Skip to Content

What is product lifecycle management (PLM)?

Product lifecycle management (PLM) is the process of managing a product’s lifecycle from inception, through design and manufacturing, to sales, service, and eventually retirement.


As a technology, PLM software helps organizations to develop new products and bring them to market. The software makes it easy to track and share data along the product value chain, from initial design through manufacturing, supply chain management and operations, and asset maintenance.

PLM fundamentals

In an age where innovation is key to business survival and success, PLM plays a critical role in helping manufacturers develop the next generation of products, at a lower cost, and with a faster time to market. While PLM can also be interpreted as a business strategy, three fundamentals impact the way teams work and the ability for organizations to grow and thrive:


  • Universal, secure, managed access and use of product definition information
  • Maintenance of the integrity of that product definition and related information throughout the life of the product
  • Management and maintenance of the business processes used to create, manage, disseminate, share, and use the information

The five phases of product development

There are many different ways to describe the phases of product development and no one industry standard. However, the phases below represent a typical development cycle.
Graphic describing the five phases of product development
  1. Concept and design: The ideation phase, where a product’s requirements are defined based on factors including competitor analysis, gaps in the market, or customer needs.
  2. Develop: The detailed design of the product will be created, along with any necessary tool designs. This phase includes validation and analysis of the planned product, as well as prototype development and piloting in the field. This generates vital feedback on how the product is used and what further refinements are needed.
  3. Production and launch: Feedback from the pilot is used to adjust the design and other components to produce a market-ready version. The production of the new product is scaled – followed by launch and distribution to the market.
  4. Service and support: Following the launch of the new product, the period of time when service and support is offered.
  5. Retirement: At the end of the product’s lifecycle, its withdrawal from the market must be managed – along with any retrials or absorption into new concept ideas.


How does a PLM system work?

A PLM system gives designers and engineers access to the critical data they need in real time. The system streamlines project management by linking CAD (computer-aided design) data with a bill of materials and other enterprise data sources, such as integration with an ERP system, and manages this product data through all stages of the product development lifecycle.


PLM also prevents designers and engineers from operating in a disconnected vacuum, giving them insight into external sources of information like customer and analyst feedback on current products, performance data on products in the field, and visibility into the limitations of downstream processes like manufacturing.


A PLM system also benefits teams beyond design and engineering. It can provide ‘single source of truth’ visibility to business stakeholders and/or suppliers for easy delivery of feedback early in the product development process.

Evolution of product lifecycle management

In the 1980s, American Motors Corporation (AMC) was a small player in the automotive industry. The company lacked the big budgets of larger players in the market, which hampered its ability to compete effectively. AMC leadership had the idea of tracking products from inception to end-of-life in order to improve processes and compete more efficiently – the first iteration of product lifecycle management.


The data gathered was used to inform better decisions from ideation through to procurement and the production process. AMC grew its market share and the company was later bought by Chrysler and became the auto industry’s lowest-cost producer by the mid-1990s.


Today, PLM has been adopted across manufacturing to foster collaboration, boost innovation, and efficiently support growth through designing to customer demand and product individualization.


And in a time of digital transformation and accelerated change – Forbes predicts that due to COVID-19, manufacturing will experience five years of innovation in the next 18 months – PLM plays a critical role in helping companies get products to market faster.



of customers expect more customized or personalized products than they received three years ago

Oxford Economics 



of customers expect the same quality products and services as they received three years ago, but more quickly

Oxford Economics

Five benefits of PLM

The following are five key reasons why companies choose to invest in PLM solutions.

  1. Improvements to development, engineering efficiency, and effectiveness: Results from the Industry Week survey found that silos are the biggest challenge to engineering team performance. PLM enables the bi-directional flow of real-time data to support better knowledge-sharing and collaboration.
  2. Elimination of errors during the engineering release process: It’s far simpler – and cheaper – to rectify product issues that are identified earlier on. PLM helps to reduce cost and offers the additional environmental benefit of reducing manufacturing waste.
  3. Reduced time to market: Offering a single source of truth with up-to-date information at every phase of the product lifecycle, PLM empowers project managers to control overlapping timelines and get products to market faster.
  4. Improved project delivery: A cross-enterprise, digital PLM solution supports advanced workflow management. In this use case, PLM allows a team to precisely calculate product costs and more effectively manage the handover to manufacturing new designs.
  5. Higher quality designs: PLM offers designers and engineers a deeper level of insight into product requirements. Ingesting data from many different internal and external sources, a PLM system with integrated machine learning can turn performance data and customer feedback into new feature suggestions.

Examples of product lifecycle management

PLM systems are widely used across manufacturing. Key industries include aerospace, automotive, and defense. These companies are using PLM in innovative ways:

  • Endress+Hauser is a leader in products and services for industrial process measurement and automation. Thanks to a PLM solution they reduced manufacturing and assembly costs, through improved transparency across the product development process, to improve their competitive advantage.
  • VACUUBRAND, an industrial vacuum equipment supplier, shortened product development times, and improved product and data quality using an integrated PLM solution in place of disparate legacy systems. 

Overcoming PLM challenges

Currently, fewer than half of R&D executives say they have visibility into the end-to-end, design-to-delivery process. This highlights that, for many organizations, PLM has not yet reached its potential as a single source of product truth.


In addition, the growing adoption of Industry 4.0 practices within manufacturing has led to an exponential increase in the amount of product and customer data available, providing greater visibility across product lifecycles. Data sharing among PLM entities could streamline product lifecycle management, but only if the data is correctly captured, analyzed, and disseminated safely – bringing into focus the need for integrated AI, machine learning, and data encryption.


Finally, many PLM advocates struggle to communicate the relevance of the software beyond engineering. In all of the above cases, investing in a solution that integrates with existing enterprise systems – and offers built-in artificial intelligence – will increase the use and value that the wider organization can gain.

Future of PLM and technology

The demands of beating competitors to market, attracting top talent, and producing the highest quality product possible using sustainable practices will only continue to increase over time. PLM can help to meet these demands with shorter, more conscientious design and product engineering cycles, but only if organizations invest in the technology required to get there.

  • More objects are coming online with the Internet of Things (IoT) and designers and engineers stand to gain far greater visibility into products in the field, as well as the ability to update products that are already in the hands of consumers. As McKinsey highlights, this enables manufacturers to continue creating new customer value throughout the product lifecycle.
  • As sustainability continues to emerge as a topic of importance, businesses will look to modernize their product development processes through green product design, manufacturing, and logistics with the goal of achieving full supply chain sustainability
  • As with other types of enterprise software, PLM systems are increasingly being offered in the cloud as software as a service (SaaS). This will make PLM more accessible to smaller companies and will continue to drive the collaboration that effective product development teams need while workforces become more distributed
  • Digital twins are virtual models of a product that are connected to their physical ‘twin’ via IoT and are managed within PLM systems. The concept is still new, but digital twins are predicted to drive significant cost savings for manufacturers in the years ahead. IDC states that, “By 2023, 65% of global manufacturers will have realized savings of 10% in operational expenses through process digital twins driven by IoT and machine learning.”

Individualized products at scale

Explore PLM solutions to support product design and development.


Product lifecycle refers to each stage a product goes through from initial concept to retirement. This includes ideation, design, prototyping, manufacturing, service, and end-of-life management. 

PLM software system is used in manufacturing to manage a product and its associated data through all stages of the product lifecycle. While primarily used by design and engineering teams working with CAD data, a PLM system can provide visibility into the product design process for all business stakeholders.

PDM only focuses on capturing and maintaining information on products through their development and useful life, whereas PLM can manage every aspect of the product through its lifecycle.

Product development software refers to solutions that help with the development of new products. Features might include product road maps, data analysis, a communication tool, task assignment, and bug tracking.

SAP Insights Newsletter

Subscribe today

Gain key insights by subscribing to our newsletter.

Further reading

Back to top