Part management is stuck between PLM and ERP

Part management is stuck between PLM and ERP

plm-erp-part-management

Few days ago, the discussion about PLM revenue model took me into part management route. This is not entirely related to revenue and business models, but my readers mentioned part cost reduction as one of the most visible ways to present PLM ROI. I have to agree, to manage parts is a critical element of overall product development and manufacturing process. Part management is an essential function of every manufacturing company.  And… probably one of the most confusing ones. Design parts, manufacturing parts, suppliers, spare parts, manufacturing, supply chain, SKUs… The list of topics that come to mind when you think about Part Management is enormous.

Today, I want to speak about one aspect of part management – interplay between PLM and ERP systems. Usually, PLM and ERP systems are presented by vendors and advisers as a complementary systems. PLM focus is product defintion. ERP focus is manufacturing. Despite that role-play, for the last decade, PLM and ERP systems developed significant amount of out-of-the-box functional overlap.

Part management is one of the areas where interplay between PLM and ERP is very demanded. The traditional focus of ERP on part ordering brings ERP part management in a focus of manufacturing planning process. From the other side, product definition is largely done by PLM system and therefore, on a conceptual level, PLM is responsible for initial BOM setup, drawings and other part related documentation.

There are lot of grey zones between PLM and ERP functionality. These areas are very visible in the manufacturing process setup and initial production stage. Also, it depends on manufacturing type (CTO, ETO, MTO), complexity of supply chain and other factors usually related to a specific company – geographical location, speed of lifecycle, etc.

Another grey zone between PLM and ERP is related to early lifecycle stages (definition) and late lifecycle stages (maintenance, support and post-production). These functionality is suffering from lack of information availability between systems. The philosophy of ERP is to focus on ordering transactions. Serial numbers and post production evolution cannot be managed in ERP. On the opposite side, date effiectivity and other manufacturing aspects of BOM can be hardly managed in a typical PLM implementation.

As I mention in the beginning, effective part management across the product lifecycle can result in significant cost reduction. I can see two main sources of cost optimization – 1/ redundant part cost and 2/ part rationalization. Here are some examples of product functionality that can help

– Part classification available across product lifecycle, including early design stages.

– Mechanisms to support part re-use such as search, where-use and other advanced BOM tools

– Approved manufacturers and suppliers list availability in PLM system

– Advanced BOM tools enabling part rationalization

– Other part, suppliers and manufacturers optimization methods

However, here a problem. The functionality I described above requires very tight interoperability level between enterprise systems responsible for product definition, engineering, manufacturing and supply chain.  More specifically, it requires tight integration of part and BOM management functions in both PLM and ERP. The commitment for such integration is a hard decision for many companies. Complexity, cost, legacy tools, product updates, corporate politics – this is only a very short list of factors preventing companies from implementing efficient part management.

What is my conclusion? Part management functionality is crossing enterprise systems and departments in every manufacturing company. As a result of that, part management literally stuck between product design, engineering and manufacturing. The potential to streamline part management process is huge and can be a source of significant cost reduction. Just my thoughts…

Best, Oleg

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  • “The commitment for such integration is a hard decision” agreed it requires a good technical understanding of data integration, master data management, EBS… This is a whole change in strategy for many companies to distinguish the datasets and the business softwares. Datasets can have inner elements that can be authored from various softwares. PLM was already tough to sold, this one will be also very very complicated. I believe the business case will be more done on cost saving on infrastructure than cost saving on risk like PLM does a lot. In fact that might be an opportunity…

  • beyondplm

    Yoann, you are absolutely right- to have a commitment to cross system integration is not simple. However, when ROI can be real, many companies can see it as an opportunity for cost saving. I’m not sure what you call “save on infrastructure”… can you elaborate please? Thanks, Oleg

  • It was more about saving on software. Instead of buying some new software that may overlaps with others on some features. integration would allow to keep some of the existing software to integrate it.

  • beyondplm

    You are right! Nobody wants to pay $$M for new licenses. Therefore, companies are looking for new business models as well as how to re-use current assets.

  • Oleg, this is a good post and addresses many of the issues with part management. You also developed a good insight that part management is between PLM and ERP. Speaking about ERP, part management is essential for company financial management. Part cost is rolled up in many ways into income statements and balance sheets. In other words, if part numbers are incorrect, company financial reporting is flawed. I lead a project once where the CFO delayed the project for 90 days because we found discrepancies in part numbers that impacted the company financial reports. Due to Sarbanes-Oxley, she became very nervous.

    The problem with PLM / ERP integration is managing part attribute data and change management. It is fairly easy to pass part numbers and BOM data to ERP. It is much more difficult keeping part attributes in sync.

    The solution is a part management system that compliments PLM and ERP and maintains and synchronizes the part attribute data correctly.

  • it would be a good activity to define a data structure which represents just a part (contains attributes but also relationships to versions for example) but would contain data for ERP and data for PLM. Some attributes may be edited from ERP and PLM, some other data won’t. In the end we would realize that ERP and PLM are just interfaces and business rules. The data is unique.

  • beyondplm

    Dana, thanks for sharing your insight and stories. You are absolutely right about managing of part data in sync. The real challenge in every implementation is to run processes that require integration of data across multiple systems.

  • beyondplm

    Yoann, I like the idea. Part information is much more than just set of attributes. However, where this “new part data structure” will belong to? What system? What is your view on how technically it can be implemented? Thanks, Oleg

  • Should belong to MDM (Master Data Management and not Mobile Device Management) and distributed via an ESB (Ennterprise Service Bus)

  • beyondplm

    It makes sense. It would be interesting to see future trajectories of MDM.