PLM and ERP Play Strategic Roles

May 9, 2007

Enterprise architects for some manufacturing companies are actively debating the roles of product lifecycle management (PLM) and enterprise resource planning (ERP) as they determine their solution strategy for product definition, manufacturing processes, and overall information sharing and collaboration across the design/build environment. PLM has steadily expanded its scope across the product lifecycle, and it would be fair to say that enterprise level PLM solution providers now offer applications that play in some traditional ERP domains, such as material sourcing and support of supply chain management applications.

Dick Slansky

In the same sense, ERP solutions have evolved well beyond their original functionality and focus on financial and manufacturing processes. Today, enterprise level ERP suites include a comprehensive array of business solutions such as customer relations management, supply chain management, supplier relationship management, data warehousing, service and asset management, and certain functional areas of PLM, such as program and portfolio management, product data management (PDM) and bill of materials (BOM) integration.What makes ERP valuable and essential to both design-centric and manufacturing-centric companies is its ability to integrate the various business processes and resources required to build and deliver products. It is vital that such companies have systems that can efficiently manage the flow of material and resources across complex supply networks. ERP brings the necessary order and structure to this activity by forecasting customer demand, positioning inventory to address that demand, capturing orders from customers and managing the on-time delivery of products.Early ERP systems were not able to include product development and engineering activities in their streamlined business processes due to their transactional data structures. However, some ERP providers now offer PLM solutions, in the functional areas of PDM, and Project and Content Management.A key benefit of PLM is its ability to integrate a wide range of business processes and information. But PLM is specifically designed for the extremely free-flowing and unstructured environment of innovation, design, manufacturing and product support. It also provides a powerful information management platform that supports the complex relationships that exist across digital models, test and simulation data, engineering version control, BOM management, manufacturing process information, content management, product support and the many other product related activities.Most valuable asset

One of the most valuable assets of any successful company is the accumulated knowledge and intellectual property captured within its people, products and processes. Effective management of knowledge leads to innovation, superior product designs, optimized processes and a more effective workforce. Learning and the accumulation of knowledge occur throughout the product lifecycle, and the management of this learning process can be one of the most valuable benefits of an end-to-end PLM implementation.ERP is no more an extension of PLM than PLM is an extension of ERP. How a manufacturer defines its enterprise architecture and information backbone should be determined by whether the company is manufacturing-centric or design-
centric. ERP systems offer central data repositories and systems of record that are adequate to manage all of a manufacturing-centric company’s business process. Conversely, many design-centric manufacturers see benefits in using PLM/PDM systems as the sole source for all data related to product, process and resources, and having their ERP systems rely upon the engineering BOM to run and manage those business processes that are not handled by the PLM system.With robust and diverse solution sets being offered by both ERP and PLM providers, today’s manufacturing executives have a choice in how they define and implement their enterprise architectures. The best decision depends upon business strategy, core competency and a company’s unique set of engineering and manufacturing practices. Dick Slansky, [email protected], is Senior Analyst, PLM & Discrete Manufacturing, at ARC Advisory Group Inc.,in Dedham, Mass.