ERP and PLM: Defining their roles and creating a collaborative environment for success
By Chuck Cimalore - CTO and President of Omnify Software
Manufacturers’ business needs have changed significantly over the past several years, evolving the roles that technology plays within the manufacturing process. Two key technologies, Enterprise Resource Planning (ERP) and Product Lifecycle Management (PLM), have developed into critical success factors for manufacturers. Each technology brings unique value to the enterprise, and when combined, ERP and PLM provide a wholly collaborative environment that has a major impact on successful product development performance and the ability to maintain a competitive advantage.
ERP and PLM address different business needs for manufacturers. There is some confusion in the industry as to what role each system plays in a company’s business process. Clarification of the key features of ERP and PLM, where they fit in the product development and manufacturing process, and how integrating these environments can deliver positive results is important for manufacturers to truly understand why each is so critical to their success. In addition, having this clarification will help manufacturers maximize the functionality of each system and gain the most from their investment.
ERP-Managing the Business Data
An ERP system is a business management tool used to fulfill the needs of many facets of a company including; finance and accounting, distribution, human resources, customer service and manufacturing. ERP supports these various departments by delivering improved processes such as an automated method for order fulfillment, providing a single location for tracking cost information to ensure consistency, and helping human resources to standardize their information.
ERP is used to manage the logistics of getting a product to market once a design is released (from engineering). It is geared toward capturing information at the manufacturing stages of a product; prototypes, production runs, redesigns, etc. This information typically consists of a Bill of Material (BOM), manufacturing and test procedures, schedules/timelines, and logistics which is then used to execute the entire manufacturing process.
Due to the inherent purpose of an ERP system, many are not designed to manage the amount and type of information required for engineering. Most systems do not contain the detailed information that engineers need to drive design including part specifications, design and test notes, and vendor supplied documentation. In addition, ERP systems typically do not provide the security or capability to enable external manufacturing partners to directly access product data and participate in development processes.
Companies that look to their ERP systems to manage complex engineering data typically find that a PLM solution is the best tool for the job. This was the case at Crystal Technology, a manufacturer of lithium niobate wafers, crystal substrates, and acousto- and electro-optic components. After initially exploring their existing ERP system as a potential solution for managing product data, Crystal Technology realized that a PLM system was what they needed to manage all of their in-depth product information. “Although it is excellent for our manufacturing environment, we found that our ERP did not have the features we needed for managing our detailed design information nor did it have the level of access control we required,” stated Fred Garderes, Director of Supply Chain Management for Crystal Technology, Inc. What the company did realize was that integrating their ERP and PLM environments to share data was critical to create a streamlined process between design and manufacturing and eliminate any previous inconsistencies associated with manual entry of data.
PLM-Managing the Product Data
PLM was designed to manage product data throughout the product life cycle. A PLM system is crucial during the design phase, where engineers need instant access to product data including specifications, engineering parameters and documentation. PLM centralizes all of this information for easy access by all team members. PLM tracks and manages component data, BOMs, product documentation, engineering changes and revisions, as well as compliance data. PLM systems also offer the flexibility to support the many iterations of a design before it reaches the prototype and manufacturing phases.
A key component of a PLM system is that it provides an automated Change Management facility that allows users to electronically propose product changes (redlines) to BOMs, documents, and vendor/supplier information. Leveraging a workflow engine, these changes are then automatically routed to the appropriate resources for electronic signatures. Once all constituents have approved the change, the PLM system automatically updates the affected products with the suggested changes, and then provides the updated information to the ERP system. An electronic change process eliminates manual data entry errors, streamlines routing, and allows all involved resources to view and sign changes simultaneously. All of these factors results in a significant reduction in the engineering change process.
Automating product design processes can enhance overall product development by shortening cycle times for engineering changes and new part requests, improving data integrity by eliminating the human error from hand-entering data and ensuring all product data is accurate by sharing information between engineering and manufacturing.
With a PLM system in place, Crystal Technology was able to centralize all of their product data and provide easy yet secure access to deign engineers and outsource partners and avoid redundancies. The company also met their objectives to better manage BOMs, ECOs, product documentation and compliance information, reducing their ECO cycle by sixteen percent with a trend towards even further reduction.
Synchronization of Information
It is the integration between ERP and PLM systems that allows direct sharing of engineering and manufacturing data through an automated process. It eliminates the tedious and error-prone task of hand-entering information, resulting in improved data integrity across the organization. An integrated environment decreases redundant efforts and guarantees that all departments involved in the product development and manufacturing cycle have access to current and accurate product data. By synchronizing these two systems, engineering teams are able to access business-level data from the ERP system to support better design processes and manufacturing is ensured receipt of the most current design information for more efficient production processes.
The benefit of synchronizing the information managed within ERP with PLM is evident at Microstrain, designer and manufacturer of Smart Sensors. The company integrated their ERP and PLM environments to give engineering and production visibility into current Bill of Material (BOM) data. As soon as an Engineering Change Order (ECO) is approved in PLM, the BOM moves into the ERP. A key advantage is that any ERP user can see the latest copy of the BOM and selected users can also access the PLM database to see whether or not change orders are being processed that will affect the BOM in the near future. This environment has helped Microstrain to reduce data duplication, speed product development cycles and save overhead costs. The average turnaround time from when the company receives an order to when it ships has been reduced from one week to just two days.
It’s never easy to adopt new enterprise technology. It is important to understand the value that the technology brings to each department and the enterprise as a whole. Enterprise applications that complement each other like PLM and ERP play a key role in supporting and improving product development and achieving bottom line operational benefits. Recognizing the distinctive features offered by ERP and PLM as well as the benefits of creating an integrated environment will help manufacturers maintain their competitive edge. Adoption of a PLM system to work in conjunction with ERP greatly enhances a manufacturer’s product development performance. The result is the ability to deliver higher quality products in less time and maintain a competitive advantage in the marketplace.
Re-published of the byline article in Plant Engineering July-August 2012 - page 29