Recently, I had a growing number of discussions about what future holds for PLM-ERP integrations. Here are a few article links if you missed them. Thank you to everyone who participated in the discussion and contributed your thoughts, insight, and experience:
How to Solve PLM and ERP: Part 2 (Implementation Options)
PLM and MBOM: Supply Chain Debates and Future Solution Architecture
The topic of connection between engineering and manufacturing environment was always on the top priority list for manufacturing companies, but recently the importance of this connection has grown because of multiple reasons. Here are a few ideas what triggered a growing importance of the integration: (1) product complexity; (2) needs to configure a product; (3) supply chain complexity; (4) needs for traceability and regulation. All these reasons are triggering questions about how to optimize usage of multiple applications and the data they produce such as computer aided design, CAD software, enterprise resource planning (ERP), product lifecycle management (PLM) and connect them to core business processes in manufacturing companies.
MBOM (manufacturing bill of materials) stands at the intersection of engineering and manufacturing process. It has impact from multiple processes such as ECO, MCO, procurement, and others. A business process that connects engineering bill and manufacturing bill is an important link between engineering and manufacturing. And for modern modern manufacturing, the management of Manufacturing Bills of Materials (MBOM) has become increasingly crucial. Such business functions like supply chain, production planning and inventory management are critically dependent on the data from both EBOM and MBOM. As companies strive to configure products with greater flexibility while navigating turbulent supply chains, the role of MBOM management cannot be overstated. The need for precise and agile MBOM handling is evident, yet many organizations struggle with understanding and implementing effective MBOM strategies.
The Misalignment in Engineering-Manufacturing Integration
During recent discussions about PLM-ERP integration and the role of MBOM, the educational aspect repeatedly surfaced. This highlighted a significant misalignment in understanding and managing MBOMs. The diverse nature of manufacturing environments contributes to this confusion, making it unclear what exactly an MBOM is, where it resides, and how it should be managed.
Historically companies were looking at this process in a very transactional manner – ERP solutions are dominant in organization of manufacturing process and everything these solutions demanded is just to import data from engineering (think CAD in most of the complex design cases, but often just a list of components)
Practical Understanding Over Academic Definitions
No one wakes up in the morning and says – I need a software to manage MBOM. The reality is that customers are not seeking a software and even more, look how to debate academic definitions of MBOM. Companies rely on their practical understanding of what needs to be done and the problems that must be solved. They are not looking for fancy terms and architecture diagrams. They are looking how to feed their existing systems that needed to order components and outsource work to get materials and components to make products.
In this article, I aim to shed light on where and how MBOMs manifest in different environments, even if customers do not explicitly refer to them as MBOMs. Here are five use cases I’ve seen systems and data can be organized in the intersection of engineering and manufacturing environments.
1. CAD-ERP Sync
The simplicity is always a place where companies want to go. Even if it can end up as a mess. One of the simplest (to start) and most common practices in manufacturing companies is the synchronization between CAD data and ERP systems. Whether or not these companies use sophisticated ERP or simple accounting system, data is often exported from CAD tools and entered into a target system (eg. ERP or financial systems).
In these scenarios, the BOM in the target system serves as the MBOM, though most companies simply refer to it as a BOM. These environments are typically fluid and lack traceability, with batch export/import processes offering a “simple and dirty” solution.
2. PDM/PLM BOM to ERP Sync
Another widely adopted method involves organizing BOM data within PDM/PLM systems before exporting it to ERP systems. The wide adoption of this scenario is based on the fact most of companies these days are looking how to organize their engineering data management practices. Although most of them use PDM to manage CAD files, this environment controls engineering release process. The outcome is used as a BOM. This allows companies to leverage the capabilities of PDM/PLM systems to restructure BOMs, preparing them for seamless integration with ERP systems, whether for internal use or for contractor manufacturers.
3. PLM-ERP System Used by a Contract Manufacturer
Larger CM (contract manufacturing companies) are looking how to formalize the process of data handover. They bring a PLM system on both end (sharing licenses) both manufacturing companies and their contractors agree to use. A typically cloud PLM allows to control the data on engineering side and formalize the data handover. Here, the contractor manages the BOM within the PLM system and exports the data to their ERP system. This process, although internal to the contractor, ensures consistency and control over the BOM.
4. PLM MBOM and Sync to ERP
An advanced approach involves using PLM systems to manage both Engineering BOMs (EBOM) and MBOMs. Enterprise PLM systems developed special services to manage multiple BOMs (EBOM to MBOM process) and, in this case, PLM systems is used to hold both. Once MBOM is all set, the synchronization process brings MBOM to ERP.
In this scenario, the MBOM is created within the PLM system and later synchronized with the ERP system, accommodating both Original Equipment Manufacturers (OEMs) and contractors. This method offers a comprehensive solution for BOM management, ensuring alignment and traceability across systems.
5. Excel-to-Excel
Last, but not least, when all options I mentioned above don’t work for a company, the last resort will be to rely on Excel to manage MBOM and supply chain. Despite the availability of sophisticated solutions, many companies still rely on Excel for MBOM and purchasing management. This approach, though rudimentary, is not uncommon and highlights the diverse methods organizations employ to manage their BOMs.
What is my conclusion?
The communication between engineering and manufacturing processes is one of the most complex challenges organizations face. This complexity arises from product complexity, process variability, and human factors. In today’s manufacturing world, where speed and accuracy are paramount, effective MBOM management can significantly streamline processes, optimize supply chains, and reduce risks. By understanding the various ways MBOMs are managed and aligning these practices, companies can enhance their operational efficiency and adapt to the dynamic demands of modern manufacturing.
At the same time, many companies are still struggling to connect engineering and manufacturing environments in the most efficient way. There are multiple factors behind this lack of efficient engineering-manufacturing integration.
In my view, the current trend towards brining more data into decision process can fundamentally change engineering-manufacturing integration and the way companies are connecting engineering to production and engineering to contract manufacturing. The opportunity is to use the data to improve the effectiveness of the decision process. And MBOM plays a key role in this process.
Just my thoughts…
Best, Oleg
Disclaimer: I’m the co-founder and CEO of OpenBOM, a digital-thread platform providing cloud-native PDM, PLM, and ERP capabilities. With extensive experience in federated CAD-PDM and PLM architecture, I’m advocates for agile, open product models and cloud technologies in manufacturing. My opinion can be unintentionally biased.
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