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
