The business environment is rapidly changing and becoming extremely competitive. Organizations can no longer afford to take a lot of time to develop and introduce their products to the market. Also in line with the various business processes, which too are getting more complex with time, the products are also evolving and getting more advanced. This has created a need for the businesses to have a better operational model to support the product development, precisely because in its absence, it will be challenging for the businesses to manage all the different aspects of creating a new product. And in such scenario, product development will inevitably run late and exceed its budget.
The need of the hour for the organizations is to make the product development process more transparent and improve the efficiencies. This will lead to more innovations, shorter product development cycles, and faster time-to-market, among other things. And what helps them in achieving all this? A PLM system.
Product lifecycle management (PLM) can be defined as the process of managing the entire lifecycle of a product — right from its inception, through design and production, to disposal of the final product and subsequent service. A PLM system thus can be defined as a tool that provides control of the product record across all development stages such as conception, designing, and production. Using a PLM system, a company can manage entire product data, including items, bill of materials (BOMs), and product files. Such a system also enables a company to track any changes to product information and communicate revisions to the supply chain.
With a PLM system in place, organizations can manage key product decisions like real-time product changes. The system also helps to consolidate, organize and track complete product data — which is otherwise scattered throughout a wide variety of organizational departments — in a centralized location. By capturing the product data in a PLM system, manufacturers have access to the single and the correct version of their product record at any point in time.
In a nutshell, PLM integrates all the organizational data, processes, resources, and systems in order to provide a product information backbone for the organization. It can essentially be broken down into the following stages:
- Beginning of life (BOL), which involves new product development and design processes.
- Middle of life (MOL), which includes collaboration with suppliers, product information management (PIM) and warranty management.
- End of life (EOL), which includes strategies for how the products will be discontinued or recycled.
Benefits of PLM
Benefits of a PLM system for an organization are many, such as:
- Development of customer-centric products
- Competitive pricing, traceability and better quality
- New market development
- Shorter time to market
- Lower product cost
- Lower lifecycle cost
- Increased productivity
- Accelerated revenue growth
- Development of innovative products
- Reduced compliance risks
- Waste reduction
- Improved efficiencies
A PLM system can help an organization efficiently manage their product’s lifecycle by providing a data repository for all the information that affects the product. It can be used to automate the management of product-related data and integrate the data with other business processes such as an ERP software. It works on the lean philosophy and its objectives are to eliminate waste and improve efficiency.
PLM & ERP
An ERP and a PLM system go well together, acting as collaborative tools that can communicate with each other and support the various distinct needs of a business. The basic difference between the two interchangeable systems lies in the names; while PLM is product-specific, more focused on the creation of a product or the product line in particular, ERP is enterprise-specific and has a broader scope, which involves gathering information and tracking a business’s resources throughout a year/cycle. PLM focuses on managing the development of the product, while ERP intends to manage the resource planning for production. A PLM system stores the initial product data such as product design, and once it is ready to be produced, the ERP system, integrated with the PLM, comes into play in order to manage the resources.
According to a CIM Data report, a PLM—ERP integration across the enterprise can result in:
- 75% reduction in terms of time, cost, and efforts associated with entering data from one system to the other.
- 75% reduction in the BOM-error cost, since BOMs are created only once and then managed consistently across both the PLM and ERP systems.
- 15% reduction in inventory cost, since designers and engineers are aware of which components are already on hand.
- An 8% reduction in scrap generated.
Since PLM manages product development, and ERP aims to manage the resource planning for production, it only makes sense to use these tools in sequential order. But if the sequence is not followed and ERP software is implemented before a PLM, the risk of submitting inaccurate product data to an ERP system, inefficient spending, product recalls, and violating compliance regulations gets high. By integrating ERP software with PLM, the most up-to-date product data is available at any time and can be shared with the necessary departments to ensure accurate financial planning. Thus, both an ERP system, and a PLM system, are critical components in a company’s growth and ability to innovate.