From BOM Exchange to Connected Digital Twins

I wrote about PLM-ERP integrations in the context of the agreement between Siemens and SAP. If you missed my article, please check it out here – Will Siemens and SAP come on the same BOM? Siemens/SAP partnership agreement was a trigger that made me come back in my thoughts about PLM-ERP integrations. For many years working on PLM implementations of different sizes, I’ve seen PLM-ERP as a very difficult topic for many organizations very often lead to confusion, wasted resources, and missed opportunities.

The last one is the most important. The bridge or connection between PLM and ERP is a key enabler to improve the efficiency of many processes and sometimes is the only way to make some business models work. Especially when it comes to configuring to order (CTO) or engineering to order (ETO) models. Digitalization combined with e-commerce made companies even more concerned about how to streamline their processes between engineering, manufacturing planning, and production.

I intentionally was using the term BOM and provoked some very interesting comments online and offline. Thanks to all for your responses. Those are absolutely important and valuable.

While many see PLM-ERP as a transactional process of “transferring” BOM, it is an enabler to streamline processes. Unfortunately, many companies and teams are thinking in “silos”, so for these companies often the process is only inside each silo – PLM or ERP.  Therefore, PLM-ERP integration and “the same BOM” is very often considered as a technical problem of transferring the data between one system to another system. While it might be true in many cases, the underlining process enablement can be huge and open tons of new business models opportunities from speeding up sales process (eg. fast quotation), improving ordering systems (eliminating mistakes) and setting up a new business (eg. advanced maintenance systems).

While I provoked many of you with BOM terminology, it is just a simple way to think about data transformation in the company. A modern digital transformation lingo brings new names and buzzwords in the world of product development, engineering, manufacturing, PLM, and ERP. Unless you lived under the rock for the last few years, you’ve heard about closed-loop approaches, connected systems, multi-disciplinary models, a system of systems, and, finally, digital twins. I like some of these words and think that some others are bringing too much hype. But whatever name is used, the key element of these approaches is building a model that can be used to manage and coordinate the information about the product and related activities. And the foundation of this information in many companies is the Bill of Materials (or Product Structure). It is a foundational common denominator between systems that in many companies today works in a ‘transactional way” passing data between systems. However, the data in BOMs are so valuable that companies are starting to capture it and build connected processes around. This is a path that can help to transform companies from siloed transactional past to the future connected digital enterprises.

What about names? Should we call it Bill of Materials, Product Structure, The Model, Digital Twin or bring another fancy name? I’m not confident that bringing fancy names can help. Both PLM and ERP industries tried in the past to bring fancy names, but it didn’t help. The culture and confrontation between systems to “own” the data failed the process. The starting point of building connected digital processes is to realize that companies and systems involved in this process must use models to process data and coordinate the activities. Bill of Materials is the simplest and easiest way to understand the information to build a common denominator and improve it in the future.

What is my conclusion?

The future of product development, engineering, and manufacturing systems are dependent on the ability of companies to build information models that can be used to organize the process. There are many actors involved in the process – companies with specific needs, information and processes, software vendors with their business models and existing products, demand to build standards, and many others. Digital Twin is the most fascinating and modern way to explain the future of these model-driven approaches. Bill of Materials is the simplest and the most well-understood data models used for integrated processes can become a way to move from transactional siloes to future connected processes. Manufacturing companies are drawn with tons of data in Excel files and existing PDM, PLM and ERP systems, To capture this information with flexible data management platforms capable of connecting silos can be a way to rationalize information, processes and build Digital Twins for the future. Just my thoughts…

Best, Oleg

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.