Unlocking the Value in PLM-ERP Integration

By September 15, 2015ERP, IT Strategy, PLM

PLM-ERP Alignment is Critical

In the seemingly endless conversation about product development software, there are those that argue that PLM and ERP serve different roles in product development and product lifecycle management. Those on that side of the fence use arguments such as “PLM helps drive product innovation, ERP helps execute the business of manufacturing”, and prop their arguments by making debatable observations such as that ERP is a static system of record and PLM manages product changes; that product data structures in ERP are rigid whereas PLM’s are flexible; or that ERP can only handle hierarchical data relationships as opposed to the dynamic many-to-many relations data model of PLM. Some years ago there was even an attempt to restore the lackluster image of ERP by coining a new term:  “Operational ERP.”

In practice, it’s not one or the other. Manufacturing organizations must have access to and use information synthesized from both PLM and ERP systems throughout the product lifecycle, starting in early product design phases through manufacturing, support and end-of-life activities.

For instance, manufacturing companies manage design changes using an ECO administration tool that is typically part of the formal PLM software suite. Design changes that are recorded in the PLM software typically require further changes to work instructions, communication with suppliers, changes in inventory, and similar activities that involve data that is typically stored in the ERP system. To have a true and complete view of an ECO across design, supply chain and manufacturing, the information in the two repositories need to be in sync, with the ERP-stored data corresponding to the most recent product design changes.

Where Does PLM End and ERP Begin?

Despite the (incorrect) belief that PLM and ERP service vastly different roles (and therefore it’s adequate to utilize separate data repositories), most product development workflows don’t adhere to this view and do not stop and restart at the boundaries of the IT systems.

Specifically, the notion that PLM’s role ends with the conversation of a product eBOM to an mBOM is flawed. There are features and attributes that will be required downstream in manufacturing, service planning and quality management that are not encapsulated in the BOM.

Hamstrung by the artificial data and workflow boundaries between institutional enterprise tools such as PLM and ERP, manufacturing companies are forced to utilize a myriad of informal and bespoke task-specific and collaboration tools to provide a comprehensive view of all product lifecycle information.

PLM as the Single Source of Product Information

PLM software has long been hailed as the maintainer of the single version of all product information “truth” and the hub of all product design activities throughout the product lifecycle.

However, the notion of PLM as the keeper of a single version of product truth isn’t as straightforward and as complete as it may sound. As we saw earlier, the single “truth” represented by the PLM system alone isn’t complete, as many key attributes of product information reside and are maintained by separate data repositories and enterprise software.

Maintaining an accurate and up-to-date view of product information across various tools to represent that elusive “single version of the truth” necessitate exchanging and synchronizing information between these systems so that decision makers that use of any of these systems to make critical decisions are ensured that the data is complete, accurate and up to date.

Master Lock Unlocks the Value in PLM-ERP Integration

Master Lock  is a manufacturer of a broad range of security products. The company uses Oracle Agile PLM and Oracle E-Business Suite (EBS) throughout its global operations.

The product development process at Master Lock and, in particular, the ECO process, is an integrated process that manage the design-to-release and release-to-execution flows and requires a unified and simultaneous view of PLM and ERP data.

Master Lock uses iLink, an integration tool that facilitates process integration and bi-directional exchange and synchronization of data between Oracle Agile PLM and EBS.  The integrated workflow helps Master Lock manage and optimize the entire ECO lifecycle by retrieving critical information from the ERP system such as on-hand quantity by organization, ECO execution status and effectivity dates. Similarly, the release of a change order triggers an automated update of product design information in the ERP system, ensuring real-time consistency and uniformity of information.

The integration between the PLM and ERP systems affords Mater Lock greater visibility and better decision-making between engineering and manufacturing operations. Master Lock envisages iLink as a platform to optimize process alignment and execution across the product value chain including supplier management and a closed-loop quality process.

Driving Better Decisions

Mature manufacturing organizations like Master Lock see significant business value in unifying different workflow units  and reduce process and data fragmentation.

By unifying processes and synthesizing data that typically resides in disparate data stores, product companies are able to improve process efficiency and accuracy, and achieve higher fidelity decisions that optimize product design consideration and business rationale simultaneously. For instance, the ECO process, which is fundamentally an engineering activity, should consider not only the engineering change itself, but, as importantly, the sunk cost and quantity on hand of defective parts, and assess the economic impact of delaying a design change in order to deplete the bad inventory first.

Another activity that leverages PLM-ERP integration is a closed-loop quality management process based on an ongoing process and data integration between PLM and various ERP modules, including warranty, inventory management, and supplier information.

An even more visionary possibility—but one that is undoubtedly attainable—is design for manufacturing (DFM) assessment. Tightly coupling PLM and ERP processes allows more immediate and higher quality feedback of manufacturing issues and rapid deployment of corrective actions.

Manufacturing companies should evaluate their current product development process and the potential risks and losses caused by process fragmentation and data gaps. The integration of PLM and ERP systems, both data and process flow, helps the manufacturing company attain continuous visibility to the entire product lifecycle process and its different facets. It gives decision makers from different parts of the process: design engineers, supply chain planners, financial analysts and others as close a view of the “single version of the truth” as possible.