ERP vs. PLM: What are the differences?

Agile design and product management are key in today's constantly changing business landscape. Learn why PLM might help and how it's different than ERP.

Manufacturers may find they can be more agile with product development with the addition of PLM software.

Product lifecycle management software offers more targeted design and development management than ERP alone. With PLM, organizations can gain better insight into processes across a service or product lifecycle, from design through to retirement.

Here's more about the differences between ERP and PLM, as well as the potential benefits of integrating the two.

What is ERP software?

Product manufacturers, like many large companies, rely on ERP for a host of back-office functions.

ERP software is a suite of integrated applications that manages and automates processes like finance, HR and procurement. It also collects and stores the data related to those processes so executives and others within the organization can access real-time enterprise information in one place.

Most ERP vendors also offer business functions such as logistics and vendor relationship management, said Sudip Pattanayak, senior director of research at Gartner. Data related to materials, parts and vendor interactions are all stored in the ERP system.

However, some organizations may find ERP software still doesn't meet all their business requirements.

What is PLM software?

PLM software focuses on product lifecycle management, serving as a data warehouse for the product's information from its ideation through its discontinuation. This product data includes information like sales numbers and quality control requirements. PLM software is most commonly used in engineering and can also help users with bill of materials (BOM) management, among other applications. A BOM is a list of the elements needed to create an item. It makes it easier to keep track of various aspects of production.

More organizations have started to adopt PLM software to support their new product development.

Manufacturing, aerospace, medical and energy companies, and retailers are among those that use PLM software. They use product lifecycle management software to support processes from inception to design and manufacture to end of life. PLM can help manage a diverse array of products, including the following:

  • planes
  • electronic devices
  • medical equipment
  • home heating systems
  • clothing

PLM software has gained new potential with the advent of IoT systems, as product lifecycle management software can use the data from IoT systems to learn more about an item's performance. However, PLM platforms must possess the proper capabilities, like data analytics, to take advantage of this information.

ERP vs. PLM: Benefits and challenges

Organizations can complement ERP functionality with product lifecyle management software, which comes with both benefits and drawbacks.

Integrating ERP and PLM gives companies more real-time visibility into product lifecycle data, which can help prevent production delays and, in turn, support customer experience, Pattanayak said.

PLM supports product pivots as well, a necessary ability for arguably all companies in today's constantly shifting business landscape.

Integrating the two types of software can be difficult, however.

Transferring data from a PLM system to the ERP system has not always been easy, as ready-made automated integration points didn't exist for many years. As a result, organizations had to create their own tools for importing data from PLM software to ERP software, but these homegrown attempts sometimes led to inaccurate or incomplete data.

Over the past several years, ERP and PLM vendors have responded to this problem by working together to create and offer ready-made integration capabilities, Pattanayak said. Some ERP vendors have also acquired or added PLM modules to their ERP offerings, bringing both functions under one umbrella.

However, those built-in PLM capabilities for ERP software may not suffice for organizations with complex product lifecycles, so those companies may need to purchase standalone PLM software.

In addition, organizations must possess strong data management programs to receive the best possible benefits from integrated ERP and PLM systems, said Jonathan Stomberger, global management consulting lead at Mazars, an audit, accounting and consulting firm located in Paris. ERP and PLM software must possess the right data to work properly.

Companies with legacy ERP and PLM software may also encounter problems.

Organizations with old versions of ERP and PLM software may not be able to take advantage of all the benefits of integration unless they upgrade, Pattanayak said.

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