product variations; document management; planning project resources; and, timescale and risk assessments. In today’s highly competitive global markets, products need to be developed rapidly to meet demand or to capitalise on novelty. The competitive differentiation of products and services is also important; this is especially the case where products undergo rapid lifecycle changes and may become quickly obsolete.
According to Leslie Magsalay, founder and chief operating officer of The PMO Practice in the United States, new product development and lifecycle management are essential components of corporate success. Bringing new products to market – ones that meet both the needs of customers and targeted launch dates – requires a focus on best practices at each stage of the product lifecycle process.  Most product development processes have between four and eight phases, as outlined in Figure 1, see below.
Best-in-class companies use the following best practices for PLM:
- Focusing on the customer. Customers should be involved early – and frequently – during product concept, definition and planning. Customers’ critical requirements need to be identified and documented. These can be categorised as follows:
- Starting Blocks: customers require these features but will not pay extra for them.
- Differentiators: customers like these features and will pay extra for them.
- Wow Factors: the customer did not know about these features and loves them at first sight.
- Defining success factors at the beginning of new product programmes, and maintaining regular reviews to ensure that these factors remain in strict control throughout the product lifecycle.
- Using defined quality methodologies and metrics, for example Six Sigma, lean manufacturing or total quality management.
- Ensuring product commonality by drafting component and platform roadmaps, which maximise the reuse of existing technologies; new components should only be used where cost-performance benefits warrant their introduction.
- Employing risk management processes to assess and classify technical, business, quality, resource, scheduling, legal or cost risks for all product programmes. Every business and technical review should include a risk review, supported by data summarised in a dashboard.
- Using exception management procedures by identifying – and documenting – all programme exceptions.
- Using product integration as a continuous process by firstly developing the kernel functionality, and then adding additional functionality, step by step, until the full product has been developed, integrated and tested.
- Employing measurements by launching new product programmes with clearly defined targets that are reported using dashboards. Quality methodology, commonality, reliability, defect or bug tracking, product costs, and production schedules are the minimum measurements required for each product programme.
- Ensuring product quality through the use of quality acceptance goals and boundaries, for example mean time before failure or defects per million opportunities. This view of quality should be derived both from customer input and bench- marking studies of the new product against competitive world-class products.
- Developing target product costs. A market-driven, product cost target ensures new products can be priced competitively. Total product lifecycle costs should be considered in product planning docu- ments. These should include costs and provisions for the disposal of old products returned from the field. N.B.: the cost of maintaining old products— and of maintaining sources for field replacement units—may be substantial, and may affect the overall profitability of introducing the new product.
Mike Keen, a supply chain manager with Cooper Bussmann (UK), a market leader in critical circuit protection, power management and electrical safety, states that suppliers, manufacturers and distributors are increasingly seeing the need to work together as a seamless entity. PLM principles offer an ideal framework to achieve this aim. Increasing customer demands, competitive forces and rising costs are driving the need for organisations to reconfigure their supply chains.  The need to remain competitive is driving organisations to become more innovative with their processes, people and performance outcomes, as depicted in Figure 2, see below.
Product lifecycles and the related supply chain contributions are described in the following phases:
Phase 1: Development – Concept Development and Design. This stage requires significant collaboration in the supply base (this is a sensitive stage where key design concepts need to be protected). At this point, suppliers can provide valuable advice to help avoid designing potentially costly elements into products that may be difficult to manufacture repeatedly. Good visibility of product demand, along with a robust plan to meet that demand, is required. Sufficient inventory should be put in place to support the product launch, along with a watertight link between sales and operations to ensure a timely and effective launch.
Phase 2: Growth – Managing Rising Demand and Fulfilling Orders. As product demand increases, credibility with customers is built through consistent on-time delivery and repeatable high levels of customer service. The supply chain focus expands to capture rising costs, devising strategies to curb excessive freight or inventory excesses, and collaborating with sales teams to consolidate the performance of new products in the market.
Phase 3: Competitive Turbulence – Seeking Cost, Quality and Delivery Improvements. As competitors emerge, customer expectations rise in terms of delivery and quality consistency. Customers may demand price reductions, forcing organisations to become more innovative and to remove costs from their products or supply chains. Streamlining the flow of products becomes a focal point, involving collaboration with customers, refining forecasts, and aligning lead-times with manufacturers.
Phase 4: Maturity – Drive Cost-Reduction and Maintain Position. Repeatability and consistency become central to the recipe for success. As margins come under threat from competition in the market, products may undergo a face-lift (leading to an extension of the product lifecycle where some of the phases repeat over again) and organisations begin to prepare for ‘end of life’. During this phase it is important to closely monitor reductions in demand to avoid being saddled with excess inventory.
Phase 5: End of Life – Ramp-Down, Phase-Out, Cut-Off and Disposal. Demand softens during this stage and may even dry up completely. Products have been replaced by superior versions or a competitor’s products. Inventory remaining along the value chain needs to be managed while ensuring that stock is reserved for after sales support. All supply chain partners should be kept fully informed to avoid unnecessary residual waste and unnecessary disposal costs.
Closed Loop Manufacturing
Theresa Barker, an affiliate assistant professor in industrial and systems engineering at the University of Washington, writes that “[some] forward-minded manufacturers are shifting to designing products as a continuous flow of service, in which customers pay for the usefulness provided by products, rather than the product itself.”  PLM has traditionally focused on a “cradle-to-the-grave” approach, in which—after delivery to customers—obsolescent products go into the waste stream and end up as landfill. However, a powerful global demand for sustainable products has now emerged, and this has led to a new “cradle-to- cradle” approach .
Using the cradle-to-cradle paradigm, manufacturers provide for the disposal or reuse of products once consumers have finished with them. This has also been called “closed-loop” manufacturing, which incorporates design for the full lifecycle of a product—i.e. from raw materials to the finished item—and then back again to raw materials. An added advantage of increasing the productivity of available raw materials is the reduction in risks associated with future scarcity, as well as the smoothing of cost volatility. The following are examples of emerging changes in PLM:
- Carrier Corp., one of the world’s largest manufacturers of air conditioning equipment, offers “contracts for comfort” in commercial buildings by providing a specified temperature and air quality level. Carrier is able to meet its contracted obligations by employing a combination of efficiency upgrades.
- Caterpillar remanufactures its engines and parts with a “same as new” warranty and quality guarantee. This extends the life of the original product and eliminates the need for totally new raw materials. The price for remanufactured parts is often much lower and this appeals to a wider market segment. In addition, remanufacturing enables parts for older models to be more readily available, building customer loyalty and repeat sales.
- Shaw Industries provides 100 per cent recycled carpet products that satisfy cradle-to-cradle design criteria. Nylon carpet is manufactured, sold and installed, and after it is worn out, is brought back to Shaw’s Evergreen recycling facility to be remade into raw carpet fibre for re-manufacture.
- Xerox leases its copiers to customers rather than selling them, and as advances are made the copiers are upgraded/re-manufactured to high quality standards.
Lifecycle Costing and Target Costing
To set appropriate market prices, total product costs must be determined—along with the price that customers are willing to pay—for products of a given quality and performance. An iterative process, using the two costing methods described below, can be used to achieve this goal.
Lifecycle costing profiles costs over the full lifecycle of products, including the pre-production and disposal stages. Lifecycle costing examines the full gamut of costs associated with:
- product research, design and development
- post-sales service
- consumption, and
- disposal by the consumer.
In comparison, target costing focuses on the development of products at acceptable market prices. Target costing seeks to reduce the lifecycle costs of new products by examining all possibilities for cost reduction; this is particularly important during the research, development and production stages. Target costing methodologies are, in reality, profit-planning systems. The proposed selling price and profit requirements are set during the research stages, thus creating a target cost. The product is then developed and produced in such a way as to achieve the proposed target cost. The following steps broadly outline target costing methodologies:
- Determine an acceptable market price point for the new product.
- Subtract the required company profits from the estimated market price.
- Determine the maximum acceptable company production costs to arrive at the targeted cost. 
According to Thomas Cutler, founder of the Manufac- turing Media Consortium in the United States, North American manufacturing organisations are struggling with the increasing challenge of delivering quality products on time and at the required price, while maintaining profitability. While sophisticated PLM software and computer aided design equipment have revolutionised manufacturing, there is still a need to improve product costing performance. 
One of the reasons for this is a disconnect between the language of engineering and the language of business. Whereas design features and the like tend to drive engineering, business focuses primarily upon finance, margins and profit. A way of translating the language of engineering into the language of business is through “cost” – specifically, product cost. Thomas Charkiewicz, president of MTI Systems, has noted that “[many] of the world’s largest and most successful manufacturing organisations utilize technology and lean methodologies to identify part cost reduction opportunities throughout the product development lifecycle, leading to millions of dollars in cost savings. Companies must be able to quickly and easily identify the cost drivers in the products they design, manufacture and procure.”
Whether a formal or informal lean initiative is used, the ability to evaluate if a part can be made more cost effectively in-house or by an external supplier is critical. Industrial engineers must have the analytical tools to evaluate in-house capabilities against those of external suppliers. Only with this data in hand can cost-effective decisions be made about whether to make, or to buy, a part. 
Product Demand Lifecycle
Lapide, a research affiliate at the Massachusetts Institute of Technology in the United States, describes product market share evolving over time as consumers purchase and embrace innovative new products.  Consumers differ in their willingness to try new products: the more adventurous will buy new products as soon as they enter the market, whereas the more cautious wait until prod- ucts have been tested and proven by others. Consumers may be divided into five adopter types, as defined by Everett Rodgers.  The following characterises these five main adopter types, and estimates the percentage of consumers falling into each category.
- innovators: adventurous, informed (2.5%)
- early adopters: social leaders, educated (13.5%)
- early majority: deliberate, many informed social contacts (34%)
- late majority: sceptical, traditional, less affluent (34%)
- laggards: informed by neighbours and friends, debt avoiders (16%).
This type of model is used to forecast sales of highly innovative, durable products such as iPhones, PDAs and high definition televisions. Figure 3, see below, depicts these five consumer categories, together with the cumulative growth of product market share:
According to Sue Prestney, a Fellow of the Institute of Chartered Accountants in Melbourne, Australia, since the 1950s, product lifecycles have reduced from 15-20 years, to two or three years. Products now become obso- lete much faster; the recent marketing race between Apple and Samsung is a powerful example of this. Shorter product lifecycles drive organisations to continu- ally develop new products, and to develop strategies for extending the lifecycle of existing products. Like product lifecycles, business lifecycles (comprising the seed, start-up, growth, established, expansion, mature and exit phases) also need to be compressed into shorter timeframes. This has affected the shape of organisational infrastructures; therefore, large premises, permanent work- forces and in-house support departments are becoming less practical. Shorter lifecycles require companies to get their products to market rapidly, and derive maximum returns by the maturity stage. Online trading has reduced overheads and provided access to global markets. In addition, the use of outsourcing has minimised the need for large capital investments, and this has driven down product costs. Customers expect savings to be passed on to them; this has led to organisations striving for higher volume production to compensate for lower product margins. Shorter product lifecycles may also lead to the demise of some businesses, as their products have been superseded. Organisations now need not only to continually assess and plan the lifecycles of their products, they need to do the same with their entire business. 
Over and above product lifecycle, there is a customer lifecycle that can also be productively managed. For example, personal computers reach a stage where they require upgrades or replacement; therefore, at critical points in the product’s lifecycle, there are opportunities to respond to a customer’s needs, which can help build a strong, ongoing relationship. For personal computers the following key stages have been identified:
- Acquisition and Sale: for online sales, it is critical to keep customers regularly apprised of the status of their order by providing progress reports from production through to shipment.
- Delivery and Set-Up: emails or text messages can be used to welcome new customers, provide links to frequently asked questions, and introduce them to online forums. This can contribute powerfully to customer loyalty.
- Warrantee Issues and Product Fixes: regular outbound communication and sponsored customer forums can help manage these issues. N.B.: wherever possible, it is important to communicate with customers using the channel of their choice.
- Ongoing Support: be proactive and offer tune-ups at critical times during the equipment’s lifecycle.
- End of Life: a good relationship during the product lifecycle can lead to customers purchasing new products. A discount could be offered for a new or upgraded personal computer at appropriate points during the product’s lifecycle, with the objective of generating a continuing customer lifecycle. 
Survey and Research
Product Costing: Manufacturers Not Doing Well
A survey of 10,000 manufacturing plants in the United States about the effect of cost estimating on business, found that:
- 93% added a “fudge factor” to quotes as they were unsure of the pricing estimate accuracy
- 79% had not responded to requests for quotations as they did not have time to meet the stated deadline
- 71% had customers requesting pricing justification, including a detailed cost breakout, when submitting a quote
- 64% said their company had lost contracts by overestimating the expected costs of making a part
- 93% believed their company had lost money on jobs because actual manufacturing costs were more than estimated
- 90% of industrial engineering organisations reported using spreadsheets as their primary method for cost estimation.
These reported factors result in poor bids and lost business – or in completed jobs with a lower profit margin than predicted. Significantly, spreadsheets are the least lean method of cost estimation. 
Poor Product Portfolio Management
Bringing products to market at the right time and at the lowest cost is a basic goal of product development; however, a benchmark survey of more than 400 managers and executives found the following:
- 56% handled more projects than available resources could cope with
- 40% reported that forecast project delivery dates were often highly inaccurate, and
- only 11% of organisations surveyed both monitored and stopped under-performing projects.
In addition, an industry review found the most common product portfolio management pitfalls were:
- Inadequate resource planning as a result of not being able to access relevant/current data.
- A lack of a standardised project prioritisation processes, making it difficult for managers to properly align work and resources to their company’s strategy.
- Insufficient or unreliable data: despite the availability of technology, many organisations relied on shared spreadsheets to share data.
- An inability to recognise and react to under-performing projects because of poor interdepartmental collaboration.
- A lack of financial transparency, making it difficult to calculate the total cost of new product development, and of maintaining existing products. 
Lifecycle Analysis Needed to Identify Cost-Effectiveness
In 2010, Tompkins Supply Chain Consortium surveyed manufacturing and retail companies about the sustainability of packaging. Respondents reported that in order to make better use of sustainable packaging, the following was required:
- better collection and recovery processes
- greater end-user awareness,
- better designed supply chains, and
- lifecycle analysis processes to identify the cost- effectiveness of sustainability initiatives.
Of these respondents:
- 65% had a sustainable packaging policy in place, and 28% were developing a policy
- 76% said that packaging sustainability had a strategic impact on their energy and material costs. 
PLM: Developing Software-Intensive Products
- 75% indicated that they used software to improve product capabilities
- 65% sought ‘smarter’ and more innovative products, and
- 50% used software to tailor their products to customers or markets.
- product quality issues
- delayed time to market
- high product development costs, and
- poor software development efficiency.
- employed unified or integrated team structures to develop new products
- used systems modelling techniques to ensure sound systems architecture at the start of development activities, and
- used combined PLM and ALM initiatives when designing software-intensive products. 
A 2010 survey of 176 Australian chief information officers and IT managers about PLM and eco-efficiency revealed the following:
- 85% of respondents had implemented environmentally friendly IT procurement policies
- 66% were measuring the environmental impact of IT, and
- 50% had policies for managing electronic waste.
- 31% employed server virtualisation (dividing one physical server into multiple virtual servers)
- 26% storage virtualisation (shared storage), and
- 38% storage consolidation (centralised storage) techniques.
Valuable lessons can be learned from the following organisations:
Aircraft Engine Components Manufacturer, Europe
Knowledge lifecycle management using Web 2.0 tools
- helped practitioners locate specific expertise outside their usual networks, and created more collaborative and iterative processes for knowledge validation
- presented information in multiple formats— such as image, video or audio—allowing the capture of rich contextual information
- enabled the sharing of content through an easily searchable knowledge base
- provided search mechanisms such as tagging, comments and ratings that helped individuals to rapidly locate and access information.
Web 2.0 applications are frequently referred to as bottom-up tools since they do not impose predefined structures but allow them to evolve in response to users’ interaction with content and tools. As represented in Figure 5, see opposite, Web 2.0 tools include interactive and user-built tools such as blogs and micro-blogs, wikis, social networks, tags, really simple syndication (RSS), podcasts, and media-sharing applications. According to an anonymous development engineer “[with] Web 2.0 tools, if something happens during manufacturing, people can go back to the blog posts through tags and read about what happened at that time in reverse order.” 
Lean supply chain management improves time to market
- gaining an in-depth understanding of the client’s product
- selecting a centralised manufacturing location
- reducing complexity with a lean supply chain
- developing strategic partnerships with suppliers
- meeting timelines and achieving quality gate requirements
- becoming a true extension of the customer’s team.
Celestica provided full sourcing and system integration via its lean supply chain. This led to better information flows, a reduction in waste, reduced opportunities for error, smaller overheads and logistics costs; it also enabled the kiosk manufacturer to reduce its warehousing overheads. In summary, Celestica decreased the time to market, increased product reliability, and significantly reduced product costs.
Computer Components Manufacturer, United States
Group Decision Support Systems help solve problems
Resene Paints, New Zealand
PLM using surplus paint
Resene created a “Paintwise” scheme after eight years of development and six months of testing: customers can now return unused paint to Resene stores. Resene donated some of this unused paint to community groups; however, more significantly, it formed an alliance with cement companies to launch a new product known as “Paintcrete.” The coloured concrete paving produced diverts waste paint from landfills and makes the concrete product stronger. The new product and collaboration process is a form of industrial ecology, where the removal of material from industrial environments is minimised; this will have a long-term impact on the natural environment.
In addition, Resene’s paint containers have been designed for reuse; alternatively, they can be returned to the company for recycling. Cardboard boxes, used internally within the company, are marked each time they are put in transit, where they are expected to last for up to 12 uses.
Dassault Systèmes, Paris, France
PLM systems enable global collaboration
Nissan Motor Co., Japan
PLM system leads to improved return on investment
- development cycles being reduced from 20 to 10.5 months
- 80 per cent fewer problems after vehicle release
- design changes being reduced by 60-90 per cent
- a better-than-expected return on investment
Carlos Ghosn, CEO of Nissan states: “In pursuit of environmentally sustainable mobility, we are now engaged in a great race [that] will change almost every facet of the car in the years ahead and… distinguish the winners from the rest.” 
Measure and Evaluate
The following provide some simple ideas on how the effectiveness of product lifecycle management processes could be measured and evaluated:
Innovation – New Product Sales, i.e. the percentage of total sales derived from new products, or the percentage of revenue coming from new products. This measure contributes to the performance assessment of the product development process and an organisation’s innovation strategies.
Lead Time – Manufacturing, i.e. the time from order to delivery, or the time from raw material being introduced to the finished product being made, or delivery lead time (packaging time, plus storage time, plus transport time).
Cycle Time – Manufacturing, i.e. the time taken to manufacture a product through to completion. This measures the length of time from the start of production for a particular product to the completion of all manufacturing, assembly and testing.
Forward Provisioning – Accuracy, i.e. the percentage of forward provisioned materials, parts or resources that are available when required, or the percentage of forward provisioned materials, parts or resources that are not required, or the percentage of forward provisioned materials, parts or resources that require rework. This measure provides an indication of how well the organisation predicts requirements for finished products and, therefore, the requirements for materials and parts to satisfy demand.
Warranty Claims, i.e. the number of warranty claims as a percentage of the total number of sales, or the cost of warranty claims as a percentage of the total number of sales, or total refunds as a percentage of the total number of sales, or total refunds through warranty claims. This provides a measure of product or service reliability and enables the analysis of customer satisfaction.
Product Waste, i.e. the quantity of product waste disposed of as a percentage of the total quantity of produced goods over a given period, or the total quantity of waste disposed of for a given period, or the total time/costs associated with waste disposal per period.
Customer Involvement, i.e. the degree of customer involvement in product development. (Scales could include the number of times customers are asked for feedback or the average number of hours of customer contact in this process). This measure indicates the extent that customer needs are integrated into the product development process.
Product Reliability – First Month, i.e. the percentage of the product found to be faulty within the first few months of sales. This is a strong indicator of product quality and customer perception.
Product – Life, i.e. the length of the usable life of a product. This measure gauges customer satisfaction, and is also useful for planning future production and new product strategies.
After reviewing the checklist and determining the actions to be taken, assign the actions to staff members and set deadlines for reporting back. Through regular assessments and the deployment of actions, your organisation’s products will become more ecologically friendly.
NB: the above self-assessment is an abridged version developed for this Best Practice Report. The full self-assessment, which was adapted from materials published by Zero Waste Scotland, can be found on the BPIR.com website.
Summary of Best Practices
The following is a summary of the best practices and/ or insights associated with PLM covered in this Best Practice Report:
- Involve customers and stakeholders early and frequently during the product concept, definition and planning stages.
- Use defined quality methodologies such as lean manufacturing, Six Sigma and total quality management to reduce waste and increase productivity.
- Ensure that responsibility is allocated to individuals and/or teams to manage product lifecycles, and that these people are adequately trained in project management.
- Employ measurements with clearly defined targets that are reported using dashboards.
- Reconfigure supply chains using product lifecycle principles in response to customer demands, competitive forces and rising costs.
- Employ “closed-loop” manufacturing to incorporate the full lifecycle of products to manage sustainability concerns.
- Employ both lifecycle costing and target costing to meet customer demand, and to deliver quality products on time, at the required price.
- Use forecasting techniques to estimate product lifecycle demand and market share.
- Proactively manage customer lifecycles that are associated with product lifecycles.
- Use Web 2.0 tools to facilitate improved collaboration between design team partners.
- Use lean supply chain management to decrease time to market, increase product reliability and reduce product costs.
- Use PLM technology and software to improve innovation, reduce development cycles and improve better returns on investment.
Words of Wisdom
“Better products, a more open world will encourage businesses to engage with their customers directly and authentically. More than four million businesses have pages on Facebook that they use to have a dialogue with their customers. We expect this trend to grow as well.”
“Design and technology should be the subject where mathematical brainboxes and science whizzkids turn their bright ideas into useful products.”
“When Apple came up with the Mac, IBM was spending at least 100 times more on R&D. It’s not about money. It’s about the people you have, how you’re led, and how much you get it.”
“It’s really hard to design products by focus groups. A lot of times, people don’t know what they want until you show it to them.”
“There is one rule for the industrialist and that is: make the best quality of goods possible at the lowest cost possible, paying the highest wages possible.”
“The cost of a thing is the amount of what I will call life which is required to be exchanged for it, immediately or in the long run.”
Henry David Thoreau
“Ecodesign is done, we know how to do that, you just have to do it.”
“Problems have become invisible and pervasive… products look clean and niche, but there is a hidden ugliness.”
“The most efficient way to produce anything is to bring together under one management as many as possible of the activities needed to turn out the product.“
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