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The Chicken and the Egg, ERP vs. PLM: Stay Sharp Episode 36

By June 14, 2024June 25th, 2024No Comments

In Episode 36 of Razorleaf’s Stay Sharp podcast, ERP vs PLM: What Comes First?, co-hosts Jen Ferello and Jonathan Scott talk with Pieter Nevelsteen, who works for Razorleaf in the Netherlands and who brings to the table years of experience implementing product lifecycle management (PLM) systems in a variety of different industries. The trio has a wide-ranging discussion about finding the line that separates enterprise resource planning (ERP) and PLM systems, the critical first step before deciding which platform to implement first, and what the best order of implementation is for your business.

Determining Implementation Order

Jen, Jonathan, and Pieter’s conversation begins and ends with the question of which enterprise platform an organization should implement first, ERP or PLM. While the group agrees that the inquiry feels highly related to the eternal dilemma of the chicken and the egg, there is an answer for implementation order. However, that answer depends on the unique characteristics of your organization, business, and products. Pieter says, “In theory, if you’re capable to do it in parallel, everything at one time, to implement everything, every application at one time, that’s the ideal world. But is that feasible? Probably not. Most companies cannot do that because then they have no business anymore, because they are doing nothing other than implementing systems.”

Jonathan makes sure to establish the baseline for the discussion, assuring listeners that they are not suggesting companies should question whether or not they need both ERP and PLM. “Don’t you have to do both? Yes, absolutely,” he says. “We are talking about order and which one is the driver of what you’re trying to do.”

Jen asks Pieter about the driving factors that help an organization decide which platform should take priority. “My view,” he says, “is if you start with the correct process—your product definition, product configuration, product portfolio, definition are well structured—the rest of the process is much easier to adapt and the flows are much easier to connect.” The point is having thorough knowledge and documentation of your product and the processes to take your product through its lifecycle, from concept and design to maintenance. Pieter continues, “You need first the very clear and mature processes in your product portfolio and configuration management before you’re able to define your ERP processes.”

Jonathan points out that different types of products—make-to-stock versus configured-to-order products, for example—mean very different kinds of manufacturing processes, and therefore a company that produces one or the other could need different kinds of ERP systems. Pieter agrees, citing the example of a customer he worked with that had no ERP and no PLM system, but decided to start with ERP. “After two years, they were struggling,” he says. They moved on to the PLM system, and realized they chose the wrong ERP, because they finally understood how their product was structured, how it was configured, and what their product architecture was. He adds, “They were thinking it was a gift for them that the ERP project failed. At the end, they were happy.”

ERP and PLM: Where to draw the line?

Another question to consider when planning to implement ERP and PLM systems is the interplay between the two—or where to draw the line between them. Traditionally, Jonathan points out, “you could count on whatever tools you had in ERP that could keep straight the configuration of your product. But today, with the dynamic supply chains and components and obsolescence and all those things, you can’t.” And even as ERP systems have evolved to include some PLM functionality for those purposes, Jonathan says, “The operation side is not necessarily meant to keep up with the rate of change on the product development side.” Pieter agrees, asking, “If you don’t control that product definition very well in your product definition application, which is typically PLM, how can you manage that in ERP? Never.”

Pieter circles back to his original answer for the chicken-and-egg implementation question and suggests that an understanding of your enterprise architecture means you can choose to implement either system first. “It doesn’t matter too much what you choose. Because if you know what you want, and you make sure that all the integration layers are well defined ahead of your selection process, this might solve the problem.”

Learn More About Implementing ERP and PLM Systems

The full podcast episode offers more details including which platform is designed to handle regulatory compliance and traceability functionality, what “enterprise architecture” really means, how communication and people are as critical to implementation success for these systems as for any others, and more.

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