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Part management is stuck between PLM and ERP

by Oleg on September 11, 2014 · 2 comments

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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re0invent-pdm-now

Product Data Management (PDM) isn’t a new domain. The first PDM systems were invented 20-30 years ago with a simple objective – to manage product data. The scope of PDM was heavily debated and included design, engineering BOMs, ECO and even supply chain. However, the most widely accepted role of PDM is to manage CAD files and their revisions.

For long time, PDM was recognized as somewhat you only need to consider if  a size of your engineering department is large enough. Even starting price to implement PDM solution went down significantly for the last 20 years, my hunch average PDM solution starting cost for engineering organization with 10-15 people will be about $30-50K. Cost and implementation complexity made PDM business limited to larger companies and was mostly handled by resellers with special skills and knowledge. Most of them associated with a specific CAD vendor channel.

CAD vendors recognized the need and complexity of PDM. For most of vendors the answer on PDM demand was to develop (or acquire) a dedicated PDM system bundled with their CAD software. As a result of that, most of PDM players were acquired. Most of existing (remaining) PDM vendors are either focusing on a specific geographical niche or developed additional solutions usually branded with “PLM” buzzword and strategy.

My hunch is that until last year, PDM market was somewhat stalled and focusing on replacing of outdated versions of PDM software as well as support of new CAD software releases. Then something happens… For the last months, I can see an increased interested in PDM software. I noticed few focused researches and articles in the field of PDM – Expert Guide to the Next Generation of PDM; TechClarity Expert Guide for Basic CAD management and few others.

Also I want to mention few activities by vendors focusing on basic PDM functionality. It started from more traditional OOTB approach made by PTC Windchill PDM Essentials, SolidEdge SP focusing on SharePoint platform leverage and GrabCAD Workbench using “cloud platform” as a differentiation strategy.

Consilia Vector published CAMScore report for GrabCAD Workbench where CAMS stands for Cloud, Analytics, Mobile, Social. In my view, these major trends are making a renaissance in the space of PDM.

As I mentioned before, because of cost and complexity, PDM software was out of reach for many smaller companies and engineering departments. DIY (Do it yourself) PDM  approach combining network file share, Excel files and FTP is a solution for probably 60-70% of market. For many years, to share files using network and USB drives was “good enough solution”. But the era of file sharing changed forever with coming trend of  social networks, mobile and cloud. So called YAPSA (Yet Another Photo Sharing Apps) became widely available in our everyday life. The question why PDM is so complex and why we cannot manage and access CAD data similar to what we do with photos and videos brings PDM solution back to the innovation room.

What is my conclusion? Cloud, web and social technologies in consumer space reached the level of maturity. It comes to the point where new tech and awareness of cloud and social approach are going to challenge a traditional PDM space. In addition to that, looks like an existing approach to use network drives and file sharing to manage CAD files is coming to logical end. People will be looking how to copy YAPSA  approach into PDM space. So, it is time for PDM to change. Just my thoughts…

Best, Oleg

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social-design-collaboration

Recent management changes in Google+ attracted lots of conversations about social products experience as well as speculations about Google+ social future. It is also made a reflection on how “social theme” will be developed in enterprise companies. In the past few years we’ve seen few examples of social products for enterprise – eg. ExoPlatform, Jive, SAP Streamwork, Socialcast, Yammer,  etc.

CAD / PLM vendors made their experiments and products to bring social theme in  designers, engineering and manufacturing communities. The fundamental idea was to leverage all social experience from Web 2.0, social networks and online communication and change the way people communicate in business. We’ve seen few successful product. Few companies got acquired. However, speaking about CAD/PLM specifically, most of products got declined. The adoption level of PLM social initiatives was very low.  I wrote about it last year in my post – Why Social PLM 1.0 Failed? In my view, the idea of structured enterprise discussion made a promise to lead re-thinking of social collaboration. However, as we learned from Facebook decline, social communication is getting noisy. Signal to noise ratio is declining and, as a result of that, the attempts of companies to make collaboration easier adopting social networks techniques requires some re-evaluation.

I’ve been reading TheNextWeb blog – Product Lessons We Can Learn from Google+ by Paul Adams. Even the article is very focused on specific Google+ related topics, I found some of them resonating well with what CAD/PLM companies are trying to do in the space of design and product collaboration. I summarized some of my thoughts about that as following 4 major lessons: 1/social collaboration & product silos; 2/ease of use; 3/life is messy; 4/network effect.

1. Social collaboration won’t solve product silos problem.

Design groups, engineering departments and manufacturing companies are running into the same problem of applications and data silos. It is natural to people in different departments and even in the same group to store data differently and use different applications. Application and data interoperability is well known problem. Social tools won’t solve this problem magically. The main goal of social application is to make communication easy. Social design collaboration should provide something beyond traditional data-message-comment user experience from Facebook. To build product focusing on how to improve communication scenario is a key to for social apps to success.

2. Ease of use vs. effort required.

The effort needed to make social design collaboration work is a critical element to success. Significant effort leads to slow adoption and decline in usage. Facebook and other social tools drove the adoption by capturing data (photo, videos) via mobile devices and exposing them directly to people. People stalked photos and videos of close friends, co-workers, ex-girlfriends and other people they barely know. It is fine. And it drove adoption. Designers and engineers is another story. To capture design data is not a simple task. People want to re-use free stuff, but in general protective about IP and work they do. To capture organization structure with all dependencies, groups and authorization is even more complicated. Without these two elements, social design collaboration won’t ramp up.

3. Accept the fact “life is messy”

People don’t like to be organized. If social design collaboration requires formal work organization and getting data under the control, it will hit the wall or rejections. The reality is that data and communication are messy. To accept that and help people to communicate on top of data mess can be a possible approach to start without changing the way people work. By trying to force people and data to order system can get rejected in the same way many other “data management” initiatives got rejected for the last 10-15 years. .

4. Build for network effect

Adoption. Adoption. Adoption. Social tools success is heavily built on network effect. Low adoption is a red flag. The use of social design collaboration should be skyrocketing. If it happens, you are on the right path. If not, check your fundamental assumptions and look for a problem to fix.

What is my conclusion? Technology made a significant impact on the way we communicate. Mobile email, internet, web and cloud file sharing – these are examples of successful technological applications. However, technological changes cannot be applied automatically to all fields. Design and product collaboration is a tricky. It requires deep understanding of data and innovative communication techniques. In my view, simple Facebook copycat won’t work. Innovation will happen  - lots of opportunities are still open. Developers need to crack the magic of social design collaboration. Just my thoughts…

Best, Oleg

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PLM Cloud Customization and Online Code Editors

May 7, 2014

One size doesn’t fit all. It very true especially when it comes down to PLM implementations. Once released as a toolkit, PDM / PLM systems did a long way from a system that requires special software compilation to be done for every customers to the current system with flexible data models and tools allowing to […]

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How to evaluate PDM before it will ruin your personal productivity

May 2, 2014

Product Data Management (PDM) was around for the last 20-30 years. However, I can see an increased traction around PDM topic last year. You ask me what’s the reason? My simple answer – Dropbox. Think 10 years back. The typical “PDM spiel” was to enable data control and collaboration in a team of engineers. So, […]

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Dropbox Harmony will knockdown PLM collaboration

May 1, 2014

File sync and sharing became the most requested feature to enable collaboration. The days when everybody were co-located in the same office and working from desktop computer are gone. According to Forrester review file sync and sharing can bring real business value. One the picture below you can see what are the most typical tasks for […]

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Pinterest will teach CAD companies to search

April 29, 2014

Search is a difficult problem. Especially when it comes to enterprise and organization. According to researches, more than 2/3 of people searches are not returning satisfactory results. Enterprise is messy, complicated and contains lot of unstructured data these days. CAD and other 3D files are part of this messiness. For many years, we generally thoughts […]

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Six dimensions to customize PLM

April 24, 2014

Ask two engineers about how to make stuff and you get at least three opinions about possible ways to do so. To find consensus in engineering, product development and manufacturing is hard. From my experience engineers and software developers is the group with largest diversity of opinions and custom requirements. I’ve learned it hard way […]

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Why Excel and Multi-BOM are killing collaboration?

April 22, 2014

Excel and Bill of Materials. What can be better to start a discussion? One of my favorites blogging buddies and author of eng-eng blog Ed Lopategui hit the button of BOM & Excel discussion in his GrabCAD blog – It’s time to drop Excel BOM. I liked the following passage. It speaks about huge cost involved […]

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How to make PLM UI less terrible?

April 3, 2014

I’m coming again to this topic – User Interface. These days you can hear about it as user experience (UX). UX is more complicated thing and includes lots of factors and aspects. So, I’d like to speak first about how UI looks. Back in time when I was developing  and demonstrating PDM user interfaces, the […]

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