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PLM and ERP should be collaborators, not competitors

11 October 2012

Success in business is usually about collaboration – between customers and suppliers, between companies offering different areas of expertise, between teams. The aim is to make two plus two equal rather more than four. Inside individual companies too, success is normally about people and systems working together to common purpose to produce more than the sum of the parts.

Bill Neuman
Bill Neuman

But in one area that is not always how it has looked. Important business systems that inform decision-making across the enterprise, through the manufacturing process and on out into the in-service life of the product, have all-too-often appeared to be competing for primacy, rather than collaborating.

Specifically, enterprise resource planning (ERP), the backbone management information system that handles the operational aspects of a business, and product lifecycle management (PLM), which manages the product attributes, are often portrayed as vying for a central starring role within manufacturing companies. 

It’s a portrayal that perhaps owes more to long-standing rivalries between engineering and managerial functions inside companies than to any reality, either now or in the past. But it’s not just a wrong view: it’s a potentially damaging one too, says Bill Neuman, vice president of software development at PTC. It can leave gaps between the two systems and it often duplicates data. “We really need to think of PLM and ERP as complementary,” he told his audience at a recent conference.

PLM collects all the information about products from innovation through to their eventual recycling or disposal; it is concerned with defining and creating the products. ERP is about the operational side of products once they have been defined, so it handles business transactions, manufacturing schedules and items such as human resources records.

As defined traditionally, these are distinct and non-competing areas of influence, and PLM and ERP are themselves systems that integrate several individual elements, with their reach getting broader all the time, because of developments by the vendors that integrate further functions and new types of information into the systems. In the future it is likely that test results and requirements management will be integrated within PLM, creating a deeper pool of information about assets and applications within the single system.

But it’s clear, Neuman said, that the process of integration in PLM needs to go further to link up to outside systems. “We see all the time that the companies that are doing best in their marketplaces are the ones who are connecting these things together,” he said – specifically linking and integrating PLM and ERP.

Neuman’s view was endorsed at the conference by industry watcher Peter Thorne from technology analysis group Cambashi. One of the big features of 21st century business is the rise and rise of networks: “It’s how we all work these days,” Thorne said. “Increasingly, the industry network is the business unit.”

Networking has been enabled by computing and communications technologies, and in manufacturing that helps closer working between manufacturers, the companies that supply subsystems and components to them and the end-customers. A factor in this also is a big change in many sectors in the definition of a ‘product’: customers now often expect a ‘solution’ that will cover the product’s performance in service. Aero-engines, for example, are now usually sold on the basis of ‘availability for flight’, and manufacturers have had to set up worldwide bases to deliver maintenance services on the products they supply.

Thorne believes these new factors put strains on the traditional ways of doing business in which PLM and ERP systems had separate kinds of information. The key question is what information flows are likely to change. His view is that there is a shift under way from the traditional ‘systems of record’ – ERP is a prime example of this – in which processes are done the same way every time, to a much more flexible ad-hoc system architecture more akin to social media.

There has traditionally been a difference in timing between the information sets contained within ERP and PLM systems. The ‘lifecycle’ of a customer order from receipt to fulfilment is very different from the lifecycle of a product from innovation to first delivery; the people involved have usually been very different too.

Customers are getting more into product design, and customisation of products and small batch sizes are the norm, so suppliers are included in both PLM and ERP systems. Product and order lifecycles, seen previously as separate and different, are increasingly intertwined and interdependent.

The model that Thorne foresees is for a blurring of many of the distinctions between PLM and ERP in terms of the information held and who accesses it, so individuals in a network choose much more freely what data they receive. Cloud-based systems have a role to play in this trend.

A systems rationalisation
UK based defence contractor, General Dynamics has taken steps to unite the information available to all sides of its business, from engineering to office functions, explains applications manager Andrew Winch.

“We had three ERP systems and three PDM (product data management) systems, and if we’re honest the organisation was much the same with a lot of silos and sites with their own ways of working. CAD files generated in ProEngineer were routinely converted through an IntraLink data management system to a PDF format for storage in an entirely disconnected library system that was derived from an alternative supplier’s system.”

The group decided it would use the PDM elements offered by the Oracle ERP system to demonstrate the benefits that could be derived from a single system and form the basis for a bill of materials approach to data. At the same time, it upgraded the CAD system by converting the IntraLink system to PTC Windchill. 

“The catalyst for the change was a major defence programme win; we saw that we needed to have better, more integrated systems. In the event, General Dynamics got the integrated systems based on Windchill and Oracle, but not the contract, which went to one of its rivals. It had, however, proved to its own satisfaction that this kind of integration was necessary in order to win major contracts in the future.

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