Are ERP and PLM Speaking the Same Language?
Costs are an excellent example of semantic confusion. Accountants know that "cost" is a not a single characteristic of an item but a category of characteristics. Without answering a series of questions about the cost, the meaning of it is vague. Is the cost the procurement cost from the supplier? Does it include shipping? Does it include tax and duty? Does it include internal overhead, or is it just direct costs? If it is an assembled item, does the cost include only material costs of the components or does it include labor or processing costs? Does the cost assume a particular volume of purchase?
The same issue shows up in seemingly simple things like status codes, dates, and numerical values. For example, is the "quantity per" on a Bill of Material in the PLM system compatible with the one in the ERP system? Is the quantity per parent unit or batch/lot? Do the units of measure align? Is the decimal precision compatible? Does it include yield and scrap factors for production? Another example that has caused problems in past ERP integration projects is the definition of effectivity dates. If a component has an effectivity ending date of December 15, is the component active on that day? Is it inclusive, going out of effectivity at 11:59:59 PM (23:59:59) in the evening, or exclusive, going out of effectivity at 12:00:00 AM (00:00:00) in the morning?
These are usually simple questions to ask and to answer, but the right questions have to be asked for semantic alignment. Ideally, the questions will have been asked and answered by the vendor in advance, whether it is through standard integration or an integrated application suite.
is Part Two of a two-part article.
One part introduced the topic of whether ERP solutions can address PLM and identified
potential trade-offs between specialty applications and pre-integrated application
Are ERP and PLM Talking About the Same Thing?
Some may argue that the yield and scrap factors mentioned in the previous section are not truly semantic differences, and they are probably correct. This type of issue highlights a conceptual difference between the PLM and ERP systems. A scenario that highlights the need for conceptual alignment between the product design in the PLM system and the production information in the ERP system is the selection of alternates.
A specific revision of a design may allow for alternate parts to be used in production. Some of these alternates can be applied independently, while others can only be used in conjunction with other alternates. For example, an alternate power supply can be substituted for the primary power supply for a piece of equipment, but only if an additional capacitor or resistor is also substituted on the same unit. Couple this requirement with the potential that a specific customer may have an approved supplier list. The customer, for regulatory, commercial, or quality reasons, may only allow components from particular suppliers. This is another constraint on the alternates that can be used for a particular production order. A final complexity to be considered in alternates is the identification of required replacements by geographical or organizational boundaries. For commercial or regulatory reasons, it is common to have alternative part requirements in certain geographies or for certain commercial entities.
Without strong conceptual alignment in how alternates are defined between the product design and the production order, and therefore the PLM and ERP systems, material planning to accommodate multiple substitutions and approved supplier lists would be cumbersome if not impossible. If both systems don't understand alternates in the same way, or if they have different ways to characterize geographic and organizational entities, technical integration will not provide the additional business logic to correct the mismatch. In this case, inefficient and error-prone manual intervention will be required.
PLM solutions have to work with many other systems, not just ERP, so integration is not a new issue for PLM vendors. Most PLM vendors recognize the need for integration and have addressed the need in their toolkits. The additional work comes from integrating the concepts and semantics of one system to the next, if this business level integration has not already been provided between the two systems. This can be a big challenge for best of breed vendors, who may need to rely on systems integrators for much of this conceptual and semantic integration.
Who Speaks PLM?
the same way that innovation is King in product design, it is also true in software
application development. Enterprises that are looking for the highest level
of functionality will probably want to turn to PLM specialty providers or PLM
suite providers. The PLM specialists typically offer greater depth of functionality
in the design, product development, and engineering functions and will probably
continue to lead in these areas for the foreseeable future. Given the rate at
which new functionality is being developed, the gap between best of breed and
ERP will probably include significant functionality.
example of this is the development and management of manufacturing processes
supported by specialty vendors like TechnoMatix and INTePLAN.
These solutions provide rich design tools to help companies develop production
processes, a complex and challenging problem. It will be a long time, if ever,
before an ERP product develops that level of expertise and functionality in
a particular engineering discipline.
On the other hand, solutions from ERP providers will be more likely to have better semantic and conceptual alignment that will make implementing and maintaining the applications less troublesome and expensive. The software selection process is going to come down to a tradeoff between best of breed versus an integrated solution. While the ERP vendors will likely continue to lag in product functionality, pre-integration means lower risk of implementation. You may need to wait longer for your ERP vendor because they have to fit new PLM functionality into the development calendar with all of the other requests. On the other hand, the ERP vendors are taking on a large part of the integration challenge for you.
of the major ERP vendors recognize the need to offer PLM to their customers,
and have a strategy to deliver these capabilities. Some have developed their
own solutions through development and acquisition such as SAP,
Baan and Oracle. Others, such as PeopleSoft
and JD Edwards, have developed partnerships. All of the major
ERP providers will provide PLM capabilities, but most will continue to lag the
best of breed PLM vendors like IBM/Dassault, EDS,
and PTC and specialty vendors like TechnoMatix and INTePLAN.
Each manufacturer must first evaluate their competitive and business requirements
for PLM based on the needs of their business.
PLM requirements should include enterprise and commercial considerations such
as the ability to deliver the new product profitably, in addition to design-related
Manufacturers should compare their PLM requirements with the capabilities
of their ERP vendors and the best of breed PLM vendors (see Selecting
a PLM Solution).
Remembering that "Innovation is King", manufacturers should first make sure
that the functionality that they require is available from the solutions they
Keeping in mind that "Integration may be Queen", significant value should
be placed on integration, including semantic and conceptual alignment.
- Don't assume
that the solution from your ERP vendor is integrated. Integration, particularly
business level integration of concepts and semantics, is difficult work for
your vendor as well as it is for you. Look for tight alignment and strategic
investment from your ERP vendor.
- Don't assume
that a solution from a PLM-only vendor is best of breed. Take the time to
define your requirements and analyze the vendors against them.
can "speak PLM". While ERP may not speak PLM as fluently and as eloquently as
the specialty PLM vendors, particularly in their areas of specialization such
as design tools, there are advantages in predefined and pre-built integration.
In order to make a PLM selection, the manufacturer should weigh the deeper functional
depth of best of breed vendors against the value of pre-integrated solutions
from their ERP providers.
Jim Brown has over 15 years of experience in management consulting
and application software focused on the manufacturing industries. Jim
is a recognized expert in software solutions for manufacturing and has broad
knowledge of applying Product Lifecycle Management, ERP, Supply Chain Planning,
Supply Chain Execution, and e-business applications to improve business performance.
Jim served as an executive for software companies specializing
in PLM and other enterprise solutions before starting his consulting firm, Tech-Clarity
can be reached at email@example.com.