PLM-ERP tango

PLM-ERP tango

It takes two to tango. PLM vs. ERP discussions are often reminds me this idiom. Autodesk PLM blog article – PLM v. ERP – What’s the Difference and Why You Should Care took me back to a discussion about roles of PLM and ERP. It reminded me my 7 years old article – PLM vs ERP: Don’t manage innovation. Here is a passage I captured from Autodesk article:

ERP represents a business system that is used across entire enterprises for day-to-day planning and transactions. It involves sales, services, purchases, inventory, facilities, human resources, and many other aspects of the business, with the primary objective of tracking the business’s life blood – its money.

PLM, on the other hand, is a business system with the purpose of “keeping the heart beating”. Its value crosses the organization independently of ERP. The long-term competitive advantage for most businesses derives not just from their cash flow, but from the continuous flow of ideas, especially as related to their products and services. Much of this intellectual property starts ugly and incomplete, and matures within a PLM system into documents and data that are ready to be passed to an ERP for resourcing and execution.

PLM v ERP is one of these conversations that in the past created lot of divide inside manufacturing organizations. Remember my article 3 steps how to put PLM and ERP each in their place? I can see PLM and ERP integrations fail in many companies because it relies to old and outdated integration principles. These old principles relies on data ownership and business of protecting data in a boundary of enterprise applications. It is going to change soon. Want to learn more? Please navigate to some of my earlier articles – The death of EBOM v MBOM divide, PLM, ERP and the death over the wall engineeringFuture digital transformation will reshape the boundary between PLM, ERP and MES.

While I agree with the position of the author about importance of doing right thing, I found that thinking about PLM vs ERP is taking us back into siloed approach of enterprise data management. Historically, enterprises charted boundaries between systems in the way they controlled the data and protected their existence. Although, it might be still true for many organization, modern organizations are transforming from waterfall siloed process to agile product development. Coordination between system is more important than ever. It was a time when engineering department was only in charge to throw design to manufacturing department. Then manufacturing did everything else. The things changed since that time. The location of data is less important than granularity of information, services and their availability.

Today, it is a time to move to lean agile product development processes. More often manufacturing companies are finding themselves in the situation where decision making should be done with full visibility into product design, configurations, business models and finance. The decision process in such organization should be driven by all data points. In such situation, the approach what is more important “cash flow” or “idea” is a wrong one. The question “Why is one design alternative better than another?” is a complex questions that requires data analysis coming from multiple data sources. It a dance between multiple systems and data sources. Some of them are located inside of organizations and some of them are outside.

What is my conclusion? The debate about PLM vs ERP should become a history. It was originally the discussion about what database should store the data. It is still an important decision. But regardless on data storage, process implementation will require to make all this data available at your fingertips at the time of the decision. The borders between PLM and ERP are blurring in the agile product development processes. Cloud data services are able to bring the data and there is no clear cut what data belongs to each system any more. Organizations are not the same. Manufacturing company needs to get data from both PLM and ERP to organize agile decision process.. It takes two to tango. PLM and ERP are clearly partners in this dance. Cloud PLMs such as Autodesk Fusion Lifecycle can make it easier than on-premise PLM systems. This is a direction we should be heading to. Just my thoughts…

Best, Oleg

Want to learn more about PLM? Check out my new PLM Book website.

Disclaimer: I’m co-founder and CEO of openBoM developing cloud based bill of materials and inventory management tool for manufacturing companies, hardware startups and supply chain. My opinion can be unintentionally biased

 

Share

Share This Post

  • Pingback: GHZ Partners | IT Services, Software()

  • Jaan Saar

    Hi Oleg,

    I have been following your blog for some time with great interest from a construction point of view. Manufacturing has enjoyed the benefits of PLM for decades but the digital revolution has not reached the AEC industry yet. There are various reasons for that but overall I see things are changing with the increasing adoption of BIM.

    I think BIM could be the answer to PLM for the construction industry. The differences and similarities of the two have already been covered in some of your previous posts and this is not what I want to discuss here… Rather I would like to know your thoughts on BIM and ERP integration? If the borders between PLM and ERP are getting blurred then should the same happen with BIM and ERP?

    Thanks in advance!

  • beyondplm

    Jaan, Thanks for your comment! I think, it is an interesting topic. The more BIM companies will be exposed to manufacturing processes (such as prefabrication), we will see more opportunities for ERP integration.Best, Oleg

  • Loic Mouchard (Innoface)

    Hi Oleg,
    my answer my be a little late, but better late than never…

    ERP doesn’t not only manages the cash flow, it also widely used for manufacturing and logistic purpose, or in order to trace products (think about serial number, or order number) for maintenance/after sales.

    My current company propose a direct integration from Windchill to ERP systems (mainly SAP and Sage) that allows to either synchronize information from both systems, or automate some workflows.

  • beyondplm

    Hi Loic, thank you for the comment!

    You’re right- the area between PLM and ERP is a bit grey and not the same for all companies. Some companies will try to use PLM system to manage SN bill of materials and some companies will use ERP for the same purposes. Logistic and procurement is almost always done using ERP (at least from my experience).

    Data synchronization is probably the easiest way and most of companies are doing just that- direct point to point integration. It has some advantages – easier to implement and drawbacks. It can get very complex within time. Also sync rules are something that hard to maintain.

    Best, Oleg

    PS. There is no such “late” for blog :). You’re always welcome!

  • Pingback: Beyond PLM (Product Lifecycle Management) Blog The future of consolidated PLM and ERP? - Beyond PLM (Product Lifecycle Management) Blog()