The Blurry Line between ERP and PLM in Engineer-to-order (ETO) Manufacturing

Alongside other business objectives, the four factors mentioned above make the connectivity between ERP and PLM a necessity for ETO companies. Ideally, it would be great if there was a single system handling everything that an ETO manufacturer needs. However, during the early days of development, the product development application camp (e.g., computer aided design [CAD] and product data management [PDM] vendors) and the transactional enterprise system camp (e.g., ERP and supply chain management [SCM] vendors) were developing solutions in significant ignorance of each other. Also, ERP and PLM systems were not implemented at the same time for many organizations (often ERP was implemented earlier that PLM) and integration between the two systems seemed to be the only realistic option.

The Blurry Line between ERP and PLM

The purpose of integrating ERP and PLM is to ensure that product definition information (which is mainly generated by the product design and development department) is accessible instantly by the following processes (e.g., production and services). Also, data from non-design phases can be a valuable input for the decision-making process during the design and development stages. ERP and PLM vendors and implementers have developed technologies to integrate the two systems and to integrate CAD design information with enterprise software applications as well.

In the past, the boundary between the ERP camp and the PLM camp was quite clear. However, after seeing the market potential of PLM solutions, almost all major ERP players have entered into the PLM market. This doesn't necessarily mean that PLM solutions provided by ERP vendors integrate with ERP systems better than those provided by pure PLM vendors (sometimes it may take very long for an acquired PLM solution to be well integrated with its new owner's ERP system), but it should be somewhat easier to coordinate the efforts of integrating two systems together.

Both ERP and PLM vendors are trying to extend their respective solutions' capabilities to the other side. This effort makes the line between ERP and PLM blurrier—ERP solutions are now more capable of managing product data and PLM vendors are adding more transactional functionality in their offerings.

On one side, ERP solutions are increasing their inward capability of managing product data. This phenomenon can be found more significantly in ERP solutions specifically for the ETO industry. To explain how ETO ERP is advancing in providing PLM functionality, I selected two common sub-modules: product data management and product/item configurator. Both submodules are available in ETO ERP and Discrete ERP (which has more generic coverage on manufacturing industries) categories within the Technology Evaluation Centers' (TEC's) knowledge bases (KBs). The comparison of average rating scores (based on TEC's software selection methodology) of the two types of ERP on the selected submodules clearly shows that ETO ERP provides better PLM capability than Discrete ERP (see figure 1). These average scores are quite representative since they are based on 111 Discrete ERP and 35 ETO ERP solutions recorded in TEC's knowledge base. Although PLM-like functionality within an ETO ERP solution can't match what PLM can do, this extension may reflect that ETO manufacturers are eager to enhance the connectivity between product data and operation data.

Figure 1. Rating scores of two submodules within ETO ERP and Discrete ERP

On the other side, PLM vendors are now working on expanding to the ERP-like functionality. A good example is the increasing availability of sourcing solutions from non-ERP PLM vendors. No matter how a PLM vendor positions its products (i.e., sourcing as a part of the PLM package or as a parallel offering alongside PLM), it makes perfect sense to increase the proximity between product definition information and sourcing. For ETO manufacturers, delivering high-quality products on time requires efficient sourcing, decision-making, and operations which rely on instant access to accurate product definition information and streamlined collaboration around it.

The Blurry Line between ERP and PLM in Engineer-to-order (ETO) Manufacturing

Enterprise resource planning (ERP) and product lifecycle management (PLM) have different business management perspectives—the first focuses on fulfilling physical orders with the respect of optimizing resource use whereas the second focuses on taking care of innovation processes by facilitating product definition collaboration. However, there is an intersection between the two systems. By empowering the consistent accessibility of one system's users to another system's data and processes, the integration between the two systems delivers benefits such as shorter time-to-market, lower manufacturing costs, and higher customer satisfaction.

The Need for ERP–PLM Integration in ETO Manufacturing

It is important for all manufacturers that have implemented ERP and PLM systems to build connections between the two software applications. For engineer-to-order (ETO) manufacturers (who design and manufacture products to the specific needs of the customer), the connection between ERP and PLM is even more important due to the specificity of the ETO sector.

Facilitating Engineering Changes

For ETO manufacturers, the probability of product and process changes is high. During the time between receiving customer requirements and delivering final products, changes happen (whether the customer modifies their requirements; design modifications are requested by the shop floor; or issues on the supplier's side result in using alternative parts). Quite often, a change initiated in one system (either ERP or PLM) will have a consequence in the other. For ETO manufacturers, the capability of efficiently capturing change requests and implementing change actions throughout the entire value chain (customer, manufacturer, and supplier) in a synchronized manner is one of the key success factors.

Reducing Rework and Scrap

Every manufacturer wants to reduce rework and scrap but ETO manufacturers dislike these costly activities more than the average manufacturer. In the ETO sector, the quantity of each product is usually small—unlike mass production manufacturing. This manufacturing process allows for a certain percentage of rework and scrap and costs are allocated to finished products without significant increase on unit price. For ETO companies to avoid catastrophic wastes in manufacturing processes, they have to make sure that the design department knows what can be made on the shop floor and that the production side always works on the up-to-date design specifications that reflect correct customer requirements.

Surviving Amid “ERP Sharks” as a “Visionary Vendor for the Pragmatic User” (Part II)

Towards the end of offering proven technology to pragmatists, SYSPRO’s fully-integrated solution suite [evaluate this product] connects to disparate systems via Service Oriented Architecture (SOA) technologies. All the above-mentioned modules are based on standard Extensible Markup Language (XML) formats for information exchange, and Web service technologies for enhanced interoperability between disparate systems and for collaborative commerce. SYSPRO’s thoughtful approach to adopting new technology, such as Web services and SOA platforms, again reflects the desires of its sensible buyers, who are driven by business needs rather than by the latest headlines.

The decision for SYSPRO to go the Microsoft .NET Framework route was apparently done even a couple of years prior to Microsoft releasing the framework for general availability. The SYSPRO e.net solution suite was developed in close association with Microsoft on the beta .NET development tools and released immediately after Microsoft’s commercial release of .NET Framework. SYSPRO was even quoted by Microsoft at that stage as the poster child of .NET.

In retrospect, it appears that the right visionary technology step was made by SYSPRO. Over time, more and more of the Microsoft solution set has been incorporated and integrated into SYSPRO’s suite, and its customers have continually benefited from this technology decision made several years ago.

One of the tenets of PragmaVision is to support multiple levels of technology evolution, as clients want to progress to the next level at their own pace, and without feeling forced to migrate to .NET or SOA-based solutions. As an indication of SYSPRO’s commitment to its customers, the vendor continues to support some versions of UNIX even though this legacy base is less than a percentile of the installed base (and despite the fact that, in order for users to benefit and use the .NET-based functionality effectively, a Microsoft environment is required).

One may wonder what exactly is pragmatic vs. visionary at SYSPRO in this technology regard. Well, pragmatic is allowing customers to have a feature-rich system that evolves with their needs and when they are ready. Visionary is to say to the customers “You want the latest and greatest technologies and are ready for them? Then, we are ready to provide it to you!”

SYSPRO’s global distribution model is heavily geared towards partners for sales and implementations, which has also proven to be quite advantageous to the company. The partners are experts in both sales and implementations and have the regional and vertical market expertise. In each geographic region where SYSPRO has strong presence, the dominant sales and implementations model is via partnerships. Certainly, some direct sales and centralized corporate initiatives would entail vertical industry requirements definition, product extensions (via new e.net solutions), further corporate expansion and management of large global accounts.

In addition, while SYSPRO has amazingly broad and deep core functionality described earlier on, some customers require functionality that is even more business-specific. The SYSPRO environment gives its customers and partners the ability to develop around the core as a combined result of the embedded trigger functionality within the .NET environment, the graphical user interface (GUI) and pervasive Visual basic (VB.NET) scripting functionality. By accessing the business logic via Web Services, customers and partners can develop on any SOA-compliant platform without inhibiting the upgradeability of the core SYSPRO product and can do it fairly efficiently and cost-effectively .

TurtleSpice ERP! (Week 4)

The story so far: Mike Chelonia, TurtleSpice’s comptroller, has been tasked to select an ERP system by his CFO. Facing pressure from his VP Wade Sharkey to short-circuit the selection process and select Big Gun Software, Mike gets a reprieve when Wade Sharkey is over-ruled by the CEO.

Now Mike has to decide how to handle TurtleSpice’s business process documentation. When we asked you what you’d do in Mike’s shoes, you voted to hire external consultants to train the TurtleSpice project team.

Don’t forget, you decide the fate of TurtleSpice’s ERP selection. Cast your vote at the bottom of this post!

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The three consultants from iRightPros Consulting storm into Mike’s office like a SWAT team. Offensive perimeter established: check. Evasive maneuvers neutralized: check.

They’re here to deliver their complimentary pre-proposal.

“Congrats, Mike, you’re making the right decision.”

“Haven’t made one yet. Still looking at a number of consulting firms.”

This isn’t true, really. The price is right, and they have an impressive client list in the manufacturing sector.

The consultants drag Mike through their approach to process documentation, and lay down a proposal for an action plan, which adds up to an intimidating number of workshops, meetings, reviews, and dispute resolution mechanisms.

“The beauty is, you can use this for anything you want. Do it once, use it for your software selection project, your org change management, your training processes, you name it.”

This is going to be a hell of a lot of work, thinks Mike. At least three months. He wonders if he can enlist his CFO’s help to steer this by the TurtleSpice selection team.

Unfortunately, lately the CFO has been stumbling around like he’s on the verge of a booze-fueled nervous breakdown. Not much help there.

Mike thanks the SWAT team for their invasion and promises to get back to them. They congratulate him again and move out with a little more swagger than he likes to see.