Blurred boundaries: It’s important to make PLM an enterprise initiative
The scope of PLM and ERP solutions can—and should—overlap considerably depending upon the company’s unique characteristics and priorities.
Industrial companies have been making significant investments in IT-based enterprise initiatives. ERP, CRM, and supply chain management (SCM) have primarily been transaction-oriented solutions addressing physical aspects of the product and business (orders, inventory, production runs, cost, etc.) while product life-cycle management (PLM) has applied more to managing intellectual assets related to product definition data and processes—primarily engineering design and analysis.
Over time, the boundaries between these domains have blurred as new functionalities have been incorporated into solutions for each area. For example, PLM has added customer-facing functions such as requirements gathering that might have been considered a part of CRM. Additionally, companies in the logistics supply chain have become development partners as well, participating in the overall product design chain using PLM technology that enables distributed engineering collaboration across the extended enterprise.
CIMdata believes a fundamental evolution in the definitions and relationships of these four enterprise domains is under way, and that two primary process-based initiatives eventually will emerge that drive the evolution of IT-based initiatives to support industrial organizations—with PLM focused on the virtual product life cycle and ERP focused on the physical product life cycle.
PLM typically includes product and project portfolio management, part/data management, product structure management, life-cycle process management, strategic sourcing management, digital production and automation, services management, authoring tools, and other related areas.
Business processes and application areas comprising ERP strategies include production planning and scheduling, sales forecasting, manufacturing change management, CRM, procurement, logistics and distribution, and capacity planning.
The PLM-ERP connection
The scope of PLM and ERP solutions can—and should—overlap considerably depending upon the company’s unique characteristics and priorities. These areas typically include part management, product structure management, and strategic sourcing. For example, some aspects of bills of material are considered part of PLM initiatives, while other aspects are considered to be a part of ERP.
Please recognize that this perspective does not imply that PLM and ERP “products” will provide all of the support that a company needs, but rather, that a company’s enterprise IT strategy is effectively supported with coherent and enterprise-focused PLM and ERP strategies and plans, each of which guide and are supported by whatever suites of tools are needed.
A third critical area has recently generated substantial attention regarding its integration with both the virtual and physical product life cycles of PLM and ERP—the execution domain encompassing shop-floor initiatives such as factory automation, production and quality tracking and reporting, machine loading and scheduling, and maintenance scheduling and reporting. Both PLM and ERP strategies are consistently (and appropriately) expanding to overlap and integrate with more and more of this execution domain in an attempt to provide broader and more effective support for the enterprise’s overall product life-cycle strategy.
Integration of this functionality with PLM is essential for a unified, enterprisewide IT strategy. Major PLM suppliers, particularly those with major digital manufacturing programs, are aggressively pursuing these integrations.
Such overlaps between the PLM, ERP, and execution domains offer enormous opportunities for efficiency and productivity gains by integrating a company’s overall operations. The nature of this commonality differs from company to company, however, and a “one-solution-fits-all” approach does not effectively address their individual needs. Moreover, none of the areas are totally supported by a single technology, but by suites of technologies implemented as components of a unified enterprise strategy.
Integration of enterprise IT strategies has particular significance with regard to implementation of PLM, since this approach positively impacts a company’s top-line revenue growth as well as bottom-line savings. With the continuing global economic turmoil, a growing number of companies are even more heavily focused on PLM’s role in cost control and productivity gains.
Regardless of their shift in focus, however, these forward-thinking organizations recognize they need to continue investing in PLM as a key component to surviving current slowdowns and significantly improving their long-term competitive position, brand value, and core strengths as market conditions improve in the coming years.