PLM Coming of Age: ERP Vendors Take Notice

PLM Background

Product lifecycle management (PLM) is the foundation that supports the management and automation of product lifecycle processes from early product conceptualization to retirement across multiple organization and enterprise boundaries. Critical to the success of any manufacturer is the ability to utilize the latest electronic commerce technologies available for competitive business advantage, i.e., to leverage them as a secure medium for the flow of trading partners' data, product designs, marketing data and so on—all in near real time. To that end, PLM applications, which typically integrate with existing ERP applications, extend critical product information visibility and processes beyond the Engineering Department and through the supply chain using the Internet. With a PLM solution in place, a company has the ability to automate, monitor and track product development and revision processes with their customers, suppliers, and employees amid the increasing pressures of mass customization, globalization, regulatory compliance, increased outsourcing, and product accountability, to name some market driving forces.

The need for shorter product life cycles is being driven by competitive pressures, customer demand, and the need to cut operating expenses. In that regard, PLM products should give manufacturers the tools to collaborate with trading partners for faster time-to-market, reduced manufacturing costs, higher quality products, and improved customer satisfaction, as some potential benefits. But, given the relative immaturity of the PLM movement, PLM often means different things to different people. For a discussion of the different views of what comprises "PLM", see The Many Faces of PLM.

Namely, due to its deep engineering roots from the 1980s, it still often gets confused with computer-aided design (CAD) and product data management (PDM) systems. While CAD involves the use of high-resolution graphics in product design activities, allowing the quick evaluation and modification of the designer's intent, PDM systems were originally developed as merely vaults for storing and updating data. These on-line vaults replaced paper-based processes and information storage with a single, centralized data repository that enables authorized users throughout a company to access and update current product information, while ensuring they follow specific procedures.

On the other hand, PLM, which is an overarching strategy (concept) of guiding the product throughout its entire lifecycle, entails much more than just PDM, allowing collaboration amongst many constituents and successful planning and execution of new product development and introduction (NPDI) programs. Namely, a much broader mission of PLM would be to provide a panoramic "one version of the truth" in terms of data and business processes associated with the product from start to finish (i.e., from cradle-to-grave) to any involved party, such as design engineers, manufacturing engineers, production planners, purchasing, marketing, c-level executives, suppliers, and other trading partners. In addition to supply chain benefits, PLM promises to enhance the design environment itself by providing an integrated view of product engineering, manufacturing engineering, and plant resources.

This still evolving category of software should help any manufacturing company deliver a product and continually enhance it by helping the company manage and automate material sourcing, design and visualization, engineering change orders (ECO), and product documentation, such as test results, product packaging, and post-sales data. The product development life cycle—conceptualize, plan, design, procure, produce, deliver, service, and retire—naturally includes multiple people operating in multiple departments, and (typically) from multiple companies, each with locations in many countries around the world. It should also help companies manage a mushrooming number of local, state, federal, and international regulations.

In other words, at the core of any serious PLM initiative is typically a database or data warehouse that handles and stores every important piece of information that goes into making a particular product, such as formula or bills of material (BOM), packaging information, shipping specifications, regulatory data, patent data, and so on. The emphasis is not only on how to design the products, but also how to manage the accompanying information, and from there, all the constituencies should be able to slice and dice data and create workflows to deliver specific information to specific functions.

For example, while design engineers will use the data to effectively determine the required parts for a new product, buyers can use it to source and consolidate orders afterwards as to smooth the supplies. Distributors can use it to determine the stocking space and ergonomics, and so on, ideally in every nook and cranny of the business. Therefore, the companies that would benefit the most from a PLM deployment would be those that sell products in heavily regulated industries and regions; those whose products require complex manufacturing processes; or those that have highly decentralized design and manufacturing workforces, including a lot of outsourcing. But, consequently, one should also note that a successful PLM collaboration deployment may rely more on how well relationships with trading partners are managed rather than the robustness of the software per se.

Traditional Approach

Still, a traditional approach to tackling PLM applications typically first looks to leverage PDM to establish a base environment upon which to build better business processes, better document control, and eventually, manage complexities in engineering and product development processes more effectively. In addition to more effort that is required before any meaningful benefits can be seen from traditional PDM, its realm is also not enough in a competitive and collaborative e-business environment where manufacturers are required to deliver new products faster, cheaper, with increased quality, and immaculate after-sale service. Customers, partner channels, and suppliers must be involved in a collaborative effort too, since systems without enabling processes in place to coordinate product data for outsourcing, design, manufacturing, and maintenance are destined for failure.

Conversely, in most cases, PDM has been limited to design and engineering functions, with only a limited application in sales, marketing, and manufacturing environments, making the notion of a "vault" not merely a pun. Yet, to be successful, systems require additional applications to manage the delivery of product data across the global supply chain. Leveraging the Internet as a collaboration vehicle, PLM solutions aim at enabling manufacturers, suppliers, and the partner channel to collaborate at each and every stage of the product life cycle. Yet, more comprehensive PLM solutions blending CAD, PDM, visualization technology, collaboration capabilities, program management, portfolio management, and integration with existing enterprise applications have emerged only very recently to enable organizations to fully manage this lifecycle.

Another Approach

Another approach to PLM is to leave existing PDM systems in place and overlay a workflow management tool to extract data, manage it in a forms-based environment, and disseminate it to users across different functional groups touching the NPDI process. A PLM with this approach is designed to take data from various systems and thus provide a mechanism for sharing all the different kinds of data required in product development (including Microsoft Excel, Word, proprietary forms, CAD drawings, non-CAD graphics, quality data, etc.), format it into an easily understandable presentation, and let users make changes, which then update the source system. This process helps companies to manage product development and change, and also to communicate data for planning and prioritization, all with a web-based and highly flexible workflow management tool, referred to as "Flex Forms," and the relative ease of creating data tables on the fly for reporting purposes. The product gives manufacturers capabilities to more effectively design, make, deliver and support products through PDM, multimedia attachment capabilities, integrated workflow and inquiry tools.

Mid-market manufacturers, which have been overwhelmed by the huge scope and complexity of still evolving PLM concept, are focusing on taking incremental steps to adopt PLM (see The PLM Program—An Incremental Approach to the Strategic Value of PLM). For that reason, manufacturing companies that use, for example, the MAPICS' ERP offerings that want to take an initial step into PLM might want to start initially from enabling design collaboration during the NPDI process, where an urgent need for a PLM solution might be felt. The messages of enabling transition of new product design to new product introduction by providing quality parameters, scrap analysis, and manufacturing process information in an iterative approach to refine a product's design for manufacturing characteristics, as the first manageable PLM initiatives, should strike chord with the risk-averse target market (see Can ERP Speak PLM?).

The PLM Market

The PLM market, however, covers a wide range of above-mentioned previously unrelated software applications and the suites offered from different vendors can vary dramatically. Applications include CAD files management and CAD integrations; product portfolio management; project management; customer needs and feedback management; resource management; strategic sourcing and approved vendors list management; design collaboration; 2D and 3D visualization; change management and quality assurance; and others. These are in addition to traditional engineering applications like PDM, computer aided manufacturing (CAM), manufacturing process management (MPM), product regulatory compliance, and computer aided engineering (CAE).

In other words, the PLM market is still in its infancy compared to ERP, and therefore, no vendor provides all of the required solutions for a full PLM initiative at this stage, and almost all the more complete PLM solutions will involve best of breed components. Due to the number of components, earlier stipulated, that are used to deliver a PLM solution, there is still a plethora of niche providers that offer compelling products yet fail to deliver the breadth of a required solution and sustainable customer bases. However the future for stand-alone PLM niche providers that fail to differentiate their value to the market is dubious. For example look at the shopping spree during the last year of Agile Software (see Has Consolidation Made the PLM Market More Agile?).

ERP Vendors Are Taking Notice

A number of ERP vendors are making their way into the PLM market by bundling or partnering strategically to embed PLM functions within their suites. Namely, some enterprise application vendors like Oracle, SAP, IFS, SSA Global, MAPICS, Epicor and others have been adding some of the above PLM capability into their products, in addition to the likes of PeopleSoft and QAD still filling their gaps through partnerships, with Agile and Arena Solutions, respectively.

One example of this is the May, 2004 announcement of Vantage PLM from ERP vendor Epicor. Vantage PLM is an integrated product lifecycle and document management solution designed for Epicor's mid-market manufacturing clients. The solution provides an integrated environment between product design and production by serving as a central knowledge repository for process and product history. Epicor plans to help its customers promote integration and data exchange among all enterprise users who interact with the product—including project managers, engineers, salespersons, buyers, and quality assurance representatives.

Epicor provides integration with CAD systems, leveraging domain expertise and technology from German company PROCAD. Epicor appears to be avoiding the most common pitfall that many ERP vendors face with PLM: by providing a more flexible environment for product innovation than for the standard ERP environment that is focused more on transactional control. For example, a part does not require the full overhead of an ERP part number to be assigned before it becomes a solidified design. Another example is that engineering BOMs are defined independently of manufacturing BOMs, which may be an entirely different structure. While this solution does not provide all of the features that a full PLM system will offer, it can offer tangible benefits to Epicor customers looking to infuse more collaboration and structure into their product design processes.

Furthermore, most PLM vendors focus on specific vertical industries, and their solutions have been developed to solve the specific needs of those industries (such as, consumer goods companies focused on maintaining and extending the value and variety of merchandize brands, pharmaceuticals, and life sciences concern with ensuring regulatory compliance and patent protection, high-tech and fashion verticals focus on shorter time-to-market, manufacturing speed and change management, and automotive suppliers care mostly about effectively managing the complex supply chain). As a general rule, the closer the PLM solution gets to the design and production of the product itself, and the more complicated the product, the more industry focus will play a role (see PLM Is an Industry Affair— Or Is It? The converse reality is that a high percentage of these manufacturers have never connected their engineering data to their ERP system.

For a more complete discussion of how to select a PLM vendor, go to Selecting A PLM Vendor.

About the Authors

Predrag Jakovljevic is a research director with TechnologyEvaluation.com (TEC), with a focus on the enterprise applications market. He has over fifteen years of manufacturing industry experience, including several years as a power user of IT and ERP, as well as being a consultant/implementer and market analyst. He holds a bachelor's degree in mechanical engineering from the University of Belgrade, Yugoslavia, and he has also been certified in production and inventory management (CPIM) and in integrated resources management (CIRM) by APICS.

Jim Brown has over fifteen years of experience in management consulting and application software focused on the manufacturing industries. Brown is a recognized expert in software solutions for manufacturers and has broad experience in applying enterprise applications such as product lifecycle management, supply chain management, ERP, and customer relationship management to improve business performance. He began his professional experience at General Electric before joining Andersen Consulting (Accenture), and subsequently served as an executive for software companies specializing in PLM and Process Manufacturing solutions. Brown is a frequent author and speaker on applying software technology to achieve tangible business benefits. He can be reached at jim.brown@tech-clarity.com.