Discover more from Verticalized
PTC and Discrete Manufacturing
the digitization journey in factories
The 1970s-80s saw an explosion in manufacturing innovations. On the process level, the Toyota System and derivative insights massively improved quality. And then as the computation age got rolling, software began its early trudge towards transformation.
The dual innovation track modernized manufacturing wholesale.
Where we sit now, there are plenty of questions for the future of manufacturing. Reshoring/nearshoring is underway with new experimentation possible in factory processes along a developing labor shortage. Ideally innovating along the dual track once more would be helpful, except it’s not clear how much incremental innovation is possible in the process track.
Thus, the digital track has only gained importance for the future of manufacturing. In short, real productivity growth depends on how many partially physical workflows we can offload to the digital realm and how many fully phsyical workflows we can digitally augment.1
Of course, the sci-fi dreamers have often speculated that manufacturing itself could become effectively digitized by 3-D printing or nanotechnology. But short of that, there is still far more to digitize.
PTC has been at the forefront of that for years.
The goal is to create a system that would be flexible enough to encourage the engineer to easily consider a variety of designs. And the cost of making design changes ought to be as close to zero as possible. In addition, the traditional CAD/CAM software of the time unrealistically restricted low-cost changes to only the very front end of the design-engineering process.
Geisberg quoted in: Teresko 1993, 282
When computers burst upon the enterprise scene, one of the very first use cases was to aid with product design. And by the time Samuel Geisberg got around to founding PTC, the CAD/CAM market was considered solved.
Geisberg thought they were clearly wrong. Current CAD technology was composed of flat files - change one component on a plane (maybe elongate a wing), and you would have to respec the whole design from scratch. It was a sketchbook in a computer. PTC’s key unlock, and where it got its name, was to commercialize 3-D parametric equations in CAD software.
Design became dynamic and linked and organizations quickly moved more and more of their processes to CAD software.
With rapid iteration now possible and a clear value proposition to moving CAD to computers, PTC was able to start executing on even more digital flows.
To go back to the Geisberg quote for a minute, by shrinking the cost of design changes to near-zero, a couple things result. First, manufacturers began to have vast swaths of design data. Second, since changes were possible at any stage with near-zero costs, design itself became far more collaborative. Designs could be altered far quicker, suppliers could give rapid feedback on procurement feasibility. Rapid iteration on CAD files in every part of the organization became not only probable, but desirable given the shrinking costs.
But this is the 1990s, collaboration software wasn’t a thing. Different departments wanted to collaborate, but moving files around from person to person, versioning, tracking changes were all concerns.
PLM (product lifecycle management) software was born. Organizations now had a system of record to center the product organization around.
In line with PTC’s future growth strategy, PTC entered the PLM market via acquisition, purchasing Windchill. Its founder, Jim Heppelmann, is now PTC’s CEO.
Since the late 90s, PLM has only taken on increased importance across manufacturing, representing one of the core software pillars alongside ERP systems:
ERP systems consistently rely on product information and manufacturing planning deliverables (manufacturing bills of material (mBOMs), process plans, work instructions, 3D visualizations, numerical controls (NC) and additive manufacturing (AM) files, etc.) supplied by PLM, so much so, that several ERP/ MES vendors have begun to incorporate PLM capabilities into their offerings or build interfaces that would allow better PLM integration. The objective is to help customers understand the impact of product design or manufacturing planning decisions in other areas, such as sales forecasting and labor resource planning.3
The next 10 or so years revolved around this one-two punch at PTC: enable design data to proliferate and then equip organizations with the SOR to manage it.
In the process, they digitized vast parts of manufacturing.
Next in Digitization
There’s several ways you could view PTC over the past decade. One option is to highlight their transition towards cloud-based products - an updating of their product suite to fit the new paradigm through acquisitions like Onshape, a SaaS PLM and CAD tool.4
This has been a highly successful growth strategy and only taken on increased importance post-Covid.
The more interesting option is to highlight the areas where PTC thinks more digitization can happen and the implicit bets they are making around the future of discrete manufacturing.
Jim Heppelmann is a prolific writer and thinker on manufacturing tech. He believes that manufacturing’s digital surface area is expanding. This is happening in a couple different ways.
First, the amount of data within a factory and a company can start to inform more and more of the manufacturing process.
Second, physical products are becoming increasingly digital. They come equipped with sensors, chips, and more that enable data to flow from device to manufacturer. That transition to productized services, also means that enabling companies to build and manage these products is increasingly relevant.
As Charlie Warren at Convex says, there’s a massive transition within both services businesses and traditional OEMs to develop products that deliver recurring revenue. Maybe that’s security cameras on a building, maybe it’s subscription programs on your car.5 But either way, the delivery model is transitioning from a one-time purchase to recurring revenue.
And getting sensor data off machinery - especially in industrial contexts - for maintenance and monitoring can be highly valuable for all parties.
Should you as a legacy manufacturer spend time and capital building out the IOT infrastructure yourself? PTC thinks not. One component of Thingworx, PTC’s platform here revolves around helping companies manage their IOT-connected products in the market.
Their second value is around managing equipment data in the factory itself. Equipment spits off more data that can better inform process optimization and PTC gives them the framework to analyze this data set.
This is in part how you get the process innovation we seem to be missing - through data fueled improvements.
And with IOT, PTC has of course extended itself into a whole new phase of the product lifecycle - the factory floor and products in the market.
Heppelmann likes to say AR is IOT for people. In Jim’s mind, AR is particularly fascinating for its potential impact on upskilling workers and its deep synergy with other digital product offering.
The aging workforce presents perhaps the single biggest issue in manufacturing with corresponding impacts on how much reshoring could potentially occur.
Processes depend upon context and teaching context is dependent upon having someone that knows both the context and the process itself.
The promise of AR in these settings is that AR can potentially give far more context to operators on the floor to unlock higher productivity.
An image is perhaps best here:
In theory, AR (the form factor doesn’t fully matter, it could be either on a tablet or goggles) allows a company to leverage all the data, designs, and more that are spit out by devices, software, etc. and leverage that in the manufacturing, service, or training processes.
That transformation means that the entire factory becomes embedded in a digital layer and atoms become far more informed by bits.
Once product leaves a factory, a manufacturer’s obligations don’t end. They’re often still on the hook for servicing. PTC has recently moved into this space via acquisition.
I’m of course talking about ServiceMax (more extensive writeup here). With the acquisition, PTC has begun some of its final steps towards a fully digital lifecycle tool. Heppelmann highlights their synergies as converging systems of record:
On the one hand, the service process consumes the digital product data created in engineering, in the form of parts catalogs and service instructions. And on the other hand, the service process is the primary source of feedback that drives ongoing product improvements through engineering change orders or ECOs.
Windchill serves as the system of record for the digital definition of all possible product configurations, and ServiceMax serves as the system of record for the actual physical instances of products that exist, each of which may have a slightly different configuration…There is a digital thread of product information flowing between these key systems in both directions throughout the product life cycle.
Aligning ServiceMax with PTC's various offerings will lubricate this flow of data creating tremendous business value.6
Increased data flow between servicing and design should increse the surface area for further innovation in delivery, feedback, and productivity.
Future Prospects and Some Questions
Over the past 30 years, PTC has built a conglomerate touching and innovating in every aspect of digital processes in manufacturing. It’s enabled fantastic growth through cross-sell opportunities, meaningfully impacted the manufacturing sector, and enabled them to become one of the most important industry partners.
With that said, the acquisition model yields products with high implementation costs, integration complexity, and more. While the products on their own terms are great and yield higher productivity. I’m far more interested in PTC’s vision to become sort of a fully integrated digital layer.
If the future is indeed this sort of layer, does PTC have the sort of integration layer that would yield even more heightened productivity? Is it a layer that could leverage AI across all sorts of business functions?
The more interesting question in my mind, especially as it relates to some past pieces I’ve done:
Would you call PTC an industry cloud?
Your answer to that question will in part determine your view on future innovations within the manufacturing industry.
Thanks to Joe Botsch and Aditya Raghupathy for conversations around manufacturing tech.
Joe Botsch at RTP has some really good analysis on the above that I’ll link to once he gets around to publishing it.
As of 2019, 95% of CAD occurs on-prem. It’s of course accelerated since then, but manufacturing is moving far slower than other industries in this regard. Link here.
To the chagrin of all.