Let’s talk about ERP and PLM, the differences, the benefits and everything you need to know in order to be successful.
Our most popular blog throughout the years has been a defining article of what the differences are between ERP, MRP, and PLM. If you want a high and fast overview of the terms read our previous blog, “ERP/MRP/PLM” – or keep on reading below for a more in-depth look at ERP vs PLM.
Oftentimes organizations wonder: Do you really need both a PLM and an ERP system? Should you, or can you, use just one enterprise system to manage all of your product information? Which system is best? An ERP (enterprise resource planning) system or a PLM (product lifecycle management) system?
We hear these questions all the time.
This article breaks down the similarities as well as the differences between ERP and PLM so you can make the best and most informed decision for your specific situation.
As an organization, it is in your best interest to use technology as a competitive advantage – therefore it’s important to understand the ins and outs of both systems.
With everyone needing to get products to market faster and more efficiently, it’s good to understand that building and sustaining brand equity is just as important as speed to market.
As your company searches for technology that will give you a competitive edge, it’s crucial that you choose the right technology to serve as the foundation for your digital transformation initiatives.
This means choosing technology that will boost your innovation efforts, fulfill your operational and strategic business goals, and help you get closer to your end customers.
While your company continuously faces tough decisions when it comes to technology investments, you may be wondering if it is better to go all-in on an ERP system or invest in a PLM solution.
After all, both ERP and PLM vendors ‘claim’ they can manage both Bill of Materials (BoMs), costs, changes, and other information related to products.
My goal is to help you learn what system or systems are best for your organization.
What is ERP and how does it work?
First, let’s breakdown what ERP is and its benefits.
ERP stands for Enterprise Resource Planning systems, software, and solutions.
One of the biggest driving factors for an enterprise-class ERP system revolves around finance and accounting. ERP systems are important because they ensure your quality products are manufactured in a timely, cost controlled manner once they have been engineered and approved.
This could be why approximately 97 percent of mid-sized companies already use an ERP application.
It’s important to also take into account that ERP solutions are considered to be one of the first software solutions to be categorized as an essential business tool. This could also be why so many organizations are already familiar with ERP.
Although there are many ERP software solutions on the market today, systems you may be familiar with might include Oracle ERP, SAP, Epicor ERP, Microsoft Dynamics AX, and a variety of others.
The fact is, ERP systems are generally built to satisfy the needs of business operations.
This means they are often used for manufacturing (such as manufacturing resource planning), human resources (HR), finance, accounting, purchasing, inventory management, order management, distribution, labor, customer service, and more.
An ERP system can take a product to market and is known for handling operational concerns such as logistics, warehousing, and inventory management.
These systems also provide vast amounts of transactional data which can be used to gauge your financial position and make informed choices about future business decisions.
What is PLM and how does it work?
PLM stands for Product Lifecycle Management software, systems, and solutions.
While ERP systems take transactional units to market, the data and information these systems use should originate in PLM.
PLM is all about the management of the process behind the product, as well as the history and collaboration that goes along with it.
Some PLM systems you may be familiar with include SAP PLM, PTC Windchill, Area PLM, Teamcenter, Siemens PLM, and more.
By adopting PLM software you can reap many rewards.
PLM solutions allow anyone involved in design, development, and manufacturing to work collaboratively with one set of comprehensive, accurate, up-to-date information.
PLM software works by supporting processes that define your brand, engage your customers, and differentiate your company’s products in the marketplace.
The unique value of PLM provides is that the software delivers a “single source of truth” about your product to anyone and everyone who has anything to do with product development.
The difference between ERP and PLM
A simple way to think about the differences between ERP and PLM is to focus on what each system was intended for, especially because both of these systems originate from very different foundations.
Product lifecycle management systems focus on planning.
Enterprise resource management systems focus on execution.
To take a deeper dive, the focus for each system influences the key and unique features that the system provides.
PLM is a collaborative planning tool for your products.
The typical users of a PLM system tend to be product designers and engineers who need to work together to figure out what a product looks like and what it should be made of.
Since PLM is about planning everything about your product, it provides capabilities around managing designs, related services, collaboration with red-lining, task management and more.
Most PLM systems even have a PDM (product documents management) system inside of them. This how they often control the history of the intellectual documentation needed to design and manufacture a product.
These systems control and manage everything from CAD (computer aided drafting) files to program, project and change management processes. A PLM system combines all this functionality and integrates it into an overall product lifecycle management process.
This is why PLM solutions have a higher impact on revenue and brand image.
ERP on the other hand is a system focused on making and executing a product. The primary user of an ERP system tends to be people who deal with manufacturing operations.
Since ERP is about execution and fulfillment, it focuses on capturing information around things such as inventory, purchases and more.
While ERP systems focus only on traditional entities such as item masters, bill of materials and dates, PLM solutions encompass all of the iterative, collaborative, and creative processes that make up the vital elements of your product’s lifecycle.
In short, both solutions are vital for a company to develop and make products as efficiently as possible.
How PLM and ERP work together
Despite sometimes being viewed as competing solutions, ERP and PLM systems work very well together.
In fact, these enterprise systems complement each other, and it is in your benefit to have both! We can help you work through a Return on Investment (ROI) analysis if you’d like. Just contact us.
So how do enterprise resource planning and product lifecycle management systems work together?
PLM software provides the single point of product truth used by ERP to manage product resources and financials.
For example, by using eBoMs (engineering bill of materials) data from your product lifecycle management system, ERP can accurately generate purchasing and inventory management records, creating a unified management of both your resources and production.
Essentially, ERP systems pick up from PLM solutions and take finalized products forward.
This means that design, development, sampling, fitting, approval, assortment planning and all other activities essential to creating great products have already been signed off by the time your products reach the ERP system.
PLM systems help define, design, and plan your product. PLM integrated to ERP allows the systems to feed relevant BoMs and file components, so your manufacturing teams can efficiently order, make, and ship your products.
In fact, combining these two software solutions has only improved end-to end business performance and has already proven to be necessary. This is why so many ERP providers have started to acquire and develop their own PLM platforms!
By using ERP and PLM together, your organization can create a powerful source of data, information, processes and workflows. It can make it easier to create and deliver products from idea generation through design to manufacturing and distribution.
Now that you have a better understanding about how PLM and ERP solutions can positively affect the profitability of your entire company, you are in a better position to understand why it is best to invest and integrate both solutions.
PLM ERP integration benefits
Oftentimes, PLM only gets associated with engineering. In fact, many people don’t even realize that the full product lifecycle management system can integrate with ERP.
Rather than considering whether or not a PLM system could complement an ERP system, you should focus on the benefits your organization will gain by integrating the two.
When used together, your organization will have unified control over your manufacturing process and here’s why.
Today, in order to stay ahead of competition it is essential to deliver the right product, on time, and under budget.
To meet these requirements your organization must shorten design time and product engineering cycles.
By using PLM and ERP systems together, you will increase collaboration throughout your entire organization. ERP and PLM work best together as they collaborate and facilitate movement throughout your organization.
Without PLM, your ERP system is likely to consume and manage inaccurate data from design and engineering. This in turn is likely to deliver minimal (if any) improvements to your business.
Only using an ERP system without a complementary PLM system puts your organization at risk of mismanagement of product changes – which could lead to instances of inaccurate financial planning.
Together, PLM and ERP enhance collaboration between engineers, operations, and suppliers as they provide a single source of product truth. This will help you to seamlessly deliver products from design concept through manufacturing and distribution.
Because these two solutions both focus on products, they help create one single version of your product truth. This helps reduce errors and guarantees that your product documents and product versions are under control.
Seamless PLM to ERP integration will enable your organization to be more agile and reactive in all business activities including traceability, cost, delivery, quality, innovation and more. It helps ease your manufacturing process and creates a more cohesive environment.
By integrating both PLM and ERP, your organization will accelerate innovation, increase productivity, improve quality, and boost your overall performance.
Our Solution: Windchill PLM System
PTC Windchill is our PLM solution that we offer to our customers – so for the 97% of you that already have an ERP system, you should consider complementing it with Windchill. A popular blog called, “What is Windchill?” distinguishes all the ins and outs of this system.
“Windchill and our new ERP system make it very easy to manage customizations and helps us to make sure that we have materials in-stock and on-time to meet those needs. We save about four hours per job with just the front-end BoM load and getting the information into the ERP system – which has been huge for us.” – Myron Pundt, VP of Engineering, ALM Positioners
Our world is rapidly becoming a place where big data reigns supreme. Just like a king!
Product lifecycle management is an all-encompassing technology solution for integrating and managing all types of data inherent in the design, development, production, support, maintenance and final disposal of manufactured goods and product offerings.
The ultimate goal of product lifecycle management is to accelerate the entire cycle of product development and improve business efficiency and profitability. In its most basic sense, PLM software is a collaboration tool that facilitates organizations to manage their product information across a wide spectrum of internal and external business processes and functions.
PLM is an integrated system that facilitates the collection, sharing and management of crucial data – a broad-based approach that governs the development of a product right from the idea conception to the ultimate disposal.
One System for Everything: Product Lifecycle Management
The product lifecycle management is a business process management tool that serves as a repository for every teeny little bit of information that might affect a product offering. It is essentially the first place where all product information comes together from different stages of production – be it supply chain, production, procurement or marketing. By consolidating diverse systems in an organization, PLM helps create a coherent data structure to develop, manufacture and retire products.
One of the most compelling benefits of the product lifecycle management approach is to empower businesses to make smart, timely and information-driven decisions at each stage in the overall product lifecycle. Of course, your product development process is unique to your company and a one-fits-all PLM approach might not work for you.
However, like most businesses, your company also depends on the quality of data that is available to make critical decisions on a day-to-day basis. PLM offers a unified, collective intelligence that helps improve the strategic decision-making process, define processes and workflows, eliminate process bottlenecks and accelerate the overall product development process.
Get the benefits that PLM has promised for years
The cradle-to-grave approach of product lifecycle management offers many benefits for companies seeking more efficient, profitable product development, and management solutions.
In the present scenario, PLM has emerged as a single vital source for managing the different aspects of product management throughout the production, development and retirement processes.
It is no secret that faster product development and shorter lead times to market have become the key to marketplace competitiveness and success. With PLM solutions, the product can be developed and finished faster. As a powerful enabling technology platform, PLM applications help integrate people, processes, business systems, and of course data to streamline the product information spinal column for your company.
The innovative technology of PLM enables your business to reduce production and material costs through prototyping, waste reduction and savings through the full integration of engineering processes and workflows. This naturally leads to enhance production efficiency and increased productivity. The robust data analytics tools, such as visual analytics of a PLM application simplify the overall processes, workflows, communications and information flows throughout the production cycle.
It leverages the full potential of integrated business systems and functions across the company, from supply chain to production and from compliance to financial divisions. Product life cycle management solutions ensure more transparency in policy disclosure and the organizational decision-making process.
Acting as a line of a message between owners, managers, suppliers, employees and customers, PLM aids open communication and conversation amongst the various stakeholders. This helps you identify and understand what works and what does not work for your company.
What to look for when purchasing PLM software
When people purchase PLM systems, they essentially invest in technology which provides a wealth of ease and convenience given that the systems are extremely complicated. This is a core reason users often find it difficult to navigate these systems, let alone make full use of all the features it offers them.
When selecting a particular PLM solution for your business, it is important to ensure that it is easy to use, navigate and apply in the various stages of the production cycle.
Another feature to consider is the ability of the PLM software to integrate with and complement readily with the systems and processes already in place at your organization.
While these elements help in the overall coordination, tracking, control and management of the various workflows involved in the production, the best PLM software should also offer functionally enabling deeper supplier collaboration, flexibility and accessibility, speed of implementation, environmental compliance and support for existing organizational systems.
PLM Applications for any PLM system
So what are we suggesting? Our solution to an easier way for everyone in your organization (not expert PLM users) to use Windchill and find product data is our EAC Productivity Apps. You can learn more about our EAC Apps on our website.
EAC Product Development Solutions introduces the powerful EAC productivity applications that make it easier for you to view, understand and manage product data.
With one single, simple and powerful interface, you can make better, faster and more effective decisions at your company. Our PLM system applications are compatible with product lifecycle management systems, thereby offering an integrated technology platform for multiple enterprise systems including ALM, MRP, ERP, SLM, CRM, Accounting, and PLM (Windchill). The cookie-cutter PLM solutions by most vendors tend to be overly complicated which inhibit your ability to consolidate task workflows and streamline production processes within your organization.
Our PLM apps work as a connectivity tool, to transform the entire PLM experience. They facilitate user experiences by allowing them to perform functions without prior training, making the PLM interface easy to work with. EAC Productivity Applications provide an added advantage of connecting with a PLM system and altering the user interface, making PLM easy to understand. They have the capability to pool data from many enterprise systems and put it on one screen.
Our goal is to give power to the manufacturers.
We have successfully eliminated the common PLM system bottlenecks and complications by coming up with our own PLM solutions that reduce the bare bones you might experience in run-of-the-mill PLM software and applications available in the market. Our PLM applications were developed to offer you a perfect user experience by improving accessibility to critical data.
With our top of the line PLM apps, everyone can use the system with relative ease and businesses can fully tap into the large PLM investment they were initially promised.
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Why is it important to manage your product Bill of Materials (BoM) in a PLM (Product Lifecycle Management)? This is a tough question to answer across the board for every company, but this article breaks down what you need to know.
The level of BoM management in PLM can be dependent on your companies’ products, downstream systems, and product development processes.
With that in mind, here are some general benefits and reasons to manage the creation of your product BoM in PLM.
The benefit of bill of materials management in PLM
The data managed in a product lifecycle management system includes CAD and BoM information, as well as additional supporting product information and documentation.
PLM functionality typically allows an organization to store any and all product information in a structured manner. The structured manner is what properly represents the product within all stages of the product’s development.
This includes everything from initial design requirements, to manufacturing requirements and process plans, to quality assurance documents- all linked to a single product structure.
This gives you the ability to graphically see a truly complete representation of any and all products managed within the PLM system.
In addition, many of the top PLM systems (such as PTC Windchill) give you the ability to manage different views of a single bill of material.
For instance, you could see the design or engineering view of the structure and all design information needed for that BoM product structure.
You would also have the ability to look at a manufacturing view that has the structure defined in a way to support the best possible manufacturing process, while it also links to any supporting information and work instructions.
Additionally, you could see a service BoM that represents exactly what is on-site or on the hands of a customer, with linked product information specifically related to service or support (such as a service repair or product manual).
These systems focus on tracking and managing all cost and profit throughout the process.
Because of this, changes are tightly controlled and require significant steps to ensure proper applications across the system.
There are also few systems that allow for full product representation inside of ERP or MES as outlined above. Nor do they fully support many different views of the same BoM.
ERP tends to only manage what is required to properly manufacture or sell a product, which does not always represent the full product design or its full breadth of supporting information and documentation.
There many impacts on these fundamental differences.
When to use PLM for BoM Management
Here are some general concepts as to when to use PLM for BoM management.
When your product development is in the dynamic phases that require many changes and updates at each phase gate, your bill of materials should be primarily managed in PLM.
If your product requires specific requirements management, detailed manufacturing, quality work instructions, or an intensive manufacturing process, it’s in your best interest to use product lifecycle management for your BoM.
At the very least, all of your product information should also be managed, or linked to your product lifecycle management system to ensure full accountability to all information updates required in the instance of change.
Integrating ERP and PLM
At a minimum, if you have an ERP system it’s important to integrate your system together with PLM.
It’s essential to establish key integration points between your enterprise systems that send needed information back and forth to your enterprise resource planning solution. This will help you properly execute new product releases and changes.
By integrating your systems, your ERP processes will ensure all proper tasks and functions are executed in your ERP or MES systems.
From there, your ERP to PLM system integration would send information back to your PLM system to close the loop.
Looking for an easy way to quickly assess your bill of materials and ensure projects stay on-time and on-track?
Let’s talk about why bill of materials are so important, how BoMs impact business, and the best BoM management practices. Or check out another helpful article on BoM management, “How BoM Management plays a role in your PLM processes“.
The importance of bill of materials
In fact, departments often rely on BOM records to get the job done right. Whether you realize it or not, your BoMs drive and affect your businesses’ operational success. This is why it is so important that your organization creates and manages well-organized, correct and up-to-date bill of materials.
BoM information accuracy and why it matters
BoMs require complete and accurate information, in order to successfully benefit design, manufacturing, sales and service building quality products.
The accuracy of BOMs influences an organization’s ability to make well-rounded product development decisions. These decisions fundamentally impact the efforts organizations peruse to generate a product in the most efficient, cost-effective way.
Oftentimes creating BOMs requires input from design, procurement, manufacturing, and sales. Using manual methods to collect and enter items on various BoMs increases the risk of producing inaccurate, out-of-date, or even possibly duplicate BoM versions.
Furthermore, if departments produce products based on incorrect or inaccurate bills of materials, delays to market can occur. This can not only be very costly for an organization, but it oftentimes impacts an entire supply chain.
Inaccurate bills of materials are one of the costliest errors engineering companies can make. In order to avoid the risks of inaccurate BoMs, many organizations have started to reevaluate the way they create, manage, and share product information.
BoM management processes
Bills of materials (such as eBoMs, sBOMs, mBoMs) are most-likely part of your product development process. That being said, what are your current processes for managing those BoMs?
How do you share, collaborate, and ensure the accuracy of your organizations’ bills of materials? Do you find it difficult to manage the differences between them and keep the data consistent across eBOM (engineering bill of materials) and mBoMs (manufacturing bill of materials)?
Odds are if you have yet to implement technology solutions to manage your bills of materials, your methods for BoM management most likely involve spreadsheets, emails, rekeying information, and multiple other systems of communication.
If this is the case, don’t worry – you’re not alone. Studies show nearly 50% of product development companies still use spreadsheets (or sometimes even nothing at all) to manage complex bill of materials!
Despite the big workload that BoM management represents, many organizations are still comparing bills of materials in excel spreadsheets or by opening separate BoMs and manually connecting the dots. This management approach is not only tiring, but it also increases risks of human error and mistakes, especially if the bills of materials are very long.
In fact, is not unusual to find one giant excel spreadsheet on top of information managed by PLM (product lifecycle management), ERP (enterprise resource planning), CRM (customer relationship management) and other databases. Why is that? The information required to assemble bill of material documents tends to reside within separate, disconnected enterprise systems.
It’s time to change that.
Connecting business systems and information
In a world of complex, role and department-specific enterprise systems, productivity can seem quite limited. But the truth is, with the help of technology, businesses no longer need to operate this way. Collaborative solutions exist, and they really are as simple to implement as they, well… should be.
System integration tools (such as applications) change the way organizations create, manage, and share product information- without even having to upgrade or change current enterprise systems.
Using system API connections, applications can pull data from disconnected enterprise systems and consolidate it into centralized dashboard display windows. In fact, many integration applications are even ready to go straight out-of-the-box (yes, this means they require absolutely no special configurations or complicated implementation at all).
For instance, productivity apps offer simple, role-based access to data and other enterprise systems making it easier for stakeholders to view and understand consolidated product information and data. What makes simple applications that integrate enterprise data even better is the fact that most of these system collaboration tools are even affordable.
With a single view to into multiple enterprise systems (such as ALM, MRP, ERP, SLM, CRM, Accounting, and PLM) you can be sure that users have access to the latest and most accurate product information when they need it, and how they need it. There’s really no catch. Productivity apps really are solutions that are; easy, affordable, and that solve the complexity of dealing with multiple disconnected enterprise systems.
Effective BoM management & bill of materials software
Parallel to system integration apps that can pull and consolidate enterprise data, BoM applications can also automatically consolidate real-time data across enterprise systems.
This means organizations can enable real-time BoM collaboration – and that is a game changer.
Real-time BoM collaboration empowers users with capabilities to collaborate and work together creating a bill, sharing BoMs and associated data, and even preview CAD drawings and images. It also opens up the ability to simultaneously edit manufacturing bill of materials, while completely avoiding duplicate and inaccurate documents. This enables users to get a virtual ‘live view’ of data.
Users are able to maintain and manage all associated product documentation such as part datasheets, materials required, CAD drawings and files, as well as anything else that is needed to manufacture a product all in one centralized location. This reassures one sole accurate and revision-controlled bill of material for a product.
This is exactly why it is so important to establish systems and methods that enable all departments within your product development process to be able to share, collaborate, and ensure the accuracy of your bills of materials.
A simple bill of materials software
Our experts at EAC Product Development Solutions recognized the need for better BoM management within many organizations- That’s why we created our bill of materials software application, BoM Reports.
Our BoM Reports PLM application is essentially an out-of-the-box PLM system plugin. It’s easy to use, simple to integrate, and an extremely affordable for any organization.
We designed our Bill of Materials Reports application with the intention of making manufacturing bill of materials and engineering bill of materials management ‘easy’ for organizations of all sizes. Meaning- our bill of materials software can even work for small businesses!
Our BoM Reports app delivers access to your accurate bill of materials database while it provides visual representations, cost rollup for materials, and detailed informational listings of items within bill of materials.
We guarantee our BoM Reports application will enhance your bill of materials management. In fact, it has changed the way many of our customers do business.
Our EAC Productivity app enables purchasers to see product cost roll-ups during design, so they can hit cost targets. It allows project managers to see the highest level status and availability of constituent parts so they can keep projects on time and budget. It helps fabricators see what version of parts go into the build so they can prevent scrap and rework- and SO much more!
We’re excited about how our organization is enhancing product development and we would love to share more information with you about how our EAC productivity apps really work.
If you would like more information about apps that could work for your business insert your information below. We promise not to fill up your inbox with overloads of information, we simply want to share tips, tricks, and tools that will help your organization succeed.
Part II – (You can read part 1 here) Evolving your BoM strategy, tools, and abilities. “EBoM vs. MBoM” transforms into “EBoM integrates with MBoM.” This integration includes associativity to one another, time saving tools, elimination of error prone manual steps & more.
Imagine eliminating the common disjointed processes, additional time, and error prone manual steps involved in the creation of downstream BoMs from Engineering into Manufacturing, Production and Service management.
Concepts & examples such as Manufacturing Bill of Materials (MBoM) are shown below, all under one system, integrated & associated, and created with a single click. Then they’re easily edited to meet downstream BoM needs.
BoM creation can be streamlined & improved by associatively creating downstream BoMs (S or M or other) and eventually, connecting them to your ERP system. For now, we’ll focus on the first step of this business transformation concept; the creation of the second, or downstream M or SBoM, starting with a simple EBoM example, created in minutes, and easily viewed & tracked.
Who should be involved in this topic at your company? Ideally, your Configuration Manager role should be leading or heavily involved in this process.
The starting point & tool is PTCs Windchill and your willingness to change & improve.
Once your CAD data is ready to check into Windchill, there is an option (check box) to auto-associate the EBoM to a downstream BoM such as an MBoM. It is a 1:1 relationship for starters. Options can branch out from here into many CM (Configuration Management) directions. Such as multi-level BoM management, uses, visualization and more.
Once created, you can manipulate & edit the default 1:1 downstream BoM to your needs; adding bulk items, manufacturing specific sub assemblies, (build throughs) even new service end items. You can also flatten out an EBoM to meet assembly or production needs. BoM items such as adhesive, lubricant, paint or coatings, packaging items, all things that typically are not on an EBoM, can and do belong on the M or SBoM.
If this fits your company’s needs? consider using Windchill’s auto-associate feature.
This article covers a couple examples. If this is not deep enough…here are even more tools to consider. Topics such as creating associated manufacturing instructions, work instructions, work plans and more. Change Management is shown as reference only, it is an optional element of Windchill for another blog.
There are many options to this topic, these are common examples that fit a lot of needs and is considered a starting point.
1stexample shows all BoM & change components all connected in one system vs. manually done in silo fashion, which is industry’s most common method today. These examples are shown in PTCs Windchill reference viewer tool, which ties all related objects into view for easy visibility with just a few clicks.
- 1. EBoM structure (highlighted in green)
- 2. Change requests, notices and tasks (highlighted in red)
- 3. MBoM structure (highlighted in blue) with their own, or connected Change Management Requests, Notices & Tasks
2ndexample shows an EBoM, SBoM (Service Kit in this example), with a saleable end item service kit, as well as components for service or manufacturing BoMs. It also shows Changes, these can also be created, edited, routed, approved or rejected, and even include the SBoM if need be.
Please connect with EAC to learn more, to discover your company’s transformation opportunities with an assessment, maybe see a demo, or attend a webinar. The goal is to help your company transform how you design, manufacture, connect to and service your products.