Last month, I published a series of articles about PLM and ERP exploring the war between both systems for data ownership, different strategies of PLM and ERP vendors, and how I can see some future strategies in the development of integrations between PLM and ERP systems. Also, I was exploring future PLM and ERP vendor development including partnership and future competition. Check my earlier articles
In my article today, I want to talk about such an opportunity as Digital Thread in the future development of integrations between PLM and ERP systems as well as growing segments of the market that can be explored by both ERP and PLM vendors.
Unless you lived under a rock for the last few years, you’ve heard about Digital Thread. The new catchy phrase “Digital Thread” has a good chance to become a fundamental element of future engineering and manufacturing software, but can also be used by many vendors are lipstick on a pig in attempts to sell the “same eggs side view” when promoting their existing products and technologies. Read the archive of my articles about Digital Thread here.
In a nutshell, a digital thread is a way to integrate information that lives in multiple organizational systems, files, and legacy databases. As data becomes an extremely important asset in the future business activities of companies, the importance of such connected information is huge. Data can also bring substantial financial benefits to companies and to vendors providing these solutions, so no surprise, all vendors will be trying to get a hold of the information.
PLM and ERP silos
Traditionally, both PLM and ERP functions are data forming two big silos in most of the companies using these systems. Although, it is probably more accurate to talk about engineering and manufacturing, planning and finance when you speak about companies of different sizes. In many companies, you can see CAD, PDM, and multiple engineering databases, Excel, and legacy systems representing PLM domains. You can also see multiple ERP systems or the absence of these systems and companies operating financial systems with many legacy and homegrown solutions.
Data Transfer and Synchronization
To transfer data from one place to another place is a natural and easy way for many companies to solve their data silo and data management problem. This way of thinking is obvious for medium size companies thinking about how to send CAD BOM to ERP systems for procurement and, a very similar approach can be found in different ways to “integrate” PLM and ERP systems. These solutions are hard to standardize and also very hard to provide out of the box. It is often provided by multiple service providers and IT departments.
From Data “Sinking” To Data Link – How to get connected?
Leaking data and bad organization information flows in the organization is one of the main reasons for business process inefficiency in many companies. It is also a source of complexity. The digital thread is one of the ideas that has a goal to connect the data and optimize information flows. Think about it as a way to keep information in many systems and places, but at the same time to be able to get a sense of the data and to support organizational decision-making processes. The challenge of digital thread is not only to connect information inside a company, but also outside with customers, contractors, and suppliers. Stopping companies and systems from sinking the data and giving data a chance to be used is a big challenge in many manufacturing companies.
What is my conclusion?
PLM and ERP systems have an opportunity to change the way information flow is organized in the company and to provide a better way to support the decision process. It can be the source of future intelligence and business growth. It is also a big source of future business advantages for vendors and manufacturing companies from both sides – providing better-connected solutions as well as finding business benefits in using data in a more optimal form.
Disclaimer: I’m co-founder and CEO of OpenBOM developing a digital network-based platform that manages product data and connects manufacturers, construction companies, and their supply chain networks. My opinion can be unintentionally biased.