Home Articles ERP and PLM; do they work together and do we really need both?
ERP and PLM; do they work together and do we really need both?

ERP and PLM; do they work together and do we really need both?

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In a exclusive article running on both WhichERP and WhichPLM, Morag Ashworth shares her thoughts on ERP and PLM, and how these systems can be successfully implemented. A prominent industry figure, Morag has more than 20 years’ experience – the majority of those specialising in product development and supply, and serves on WhichERP’s Expert Board.

What is ERP?

Before we can address the title question, we need to establish an understanding of what each system is. Enterprise resource planning (ERP) is an enterprise-wide solution used to automate and integrate core business processes. It is focused on the physical, transaction-oriented business processes and deliverable assets and has been optimised to manage the transactional flow of large volumes of historical transactional data.

Common attributes of ERP include:

  • Production planning, scheduling and tracking
  • Contracts & sales and order management
  • Inventory management & control
  • Shipping & logistics
  • Materials, product cost and prices management
  • Purchase Order Management, accounting and financial reporting

What is PLM?

Product lifecycle management (PLM) is an enterprise-wide methodology that manages and controls all product data from cradle, through design and development, production, and back to the cradle.

Common attributes of PLM include:

  • Trend, planning
  • Creation, design, iteration and revision management
  • Support of transparency & visibility across the entire product lifecycle
  • BOM & BOL management
  • Raw material & trim libraries
  • Product and process iterations, revisions, and decision history
  • Visual, 2 & 3D models, virtual simulation and animation

So, how do ERP and PLM ‘fit together’?

ERP systems and PLM systems supporting different distinct phases of business needs (pre-order and post-order) and, when implemented and fully integrated correctly, give an organisation complete control over its core competencies. PLM is used to create and manage the design & development of a product and ERP is used to manage the bulk material purchasing and resource planning for sales and production.

By integrating ERP with PLM, the most up-to-date product data is available at all times and can be shared with the necessary departments to ensure accurate operational and financial planning. Common processes that are often interfaced include: BOM (Bill of materials), BOL (Bill of labour), and Material & Component libraries to help maintain accuracy of pre-production costing estimates and, more recently, we now see the use of shared images and supporting data for use with other departments (i.e. marketing that can also benefit from a joint PLM & ERP platform).

And why does a business embark on a PLM/ERP integration project?

To understand the proper roles and respective strengths of ERP and PLM, it’s helpful to look at the critical challenges companies are trying to solve by using these solutions.

These challenges include the need to:

  • Increase productivity
  • Develop higher quality products at lower cost
  • Increase the number and variety of products, without driving up costs and negatively affecting delivery schedules
  • Deliver products that meet customers’ demands
  • Coordinate the work of global, diverse, cross-functional development teams
  • Enable and accelerate innovation
  • Comply with corporate standards and procedures
  • Implement company initiatives across the enterprise
  • Ensure regulatory compliance
  • Support sustainability initiatives

Which implementation should go first?

I’m often asked the question of which of these large implementation projects should come first, since more and more companies are recognising the benefits of having a seamless end-to-end process and integrating the two.

Logic would suggest that the first target should be where the product is born, where the product is designed and created: PLM. But the reality is that businesses run on financials, and so companies often implement ERP first as they believe this is where the greatest benefits will be realised. In reality, the correct answer is neither ERP nor PLM; they should be designed together to ensure that the implementation teams consider and build the right integrations from the start.

Integration is more than just the data transfer between two applications, as the real challenge is the interpretation of the data. Often, when an issue arises it is not because the data hasn’t been transferred but rather that it hasn’t been translated and understood correctly.

In order to successfully integrate systems, it is necessary to know more about the data, where and how the data is stored and what that data really means. This often requires a ‘Master Data’ project to precede the implementation of either system.

Master Data; what is it and why is it important?

Master Data can sometimes be referred to as Big Data (although Big Data is in fact linked to volumes of data), Reference Data or Common Data and is one of the most vital components of any enterprise and of any PLM/ERP Integration project.

Without a dedicated Master Data project, all of a business’ information is at risk of being outdated or duplicated and it can even put the entire implementation process in jeopardy. Managing the data used by any business has always been a major challenge for any organisation wanting to share or integrate data across solutions, between divisions, brands and departments which can be complicated further by geographical and time differences.

Much of the information a business holds falls within the scope of Master Data.   A few examples of Master Data would be things such as product names and codes, season names and codes, colour names and codes, country codes, foreign exchange rates, unit of measures, supplier details, employee details, images and their meta data tags.

The first task is to assess who is using the data and where they keep it, and this is when it can get complicated as everyone uses it and keeps it in all sorts of different places and solutions. Basically, every department within an organisation and their external partners up and down the extended supply chain will use the data. They will all have different versions of the same data in disparate systems – many of which will be traditional paper-based methods or electronic proxies for those methods – and because of the disconnected way it’s been archived and used it is considered to be “poor quality”. Below is an example of what I mean by poor quality:

Black

Here, “Black” is written in three different ways;

The abbreviated “Blk” is also written in three different ways;

And finally, “Jet Black” is, too, written in three different ways.

This creates nine different ways of expressing the colour black (and there are myriad more) and creates a good example of what can happen when a single entity is duplicated.

I am going to outline a hypothetical example to highlight the point.

PLM ERP table
Master Data is, in its purest form, the establishment of one centralised, consolidated set of data, one set of the facts, which all of the solutions used by an enterprise can draw from. This is absolutely critical to any successful enterprise project and should be considered before any implementation of either ERP or PLM has commenced and will ensure the smooth integration between the two systems. This example is not about the the maths, but is to highlight the scale of the uncleansed data issue when there is no policy or control, and the reality is actually worse; when you begin bringing in colour, there are around 2000 Pantones and literally 100s of fabrics and trims. Just think how that explodes the algorithm. We are talking about a trillion bytes of data.

PLM and ERP Integration – what can go wrong?

I’m now going to go through a few examples of the potential issues when the two systems are not considered as one end-to-end project from the get go:

  • 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. For instance, PLM may allow you to have 8 attributes but ERP may only allow 6. Decisions then need to be made to see if you can reduce the 8 to 6 and still be able to get the information you need easily and quickly. 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 fraught with 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 capitals, lower case, proper 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 colour, size, dimension, volume, season and it is important that this is translated correctly. They can be called different things, because they are different things! Examples would be landed costs, FOB costs, CIF costs etc.

  • Decimals, Rounding

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

  • BOMs & Usages 

Firstly, it is important to ensure that the (BOM) Bill of Material in the PLM system is compatible with the BOM in the ERP system. Do they both support the same units of measure (metres, 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. Also, we have to be clear about the start and finish of the effectivity date, e.g. a product has an ending date of December 15 but in reality is it effective until 11:59:59 PM in the evening or did it become ineffective at 12:00:00 AM in the morning?

  • Integration Method and Timings

It has to be clear how and when a colour, component, or product gets pushed from PLM into ERP – is it manual or automatic? Does it get pushed at creation or when a number of 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 really important as, otherwise, products which 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?

PLM to ERP Integration Conclusion: is it worth it?

Sure, PLM and ERP can work harmoniously together – but it takes time, analysis and careful consideration to ensure it really is an end-to-end process that everybody 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 organisation technology.

Both system integration and data consolidation share a common goal: they aim to bring clarity and cohesion to a confused 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 – and profitability is, as I’m sure you know, the magic word where any CEO is concerned.

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