ERP+PLM: 2 heads are better than 1

erp and plm

At the heart of ERP is an organization’s financial system offering, accounting, GL, purchasing, A/R & A/P, order management, and inventory accounting.

In other words the results, the measures of an organization’s product, sales, and operations.

In contrast, Product Lifecycle Management (PLM) has many unique features

Today, it is the foundation stone of an organization’s success – creating a great product.

Yes, of course we start our organization, our product in CAD, but a disconnected CAD will soon slow you down. It starts with an integrated team, working together on a great product that delivers something your audience will want. It starts with a Product Innovation Platform in which your CAD resides.

And here your Product Lifecycle journey begins. Your PLM Application helps manage item design, engineering simulation data, and the Engineering BOM. A PLM system also tracks material sources, compliance, quality, and all engineering documents.  PLM manages items and parts before they received final approval for production. Thereafter, the Product Lifecycle continues

No organization wants to clutter up their ERP financial system with thousands of items that may not eventually be produced or purchased.

In a typical business process review:

  • New Product Introduction
  • Engineering Change Management
  • Valiant Management
  • Bill of Materials
  • Document Management

You can see that seamless integration between PLM and ERP is essential however.


ERP & PLM Disconnected = Mismanaging Products

No ERP, no PLM or as disconnected applications mean mismanaging product changes and therefore creating mistakes in manufacturing or failing to correct product quality issues. Without PLM – ERP integration, there is duplicate data entry of approved items, and the Item information in the ERP system is missing valuable information from Engineering.

ERP, having been around for many years, has considered all aspects of PLM to a certain degree, but when you’re based on “numbers & financials” its culture and way of thinking remains in here. Yes, you could get by and get from A to B for a period of time, but as we all know “getting by” will not keep you competitive!

Can you afford to consider only part of a journey and even that part at a less than perfect level in terms of speed, time, and accuracy?


ERP & PLM – How they were intended

A simple way to think about the differences between ERP and PLM is to focus on what each system was intended for, especially because both of these systems originate from very different places.

Product lifecycle management systems focus on innovation, planning, and speed to market.

Enterprise resource management systems focus on profitable execution.


PLM – Product Lifecycle Management

And, we go to the PLM layer; the upstream and downstream of the product, managing each stage of demand, ideation, specification, R&D, design, engineering, manufacturing, sales, service, and maintenance all from a product perspective. Drawing on relevant information, from the technical point of view, all the product-related materials in the enterprise, as well as the operations related to these product materials, effectively integrated and controlled, and operated through the information system.

Product innovation, research, and development are the lifeblood of enterprise competitiveness, but can often fall on deaf ears in management.

However, if you can grasp the information related to product development at any time, such as the progress statistics of each research and development project, the completion rate of each dispatch and output, the delay rate, the language is one best heard by senior management. Furthermore, it can provide details related to implementation or lack of, shorten the time to market, reduce the cost of engineering changes, properly manage the research and development results, and greatly improve the efficiency and quality of product development.

Defining PLM

Broadly speaking, from the perspective of the whole enterprise, the management of product data and the management of its process, that is, PLM is a method to assist enterprises in managing Data and its Process.

In a narrow sense, it refers to the application of R&D to engineering planning, emphasizing how to effectively integrate product data (blueprints/documents) and workflows (engineering process execution) during R&D and engineering operations, and explore how to integrate the backends ERP, MRP, MRPII systems and SCM, CRM systems.

The Range of PLM

The scope of PLM is extended by traditional Product Data Management, paying attention to the product life cycle, increasing the overall project management, integrating relevant information in the enterprise, and providing or integrating integrated information to customers. Lastly, it provides a collaborative platform for design, asset management, maintenance, or data exchange to expand the coverage and application of PLM.

With PLM, the transparency of management of R&D projects can be greatly improved, along with the efficiency of R&D departments. The R&D process can guarantee the quality of R&D through process management.

Through the system number management, the product name specifications are no longer repeated and convenient for R&D queries, together with all material requirements. The documents stored such as the BOM can be centrally controlled and provided for inspection at any time. The ERP information can be integrated simultaneously, enabling the company to quickly respond to changes in customer needs and market changes to reach Time to Market & Time to Volume.

These systems control and manage everything from CAD (computer-aided drafting) files to program, project, and change management processes. A PLM system combines all this functionality and integrates it into an overall product lifecycle management process.

This is why PLM solutions have a higher impact on revenue and brand image.


ERP – Enterprise Resource Planning

It’s there to integrate the workflows of each internal department within the enterprise, unifying internal data processing programs to instantly reflect the internal resource utilization and provide information for decision making.

The main systems include financial, human, production process, and supply chain management.

The ultimate goal of the ERP system is to integrate the work processes and information of production, sales & distribution, human resource, development, and financial accounting of the enterprise, which can be effectively implemented through the ERP system. It assists enterprises to establish processes, systems, standards, reduce manual work repetitiveness, ensure the company’s TQC (delivery, quality, and cost) control, optimize operational management mechanisms, and thus enhance the core competitiveness of enterprises.

Before ERP, the manufacturing industry began to plan how to manage production and procurement better, starting with “Materials Requirements Planning” which included material demand planning.

The idea was that the MRP demand planned the procurement and production via the Bill of Material (BOM) through to the lead time of production and procurement of raw materials When is the production? How much is the quantity purchased? How much is produced?

However, the flexibility of the production process, frequent design changes, and drawing insertions made the management overly complicated and cumbersome (for example, the data input was not timely, or the inventory inaccurate).

Then came a further advancement based on the assumption that the enterprise produced according to the order. Therefore, when the order was changed, the purchase order and the work order production plan were to be linked.

However, this new requirements planning solution in isolation, care of the calculation of materials was never enough, as the manufacturing process was insufficiently considered. As a result, MRP incorporated the equipment and labor capacity resources into the overall effective planning and control. However, in the event of limited resources, it was the job of the CRP tools (Capacity Requirement Planning).


Never a greater need for ERP+PLM integration

PLM and ERP have never been more relevant than in today’s increasingly competitive climate. Every part of the industry, each part of every industry is being immersed in technology enablement and differentiation.

Manufacturers all over the world aspire to release products to manufacturing more efficiently, coordinate change processes more smoothly across the supply chain, and streamline product development processes. They are eager to leverage software tools to minimize costs and improve their bottom lines. Best-in-class companies are therefore more likely to have an integrated PLM and ERP infrastructure; going beyond CAD data in PLM and financial reports in ERP.

Combining the two, however, can raise a multitude of mechanical questions.

  • Trying to decide which system should be the system of record for certain pieces of information is just one battleground.
  • Disagreements may arise about which system should drive data for common components such as products, parts, item costs, product graphics, or item specifications.
  • Some engineers and manufacturers may wrestle with more mysterious issues such as who owns the eBOM, mBOM, as-built, as-maintained, as-configured, or as-installed BOM. Getting caught up in the mechanics of integration though can block the path to realizing the strategic benefits.


The bottom line is that processes need to operate seamlessly between PLM and ERP systems.

This offers important benefits such as exposing all PLM specifications to material substitution planning at the start of manufacturing; comparison of multiple product BOMs or eBOM versus mBOM; establishment of product readiness controls; and gaining visibility into which sales orders will be impacted by a change order.


PLM and ERP Integration – what can go wrong?

Thinking in silos in an integrated complex world is at the backbone of what can go wrong! Start with an end-to-end flow of information and collaboration.

Product Hierarchies & Attributes

The way the data is structured and the attributes given are fundamental to being able to store, search and report. An attribute is simply the description of a field or a table. In some cases, PLM and ERP will support entirely different structures and fields. Sometimes the fields in ERP are linked so it can limit how the fields can work together which can put in obstacles within ERP that may not be in PLM.

Style Codes, Style Names, Raw Material Codes & Colour Names & Codes

This often seems like such a simple thing but it can be full of issues as different applications can have different character restrictions in different fields, such as the number of characters.

Numeric & Alphanumeric Data

Some may only allow numbers, some only alpha and only in upper case, lower case, etc. Some may auto-generate and want to overwrite pre-generated codes and numbers which can lead to discrepancies and confusion between one system to another.

Costing & Pricing

Costing and pricing is an area where there can be many interpretation issues. A “cost” can be many different things and without clarification, the meaning of it can be vague. Costs can vary by color, size, dimension, volume, season and this must be translated correctly. They can be called different things because they are!

Decimals, Rounding

Is the number of decimal places the same? And if not, does the rounding match across all applications? The correct information must be transferred to the correct fields.

BOMs & Usages

Firstly, it is important to ensure that the BOM in the PLM system is compatible with the BOM in the ERP system. Do they both support the same units of measure (meters, yards, singles, dozens, etc.), and the number of decimal places?

Seasonality & Effectivity Dates

This is often an area of confusion and can cause some real headaches as some applications may not work with seasons and only with effectivity dates and those effectivity dates may need to be different for different areas of the process.

Integration Method and Timings

It has to be clear how and when a color, component, or product gets pushed from PLM into ERP – is it manual or automatic? Does it get pushed at creation or when many fields are completed? Or is it a “click” that is established as part of the lifecycle approval process? Also, any mandatory fields in ERP must be considered and steps taken to ensure these are complete before the push occurs. This is important as, otherwise, products that have not been fully established could become part of the ERP process and could potentially end up being ordered or appearing on the web if handled incorrectly. Once an item has been pushed and amendment happens in PLM it is important to establish how, when and what gets uploaded to ERP – once again is it manual or automatic, and how does the process work?

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PLM to ERP Integration Conclusion: is it worth it?

Sure, PLM and ERP can work well together – but it takes time, analysis, and careful consideration to ensure it really is an end-to-end process that everyone trusts.

To fully integrate and get maximum benefit a company must have a comprehensive, well-planned strategy that considers: system solutions, data, people, processes, and organization technology.

Both system integration and data consolidation share a common goal: they aim to bring clarity and cohesion to a confusing situation; they aim to eliminate multiple data entry and obtain ‘one version of the facts’ available to all, ensuring that everything in a business resides in one place and remains correct for the foreseeable future.

There is no doubt that an implementation project can be disruptive and complicated and this can bring its own challenges, but when ERP and PLM solutions are well integrated and successfully implemented they can deliver maximum value. They can ensure that companies can develop the best products possible at the correct costs and deliver them to their customers efficiently and on time.

Any investment into a PLM and/or ERP solution is normally required to improve overall efficiency, reduce costs, and therefore improve profits.

However, every company is faced with the daunting prospect of needing constant product innovation. With that, organizations must also be able to maximize profits from existing products and introduce products in a way that you aren’t left with a pile of obsolete inventory. When organizations take a step back at which areas have the biggest impact on profitability then you will see that PLM is the essential and first solution you need.

After all, without innovation, new products, for how long can you survive in defense mode?