18 February 2020

Top 4 Benefits of PLM and ERP Integration

Business-Integration-Solution

Many businesses are already enjoying the benefits of product lifecycle management (PLM) and enterprise resource planning (ERP). While PLM helps them manage their complete product development stage and the processes, ERP facilitates supply chain management, including inventory, logistics, pricing, and payment.

Though useful in their own rights, the integration of these two systems boosts their capabilities substantially. Moreover, experts believe that integrating PLM and ERP systems can bring out their fullest potential. 

Let us deep-dive into how ERP and PLM work together and the benefits of their integration.

What is PLM?

Product lifecycle management (PLM) is a process of managing complex product development from ideation, designing, manufacturing to the disposal stages. It is a software solution that integrates data, workflows, business systems, and people in a value chain to manage the entire lifecycle of a product efficiently and cost-effectively.

Benefits of PLM

  • Reduces your risks associated with compliance by enabling a single source of truth
  • Enables innovation by allowing companies to work in sync no matter the location
  • Increases the bottom line of the company
  • Reduces costs associated with materials and productions through collaboration
  • Speeds up your time to market by centralizing data and accelerating product development
  • Enhances productivity and product quality

What is ERP?

ERP is a procedure that integrates all the core processes of a company, such as HR, finance, procurement, manufacturing, services, supply chain, and the like, into one system. However, modern ERP systems have evolved beyond the basics to offer efficiency, visibility, and intelligence across all your business aspects.

Benefits of ERP

  • Unifies your IT spend and helps you focus on one single ERP system
  • Better reporting and planning through insights that enable smooth analysis across departments
  • High customer satisfaction through centralized data and aligned communication
  • High data quality and security to keep hackers and any discrepancies at bay
  • Complete visibility to manage your operations and costs appropriately
  • Enhances collaboration between multiple teams and, thus, seamless workflows
  • Agile supply chain due to high visibility and management of your inventory and logistics

PLM vs. ERP

As the name suggests, one of the main differences between the two systems is that PLM is mainly about the ideation and planning of a product while ERP, on the other hand, is about execution, i.e., the making of that product. Typically,  PLM is used by engineers or product designers and ERP by manufacturing operations personnel.

Product Lifecycle Management (PLM) is involved more during a product's ideation, innovation, and design processes. ERP helps manage its quality, efficiency, and cost-control aspects in the manufacturing and supply stages. 

This means PLM focuses on the configuration and relation between the various components of a product. On the other hand, ERP deals with the movement of materials such as inventory management, production scheduling, and logistics. Clearly, both the systems are diverse, and each system’s capabilities are not replaceable with the other’s.

PLM vs. ERP Capabilities
PLM ERP
Bill of materials (BoM) management Purchasing
Item management Inventory management
Change management Order management
Document management Accounting and finance
Compliance management Schedules
Product design Product manufacturing

Why does your business need PLM and ERP integration?

Having real-time access to comprehensive product information, including costs, is crucial for an efficient product development process. Besides, getting accurate calculations means working with multiple business systems and verifying the data back in your isolated Product Lifecycle Management system.

When your PLM and ERP are not integrated, your R&D department ends up spending plenty of time re-entering data and fixing related errors, working with wrong product forecasting, providing incomplete information instructions and material master records, and following up on process delays.

Therefore, you need to centralize the data between your PLM and ERP systems by integrating them to ensure an efficient flow of the product life cycle.

The benefits of PLM and ERP integration

PLM and ERP business systems are critical for innovative development and profitable launch of products. The two software systems are complementary, and you cannot choose one over the other. Their integration ensures the success of a product. Let us look at the various benefits of PLM and ERP integration.

1. Higher efficiency

PLM-ERP integration can enhance process efficiency and productivity. Consequently, it helps you increase your company's bottom line as well. You gain access to real-time data and see data transfer in real-time. This means you are always updated on the current status and can make modifications as required. Your ability to detect probable improvement areas enhances as you have more operations-related information at your disposal.

The PLM and ERP combination automates the process of updating and transferring data. Thus, your employees can be free from the mundane task of repetitive data input. They can utilize their valuable time in executing more business-critical, skill-relevant tasks, leading to increased productivity.

2. Cost reduction

The ability to save costs is one of the top benefits of PLM and ERP integration. When the data starts to transfer back and forth automatically between both systems, the manual intervention is minimalized.

In an integrated environment, you need to feed the data only once instead of twice. The data added can then move directly to the other system without any interference. As a result, the scope for errors decreases considerably and increases data accuracy. Integration also nullifies the chances of any inconsistencies between the systems.

With increased data accuracy, a business can place their purchase orders more confidently, helping you avoid supply shortages and save money on excessive supplies. Furthermore, you can ensure the on-time delivery of orders without having to spend on hiring additional supply chain resources.

3. Higher customer satisfaction

Centralized data ensures higher visibility into your business operations, allowing you to recognize the potential areas for cost reduction.

Undeniably, when your errors are minimized, efficiency is increased, processes are improved, your customers are happier and satisfied. Despite the PLM and ERP functionalities supporting the internal systems, their combination can help increase customer satisfaction by fulfilling their orders quickly and accurately.

What is more, the  PLM and ERP integration can enable you to adjust prices to expand your customer base. With many of your processes being automated, your employees can focus on order fulfillment, customer satisfaction, and product improvement, among other vital tasks. This integration also facilitates your option to integrate Customer Relationship Management (CRM), which can increase your ability to achieve the highest level of customer satisfaction through relevant and accurate data.

4. Improved collaboration

Seamless and clear communication among multiple departments is vital for business success, especially in larger organizations. The slightest disparity in the information or incompatibility of formats uploaded by different employees can cause miscommunication, leading to errors, extra costs, and revenue loss.

When your business systems are integrated, all the stakeholders are directed to a single source of data. For instance, when someone needs to modify any data, especially at the last minute, it is crucial to inform all the stakeholders of those changes simultaneously. An integrated system automates the updating of data for everyone. Besides, one can even view all the changes made in the past to understand how the products or processes have progressed over time.

System integration encourages the exchange of information between multiple departments, leading to surprising improvements in your business. Access to the overarching data of their business operations helps all the departments align better, increasing performance and productivity.

Which comes firstPLM or ERP?

Our customers often ask which system needs to be implemented first—PLM or ERP? With every business now recognizing the value of the system integration, they want to ensure each system is placed well for seamless end-to-end integration. 

Logically, one must start with the origin of a product, where it is ideated and designedPLM. However, many businesses believe ERP implementation comes first as it deals with the financial and operational aspects. 

In all honesty, the right answer is neither PLM nor ERP. Building and implementing both systems simultaneously makes more sense, as it ensures the integration is done specifically to your business needs.

Successful integration involves a complete understanding of the data, including its real meaning and how and where it is stored. A Master Data Management project often needs to be undertaken before implementing the ERP or PLM systems.

Want to learn out how the leading manufacturers are benefiting from PLM and ERP integration.      

How are the Leading Manufacturers Winning with PLM and ERP Integration

Peter van Leeuwen,
Peter van Leeuwen,
Manufacturing Industry Expert

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