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ERP and PLM Integration Considerations by Richard Bourke


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ERP and PLM Integration Considerations by Richard Bourke

  1. 1. An Introduction – for manufacturers of complex products Maximizing the Value of Product Lifecycle Management and Enterprise Resource Planning: Integration and Collaboration August 2011TABLE OF CONTENTSPart 1: Introduction....................................................................................................................................... 1Part 2: Product Lifecycle Management and Enterprise Resource Planning ................................................. 3Part 3: Collaboration and Integration – Overview ........................................................................................ 5Part 4: Collaborative Product Development and Configurability ................................................................. 7Part 5: Collaborative Product Development and Enterprise Resource Planning .......................................... 9Part 6: Integration – The Quest Continues ................................................................................................. 10Part 7: Some Questions – Some Answers ................................................................................................... 12Part 8: Introduction to Product Lifecycle Management as the System of Record ..................................... 14Part 9: Manufacturing Process Management Explored .............................................................................. 16Part 10: Manufacturing Execution System Added to Foundation .............................................................. 18Part 11: Final Thoughts ............................................................................................................................... 20APPENDIXAdditional Sources of Information .............................................................................................................. 22About the Author ........................................................................................................................................ 23
  2. 2. Maximizing the Value of PLM/ERP: Integration and Collaboration Discussion NotesPart 1: IntroductionPrologueAs the economy recovers from the recent tough and turbulent economicclimate, manufacturers of complex products, such as Industrial Equipment andHigh Tech, are still coping with many unrelenting challenges. These challengesinclude increasingly complex supply chains, numerous regulatory andcompliance directives and heightened customer demands. Some companies have been in a “survival mode,” often seeking immediate,short-term cost reductions, possibly sacrificing product innovation in thefrantic quest to save money. Yet, as the economy improves, longer-termproduct innovation initiatives are crucial to ensure future competitiveness.Cost reduction alone cannot ensure a competitive market posture.Recent surveys show that companies are willing to invest in InformationTechnology (IT); some of the motivation for IT expenditures for applicationsystems, however, appears to be cost containment, particularly, personnel.The Foundation SystemsTwo application systems are commonly recognized as the indispensablefoundation for an enterprises IT infrastructure: Product lifecycle management (PLM) Enterprise resource planning (ERP)One of the common dimensions in these systems is Time: cut, shrink and slash.Successful users of PLM systems cite “Time-to-Market” as a strategic value forimplementing PLM. Yet, also achieving “Time-to-Volume” and “Time-to-Profitability,” highlights the need for effective and efficient PLM/ERPintegration and collaboration. And, Time is a key focus for any discussion of“lean.”About LeanLean for manufacturing has long been a proven strategy. Now, somecompanies and several product development (PD) consultants recognize thatapplying lean principles to PD activities is essential. The values of lean, such aseliminate waste, improve flow, and many more apply. Yet, the application oflean must accommodate the differences in the PD environment (lessstructured) as compared to manufacturing and supply chain activities (morestructured).Thus, the proven philosophy and techniques of lean manufacturing cannot beapplied “as-is” to lean product development (LPD); rethinking the applicationof the methods is an absolute necessity. For instance, the role of Six Sigma toreduce variability in manufacturing processes is vital. In product development,conversely, not so, accommodating variability in the processes is moreimportant.©Bourke Consulting Associates, 2011 Reproduction allowed provided attribution is retained Page 1
  3. 3. Maximizing the Value of PLM/ERP: Integration and Collaboration Discussion Notes What’s more, be aware, lean PD consultants may tout different emphasis forapplying the various Lean methods. Practitioners and LPD consultants are re-examining systems to manage PD, such as Stage-Gate. For example, at arecent conference, a recurring theme was “the best results come, frombending the rules some.”Lean concepts and methods have proven to increase the value of PLM and ERPsystems – when properly applied and efficiently deployed. Incorporating Leanin these systems is a requirement for success, not an option.A Core ThemeThe following discussions are based on the decade’s old, classic paradigmstated by Peter Drucker, “Efficiency is doing things right and Effectiveness isdoing right things.” The interpretation is: Effectiveness – invest in appropriate IT tools when they will facilitate the corporate strategy and justified. Within this key assertion, software is only part of the answer to successful systems; it is only an enabler, a facilitator, no more, no less. Efficiency – gain the greatest value from the IT investment. Successful systems are crafted on a foundation of best practice business processes supported by proven IT. Cultural aspects, moreover, will be an important consideration for successful implementation of powerful, software-based systems.What’s NextThe next parts will focus first on maximizing the value of two foundationsystems – PLM and ERP – with collaboration and integration processes and ITsupport. Later, as an additional building block for a comprehensive systemfoundation, manufacturing execution systems (MES) will be examined. Thesesystems are rapidly gaining adherents in many industry sectors, particularlywhen regulations and complex shop floor environments require detailed work-in-process management and reporting.A Reading NoteThis paper is an introduction to the concepts of PLM/ERP systems andcollaboration and integration for those readers needing just the highlights. Togain more detail and further understanding of these vast subjects, see“Additional Sources” in the Appendix that provide you numerous, easilyobtainable articles and books. Several professional organizations are alsoidentified.©Bourke Consulting Associates, 2011 Reproduction allowed provided attribution is retained Page 2
  4. 4. Maximizing the Value of PLM/ERP: Integration and Collaboration Discussion NotesPart 2: Product Lifecycle Management and Enterprise Resource PlanningPrefaceA basic premise: PLM and ERP are both powerful systems with uniquepurposes and functions. Both systems are required to manage “productdefinition”1 over the total lifecycle of a product. It’s not an either/or situation.Product Lifecycle ManagementA product’s lifecycle may start with the “first cocktail napkin” ideation, ormore formal methods, and continues until the product is retired, which formany companies could occur decades later.Definitions of PLM abound; my definition is that a PLM system is an astuteblend of processes (best practices), people (roles and responsibilities) andprograms (PLM application elements) to facilitate product development and tomanage product knowledge. In other words, as stated earlier – software is justan enabler.When forging a company’s tailored definition, potential users should consider: There is little agreement on the definition of PLM The scope of PLM is constantly expandingPLM systems have two basic purposes: (with the functions to support them):1. To facilitate product development using product design tools, often called authoring or creation tools, such as Computer Aided Engineering and related development software.2. To manage product knowledge over the product lifecycle using a selected range of PLM applications.Product data management (PDM) is the base PLM application that typicallyincludes capabilities to store, secure, share and distribute all electronic formsof product knowledge for new and existing products. PDM applications shareand distribute product knowledge with electronic workflow tools withcapabilities for eliminating paper documents and manual workflows.A key function of PDM is to manage the engineering bill of material (eBOM)and related change information in a timely, accurate and properly structuredmanner for use by other systems, including ERP and MES.1 The term “product definition” spans a wide range of data elements and/or files including: engineering Bill of Material (eBOM),manufacturing Bill of Material (mBOM), lifecycle stages of released BOMs, routings, assembly instructions, part specifications,costs, sources, quality plans, and more. During the design process, engineers create a design-oriented parts list, i.e., eBOM,which represents how engineering views the product. Manufacturing engineers will restructure the eBOM into a process-oriented mBOM (commonly known as a Bill of Process - BOP). It will show how the product will be made, and simultaneouslycreate the sequence of steps to produce a part and the required resources - work centers, tools and skills.©Bourke Consulting Associates, 2011 Reproduction allowed provided attribution is retained Page 3
  5. 5. Maximizing the Value of PLM/ERP: Integration and Collaboration Discussion NotesThe importance of properly structured and accurate product data cannot beoverstated. Several major organizational entities – in addition to productdevelopment – rely heavily on PLM applications for accurate productknowledge: Management – Portfolio and Project Management, for new product introduction Operations – supported also by ERP and MES Vendors – Component & Supplier Management, often identified in supply chain management (SCM) systems Customer – Requirements Management, often identified in customer relationship management (CRM) systemsEnterprise Resource PlanningThe purpose of an integrated ERP system is to optimize the management ofmanufacturing to meet customer needs for high quality products withcompetitive pricing and delivery.The functions ERP span an extensive range of applications for masterscheduling, material and resource planning, order entry, shop floor scheduling,costing and financial reporting. Most ERP systems provide some of the productdefinition functions for the management of mBOMs, Routings/Work Centersand Engineering Change.ERP systems, however, may not provide adequate detail to manage work-in-process; hence, the rising interest in MES systems for more detailedinformation for managing work-in-process, including detailed reporting ofactivity.ERP’s definitions are more mature compared with PLM; however, ERP isoccasionally incorrectly postured as a financial system. Not so, though mostERP systems include substantial accounting capabilities.For Your ConsiderationUnderstanding the differences and objectives between PLM and ERP systemsis critical. What’s more, coping with the cultural aspects – diverse users’attitudes and values – may be as important as technical issues.The respective systems are different. Yet, both contribute to the objectivesstated earlier, achieving reduction of all three “Times to Market, Volume andProfitability,” more so when properly integrated.Nevertheless, companies must recognize the unique functions and processesof PLM and ERP. Also, the individual needs of users as they move forward togain the benefits of integration and collaborative environments.©Bourke Consulting Associates, 2011 Reproduction allowed provided attribution is retained Page 4
  6. 6. Maximizing the Value of PLM/ERP: Integration and Collaboration Discussion NotesPart 3: Collaboration and Integration – OverviewPrefaceAs an extension of Peter Drucker’s perspective (“do the right thing and do itright”) stated in the first part, consider his corollary as a starting point: “The most efficient way to produce anything is to bring together under one management as many as possible of the activities needed to turn out the product.”In that spirit, let’s examine two key elements: Integration – unifying related systems to facilitate timely exchange of data Collaboration – working together to achieve economic manufacturing and supply chain management, and efficient product development. . . our focus nowIntroducing Collaborative Product Development (CPD)One of the motivations for CPD is ever-increasing outsourcing of the designand manufacturing functions throughout a company’s virtual enterprise.Outsourcing recognizes that innovative product ideas come from not only thecompany’s internal functions – but also from customers, partners andsuppliers. All parties can contribute expertise working together to develop ahigher quality product, while reducing time and costs – if given theopportunity.CPD eliminates many of the problems caused by serial design processing, theoften cited . . . throwing the prints over the wall to manufacturing after anengineering design is supposedly complete.CPD is an approach in which design and manufacturing engineers and otherswork together in parallel before engineering releases the product to thevirtual enterprise. An efficient CPD relationship, therefore, provides anexcellent opportunity to consider all elements of a product’s lifecycle in theearly design stages, such as requirements, quality, cost, maintainability, to citea few.CPD helps companies to deal with two widely accepted axioms: The early stages of product development account for 70-80% of committed product cost Engineering changes later in the product lifecycle become exponentially more expensive to incorporate, that is, after a product has taken physical form in manufacturing or at supplier facilitiesResolving product design issues and developing improvements while a productis still in a digital state is clearly a desired best practice. Thus, the values gainedwith efficient CPD will be higher quality product at a lower cost and a speedierrelease to the virtual enterprise.©Bourke Consulting Associates, 2011 Reproduction allowed provided attribution is retained Page 5
  7. 7. Maximizing the Value of PLM/ERP: Integration and Collaboration Discussion NotesSoftware EnablersAn abundance of proven, commercially available software is now available.Software enables efficient coordination and selective sharing of productinformation throughout the virtual enterprise. For collaboration, choices rangefrom e-mail and other asynchronous methods to more interactive(synchronous) methods. For instance, using PLM capabilities for automatedworkflow routing, visualization and markup of 3D CAD models to achievetimely product design reviews among geographically dispersed design teams.Therefore, selecting and using the right software is a step to gain the values ofefficient collaborative relationships, be it group or global. A company mightacquire highly capable software, but still not achieve a high level of efficiency,i.e., value, without a constant devotion to best practices and processes.Improving practices and processes should be a prime motivation to developthese relationships and to gain the values for your company’s efforts, forexample: Cost reduction – save travel time and cost by eliminating on-site meetings; i.e., virtual co-location. Some physical co-location, nevertheless, may still be advisable for individual circumstances New product introduction – cut engineering change order processing by over 50% to support the key strategic objective to reduce Time-to-MarketIt Takes More than SoftwareMany factors – both technical and cultural – affect attaining a high degree ofefficiency in any collaborative relationships, be it group or global. A key toachieve true efficiency is user’s confidence in the quality of data flowingthrough the systems. Lack of confidence among team members may causecontinual questioning and correcting data, wasting time, money and user’spatience.Trustworthy, continuous communication in an environment of widely diversepersonnel with differing motivations, values and attitudes is mandatory.Cultural aspects will be (not, may be) as significant as the technical (software)capabilities to gain efficient collaboration and integration.Validation? Just ask any experienced user.What’s NextThe next parts of this paper will examine integration and collaboration in moredetail. A continuing focus will be the eBOM-mBOM life cycle and processes.©Bourke Consulting Associates, 2011 Reproduction allowed provided attribution is retained Page 6
  8. 8. Maximizing the Value of PLM/ERP: Integration and Collaboration Discussion NotesPart 4: Collaborative Product Development and ConfigurabilityPrefaceToday’s competitive environment – and highly likely for the future – demandsthe ability to produce and sell complex, configured products. Customers inboth the B2B and B2C sectors expect customized products to match theirunique needs – but with lower prices, higher quality and faster delivery.The Need of Configurable Product ManufacturersTo meet these customer demands, some companies are pursuing masscustomization: “The development, production, marketing and delivery ofcustomized products and services on a mass basis.” 2Embodied within this strategy is the need for “configurability,” i.e., optimizingcustomer choices by providing more options with less, or more efficient use ofresources.The essence of a configurability strategy is to take advantage of provenmethods of product development to achieve greater customer satisfaction atlower costs.3 A few of these methods include: Platform planning – designing parts and assemblies to be widely shared by product families Design reuse/parts standardization – capitalizing on tested designs Product modularization – developing smaller sub-systems that will be able to function properly when assembled and tested as an end itemIntroduction to ConfiguratorsA comprehensive configurability strategy requires an enabling IT-basedcapability, i.e., configurator software – tools to create, maintain and useelectronic product models to identify available options and variations to definea unique end-item. For many products in complex industrial equipmentmanufacturing, product modularization is a prerequisite step to gain efficientuse of configurator software. It eliminates predefining all possiblecombinations with individual part numbers and bills of material (BOMs) – animpossible task.Configurator capabilities come in all sizes and shapes from PLM, ERP and thirdparty sources, the simplest are rules-based (If-Then-Else logic); the moresophisticated software includes constraint logic and handling spatial andvisualization.2 Pine, B. J., PhD, Mass Customization: The New Frontier in Business, Harvard Business School Press, 1993.3 For more detail, refer to the author’s white papers titled “Configurability Strategy: A Competitive Advantage,” “Optimizing the Lead-to-OrderProcess” and “Top Ten Risks to a Configuration Project and How to Avoid Them.” Though written for Access Commerce, a configurator vendor,the information is generic and suitable for general education.©Bourke Consulting Associates, 2011 Reproduction allowed provided attribution is retained Page 7
  9. 9. Maximizing the Value of PLM/ERP: Integration and Collaboration Discussion NotesA robust configurator is one that automatically and seamlessly meets allconfiguration needs – marketing, sales, engineering and manufacturing –across the company’s product lines and for its competitive environment.Individual manufacturing environments require different methodologies; casein point: Manufacturer of dimensional, cut-to-order products bought a Features/Options software package from a vendor all too willing to sell the mismatch. Didn’t work. . . company returned software. . . vendor sued for breach of contract. . . vendor admitted error of its way and settled in favor of manufacturer.In this case, the need was for a configurator integrated with CAD software todevelop unique configurations at order entry time that are not pre-defined.The moral? Know your requirements before selecting software.Benefits of Using Configurator SoftwareOne of the values of efficient processes built with configurator software is towipe out the inefficiencies commonly found in non-integrated, manualprocesses. These inefficiencies include, extended quotation lead-timesresulting in excessive costs and time to validate configurations. Eliminatingthese inefficiencies will result in significant cost reductions, for example, orderentry expenses down between 50 and 70%.On the other side of the benefits equation, revenue enhancements includeincreased sales and improved customer satisfaction, to cite a few.Configurability and Collaborative Product DevelopmentThus, for manufacturers of products with options and variations, developingconfigurability must be inherent in CPD activities.4 Product definition – asdefined in an earlier footnote – now includes “model building,” a commonterm identifying the core activity of planning and implementing aconfigurability strategy.Model building is more than a trivial task; users report that it can take months,and requires a multi-disciplinary approach. What’s more, to ensure integrity ofthis additional form of product definition, model building must integrate withengineering change management processes.AndAn efficient CPD with an embedded configurability strategy also extends wellinto the realm of ERP processes – briefly described in the next part.4 Salvador, F., Martin de Holan, and Salvador, F., Martin de Hohan, P. and Piller, F., Cracking the Code of MassCustomization, MIT Sloan Management Review, Spring 2009. See also Frank Piller’s©Bourke Consulting Associates, 2011 Reproduction allowed provided attribution is retained Page 8
  10. 10. Maximizing the Value of PLM/ERP: Integration and Collaboration Discussion NotesPart 5: Collaborative Product Development and Enterprise Resource PlanningPrefaceAs stated in the Introduction, “Successful users of PLM systems cite “Time-to-Market” as a strategic value for implementing PLM. However, achieving “Time-to-Volume” and “Time-to-Profitability,” highlights the need for effectivePLM/ERP integration and collaboration.”ERP Collaboration with CPDNo finer example of CPD and ERP working together exists than the topmanagement process called Sales & Operations Planning (S&OP)5. One of itsprime purposes is to coordinate the new product introduction (NPI) activitiesof CPD to ensure optimum use of enterprise resources from product launch,manufacturing, delivery and on-site maintenance of the product. The key isbalancing the forecasted demands for new products with the availableresources to get products to market.For configurable products, identifying product modules for S&OP planningpurposes is vital. The goal is to meet the demands for innumerable uniqueconfigurations, delivered in a timely manner, with just the right mix of thesebuilding block modules in the supply pipeline to protect lead times.Numerous software capabilities support S&OP processes, some quitesophisticated, for instance, providing continuous simulation of alternate plans.However, a recent survey by AMR Research (now a part of Gartner)highlighted again that software is not the only critical factor.Achieving efficiency with the S&OP process is critical – but dependent on trustamong enterprise personnel with different attitudes, values and conflictingobjectives. For instance, product development personnel may not have thesame outlook on desirable new product features as marketing. Culturalaspects will be as significant as software capabilities in supporting enterprise-wide collaboration.ConclusionThe need to compress product development, and delivery lead times and costsremains a major competitive consideration. Collaboration in its many modes,such as CPD and S&OP, has rightfully sparked a great deal of attention.5 According to the APICS Dictionary, 13th Edition: “A decision-making activity involving the leader of the business, his or her staff, and a numberof middle managers and specialists. Its mission is to balance demand and supply at the aggregate level, to align operational planning withfinancial planning, and to link strategic planning with day-to-day sales and operational activities.”©Bourke Consulting Associates, 2011 Reproduction allowed provided attribution is retained Page 9
  11. 11. Maximizing the Value of PLM/ERP: Integration and Collaboration Discussion NotesPart 6: Integration – The Quest ContinuesPrefaceThe need to unify the flow of product data throughout the engineering–manufacturing continuum is more critical than ever. The motivation isfundamental: Continuing and unrelenting competitive pressures to reduce nonvalue-added times and costs.IntroductionThe basic purpose of software integration is to unify related systems to makepossible the timely exchange of trustworthy data. Successful softwareintegration eliminates the inefficiencies of manual tasks, semi-automatedprocesses and disconnected systems. Such inefficiencies obstruct the flow ofdata and frustrate system users struggling to meet job expectations. Theseconditions, unfortunately, often encourage inappropriate use of Excelspreadsheets.In the past, custom coding of software integration offered a company theallure of a fully tailored solution to meet its specific needs; the custom code,however, also brought greater risk and a high price tag. This is because itrequired special maintenance and on-going support, due to subsequentreleases of related software application systems.Custom coding for systems integration is no longer the preferred tactic.Continuing advances in software provide capabilities to unify interrelatedsystems – with reasonable expenditures. Sources of this software includePLM/ ERP vendors as well as numerous third party firms. Nowadays, a faster,more cost-effective approach is to start with commercially available softwareas a base, and then add custom code – only if necessary – to achieve thedesired level of systems integration.Integration of PLM/ERP SystemsUnifying PLM/ERP is one of the most critical integrations for a manufacturingcompany to implement. These two foundation systems – working together –are indispensable for total management of a product’s lifecycle.In the engineering – manufacturing continuum, coping with massive amountsof frequently changing product data is a constant challenge. Manual and semi-automated processes for exchanging data are error prone and timeconsuming. Interfacing or loose coupling methods, such as use of Excelspreadsheets, have not proven adequate to cope with the challenges tomanage product data.©Bourke Consulting Associates, 2011 Reproduction allowed provided attribution is retained Page 10
  12. 12. Maximizing the Value of PLM/ERP: Integration and Collaboration Discussion NotesWorse yet, product configuration integrity is at risk; discovering the trueconfiguration during final assembly haunts companies with inadequateconfiguration management. Therefore, to attain a timely and smooth flow oftrustworthy product data the complete electronic integration of PLM/ERP ismandatory.Best practice integration methods take advantage of software capabilities forseamless, real-time, bi-directional exchange of synchronized product databetween PLM/ERP systems. This level of integration makes possible theautomated transfer of engineering bills of material (eBOMs) to the ERPprocesses for managing manufacturing bills of material (mBOMs) and relatedplanning, such as bills of process (BOPs). What’s more, they nourish the timelyreturn of accurate data, such as part attributes and status, from ERP back toPLM.Using Web-based technologies, PLM/ERP integration gives all virtualenterprise users the ability to view, revise and make the most of productinformation for astute decision-making. Joint decisions are facilitated, such asplanning new product introductions and managing engineering changes.After successful implementation of best practice systems integration,companies should look to the range of results such as those cited by CIMdata:6 BOM – 75% reduction in errors due to more consistent management BOM – 75% reduction in time and cost due to eliminating duplicated effort Inventory – 15% reduction as a result of improved design re-useThese day-to-day operational savings contribute directly to attaining strategicbenefits, such as reduced Time to Market. Nevertheless, there is a continuingquest for even more productive means of unifying these systems.Coming Up SoonAn emerging approach to unifying PLM/ERP has been gaining attention.Identified as “PLM as the System of Record,” some view this unifying approachas a step to a “Single source of truth” – but not all agree. Later, I will examinethis subject in depth later.What’s NextBefore moving on, a pause to answer some common questions about PLM andERP systems.6 CIMdata, “PLM and ERP Integration: Business Efficiency and Value,” 2007.©Bourke Consulting Associates, 2011 Reproduction allowed provided attribution is retained Page 11
  13. 13. Maximizing the Value of PLM/ERP: Integration and Collaboration Discussion NotesPart 7: Some Questions – Some AnswersPrefaceIn various discussions about these topics, some common questions frequentlyarise. Here they are with answers.Some Questions and Answers1. Question: There are more differences between product lifecycle management (PLM) and enterprise resource planning (ERP) systems than you have cited. Don’t we need to know more about them before starting down the integration path? Answer: Definitely. My point was to sensitize your antenna, pique your curiosity and encourage you to take advantage of the many references identified in the “Additional Sources of Information.” Hence, it was a start to a fuller understanding of each systems functions and capabilities. Such understanding has proven to be a pre-requisite to gaining the benefits of the PLM/ERP bi-directional integration, previously described.2. Question: You identified PLM and ERP as the two mandatory foundation systems for management of the entire product lifecycle. Don’t some companies also want more detailed information from work-in-process (WIP) than most ERP systems provide? Answer: Yes, I agree. So, let me expand on this subject. For some industry sectors, three systems should comprise the indispensable foundation: PLM, ERP and MES. Any company requiring detailed information to manage WIP, or to cope with industry regulations, should consider an MES. Prime examples include those companies in aerospace and defense, automotive and medical product industries. Moreover, even if regulations do not drive the necessity a company still might choose to gain more efficient WIP management by implementing an MES system.The above question triggers a comment about any differences betweenintegration methods for PLM/ERP/MES.At a general level, the characteristics of best practice integrations of MES areabout the same as for PLM/ERP, as described in Part 5. In any of the possiblecombinations of systems integration, one of the essential tasks, of course, willbe comprehensive, up-front planning, sometimes called a “vision.” And, astempting as it is to secure fast benefits, moving ahead on a piece-meal basis isnot recommended.©Bourke Consulting Associates, 2011 Reproduction allowed provided attribution is retained Page 12
  14. 14. Maximizing the Value of PLM/ERP: Integration and Collaboration Discussion Notes3. Question: You didn’t comment on the highly likely company cultural issues inherent when integrating PLM/ERP. Isn’t that a consideration? Answer: Yes, certainly, I’ll stress it now with a direct suggestion. Ask any experienced systems implementer about the relative importance of technology – and of sensitivity to company cultural issues. Technology is necessary, certainly. Invariably, however, their responses will be to urge you to address the likely cultural issues when planning systems integration. Planning for a new system demands a process orientation that includes defining workflow and identifying appropriate user roles and responsibilities. Unfortunately, expect heated discussions, such as “Who owns the bill of material?” Another reason to understand PLM vis-à-vis ERP capabilities is to minimize the potential hassle encouraged by parochial system diehards. Thus, as mentioned earlier, one of the objectives of up-front planning should be to eliminate the “we-they” cultural syndrome of these and other entrenched organizational attitudes. My axiom: Management commitment – by itself – will not put an end to cultural resistance to accepting new software-based processes. Consequently, the project team cannot be passive, hoping that time will deal with the resistance risks, or that momentum will sweep along any dissenters. It will take a proactive approach by a project team to win user acceptance of new processes and responsibilities.4. Question: After a best practice PLM/ERP integration, is there a next step? Answer: Yes, briefly stated, consolidating in PLM all functions for the creation and management of bills of material (BOM) and bills of process (BOP). Some view this unifying approach as a significant step to a "Single source of truth" – but not all agree. I will examine this subject over the next parts of this paper.©Bourke Consulting Associates, 2011 Reproduction allowed provided attribution is retained Page 13
  15. 15. Maximizing the Value of PLM/ERP: Integration and Collaboration Discussion NotesPart 8: Introduction to Product Lifecycle Management as the System of RecordPrefaceEven with the economy rebounding, cost reduction is still a high priority. So iscoping with relentless competitive pressures, such as the need to reduceTime-to-Market that fuels the need for more efficient collaborative productdevelopment (CPD) processes.Now is the time, therefore, to explore using PLM as the system of record(SoR). It is an expanded vision for unifying PLM/ERP – plus MES in someindustry sectors. SoR is based on manufacturing process management (MPM)processes aided by software capabilities.PLM as the System of Record – An OverviewAt this time, there is no known industry-wide accepted definition/scope ofPLM as the SoR. For our purposes, an SoR is the authoritative data source for agiven data element. It is also known as the “single source of truth,” storing theauthorized version only once for use by all systems and all users.The scope of SoR implementation, however, must be clarified appropriate to acompany’s individual needs and ambitions. The scope could include many dataelements/files of product definition: lifecycle stages, parts, routings, assemblyinstructions, labor and equipment resources, specifications, costs, quality,computer-aided-design (CAD) data and more.When did the quest for PLM as the SoR begin? Since the days whenengineering parts lists (EPL) on blueprints were “thrown over the wall” tomanufacturing.One aspect has been the constant concern to maintain product configurationintegrity – acutely painful to achieve with non-integrated software systemsand processes. Also, manufacturing had to restructure the EPL to meet itsrequirements for ERP processing, often different from the engineering view ofthe product structure. Alas, data “silos” were created, and the heateddiscussions began, “Who owns the BOM?”Collaborative Product Development Associates (CPDA) nailed the issue in1997, “But, the right way to approach the PLM/ERP integration problem is notto write costly integrations – the right way is “to change the way the product isrepresented, until it is represented in a form that an ERP system can interpreteasily.” In other words – use MPM processes.©Bourke Consulting Associates, 2011 Reproduction allowed provided attribution is retained Page 14
  16. 16. Maximizing the Value of PLM/ERP: Integration and Collaboration Discussion NotesMPM in PLM as the System of Record: IntroductionMPM is the heart of PLM as the SoR concept. It is the collection of processesand technologies used to define how products are to be manufactured anddelivered. It is an approach for unifying the eBOM/mBOM processes, andcreating and maintaining the related information for bill-of-processes (BOP)for making parts.Currently, both PLM and ERP systems have product definition functions –some similar by name, but not by capability. Both PLM and ERP have bill-of-material (BOM) management capabilities, yet with distinct differences: The engineering version (eBOM) is the “As-Designed” view, as the engineer sees the product structure. The manufacturing version (mBOM) is the “As-Planned” view, the way manufacturing needs to structure the product for ERP in order to plan material requirements.What’s more, the differences between the two versions must be recognizedand accounted for to achieve complete product configuration integrity overthe lifecycle of the product.As CPDA pointed out years ago, the key thought is to create the mBOM inPLM. Then it is passed to ERP and is useful without further restructuring.Final ThoughtThe potential strategic value of PLM as the SoR, with MPM processes, suggestsa thoughtful evaluation of its use to boost a company’s CPD environment.Some consulting firms, e.g., Gartner/AMR and CIMdata, among others, haveendorsed the SoR vision. But, not all PLM/ERP system users see eye to eye onthis issue.©Bourke Consulting Associates, 2011 Reproduction allowed provided attribution is retained Page 15
  17. 17. Maximizing the Value of PLM/ERP: Integration and Collaboration Discussion NotesPart 9: Manufacturing Process Management ExploredPrefaceThe previous part introduced manufacturing process management (MPM) as asignificant step to make product lifecycle management (PLM) the System ofRecord (SoR) - and its potential to help boost the efficiency of a companysCPD effort.My definition is straightforward, "A collection of technologies and processes todefine how products are to be manufactured." Nevertheless, the scope ofapplications involved can vary because companies will interpret the scope -narrow or broad - to match their unique requirements.In some large, complex companies, such as automotive, taking a broad scopeof MPM applications is valid and justified. It could include plant design layout,simulations, ergonomics, computer-aided-manufacturing (CAM) and more.Software providers such as Dassault with its DELMIA suite and Siemens withTechnomatix present this broader scope as "digital manufacturing."Regardless of a companys MPM application scope, a core software-supportedprocess is required.The Core of MPMThe core of MPM is the capability to unify the creation and management ofthe engineering bill-of-material (eBOM), manufacturing bill-of-material(mBOM) and the Bill of Process (BOP). This capability is essential to realizePLM as the "single source of the truth" and to maintain configuration integrityover the product lifecycle.A key point: The capabilities of MPM functionality in PLM allow PLM softwareto assume the mBOM functions now in ERP. It recognizes that the mBOM mustbe synchronized with the eBOM for traceability of changes in order tomaintain configuration integrity. Furthermore, in some multi-plantenvironments, multiple versions of the mBOM may be necessary toaccommodate differences for individual plant methods in each plants versionof the mBOM.The "desired" MPM technology is to link eBOM/mBOM data in a bi-directionalmanner. Tight linking of this data provides detailed information to personnelwho interact with the PLM/ERP systems. When an update is in process, theMPM system immediately alerts responsible personnel for possible action inthe event the pending update affects any other linked data.©Bourke Consulting Associates, 2011 Reproduction allowed provided attribution is retained Page 16
  18. 18. Maximizing the Value of PLM/ERP: Integration and Collaboration Discussion NotesAs Gartner has recognized7, however, this "desirable" technology issophisticated and powerful; yet, it is not widely used in all software packages.As a result, when evaluating MPM software be alert to the differences interminology and capabilities. Gartner calls linking "BOM synchronization." InPTCs MPMLink, the technology is "associative." SAP calls it "Guided StructureSynchronization." New MPM processes and software must meet the exacting needs of bothengineering and manufacturing to promote acceptance of MPM. NumerousPLM software alternatives exist to accomplish this. For example, Microsoft hasstrategic partnerships with PTC and Siemens to support its Dynamic AX (ERP)customers with PLM and MPM capabilities.The reality is that not all companies can justify the "desired" PLM/MPMtechnology, referenced above. For those companies, some alternatives areavailable.In addition to the vendors mentioned above, other vendor offerings may befeasible to consider. Aras and Omnify, both PLM-only vendors, offer mBOMfunctionality without all of the "desired" technology. Other vendors offersome mBOM functionality in their PLM modules provided with their ERPsystem: IFS and Infor are two of them. The approach to help users keep theeBOM and mBOM in synchronization would rely on alerts, flags and changeprocesses.Value of MPMMPM is starting to be recognized as a key module in PLM systems; it facilitatesCPD. MPM should help to negate the "over the wall with the prints" mentality;no more serial processing, thus cutting non-value added time throughout theengineering- manufacturing continuum.Ultimately, the true value of using MPM is if it contributes to reducing "Times-to-Market, Volume and Profitability.” Time-to-Market is in PLMs sphere ofinfluence; Times-to-Volume and Profitability are the domain of ERP (in somecompanies, MES). These Time metrics are clearly at the strategic level;furthermore, identifying operational (day-to-day) metrics should help to makea business case for moving forward with MPM, for instance, to reducescrap/rework and increase quality. And, after all, true value has to be theprime criteria for deciding on MPM.7 Gartner, “Hype Cycle for Manufacturing Product Life Cycle Management and Production,” 2010.©Bourke Consulting Associates, 2011 Reproduction allowed provided attribution is retained Page 17
  19. 19. Maximizing the Value of PLM/ERP: Integration and Collaboration Discussion NotesPart 10: Manufacturing Execution System Added to FoundationPrefaceNow, let’s explore MES as another major foundation system in the continuingquest for competitive excellence.IntroductionAn MES is the IT capability to help manage manufacturing operations; theterm manufacturing operations management (MOM) is also used to identifythese applications. The depth and scope of MES/MOM applications varybroadly, but its core is the detailed management and execution functions forwork-in-process – defining bills of processes (BOP) and data collecting andreporting, including for product genealogy and lifecycle status. Extendedcapabilities add visual work instructions, quality criteria and connectivity toproduction equipment for real time monitoring, to cite a few.MES ArisesWhy the increasing interest in MES? The consensus of opinions and surveysindicates two general reasons: 1) continuing competitive pressures driving thecall for more efficient operations management, such as reducing scrap andrework, and 2) more MES software with expanded functions.In the past, large companies with demanding requirements for detailed work-in-process information usually energized the need for comprehensive MES,e.g., in highly complex and regulated companies, for instance,aerospace/defense, automotive, medical and semiconductor.ERP systems didn’t provide sufficient detail to help manage these complexoperations efficiently. “Do It Yourself” (DIY) extensions to ERP were theexpensive solution because comprehensive MES software was not available.Now, more commercially available MES software negates the DIY approach.The recent Logica MES Product Survey identified about sixty packages fromPLM, ERP and MES software vendors, with wide ranges of industry focus,capabilities and costs. In addition, acquisitions and partnerships are a sourcingfactor to consider, for instance, Dassault (PLM vendor) just acquired Intercim(MES vendor).What’s more, MES software vendors Apriso, iBaset and CIMx report risinginterest for this software in other sectors, such as industrial equipment, and bysmall/medium businesses.With the escalating interest in MES, however, may come “turf wars.” Avoidingpotentially devastating turf wars calls for comprehensive implementationplanning that embraces healthy doses of cultural change management.©Bourke Consulting Associates, 2011 Reproduction allowed provided attribution is retained Page 18
  20. 20. Maximizing the Value of PLM/ERP: Integration and Collaboration Discussion NotesImplementation PlanningAn essential step is to gain a fresh – and objective – understanding of thecurrent and probable future roles of each of the three inter-related systems inthe total corporate vision: PLM for product innovation, MES for detailedoperations management and execution, and ERP for high-level operationsmanagement.Additionally, all of the elements of comprehensive planning apply, particularlythe prerequisite to link the MES vision to corporate goals, as stated in theMESA report “MESA Metrics that Matter Revisited.”8 Two other significantplanning considerations include: Achieving product configuration integrity by integrating the total product life cycle “As” statuses: Designed, Planned, Built and Maintained. Presently, neither PLM nor ERP individually can completely meet this need, just pieces. Therefore, integration with MES functions will be required for total integrity. Designating the system of record (SoR), discussed in previous columns regarding PLM and manufacturing process management (MPM). In some circumstances, MES is considered for this purpose, as recognized by Julie Fraser, industry analyst and president of Cambashi Inc.:9 “As-Built is a critical phase of the lifecycle, particularly for products that may require maintenance or have safety implications requiring a recall. MES is usually the system of record for this phase.”Furthermore, planning must be comprehensive; Julie Fraser cautions us aboutone of the pitfalls of improper planning: “To speed up implementations, some companies try to focus only on the plant’s needs and treat integration as a second step. Because MES/MOM systems often have capabilities that ERP and PLM do also, it is important to decide which system will be the master of which data and have a vision. Conducting integration with implementation is the safest approach.”Final ThoughtFor a significant advance in the quest for competitive excellence, MES can be amajor contributor – when properly unified with PLM and ERP.8 Manufacturing Enterprise Solutions Association, Contact Julie at©Bourke Consulting Associates, 2011 Reproduction allowed provided attribution is retained Page 19
  21. 21. Maximizing the Value of PLM/ERP: Integration and Collaboration Discussion NotesPart 11: Final ThoughtsPrefaceThe future is now; i.e., the past is only prologue. The future cannot be ignored,despite the current economic malaise. A recognized strategy is to use ITsmartly to reduce the complexity of the virtual enterprise’s infrastructure andto increase its flexibility to meet changing conditions.Application Systems and ProcessesWhen planning for implementation, users should be aware of the currentstatus and future trends. A few to keep in the radar scopes include thefollowing. Continuing development of “cloud” (also known as SaaS, Software-as-a- Service) alternatives to provide application functionality and avoid the costs of internal IT departments. The advantages and disadvantages have been under scrutiny for quite a while. One of the major issues is security. Ongoing development of the major systems described in this document, specifically: o Product Lifecycle Management – not as mature as ERP systems, and still expanding its application scope far beyond the original focus on PDM Note: Some perceive PLM as only for large companies. This impression is fostered by the lack of agreement on the definition and scope of PLM and lack of understanding. The rationale for investing in PLM – however defined – should based on the urgency to efficiently manage the engineering-manufacturing continuum. o Enterprise Resource Planning – the general consensus appears that enhancements will be more in the delivery mode, e.g. SaaS, rather than application functionality Note: Many ERP vendors also offer PLM systems, either theirs or through acquisitions and alliances. o Manufacturing Execution System – some say that this application is the last major frontier for achieving competitive excellence Note: See comment under PLM.ERP systems have proven their values . . . and PLM systems have proven theirvalues – when properly planned and implemented. Business literature is chockfull of insight and inspiration regarding successful implementation andavoiding failure with these systems. Nevertheless, a few final comments arestill appropriate.Planning and Successful ImplementationCompanies achieve successful PLM/ERP system implementations when thecompany has a clearly articulated vision, secures unwavering top managementcommitment, selects the appropriate software and commits adequateimplementation resources. These are all significant issues to consider whenselecting and implementing a PLM system.©Bourke Consulting Associates, 2011 Reproduction allowed provided attribution is retained Page 20
  22. 22. Maximizing the Value of PLM/ERP: Integration and Collaboration Discussion NotesThere is no single “magic” path to successful implementation. Each company’sstrategic priorities, business process needs and current system conditionsdiffer and must be considered to develop its unique implementation strategy.With a precise definition of business process needs, a multi-disciplinary projectteam can identify the necessary PLM capabilities and determine the optimumimplementation sequence that will gain the expected benefits. The industryaxiom is “plan totally, increment in small steps, gain benefits as you go.”A Final Word on Cultural AspectsFinally, and most importantly, take into account that software is an enabler –only one factor in the system success equation. Experienced companiesfrequently refer to cultural risks as one of the foremost reasons for projectfailures. Technical reasons have rarely been the cause.The implementation risks are often subtle – like an iceberg. The obvious,formal policies and processes exist above the waterline. Beneath it may be theinformal attitudes, values, norms and fears of disparate teams and membersthat endanger the project. For instance, users may perceive a change in rolesand responsibilities as a loss of status, power and job.Management commitment, by itself, does not solve cultural resistance toaccepting new processes. But, as the advertising slogan stated, “Don’t leavehome without it.” What’s more, a project team cannot be passive, hoping thattime will cure the resistance risks, or that momentum will sweep along anydissenters. It will take a continual, proactive approach by the project team togain user acceptance of new processes and responsibilities. In fact, the projectteam must relentlessly work to eliminate any potential organizational potholesand landmines that can undermine expected project benefits.ConclusionRemember that efficiency (do the right thing) is only one-half of the classicparadigm; the other is effective (do it rightly).©Bourke Consulting Associates, 2011 Reproduction allowed provided attribution is retained Page 21
  23. 23. Maximizing the Value of PLM/ERP: Integration and CollaborationAdditional Sources of InformationThere is a wealth of information available from many sources. The following is a representative list. Inaddition, most software vendors also provide generic literature as well as product specificdocumentation.1. Aberdeen Group, Integrating the PLM Ecosystem, April 2008.2. AMR Research, Multi-Enterprise, Are You Creating Collaborative Relationships and Developing Collaborative Practices?, December 2007.3. APICS – The Association for Operations Management, CIMdata, The Value of Unified Architecture for PLM, August 2008, Collaborative Product Development Associates, Fulcher, Jim, “Product Development in 3D – Integrating PLM and manufacturing solutions speeds time-to-market by building production plans into product design,” Manufacturing Business Technology, January/February 2009.7. Gardner, David J., Mass Customization, HappyAbout, 2009.8. Gray, Christopher, and Dougherty, John, Sales & Operations Planning Best Practices, 2006, Harvard Business Review, “Closing the Gap: How Companies Achieve Smarter Product Development and Make Better Decisions with Technology,” 2011.10. Institute of Configuration Management, International Institute on Mass Customization & Personalization, Kegan, Tom, “Reconnecting Design & Manufacturing,” Desktop Engineering, June 2010.13. Kennedy, Michael N., Product Development for the Lean Enterprise – Why Toyota’s System is Four Times More Productive and How You Can Implement It, 2008.14. Mass Customization & Open Innovation News, Mint Jutras (Enterprise Systems Research), PLM Glossary and Acronyms, Product Development Management Association, Radeka, K., and Sutton, T., “What is “lean” product development,” PDMA Visions magazine, June 2007, Volume XXXI, pages 11-16.19. Reinertsen, Donald G., The Principles of Product Development Flow – Second Generation Lean Product Development, 2009.20. Society of Concurrent Product Development, Smith, Preston G., Flexible Product Development – Building Agility for Changing Markets, 2008.22. Stark, John, Product Lifecycle Management: 21st century Paradigm for Product Realisation, 2006.23. Tech-Clarity Insight: The Evolving Roles of ERP and PLM, 2009, Tech-Clarity Insight: Integrating PLM and MES, 2011, Time Compression magazine, Wallace, Thomas and Stahl, Robert, “Building to Customer Demand,” 2006.27. Watts, Frank B., Engineering Documentation Control Handbook, Third Edition, 2008.28. Whittier Consulting Group,©Bourke Consulting Associates, 2011 Reproduction allowed provided attribution is retained Page 22
  24. 24. Maximizing the Value of PLM/ERP: Integration and CollaborationAbout the AuthorRichard W. Bourke is the founder and principal consultant of Bourke Consulting Associates. His long-established firm is dedicated to assisting manufacturing companies to gain the benefits of InformationTechnology based solutions that span the engineering to manufacturing continuum. His extensiveconsulting experience spans discrete, process and repetitive manufacturing companies — ranging fromFortune 100 companies to small firms. His prior industry experience included material and ITmanagement responsibilities. He earned a BS in Chemistry and MBA from UCLA.To comment on this publication, contact the author at 1.888.461.006822 C Avenida CastillaLaguna Woods, CA 92637©Bourke Consulting Associates, 2011 Reproduction allowed provided attribution is retained Page 23