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 PLM and ERP 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. ERP vendors 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.
Is it a good idea for you to follow one vendor's approach and put all your eggs in one basket? To answer that for you, we'll attempt to stake out some of the PLM-ERP gray areas 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 says it 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.
Are the specific philosophies of each domain becoming a little clearer? These two worlds do connect and interact around BOM, product configuration, and change management (among others) 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, in which database will the master be kept?
- How often will updates be shared between databases?
- How much automation should we build into the update protocols?
- Which way should the updates flow?
The way you integrate your systems and processes may generate a competitive advantage for your organization (we'll expand on this in a future article). Be sure to consider the investments and expected benefits carefully- consult professionals when in doubt.
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