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Differences between ERP and PLM – A White Paper

I was forwarded this whitepaper written by Chuck Cilamore, CTO of Omnify Software. The topic of the whitepaper is to delineate the roles of ERP (Enterprise Resource Planning) and PLM (Product Lifecycle Management) in creating a successful collaborative environment. Omnify Software is a providers of PLM software for OEMs (Original Equipment Manufacturers) and EMS (Electronic Manufacturing Service) providers.
Chuck highlights the following as the essential difference between an ERP and PLM offering:

The manufacturer had an ERP system in place to manage all of the operations-centric business activities such as financials, purchasing, planning and work orders. But the ERP system did not address their engineering design requirements.

Furthermore, the real objective of the PLM is,

A PLM system is designed to manage the full gamut of engineering information in a single location through the many stages of a design. The enterprise server manufacturer used the PLM system to manage the lifecycle and all revisions of their Bill of Materials (a listing of components used in a product), provide revision control of engineering documents (such as assembly drawings, schematics and datasheets), electronically route approvals for New Part Requests (NPRs), manage and automate Engineering Change Orders (ECOs), and control Approved Manufacturer’s List (AML) changes. More importantly, the PLM system helped bridge the gap between engineering and manufacturing. By providing direct data sharing with the ERP system, any changes made in the PLM system were automatically uploaded to ERP so that engineering and manufacturing were always in synch.

The essential distinction being drawn between ERP and PLM by Chuck is a void that exists on the ERP side i.e. an ERP system doesn’t delve into the details and complexities of product development and lifecycle management. However, that void is something that ERP systems will expand into by acquiring some of the PLM players and integrating their products into the ERP suite of offerings. I saw the same thing happening with ERP players gobbling up TMS providers to precisely fill this gap that was perceived in their offerings.

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Product Lifecycle Management (PLM) – What is it?

Another buzzword, another hyped up same ol’ thing or something new, looking at an age old problem with new glasses – what is PLM exactly all about? I came across Arena solutions which is in the business of selling PLM tools and went through their demos to ascertain what they’re upto. In a nutshell, PLM software:Products as ERP:Finance and CRM:Customers. Attendant to the described associations is an underlying definition that no vendor of the latter products might sign up to because they’re in the business of extending their solutions/services into the PLM space or any other space that one can think up.

Mark Holman of Arena solutions in his demo seeks to explain how PLM can:
1. Accelerate time to market
2. Streamline collaboration in the supply chain
3. Ship profitable products

Mark also compares the current state of PLM software with traditional PLM software based on the Client-Server model as opposed to the PLM as a service (SOA approach?) model – meaning that all you need is a internet connection and a web browser (Web 2.0?), that they follow.
A first cut review of the demo leads me to think of PLM as a information exchange and, product related control routing and processing tool that uses SOA to deliver its content. I’m sure that ERP vendors are hot on their heels adopting the same technology wholesale into their myriad functionalities or extending their current capabilities in that direction. Gleaning information from the demo, I’d classify PLM as an analytic tool that brings into a firm adopting it a host of its own preferred method of structuring product management, cost reductions, collaboration etc.
However, something that struck me that if ERP seeks to subsume PLM, might PLM instead replace ERP itself simply because of the ease of adoption, focus on product management rather than financial mumbo jumbo and accounting? Could PLM and CRM taken together as an integrated SOA render ERP irrelevant?

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About me

I am Chris Jacob Abraham and I live, work and blog from Newburgh, New York. I work for IBM as a Senior consultant in the Fab PowerOps group that works around the issue of detailed Fab (semiconductor fab) level scheduling on a continual basis. My erstwhile company ILOG was recently acquired by IBM and I've joined the Industry Solutions Group there.

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