PLM & ERP: Why and How to Integrate These Business-Critical Systems

Designing the best product is not enough today. Companies operate in a highly complex environment, meeting more challenges than ever to stay competitive. With this complexity comes requirements to control and own your enterprise master data. Two major enterprise systems to support this and help companies succeed in digital transformation is product lifecycle management (PLM) and enterprise resource planning (ERP).

Both are fundamental. By integrating them, they add value beyond what either system can deliver as stand-alone applications.

What is PLM?

PLM and ERP originate from different disciplines with different goals. This has resulted in that both systems have co-existed side-by-side as separate entities and has been developing differently to support their respective functions in the best possible way.

PLM systems enable companies to centralize and structure product information. It manages the product’s lifecycle from conception, product design and prototyping to final production, service and taking care of the product during and after its use. PLM addresses product quality, reduces costs, accelerates time to market, and where collaboration and innovation in product engineering are essential—especially for complex designs—PLM becomes not just useful, but absolutely mission-critical.

What is ERP?

ERP systems have a broader scope, covering a wide variety of business functions and processes. They integrate supply chain management, finance, accounting, human resources, customer relationship management (CRM), and more into one unified platform. The goal of ERP is to streamline and automate processes, centralize data, and enhance decision-making while improving resource management across the entire organization.

When faced with challenges, it can be tempting to use one system for tasks better suited to the other. Companies might view ERP as the sole repository for all data, but each system should apply to the tasks and functions it is specifically designed to handle. ERP relies on information about the products, as bill of materials, which is supplied by the PLM. Discussing ERP and PLM is not a question of either or. It is rather about where and when to store and manage data to best support the business operations.

Strengths of the ERP system

ERP has grown from handling financial assets and flows to include the physical assets and the flow of materials. It links all key operational functions and departments. ERP collects all data necessary for planning and accounting of the production. Some attributes of strength in ERP are:

• Transactions focus, handling repeated and reoccurring transactions.
• Controls inventory.
• Orders administration.
• Provides financial data.
• Handles flat bill of materials.
• Building released product versions.
• Handling supply and procurement.

Strengths of the PLM system

PLM arose from the need of an increased support within product design. PLM focuses on the digital asset, optimizing design and collaboration. Some attributes of strength in PLM are:

• Captures digital data.
• Enables changes early in the design process.
• Transparency for better informed decisions.
• Focus on innovation, creation and design.
• Supports change management.
• Manages various levels and types of Bill of Materials (BOM)
• Helps to reuse data.
• Provides manufacturing deliverables to the ERP.
• Provides data for quality management.

Improve your collaboration–move from silos to cross-functional

To survive in the increasingly tough global competition, manufacturers can no longer rely on silo approaches. In siloed organizations, different stakeholders from different departments do not share information across the value chain. The silo approach leads to information islands, bottle necks and time-consuming manual work.

An integrated PLM and ERP facilitates collaborations between departments. For example, decisions, actions, and intentions within the product design team can be instantly communicated to procurement teams, allowing for smooth and precise supplier adjustments.

With its strong collaborative capabilities, PLM is increasingly becoming a driving force in moving from silos to cross-functional organizations. It speeds up innovation both within design engineering and across other departments. Integrating PLM and ERP will make the organization faster, more innovative, competitive, secure, and more profitable.

Summing up 

Start by investigating yourself, your needs and your challenges–not only for today, but also look ahead at what might wait around the corner. Having a long horizon and a strategic perspective are keys to finding the right PLM platform. 

Next–don’t let a thousand dazzling functionalities seduce you. Of course, they are important; your chosen PLM platform must be potent and meet all your demands, even the ones you didn’t know you had.  

But most important of all is the partnership you are about to enter. Do the solution provider have the muscles, engagement and insights to guide you through your digital journey and support your vision? Taking this aspect into consideration will separate the wheat from the chaff, leading you to the right stuff, adapted to your business realities. 

How you will benefit from integrating PLM and ERP

The major challenge within today’s global competition is to get your products and innovations to the market first, without compromising on product quality. This is very tough to achieve without integrated systems processes.

Wave goodbye to manual handling

With manual handling and data duplication, your staff will do the same job twice, and sometimes even thrice, in different systems. Too many sources of information degrade quality and increases cost and lead times. It also results in mismatches, decreasing levels of collaboration and poor traceability with limitations to scale.

Welcome streamlined workflows

Integrating PLM and ERP opens for streamlining your workflows. It enhances coordination between design, resource management, and production, leading to more efficient scheduling. Moreover, by including external partners in the communication process, you can minimize or prevent potential supply chain disruptions, keeping the work flowing smoothly.

No more time-consuming rework

This streamlined workflow eliminates bottlenecks and inefficiencies in data and knowledge transfer, reducing the risk of one of the costliest outcomes of poor integration—rework.

Strengthen your security

Product lifecycle data represents a highly valuable business asset and often makes up a company’s intellectual property. A well-designed and seamlessly integrated system can significantly reduce vulnerabilities within and between technology platforms, minimizing the risk of cyberthreats.

How do you connect the two systems?

1. Understand where your product master data is today
   Then you need to determine where you should store it. Avoid having multiple systems mastering the same data. The principal approach here is that the right people should do the right work in the right system, not doing duplicate work or using different systems.
2. Choose the right technology
   Key technology challenges involve managing changes in how data is formatted and defined across different functions, while ensuring that integrated or transferred data remains “clean” for successful integration. The system must also handle version and release management, as updates won’t occur simultaneously across all components of the IT environment. Throughout the upgrade process, the combined system must continue to operate effectively as a whole.
3. Choose the right partner
   It is essential that your chosen, trusted partner is experienced in integrating PLM and ERP. These are complex systems, both technologically and business wise. Your partner must understand both these systems and your business goals and challenges. Ensure that your partner has resources and competence to educate and train everyone involved–and that they will provide sufficient support.
4. Implement in multiple stages
   Don’t integrate everything in one big blow. Plan carefully and prioritize the areas where the integration provides the most value. This reduces risks and creates the conditions for a smooth transition.

Summing up

Both ERP and PLM play a critical role in manufacturing companies. ERP owns the data of the physical assets, as production planning, forecasting, sourcing and transactions. PLM owns the data of the digital or intellectual assets. Connecting both will provide all product information, from design and development to production, sales and after-sales in one transparent, real-time flow.

The combination and ability to drive cross-functional transformation initiatives around PLM and ERP will give you benefits as:

• Increased efficiency and reduced cost.
• Improved collaboration and communication.
• Improved quality control.
• Increased customer satisfaction.
• Improved regulatory compliance.
• Streamlined workflow within product development and production.
• Eliminated rework.
• Strengthened security.

Next Steps

Learn more about PLM and ERP with our experts by watching our webinar about the same topic – PLM & ERP and Their respective roles in manufacturing enterprises.

If you are ready to dive into what Windchill, PLM system is make sure to watch this webinar – Introduction to Windchill, PLM System.

We have also gathered our experts best advice on how to choose a PLM system which you can find here – 5 Advice on Choosing a PLM Platform.

Get in touch with our experts here to learn more about PLM!

About Windchill

Windchill is the first web-based PLM solution that provides the openness needed for integration with other systems like ERP and MES (Manufacturing Execution System). Windchill will complement any type of existing ERP and MES solutions to help master the production. Together with an IIoT platform, like PTC ThingWorx, these integrations will create a digital thread from design to the shop floor and vice versa.