PLM vs ERP– do you really need both?

The human body contains over 600 muscles and more than 200 bones. Although the muscular and skeletal systems fulfil separate functions, they also work together to facilitate movement. In many ways, the analogy is relevant for companies deciding between implementing Product Lifecycle Management (PLM) and Enterprise Resource Planning (ERP). Here, Bob Hillier, managing director of PLM software expert, Design Rule, shares the best practice for companies caught up in the PLM vs ERP debate.

Despite what some industry voices may say, PLM and ERP go hand in hand in most leading manufacturing companies. PLM manages the innovation and design process, while ERP ensures quality products are manufactured in a timely, cost controlled manner once a product has been engineered and approved.

Both systems have distinct purposes, but they also have a number of overlapping capabilities, which is where some of the confusion can originate. However, there are practical reasons why ERP and PLM can work harmoniously together, improving the end-to-end business performance. In fact, combining the two have already proven to be necessary, with some ERP providers acquiring or developing their own PLM platforms.

According to an IBM study, 97% of mid-sized companies are already running an ERP application. This is because ERP was the first to establish itself as an essential business tool, however without PLM the ERP system is likely to consume and manage inaccurate data from design and engineering, which delivers minimal or no improvements to the business.

PLM as a priority

PLM software is developed specifically with the total product definition in mind. PLM delivers complete configuration control of product data from all stages of development, from initial concept, through to design and production; to include complex product and materials data, associated files, issues and engineering changes. PLM is also designed to communicate engineering changes to the entire business and supply chain in real time. Put simply, PLM is all about product development – the very first stage of the manufacturing process.

This makes PLM a building block for any company that designs and manufactures its own products, or manufactures to print. PLM software also provides the single point of product truth used by ERP to manage product resources and financials. For example, by using EBOM data from the PLM system, ERP can accurately generate purchasing and inventory management records, enabling seamless management of both resources and production.

Ultimately, an organisation that implements an ERP system without a complementary PLM system risks mismanaging product changes and therefore conducting inaccurate financial planning. Without accurate PLM data, the ERP system becomes Sisyphean.

Integrating PLM and ERP

Despite the perceived rivalry between the two systems, we are seeing new partnerships and collaborations between PLM and ERP providers to ensure seamless communication between the two systems. At Design Rule, we have integrated the Dassault Systemes 3DEXPERIENCE PLM platform with Columbus Global Microsoft Dynamics AX ERP. This helps our clients align their product design to wider operations management supporting a single source of truth.

Winning combination

In today’s competitive environment, manufacturers face increasing demands to deliver the right product, with zero defects, on time and in budget. Meeting these requirements often means short design and product engineering cycles. Providing a single source of truth, a successful combination of PLM and ERP can aid the seamless delivery of products from design conception, right through to manufacturing and distribution.

Admittedly, there are many cultural and technical challenges to overcome before the integration of PLM and ERP becomes seamless. However, as this age-old rivalry turns into collaboration, industry will start to reap the benefits of integrated PLM and ERP. And just like the world’s best athletes, companies will start moving faster and become stronger.