Modern companies need a whole range of technologies to achieve their production, quality, and financial goals. In manufacturing, the integration of two fundamental systems is a top priority: the Product Lifecycle Management (PLM) and Enterprise Resource Planning (ERP).
The difference between PLM and ERP is that the systems manage different aspects of business operations. PLM is used to manage discrete products throughout their lifecycle. This includes concept and product design, engineering, prototyping, manufacturing and service. Where collaboration and innovation in product development are particularly important, especially for complex designs, PLM is not only helpful, but critical.
ERP encompasses a wide range of business disciplines and processes, from supply chain management to finance and accounting, human resources to customer relationship management (CRM), and many more. Essentially, ERP aims to automate and streamline processes and centralize data to improve decision-making and resource management across the enterprise.
If both systems work separately from each other, the full potential of both cannot be utilized. Manual transfers and data duplication in ERP and PLM systems impair quality, cause costs, extend delivery and waiting times, lead to incorrect coordination and poor traceability, and make it difficult to implement customer requirements. Scaling is hardly possible because, for example, production capacity can only be doubled if the staff for data input is also doubled.
A lack of transparency also exacerbates the problems with change management. Many manufacturing systems were designed for manufacturing professionals with years of experience. However, today's workforce is largely made up of workers with no more than three years' experience. At the same time, products are becoming more complex and the rate of change is increasing. To achieve improvements in quality, productivity, and sustainability, manufacturing companies need to empower their employees with real-world product and process knowledge so that they have the tools to continuously identify, prioritize, analyze, and resolve the issues in their day-to-day work and don't waste time searching for information that doesn't add value.
In order to reduce costs and increase quality at the same time, manufacturing companies are also faced with the task of constantly improving the operational efficiency of their products, processes, and resources. This enables them to reduce their labor and processing costs. They must also evaluate and optimize their product and process design in order to reduce material costs. However, technical development generally accounts for 70% of product costs. With non-integrated systems, engineers have to duplicate work by entering the same data into the PLM and ERP systems.
The relationship between PLM and ERP
This shows that the relationship between PLM and ERP systems is synergistic: the complete optimization of both systems depends on the successful use of effective integration of the other system. When well coordinated, they complement each other fully, with each system not only preserving but also increasing the value of the other.
There are numerous commercial PLM and ERP systems on the market, most of which are configured on a company-specific basis. Nevertheless, the "division of labor" between them is straightforward: PLM manages the lifecycle of the product from conception to final production-ready design, while ERP takes over when the product is ready for manufacturing and distribution. Although information is exchanged between the systems throughout the process, they perform their tasks separately.
Preparation for integration
The key to successful integration is a strategically thought-out, precisely planned, and carefully executed implementation plan. Although every company is different, there are some general considerations that apply. This includes answering the question of which tool will be most effective after the integration to achieve the goals that the integration is intended to accomplish. When planning the interface between the two systems, it is important to consider how the product data can flow smoothly into other applications. Relative units of measurement, currencies, all vendors in the supply chain, and other data variables need to be considered.
How does the right PLM data get into the ERP system?
The optimal approach depends on the business model and product complexity. However, three factors are always the same and must be taken into account: the storage location of the master data, where it is also curated, configuration management, and change coordination. Company-specific business initiatives also play a role. Where does the company see important opportunities in terms of product innovation, product quality, product costs and product efficiency? Implementing a process that encompasses all value chains across products, manufacturing, and logistics requires a complex set of interlocking considerations. Three steps are recommended for seamless application integration:
Step 1 - Manage the right data in the right tool and access the right product master data
The first step is to determine where the product master data is currently located, identify it, and clean it up. This prevents the same data from being maintained as master data in several systems at the same time. For example, an ERP system does not own information upstream of the product and manufacturing and has limited ability to create and define optimized process plans for manufacturing a complex product that is subject to change.
If you start by laying solid digital foundations for PLM and ERP, the work results of technical development are automatically forwarded to downstream areas. Ultimately, it's about the right people doing the right work in the right systems and not having to switch between different systems and duplicate work.
Step 2 - Design seamless, bidirectional process flows
All stakeholders need to be able to access all the product information they need in relation to their role in the product lifecycle, rather than having to obtain it from colleagues. For example, manufacturing and process planners, plant and tool designers, production managers, and manufacturing workers need access to the latest information from engineering. Design engineers need real-time feedback from manufacturing.
The ideal future status is the integration of processes, not data. This requires access to PLM data via existing ERP systems and a single reliable and universally valid data source. Each system should only contain the data required for its function.
With networked systems, it is also important to clearly work out how much definition should be included in the individual systems, i.e. where one system ends and the next begins. On this basis, users can gain insights from data that contribute to coordinated decision-making and automatic coordination of processes in technical development and production. The goal is a closed loop of integrated automation and reporting functions that cover all phases of production.
Once the designs have been tested and validated in digital form, the information is forwarded to the ERP system so that preparations can be made for the physical manufacture of the products. The higher the quality of the information from the PLM system, the greater the benefit of the ERP system and the lower the effort required to enrich the ERP material.
This primarily requires higher-level information from the PLM system, such as material master data, parts lists, purchasing specifications, etc., not technical data. When transferring data for a production item from the PLM system to the ERP system, all necessary definitions should be included in order to automatically calculate the costs for the item in the ERP (if MPM and process planning are used) and to transfer the item BOM with cost and routing information from the process plan for configuration/logistics.
Step 3 - Create digital functionalities from data and make them available to employees in production
Once the data has been assigned, the systems integrated and the processes optimized, dashboard views can be generated to analyze time expenditure and execution quality. This opens up countless possibilities, for example:
- The democratization of product data with out-of-the-box apps or user-defined low-code apps for real-time collaboration from the production manager to the production worker
- Linking the production operation back to technical development through context-related reporting of problems or deviations from conformity via terminals in production
- Connecting work cell use cases to provide a seamless experience for workers while capturing realization data through access to relevant control features, smart tools, and machines
- Visual and digital work instructions tailored to the employee's skill level
- Design of production processes based on better coordination between production and factory layout
Challenges in the integration of PLM and ERP
Some activities that appear to be subordinate to the technological processes can significantly increase the success of the integration or - if neglected - impair it. These include the alignment of business expectations, appropriate internal training, and the involvement of third-party providers in the process.
Key technological challenges include dealing with changes to the way data is formatted and defined in different functions and ensuring that integrated or transferred data is "clean" for the planned integration. The system must also be structured to support version and release management. This is because these changes do not happen simultaneously to all components of the IT environment, yet the combined system must continue to function in its entirety during the upgrade processes.
Utilize advantages
If these steps and challenges are taken into account, nothing stands in the way of successful integration, and companies can benefit from numerous advantages.
PLM/ERP integration eliminates many inefficiencies caused by multiple data entries, which are often exacerbated by human error. The PLM system can consistently capture BOM and product data and pass it on in real-time to all the functions that need it. This links upstream and downstream processes and makes them more efficient. Many of the frictional losses of conventional communication systems are eliminated, resulting in better collaboration. Decisions and activities in the product development team can be tracked in real time by the procurement teams, for example. The improvements in efficiency, collaboration, and innovation also lead to significant cost reductions.
In addition, integration can create a robust framework for compliance with complex legal rules and regulations and mitigate their impact on the company's profitability. Compliance processes are streamlined through the centralization of data and the associated improved access.
Consistent data processing also helps to ensure accuracy and reduce errors across the organization, while improved change management capabilities enable the organization to respond effectively to changing compliance requirements. Traceability and accountability are optimized, as are reporting capabilities that help the company identify and manage potential compliance risks.
Another measure of successful PLM/ERP integration is more satisfied customers. When they better understand the impact of product design and manufacturing decisions, they can plan their own business more effectively.
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