Connecting PLM and ERP (1)

This week I was in South-Africa working with Aerosud, one of the prominent companies in the Aerospace industry in South Africa, working with the major OEM’s One of the topics discussed in the workshop with Aerosud was the connection between PLM and ERP. As this is a question that occurs so often, see also previous posts, I will address in this post and the upcoming posts the logical steps for an PLM – ERP integration and issues a company might face.

For some people I guess the big surprise will be that most of the difficulties and discussions are not on the technical level, but on how a company has organized their data and organizes their data in the future.

The first rule for implementation is:
The PLM system manages all product related IP (Intellectual Property) and the ERP system manages the executing in the most effective way, taking into account resources, time, material scrap etc often linked with financial transactions

Although some ERP vendors might want you to believe they offer also PLM functionality in their system, it is always a small subset of the total PLM capabilities. Linking manufacturing documents to an item is not PLM. PLM is managing all product related IP and this requires connections to all information sources during the whole product lifecycle, not only during manufacturing.

So if we agree on the above, we understand there is a need to connect PLM and ERP, as both systems have a vital task in a manufacturing company and both work around common information, the product, composed of all its physical items.

The Item

The physical item, is the shared and understandable entity understood through the whole company. Some companies call their items parts. In order not to confuse between an item and a part designed in the CAD system, i will talk about items, when I mean the physical representation.

Items can be a single item, a rivet, a specific metal plate or it can be a complete product or smaller component of a complete product. They have one thing in common, we all identify them with a unique number the item number.

In engineering oriented companies you might hear designers say, the item number is equal to the part number of the part or product they are designing, as often in their case what they design on the lowest level of the assemblies, becomes an item.

In general you can subdivide the items in two major groups:

• standard purchase items
• company or project specific items.

  Standard purchase items

The characteristic of a standard purchase item is that it has been designed and developed by external companies and that these items can be found in catalogs produced my one or more manufacturers around the world, based on defined standard. For example a M12 Nut, a bearing with specific diameter and performance characteristics. The company that uses these standard parts creates an own definition of the part and makes references to manufacturers who provide these parts in the right quality and standard. These manufacturers appear on the Approved Manufacturer List (AML), which is an engineering task inside PLM to define this list.

In addition, based on this approved manufacturer list, the purchasing department will allocate vendors for these parts and based on vendor performance and reliability, they create a List of Approved Vendors (AVL)for these parts. This is a execution task to be defined in the ERP system.

So in day to day operation, engineering will define new standard purchase items if not available and this request will lead into an AML and then in ERP towards a AVL of the standard item. It is a combined activity where each of the disciplines has participate. For existing standard items, there is also a process triggered from ERP that influences their usage. For example a certain manufacturer might stop producing a certain item and this affects the AVL – purchasing raises a flag that the item becomes hard to acquire or even unavailable, which leads to engineering to define a new AML, which might end up in an engineering change as by changing some of the product functionality other standard items can be used to replaced the original defined item.

So for standard purchase items we see:

• new standard items are introduced through PLM – starting from AML into ERP with the AVL.
  Both system add information to the item information
• exiting standard item can become obsolete through PLM – as the company decides not to use them (anymore) or become phase out or obsolete based on a trigger coming from the ERP side, as the AVL has changed.
• Standard purchase items do not have revisions

Items

With items here we mean the non-standard purchase items, which can be divided again in two major groups:

• company standard items
• project specific items

Project specific items are items defined by engineering during the definition of a product. These items need to be manufactured specifically for this product based on the specification provided by engineering. Outside the project these items are not used again anymore as they are too specific.

However companies try to standardize even their project specific items, in order to share and reuse them in other products. At this stage, the project specific item becomes a company standard item and is managed to be reused.

Both company and project specific items can have revisions as their maturity may grow. As long as the new definition complies to the Form-Fit-Function rules, the new revision of the defined item can replace previous revisions, meanwhile better support future usage.

So for items we see:

• project specific items are introduced through PLM and on the moment of production pushed to ERP to be manufactured according the design specification with the right revision
• company standard items are introduced through PLM and can be produced on stock (if there is a wide usage through various products) or pushed to ERP when needed to be manufactured according the design specification with the right revision
• Items are revision managed and follow the Form-Fit-Function rules

The conclusion of the above for this post is:

• Items have a common usage in both PLM and ERP
• Items are initially created in PLM and at a certain time transferred to ERP to be completed with logistical information
• Item usage can change based on availability triggers from ERP or use cases in PLM
• an item is a hybrid entity – with a common shared identification, PLM relevant data and ERP relevant data
• Some of the ERP data might be relevant for information to be viewed the engineer and the other way around

Once agreed on the above concept, we have the guidelines how to connect items between an PLM system and an ERP system.  In my next post I will talk more about that, also about how to connect BOMs between PLM and ERP.

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