PLM and ERP: Why They Are a Perfect Match

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PLM software (Product Lifecycle Management) and ERP systems (Enterprise Resource Planning) are common tools in businesses of all sizes. PLM and ERP have unique assets and features that provide countless benefits to businesses such as multiple-user data sharing, real-time updates and multiple deployment options.

Neither tool is going anywhere. ERP software accumulates more than $25 billion each year and continues to grow anywhere from 10% to 20% annually. The PLM software market was valued at $46 billion in 2018 and is expected to hit $67.3 billion by 2025. They both have ties in automotive, fashion and other industries and will only continue to evolve. Imagine the potential capabilities you would have if you were to combine them. Let’s look at how PLMs and ERPs work separately and then how they work together as a hybrid system that helps your business run more smoothly.

Compare Top Manufacturing ERP Software Leaders

ERP revenue growth statistic

PLM and Tracking a Product’s Lifecycle

As the name suggests, PLM software tracks the lifecycle of a product from the early concept stages to getting it into the hands of customers. This software first emerged in the automotive industry during the mid-1980s when American Motors Corporation (AMC) wanted to make their processes more efficient with computer-aided design (CAD).

The AMC Jeep Grand Cherokee was one of the first vehicles produced with PLM software and even got Chrysler’s attention (who eventually bought AMC). Since then, the implementation of PLM solutions has been fine-tuned and extended into other industries like fashion and electronics. A product’s life cycle now consists of four main stages: concept, design, production, and distribution and maintenance.

Concept

This is the primary stage. Analysts research to configure the ideal product to solve a problem consumers face. PLM solutions can help designers record the evolution of the product from idea to reality.

Design

The design phase is exactly what it sounds like. During this stage, designers work to turn the configured idea into reality. They build multiple mockups, prototypes and perform tests to assure the product is ready for the market. PLM solutions with centralized product information and document management hubs can store the data gathered during this phase, guaranteeing that your team has the most up-to-date files.

Production

Once the prototype or mockup passes all required tests, it’s ready for manufacturing. The final design must be shipped to the production environment. PLM software should account for sourcing of materials, costs, countries of origin, productivity quotes, timelines and more during production. Without it, your business can face unexpected costs, delays and inaccurate forecasts.

Distribution & Maintenance

This final phase of the process is vital to quality assurance because it’s centered around monitoring both the usability of your product as well as ensuring that you’re able to get it into the hands of your customers without any hiccups. You’ll warehouse the final product and distribute it through various sales channels.

From there, you’ll want to review customer support and sales data to understand the product’s overall performance in the market. Ideally, your PLM will be able to track these metrics for you, making it easy to review and improve the product’s functionality or its distribution method as necessary.

Top Features

Forty-eight percent of top-performing companies use PLM software. There are a few quintessential features that companies should consider when choosing a bona fide system. Some of these features include:

Multi-User Data Sharing

Sharing data between employees, important business partners and valued customers can be cumbersome —and it shouldn’t be.  With data sharing, you can get the right information to the right people in real-time. This kind of interconnectivity allows for a greater level of collaboration. Data sharing can reduce the amount of time you spend focusing on planning and development in the design phase, allowing you to quickly catch and resolve complex issues. Additionally, you can easily update pricing, product attributes and sales information during the product launch.

A PLM product’s data sharing goes hand-in-hand with ERP software’s real-time updates like peanut butter and jelly. You want your critical data to reach the right people in the shortest amount of time possible, right? Joining your PLM solution with an ERP product allows product information to go to the right people in the right departments while also updating the logistics of the product (i.e., distribution schedules and inventory management) as needed.

Product Revisions

Your company must manage revisions and challenges that arise during your product’s lifecycle.  With a good product management feature, you can track changes and updates to the product, modify document versions and follow change orders from engineering, marketing or operations. This feature also helps to provide a data-driven analysis of things like inventory, market timing and production changes while simultaneously keeping records of workflow and approvals.

Ideal Deployability

Last but not least, you need to know which type of deployment you want: on-premise or cloud-based.  Cloud-based deployment refers to solutions that are hosted by the vendor’s servers and accessed directly through the internet. This type of deployment gives you and your team access to data and important information from anywhere at any time on any internet-connected device.

Conversely, on-premise deployment is housed internally on your servers. This provides you with direct control over the system’s security by ensuring that the system is only accessible by in-house employees.

Get our PLM Software Requirements Template

ERP’s Multiple Facets of Operation

Now that we’ve reviewed PLM and its role, let’s switch gears to its close comrade ERP software.

ERP solutions allow businesses to use a system of integrations to cover a wide array of functions through a centralized interface. From product planning to core HR and everything in between, ERP systems act as an all-encompassing solution providing a variety of benefits. This software dates back to the ‘60s — a time when it was mainly used for inventory management within the manufacturing sector.

In the ‘70s, it morphed into a solution focused on scheduling production processes, known as material requirements planning (MRP) software. It expanded to MRP-II to encompass more manufacturing processes by the ‘80s. In 1990, the term ERP was coined by Gartner when MRP-II enlarged beyond inventory control to back-office functions, becoming the software it is today.

Intacct ERP Dashboard

An example of how an ERP system monitors the logistics of your business.

Five Telltale Signs You Need an ERP System

Many businesses use traditional standalone tools (i.e., Excel spreadsheets, QuickBooks, Microsoft Word, etc.) to manage different processes within their first few years of operation. Here are five telltale signs that you’re ready to make the switch.

1. Longer Duration for Routine Activities

If routine activities, such as bookkeeping or organizing data, take longer than expected then systems that don’t work together effectively may be the underlying cause. ERP software seamlessly integrates data into one system with a common interface for software to communicate more efficiently, thus doing their jobs more effectively.

2. Abundantly Unanswered Questions

Is it easy to answer important questions about your business? Can you tell someone what your revenue per product line is or the exact number of returns you have? If not, a lack of access to metrics and KPIs may be slowing you down. Fast-track business and financial reporting on this software can address and easily resolve these problems.

3. Business Processes Need Recalibration

Is it hard for you to manage your inventory, satisfy customers or keep costs in order?

ERP solutions possess efficient operations and access to all of your important data. This feature can refine your business processes to more closely align with your growth and changing priorities.

4. Duplicate Data Entries

Reporting takes longer, errors happen often and decision-making is hindered when most of your departments use their applications. Chances are, you’re getting duplicate data entries and spending too much time correcting them. ERP allows information to proficiently flow between systems, alleviating headaches and saving time.

5. Missing Out on Opportunities

Newer systems feature advanced intelligence capabilities, like machine learning and predictive analytics, to ensure effortless identification and capitalizing of new profitable business ventures.

5 Signs You Need ERP

Top Features

Though ERPs differ, there are quintessential capabilities businesses consider when choosing the best system based on their unique needs. These features include:

Department Updates

Business processes automatically integrate across offices. For instance, a new order from the inventory of your hat store will initiate a credit check, inspect product availability and update the distribution schedule. Then, once the order ships, an invoice is sent.

Immediacy

If problems occur with a credit check, product availability or distribution schedule during a specific hat order, you’ll know immediately thanks to the real-time operations of your ERP system. It permits you to swiftly identify and correct the situation so you can return to normal productivity.

An ERP software’s immediate updates module needs a PLM solution’s product management tool like popcorn needs butter. Sure, you can have one without the other, but they function better together. When production management lacks real-time updates, your logistics team is in a fog of confusion. How can warehousing and distribution schedules be met if your logistics team is unaware that your new hat is back in the design stage because the prototypes failed? Immediacy and product management keeps everyone in the loop.

Coherent Look and Feel

Early on, vendors discovered that software with a consistent user interface reduces training costs and feels more professional. Sometimes a common look and feel are abandoned to make a speedier entry to the market. But as new releases surface, most product vendors prioritize a user-friendly interface over speed. This means that an interface with easy navigation is a common benefit for this software.

Get our Manufacturing ERP Software Requirements Template

Fusing PLM and ERP

Now that we’ve reviewed how PLM and ERP tools work separately, let’s discuss the benefits of them working as a coalition.

Enhance Accuracy

With both systems automatically transferring information back and forth to each other, you’ll find that combining your PLM software with your ERP system can reduce costs because you’ll only need to input information into the system once instead of in separate systems. This depletes discrepancies and duplicate data entries, saving your funds from purchasing unnecessary supplies. You can kiss product shortages goodbye because you’ll have the ability to make more accurate predictions of your inventory.

Cohesive Coordination

One of the initial advantages of an ERP system is the ability to house all of your data into one database. This means that data from every department in the company is stored conveniently in a single location. Integrating PLM with ERP grants all employees across all departments access to the same information, keeping everyone on the same page. This particularly comes in handy when someone has to make a last-minute adjustment. The affected parties are notified ASAP,  eliminating all surprises.

More Satisfied Customers

The endgame of this coalition (and surely your business) is satisfying customers with your products. Customer orders are fulfilled with enhanced precision and speed. You may also consider combining your PLM and ERP system with a customer relationship management (CRM) solution. This will improve the accuracy of the data recorded in your CRM system, helping you further improve the relationship between you and your customers.

Compare Top PLM Software Leaders

Conclusion

Moving forward, PLM and ERP products are both useful tools for your company. But leveraging their features as a combined solution can enhance your accuracy, raise productivity, establish cohesive coordination and guarantee satisfied customers.

How has PLM or ERP software benefited your business? Let us know in the comments.

Khaleel HayesPLM and ERP: Why They Are a Perfect Match

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