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PLM & ERP
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Fig,1Fig. 1 - PLM’s growth and diversification has balanced out ERP, making the two complementary
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Bill NewmanFig. 2 - Bill Neuman
The CAD/CAM business has been an alphabet soup since Noah was a boy, but when PLM came along most people breathed a sigh of relief in that this single acronym seemed to embrace all the others.
All was simple for five minutes until the Enterprise Software vendors decided PLM was a good idea and companies like Oracle and SAP started offering PLM modules. And of course they weren’t the same as the CAD PLM modules as geometry and design were not
This results in two distinct value chains — the creative product development value chain and the logistical product execution value chain. The more mass market the product the more the logistical value chain predominates — the more ‘one off ’ the product, the more product development would dominate. According to Neuman the glue that helps these processes coexist is the process design that bridges the gap and builds the effective interface between PLM and ERP. In the Logistic Value Chain this process design takes place in the ERP system and conversely in the PLM system where the Product Development value chain predominates.
The Cambashi view concurs with the different roles of PLM and ERP and it introduces the concept of the Industry Network where information flows in an integrated ‘social networking’ fashion to pull and not push data. For example users would subscribe to “changes to part” rather than receive ECOs, with more emphasis on collaboration and the revival of Business Process Management (BPM) to integrate people for new automation and flexibility of business processes.
Amongst those big companies in the know, there is general agreement over what PLM means and what it can do for the enterprise. But there is a serious lack understanding amongst the general user community and there is still a significant schism in the PLM church. On the design or geometry generation side of manufacturing, PLM is “just another name for PDM (Product Data Management) and PDM has been around since the 1980s. Most engineering professionals understand what it means and what it can do.
On the Enterprise Software side of manufacturing, PLM is about ‘cradle to grave’ product management and tracking, or as SAP puts it “PLM is software that provides the single source of truth for all product-related information”. And by implication, to SAP, geometry is only a very small part of the process.
According to Kevin Asbridge, PTC’s UK Sales Director: “Production in the 1990s was all about ERP. Those of us in production management all read Eli Goldratt's ‘The Goal’ and other esteemed publications and all efforts were directed towards optimising that transactional engine in the company to get maximum efficiency to the enterprise.
“That's really all we thought about and engineering and product development was kind of external to that process,”
the main focii for these companies. But the mere fact that they were offering PLM confused the market still further, at a time when CAD people were cautiously feeling their way with PLM.
For the longest time PLM was considered to be valid only for big companies in markets like aerospace, defence and automotive, where traceability and compliance was important and product retirement or recycling was a growing issue.
As PLM became more widely accepted it’s place within the grand scheme of things became clearer. According to Bill Neuman (Fig. 2), Vice President, Software Development at PTC this is how the software landscape has been transformed in most manufacturing companies:
“To many people PLM was just like ‘grown up’ PDM — data with links, but for the software vendors, coming off the back of the solid modelling revolution, PLM or PDM and ERP have been a constant problem. They are difficult to describe and sell because it’s very tricky to predict the benefits or even to make them sound interesting let alone attractive.”
Well if you’re petrolhead PTC is on your side. Recently, PTC hosted what they called ‘PTC Live — Executive Exchange’ for customers and invited guests at Prodrive — Aston Martin Racing. Here we were treated to the most common sense discussion about PLM in the context of Enterprise software I’ve ever heard and all against the backdrop of probably the most successful automotive engineering consultancies the UK has produced.
I would love to get sidetracked into the cars, but the main event featured PTC presentations, a customer perspective from General Dynamics and the analyst view from Cambashi.
In summary today’s manufacturing landscape shows PLM and ERP as equal partners (as Fig. 1), with some variance depending on the kinds of organisations and products involved. PLM on the creative, design side and ERP on the manufacturing side.
According to CIMdata: “PLM manages the innovation process — enabling companies to create right-to-market products quickly and to exploit part re-use... ERP ensures that a quality product is produced according to customer demand in a timely, cost controlled manner.”
“PLM looks after the intellectual assets in the process,” said Neuman. “Things like the eBOM, Compliance and Partner Programmes. Whereas ERP looks after the continuous physical processes like inventory tracking, materials handling, forecasting and production planning.”
continued Asbridge. “If they could just get their act together and get a decent data set over to us, we could really convert that efficiently into products and get them out the door.
“That's still the case, we need an efficient transactional engine to run the business, but increasingly as product lifecycles shorten and the products become more and more complex this is a tyranny that is set to continue,” said Asbridge. “So we need to be able to knit these two worlds together in a very effective manner, so that we get very early disclosure of product information through into the manufacturing space. So that we are able to act on that information for supply chain planning and to put in place the supply chain networks. We need to be able to respond as changes come through and as new product comes through based on new product platforms. It's a really challenging time — we've almost got two software behemoths in ERP and PLM and working out how they fit together most effectively is the challenge.”
Going back to the users, we have been bombarded with PLM messages from the major CAD/CAM vendors for the last 12 years and yet very few SMEs have taken the leap of faith. Largely because PLM is seen as a ‘Big CAD’ data management and manufacturing control solution that is expensive, time consuming to implement and risky for small enterprises. It’s okay for the likes of Boeing and General Motors who have the expertise on site to implement it and enough slack in their business processes to accommodate relatively long implementation cycles.
SMEs are generally not using ‘Big CAD’ products like CATIA, Siemens NX or PTC and it’s very noticeable that Autodesk and SolidWorks seem to have deliberately shied away from PLM in their outbound messaging, until recently. Autodesk have recently launched its own PLM solution for example, Autodesk 360 PLM: mytct.co/adsk360.
The challenge for the PLM industry is to condition PLM for SMEs rather than just the large automotive, aerospace and defence concerns who have the time and resources to deploy these applications internationally.
This challenge has been met to some extent by ‘on-demand’ hosted PLM solutions that offer quick start-up and relief from the complex IT infrastructures that normally surround enterprise PLM solutions. In addition, on-demand applications offer a wide range of ‘big company’ PLM capabilities without requiring dedicated IT personnel, nor any major changes in company practice, helping SMEs do what they do best.
Today, SMEs (and larger companies) can use a range of hosted PLM solutions offered by Agile (now owned by Oracle), Arena Solutions, and PTC, along with on-demand collaboration solutions.
“The PLM on demand product that we introduced about five years ago was probably a little too early for the market”, says Richard Allan, Channel Business Development Director at PTC. “It was ideal for companies that didn't want to invest in an in-house PLM system, but it was probably too early for the ‘mentality’ of the market and the available hardware technology.”
The PLM market seems to be polarising into the ‘haves’ and the ‘have nots’. A formative distinction was made back in 1997 when Dassault Systèmes acquired SolidWorks. Companies now well into PLM were described back then as being ‘enterprise’ or ‘process’ centric. These are companies trying to collaborate and share data within and across enterprises. At the other end of the scale were the ‘design centric’ companies whose interest in computer automation was purely geometric.
These distinctions are still largely valid. The difference today is in the ‘easy’ and general acceptance of the concepts of PLM even within small companies. According to Mike Burkett Research VP at Gartner, Inc and previously of AMR Research: “PLM is not just for big companies, but for small companies with significant complexity.”
PLM implementations can be pricey, but here’s the clincher: in the consumer products market companies can save the cost of the software in express-shipping charges for prototypes alone. Prototype costs can also be reduced significantly, and companies can handle more than twice the new concepts they did before.
The word coming back from users most often is that the major benefits of PLM are workflow management and synchronisation of data across enterprises. Or like the advert says – surprise, surprise it does “exactly what it says on the tin.”
PLM is not rocket science it’s just joined up thinking and taking every opportunity to allow the computers to take the strain internally and externally.
Today, many manufacturers are integrating PLM and ERP to improve efficiency and quality. Companies can now ensure that BOM data, captured by the PLM system, is made available to all functions that need it. And, because the PLM system can provide routing and manufacturing process plans as well, critical upstream and downstream processes are linked and made more efficient and productive.
For the vast majority of manufacturers, the question should not be ERP or PLM, but how to implement and integrate these two solutions most effectively. Choosing the right ERP and PLM systems for the business is crucial, and manufacturers should not have to compromise on the benefits of either to realise the value in both. The value begins when product development and execution processes are no longer implemented separately, and the functions of PLM and ERP are deployed in a seamless, end-to-end solution.
Through the well-executed integration of ERP and PLM, companies can develop a smooth flow of major innovations such as new and more highly differentiated products, as well as ongoing business innovations like continuous cost and quality improvement.
Integrated ERP/PLM systems help deliver value across the entire range of innovation, whilst providing the continuous controls a modern manufacturing enterprise requires. This integration can provide a significant competitive advantage, as it drives nimble manufacturing, enabling manufacturers to make the most of every significant and niche market opportunity.
Enterprise centric vs. design centric — who is giving the right service to the user? It has been suggested that all these new, powerful and affordable design systems were doing draftsmen and designers out of a job. The opposite is true — fast systems mean that you know you've got it wrong sooner, so, far from making engineers redundant, fast, linked systems improve product quality substantially. So who really cares which ‘centricity’ is right as long as the job gets done and it’s the best job possible.