PLM Technology can be a difficult domain to define. In recent years, software vendors have further blurred the lines between PLM and other technologies as they look for growth across enterprise IT domains. The boundary between the ERP and PLM domains is the newest front line in the battle.
ERP vendors especially have made their product categories more ambiguous, crossing over into multiple IT areas. They feel that it's a logical extension for systems that already manage part inventory and production scheduling to reach back into engineering and integrate the product development processes as well. Are they right?
Know Your Domains
Is it a good idea for you to follow one vendor's approach and put all your eggs in one basket? To help you answer question, we'll attempt to stake out some of the "gray areas" between ERP and PLM and explore what each technology is designed to do.
PLM technology is engineering-centric. It is primarily concerned with enabling the creation, innovation, and collaboration around new products and line extensions. PLM software helps define physical items but it doesn't manage them; there are no serial numbers or air-quality conditions to track. PLM associates things. It manages information about the myriad of product designs.
ERP technology is manufacturing-centric. It is focused on controlling the parts in inventory, capacity planning, and production schedules needed to efficiently produce a product. ERP software does not care about pre-release documents, concept iterations, or design simulation. ERP counts things. It manages information about each physical product produced.
According to the Aberdeen Group, nearly 80% of product costs are decided in product development leaving transaction-based applications like ERP with direct influence over only 20% of the total costs.
Daratech defines differences between ERP and PLM a little more strongly. They believe that ERP is about controlling money, while PLM is about making money. In other words, PLM has a greater potential impact on your business because of its value creation focus.
Choose a Philosophy
Are the specific philosophies of the ERP and PLM domains becoming a little clearer? These two worlds connect and interact a great deal (often around BOM, product configuration, and change management) and they each have an important role to play. It's doubtful that one domain will ever fully encompass the other, although industry consolidation is bringing them closer together all the time.
Even so, most companies choose specialized PLM and ERP vendors to supply their technology. If you decide to follow that route, you'll need to decide how to integrate these two powerful application sets.
There are four key questions to answer. For each type of data you manage, consider:
- Which database/system will contain the master (original) version?
- How often will updates be shared between databases?
- How much automation should you build into the update protocols?
- Which way should the updates flow?
The way you choose to integrate your systems and processes may generate a competitive advantage for your organization. Be sure to consider the investments and expected benefits carefully. Before implementing your ERP and PLM integration strategy across the enterprise, consult with a professional to help you assess the right configuration for your business.
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