PLM + ERP Crica 2023: Thoughts about integrated engineering and manufacturing systems

As the manufacturing landscape continues to evolve, two of the most influential tools – PLM and ERP – are becoming increasingly intertwined. Both technologies have their own distinct uses when it comes to product development and management, but their combination can offer game-changing benefits for manufacturers.

Digital transformation continues to be implemented across manufacturing engineering companies both large and small and it is time to explore how Product Lifecycle Management (PLM) + Enterprise Resource Planning (ERP) and what can set them up for success in coming years.

With the increasing availability of cloud technologies, artificial intelligence innovations, and other advancements – it’s no surprise that integrating PLM+ERP will be a priority for many businesses looking to become more digitally cohesive. Learning the trends and best practices can help you prepare your organization for optimal performance going forward.

PLM and ERP – From Wars to Consolidation?

For the last two decades, I’ve seen many examples of PLM and ERP systems development. As such I can speak about very successful implementations and systems as well as about total failures where vendors and implementation partners were conflicted and messed up everything. Here are a few articles I wrote about that.

PLM vs ERP Tug of War

PLM vs ERP Change The Battleground

PLM vs ERP How to Achieve Synergy

PLM vs ERP – Opportunity To Grow

The Future Of Consolidate PLM and ERP systems

However, achieving a consolidated PLM+ERP system was always a challenging step for both PLM and ERP business processes. The largest experiment with consolidated PLM and ERP systems these days is a partnership between SAP and Siemens about PLM+ERP integrated systems.

My attention was caught by the NetSuite article explaining their vision of product lifecycle management (PLM) and enterprise resource planning systems (ERP). Check it out, I found it very interesting – Ultimate Guide to Product Lifecycle Management (PLM). I liked the article because it presents a holistic view of Product Lifecycle Management stepping beyond a specific domain – PLM, ERP, CRM, and others. Focusing on how to achieve a balanced information flow is extremely important in modern enterprise applications to build a digital thread and knowledge graph.

Product lifecycle management is the process of managing how and when products are presented to the market, from development to growth, maturity and decline. PLM is used to develop strategy and make decisions around your product portfolio. Product lifecycle management is used to determine pricing strategy, marketing and promotions and selling strategy, as well as expansion and discontinuation plans. It’s a complex process and involves technology to help you create, capture, manage and leverage your products to help your business maximize profits.

Nevertheless, you can see continuous debates about what is the right way to organize the Bill of Materials in the context of different processes:

Most products are complex and are made up of many components, or raw materials that also require assembly. The bill of materials (BOM) could be considered the recipe for your product. It explains where materials will be purchased and how products will be put together. A common misconception is that the BOM is the entirety of a product’s lifecycle. When in reality, it’s an important step in any product’s lifecycle, but there’s more to a product lifecycle. It doesn’t account for other aspects like design, distribution, sales and more, which is where PLM comes in.

The passage above reminded me of an almost a decade ago an article by Engineering.com’s Verdi Ogewell – The Next Big Boom in PLM and ERP and the Battle Over mBOM Ownership and some of the previous articles I wrote about organizing information between PLM and ERP systems – BOM: Apple of Discord Between PLM and ERP systems; Manufacturing BOM- The Next Cool Thing in PLM; PLM and ERP are separated by a common BOM. Check them out.

The article is spot on about problems of product lifecycle management. Here is the

In trying to accommodate more complex product development processes, organizations struggle with disconnected systems, processes and departments, as well as issues with data quality and frequent engineering change orders. Disparate software systems can drive up costs because of inefficiencies and slow product commercialization. To summarize, some of the biggest PLM challenges include (1) Disconnected systems, processes and departments; (2) Poor quality data; (3) Frequent change orders; (4) Increased inefficiencies with separate tools.

and recommendation to have integrated systems.

PLM is a business strategy to continuously improve products and innovate with new offerings. And it’s supported by a series of integrated software application solutions to address single stages of a product’s lifecycle or connect different functions. Although manufacturing processes are an important emphasis, PLM strategies and software include other modules, including marketing and sales and portfolio management. Enterprise resource planning software helps you gather, manage, monitor and report all the data necessary for successful PLM. ERP solutions connect inventory and order management, accounting, human resources, CRM and other steps in a product’s life cycle in one system for your entire organization.

To achieve integrated data management between PLM and ERP was on the demand list of manufacturing companies for the last 20+ years. Companies have mixed results in this field with most of them achieving successful implementations by applying a brutal force of custom integrations and substantial services applied on top of separate PLM and ERP systems. Is there a better way in 2023 to do so?

PLM+ERP: Knowledge Graph, Digital Thread & Information Streams

The demand for the integration process is as big as never. Companies are struggling with the absence of integrated processes, siloed information, outdated document-driven processes, multiple data conversions, and data duplications. Supply chain management problems in the post-COVID world continue to damage the manufacturing world in which a specific existing ERP system in every manufacturing company cannot solve a problem. The magic words like the SaaS model, on-demand software, and cloud computing are not going to change much while deploying existing siloed PLM and ERP products hosted using cloud computing services (AWS, Azure, and GCP) are still the same software with outdated integrated data management capabilities.

Both PLM and ERP are looking at how to solve the problem, which clearly cannot be solved by one side alone. As I wrote in my PLM ERP Tango article:

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

Looking at the PLM+ERP roadmap by Siemens and SAP, the two biggest vendors in PLM and ERP domain, you can see what money and strategy can bring together. The best summary of what SAP and Siemens delivered so far is presented in Lionel Grealu Engineering.com article – A Third Go at an SAP and Siemens Teamcenter Integration. Read the article to get more details. It also includes useful links to SAP and Siemens blogs with additional details.

The integration started by the agreement signed in 2020 is in full swing. I captured a few interesting topics that are planned for 2023 and 2024. They can give you an idea of how complex the integration is.

2023: (1) Ability for maintenance of BOMs with sub-items in product development; (2) Ability for product development to maintain BOMs with substitutes. and for 2024: (1) Advanced structure version for data federation. (2) Support of basic ETO processes.

What you can learn is that you will need to have the full power of SAP and Siemens PLM to create a basic ETO process in 4 years (still planning). Use it as a projection of what is the cost of integration for legacy software such as SAP and Teamcenter. With years needed to integrate the two most complex enterprise systems in the manufacturing world, you can ask what can be done differently and most importantly in a more agile way for manufacturing companies looking for better-integrated information management.

Here is my take on what every company in the manufacturing world can consider as steps to better integration of data and processes.

5 TODOs in the action list for PLM and ERP professionals

Here is what I can recommend to all professionals regardless if you’re developing PLM or ERP software as well as if you’re in the business of professional services for manufacturing companies, or looking how to plan your next 2-3 years of data management and IT strategy working for an industrial company.

1. Include data integration strategy in your change management plan for 2023-2025. Focus on data organization beyond enterprise systems – PLM, ERP, and any legacy you might have. Check my Digital Thread series of blogs.
2. Upgrading existing systems (both PLM and ERP) to improve integration capabilities of existing systems by developing and deploying REST APIs and no code techniques capable to make data in existing systems available for broader integration efforts.
3. Digitally transform the legacy data and systems, which will allow you to make data available and stop relying on outdated Excel-based software and 20+ years old databases.
4. Create an integrated environment beyond existing systems of record allowing accelerated collaboration and engagement to build faster and more optimized processes.
5. Focus data analytics to glean intelligence customer data, existing ERP systems and product lifecycle management systems, and engineering databases

What Is My Conclusion?

Over the next few years, we’ll see more progress toward what experts call “PLM+ERP”, which brings together these tools in a more seamless way than ever before. It is the opportunity for ERP companies to establish their PLM strategies and bring the foundation for integrated digital thread and product data analytics. It is the opportunity for PLM companies to build beyond their existing CAD data management processes and most importantly it is the opportunity for industrial companies to stop buying in the magic of a single integrated system that can do everything and focus on modern SaaS software capable to build integrated data and process architecture for the future of connected manufacturing.

If you’re looking at how to optimize processes and streamline data, you should be looking for a stronger data management strategy beyond existing systems, agile integration infrastructure, and migration away from legacy data and software to introduce agile integration strategies and data analytics in your integrated product development processes. Just my thoughts…

PS. Stay tuned for my coming articles about how to build a Knowledge Graph to empower your data integration.

Best, Oleg

Disclaimer: I’m co-founder and CEO of OpenBOM developing a digital cloud-native PDM & PLM platform that manages product data and connects manufacturers, construction companies, and their supply chain networks. My opinion can be unintentionally biased.