Friday, March 15, 2013

PLM vs. ERP: Can't We All Just Get Along?

Recently I've read several posts about PLM vs ERP. First, one from Oleg Shilovitsky about the differences, and one from Arena Solutions about how they might work together. We often hear this as a big challenge in our PLM certificate classes from many students. This is an important topic, and one that can cause a lot of contention in any business. I want to address some basic issues and see what you think.

PLM - ERP - What's the difference?

The most basic way that I can think to categorize the difference between PLM and ERP is this: PLM manages the virtual product and ERP manages the physical product. The virtual product must ALWAYS match the physical product, and thus the two must be seamlessly connected. This requires integrated systems that include sophisticated configuration management tools to accommodate changes and updates.

Choosing the right tools

Given the complex nature of keeping PLM and ERP synchronized at all times, we must decide which tools are best suited to do this. ERP tools tend to be very transaction oriented. Their goal is to move a product from one step to another until it is complete. ERP systems must keep track of parts inventories, resources needed to manufacture the product, available tools and processes, along with costs and scheduling of all activities. ERP tools are great at making sure all the steps for manufacturing happen on time and under budget.

PLM on the other hand is usually tied to 3D CAD models and accommodates changes, options, modifications, and frequent updates to models parts and products. PLM is also a very visual environment, with  many people looking at models, exchanging ideas, and viewing the product as it is designed. PLM is also very collaborative: a group of people must often review any updates or changes as they happen. Engineering review often happens across the globe and around the clock as many engineers and designers are involved. Understanding changes requires sophisticated visualization tools that allow models, parts, documents, and other information to be shared in real time.

PLM must also manage changes and links to CAD files, assemblies, docs, test data, software, EDA files, and more. PLM  must always provide an updated view of the As-Planned, As-Designed, As-Manufactured, As-Maintained, and other views of the product information. Product information must also be connected to the product requirements documents so there is always a link to the original specifications.

When we look at the tools needed to manage all the permutations of products throughout the product lifecycle, it is clear that PLM is much more suited to this task. PLM can always track the changes to the products out in the field, and then easily use that information to start creating the next version of the product; ERP has no such tools.

Who owns the data?

There is always a big argument about where the data should be mastered, and who should own it. The truth is, ultimately, the company owns the data; ownership changes as the product moves from one state to the next. While the product is in Design, the data is owned by the PLM system; while the data is being manufactured, the data is owned by ERP. Once the product is out the door and in the field, it is owned by the Service group, or Warranty, or whatever you want to call it. It does not really matter who owns the data as long as the most up to date version is always tracked very carefully, in PLM.

Start at the beginning

To me, it makes sense for most businesses to carefully master their data in PLM at the beginning of the product lifecycle. PLM is where the product starts, and any mistakes made here will eventually find their way into ERP. Over the years many companies have gotten use to fixing problems with unclear, incomplete, or incorrect information coming from ineffective PLM systems during the manufacturing process. Companies have also invested almost nothing in PLM when compared with the millions upon millions of dollars invested in ERP. Is it any wonder that most PLM implementations leave a lot to be desired?

PLM supports product innovation

ERP does not readily support product innovation. ERP supports innovation in manufacturing processes and technologies, but not product innovation. Innovative products are imagined and created during the PLM design activities, and not in ERP. By the time you get to ERP it is too late to add much product innovation. Commitments to product innovation are locked in during the PLM phases of product development. This supports the need to invest in more and better PLM technology to support the goal of creating more innovative products.

Conclusion

There are certainly exceptions to what I have said here. Many process industries, like CPG, food and beverage, chemicals, and others will be much more ERP-centric. Also, those companies without the goal of creating new and creative products, but only cheaper "knock-offs" will want to invest more in ERP. Products without much 3D CAD and those that have little engineering IP may not need a ton of PLM.

In my experience, most companies have under-invested in PLM. With PLM you can create innovative, higher quality products that get to market faster. If you are a manufacturing company that wants to create innovative products that delight your customers, and if your products require strong engineering design with 3D CAD models, you will want to invest more in PLM than you do in ERP.

What do you think? Have you invested enough in PLM?

Cheers,

Jim

27 comments:

  1. Hello

    a good article which summarizes many known issues. Not enough investment in PLM in comparison to ERP. Who owns the data and I could not agree more, Data ownership changes with life cycle state.

    However, I must say (as briefly mentioned on linkedin (sorry I was using a small smartphone I will not tell the brand :) ) that PLM vs ERP is from my point of view the wrong approach. But the one taken, from what I can tell, per vendors and VAR/Consultant. My system is better than yours..

    As end user, (I work for a discrete manufacturer), there is no such a thing. The company is a whole and everything must flow seamlessly from one end to the other. There are processes which go accross systems/software and departments, each of them has a dedicate function but that is not all, The implementation teams, usually separated as ERP team and PLM team must also work as a unified team. Therefore, it is not about PLM vs ERP. What is actually PLM and ERP, just some piece of softwares. Have you heard of true PLM and true ERP and nominal PLM and nominal ERP?

    In order for companies to fully understand the scale of the challenges and make the best of the various systems we should consider that it is a whole and that PLM ERP is indeed an union thus the paradgim PLMuERP (sorry I cannot make the proper math symbol for Union). It is a union of separated processes, an union of various implementation teams which should understand what is happening upstream and downstream (relative to where they are), union of systems too. All this should be considered in a whole, which I designate under PLMuERP.
    One can't succeed in only considering a technical bridge between two softwares, one can't succeed, if processes do not pass the information to each other, One can't succeed if teams only work in isolation.

    Have you done any research of how ERP and PLM teams actually work together ? Most of the time ERP and PLM implementations are done separately.

    Please have a read to the PLMuERP primer and let me know what you think.

    Thanks and keep posting. I enjoy reading your blogs.

    ReplyDelete
  2. Christophe,

    Thanks for your insightful comments. I could not agree more. PLM and ERP should work together, and they should not be separated, but in reality that is what happens. I would like to see more companies looking at PLM vs ERP in a united way. I think that with more education (PLM people learning about ERP, and ERP people learning about PLM) there can be a closer relationship between these two very important aspects of the product lifecycle.

    Thanks,

    ReplyDelete
    Replies
    1. This subject is coming up every few years. Although PLM has made some advancements since it's Enggineering Databas days through PDM to PLM by basically widening and deepening th areas it covers, the progress in ERP has been more on the useability then functionality. Only in the last few years some ERP systems are trying to cover PLM functionality (some more successefull then others).
      There is no question that these two systems that share the same information (Items; BOM; CM; etc) need to interface and be integrated in such a way that information is entered once, without even getting into the discussion of who is the Master. Any information in an enterprise that is entered more then once requires a second look and an interface/integration consideration to save time and potential data wentry errors.
      The question/issue of who need which system is a decision based on the busines model, a pure mfg organization probably can manage without PLM but will need ERP, on the other extreme, and Eng organization that does not have mfg facility can only use PLM. The rest fall in between depend on the business requirements. Big enterprises like automotive or aerospace are the good examples of having the two systems with integration/interfaces between and a clear set of processes that define data ownership and process.

      Delete
  3. eldadc,

    I agree with your comments about PLM and ERP. There are examples of large companies that need both, but there are many companies that are clearly manufacturing-centric, or engineering-centric, and they need one more than the other. I believe companies should evaluate where they fit, and then get tools to support their business.

    It shouldn't really be a fight between ERP and PLM, but a very pragmatic evaluation of which tools support the business better. If you need lots of both, then you have to figure out how to integrate.

    Thanks for your comments!

    -Jim

    ReplyDelete
    Replies
    1. I believe that on the long run, the ERP companies will 'swollow' PLM, so the interface/integration issue will no longer be there. PLM will be offered as one of the modules of the ERP system. This way if you start in Eng with no mfg, you start with PLM module and gradually add modules as the business moves to mfg.
      Unfortunetly, the Eng/mfg wall still exists in some organization, the integration will force some cracks in the wall and hopefully help to bring it down.

      Delete
  4. eldadc,

    Thanks for your comment.

    I don't see ERP EVER 'swallowing' PLM. ERP is very transaction oriented, and does not handle massive changes well. PLM is designed to support the very iterative design process; ERP does not handle that well.

    There will always be a place for both, and I don't think that will ever change. Some ERP solutions "think" they can handle PLM, but none of them have yet to do it well, in my opinion.

    -Jim

    ReplyDelete
  5. I found the blog a very interesting discussion point. It is a question often posed. The physical vs virtual distinction is becoming ever more blurry as well with the addition of quality management from PTC and MRO and SEMANTIC IT from Siemens. A definition / distinction I use is transactional vs management.

    ReplyDelete
    Replies
    1. Colin,

      You are right. The line gets blurrier every day. The only problem I have with the transactional vs management definition is that "management" is pretty vague. We will keep trying to delineate, but it gets harder and harder.

      Cheers,

      Delete
  6. This is a great distinction between PLM and ERP. One thing is that PLM has its own set of challenges. This article seems to adress a lot of them. http://blog.compudata.com/blog/overcoming_obstacles_to_efficient_product_lifecycle_management
    Thanks!

    ReplyDelete
    Replies
    1. Thanks for your comments. I appreciate them!

      Cheers,

      -Jim

      Delete
  7. Can anyone point me to a good visual representation of the product lifecycle from birth within PLM through product manufacturing in ERP and then end of life in both ERP and PLM?

    Thanks,
    Steve

    ReplyDelete
  8. Steve,

    That would be a good chart. I have not seen anything, because it would be very dependent on the industry/company. I think there are few companies that do this well and tie it all together, but maybe that is something I should start working on...

    Thanks for your comments.

    Cheers,
    Jim

    ReplyDelete
  9. Hey, nice site you have here! Keep up the excellent work!

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    ReplyDelete
  10. Praveena,

    Thanks for your positive comments!

    Cheers,

    Jim

    ReplyDelete
  11. Interesting discussion. As mentioned a few times, the lines are getting blurred and the definitions are constantly modified to support the individual vendors. If you stop and think about the definition of PLM, Product Lifecycle Management, it does not support your argument of virtual versus physical management. I do not believe that PLM is a separate system, but rather the strategy used to manage the product from Concept through End-of-Life. This strategy includes the virtual and physical management.

    For years, consultants have viewed engineering as the only group that manages the virtual definition of a product. This assumption could not be more incorrect. Like engineering, many groups in a manufacturing company need to create information and processes during the planning and development of new products. Groups such as supply chain, procurement, manufacturing, marketing, service, and documentation begin planning for new materials and deliverables and are pressured to start early in the process and deal with the high rate of changes. This theory is proven through the expansion of the pure play PLM companies as they add functionality that has traditionally been classified as ERP such as supply chain management tools, procurement solutions and promote the change management process to include functional groups outside of engineering.

    I think that we need to stop looking at this as two separate systems and begin to look at this as a single environment that put the product front and center and not the software.

    ReplyDelete
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