How, he asked, do I know where my PLM and ERP system should begin and where should they end? How do they work together? How should I structure my data be stored and accessed?
This question was coming at a moment of extreme digital change for him. His company was in the midst of a 2–year battle to evaluate ERP solutions and upgrade their obsolete system, and their prodigious growth had also forced them into expanding their investment in their product data management system. These parallel digital initiatives were critical to their continued growth – but it was not immediately clear to him on how to reconcile these two seemingly disparate systems.
Understanding the difference is a challenge for many companies, especially given how PLM & ERP systems have changed and developed since their inceptions decades ago. Both systems of record have matured and advanced far beyond their original conceits. Many ERP systems will offer modules which purportedly function like PLM and some PLM systems will allow you to interact with vendors in ways which are reminiscent of ERP. There are overlapping capabilities, but the central roles of ERP and PLM are distinct and optimizing a harmonious PLM-ERP connection delivers real value to the entire enterprise.
PLM is to your Intellectual Property what ERP is to your physical property
Both systems manage data but the distinction can be seen at the moment of financial impact. Once you physically buy parts or service and that transaction belongs on a P&L, then that transaction should be owned by ERP. Everything up to that point, however, is part of the product development process and we believe that PLM has many more impactful tools and processes when it comes to product development.
Think about building a house. Would you start by buying some amount of lumber and pouring concrete around a lot? No. You’d start by planning and drawing out schematics, calculating loads, and simulating the house in CAD before you ever buy anything. That’s the power of PLM – PLM is the planning tool that allows you to design and iterate a product before you ever purchase physical assets to build it with. It saves you time and money by planning smart and being precise.
One need not take precedence over the other, I explained to the CEO. The goal for any intellectual product is to one day become reality, and thus PLM needs to talk with ERP and ERP needs to be in step with PLM. Companies that want to understand true cost to produce and supply chain will need both tools working together. The key is to use the best tool for the job and not pour any concrete before the foundation is planned.