It is fair to state, that the 21st century can be called the “system approach age” of management. Nowadays, more and more companies use either an enterprise resource planning (ERP) system, a product lifecycle management (PLM) system or both. People got so used to them. However, lots of managers still cannot answer this simple question: “what is exactly the difference between an ERP and a PLM system?”
ERP vs PLM
We could start by comparing the names first, but that would not bring us that far. Is ERP for enterprise management and is PLM for production management? Well, partly, but the whole thing is much more complex than this. It is better to have a look at the definitions:
- “Enterprise Resource Planning is a software that allows companies of all sizes to manage their entire business organizations, including supply chain, procurement, human resources, financials, and projects.” (Microsoft, 2018)
- “Product Lifecycle Management is the business activity of managing, in the most effective way, a company’s products all the way across their lifecycles; from the very first idea for a product, all the way through until it is retired and disposed of. PLM is the management system for a company’s products.” (Start, 2018)
These definitions should somehow clear some confusion and could start to show real differences between the two systems.
An ERP system is an integrated system that manages processes organization-wise. It is used for the planning and scheduling of company resources. An ERP system consists of several different departments in a single, common environment, making inter-department processes easy to execute.
A PLM focuses on single products or product groups while establishing visibility around them through their whole lifecycle. PLM integrates and manages product data and processes in a single, information-driven system.
So, which one is better?
It depends: on what? Several articles were written that circles around this question. As a result, all of them conclude that as every company and company goal is different there is no general answer to this. Some organizations’ profile might suggest using a PLM, while an ERP might be more suitable for other, more complex manufacturing companies
with multiple sites.
However, if your goal is to create a complete link between engineering and manufacturing, you should consider using both systems in synergy. This ensures that a single product is followed through its journey – from planning through development to being shipped to another site and sold to the customer.
What is an ERP-embedded PLM?
By now, we have a basic understanding of what ERP and PLM are and the relationship between them. You might ask yourself, that if the connection between the two systems is so crucial and beneficial, can this integration be on a higher level? The short answer is yes, by using an ERP-embedded PLM.
Having a PLM embedded in the ERP represents the highest possible integration between the two systems. An ERP-embedded PLM overcomes common issues arise from synchronization between the two environments, as there is only one, common system to maintain which the data does not leave through the processes. This results in having more time-efficient process management and lowers the possibilities for errors. Besides, by having a single collaborative setting, people do not have to learn to use an additional system. They can work in the same user interface which they are already familiar with.
Nevertheless, there is one major throwback if you are using an ERP-embedded PLM. The availability of possible PLM solutions is limited by the used ERP system. Besides, if the organization decides upon changing the ERP system, they have to look for a new PLM system too. Although some PLM vendors might have connector programs to overcome this barricade, these usually offer a limited solution.