Executive Summary
Two key enterprise IT systems drive modern manufacturing: Product Life cycle Management (PLM) and Enterprise Resource Planning (ERP). A Product Life cycle Management system supports the product design, material sourcing and product development in general from concept to production. PTC’s Windchill and Flex PLM is an example of a successful PLM system. An Enterprise Resource Planning system, the most popular examples being SAP and Oracle Applications, supports a company’s fundamental operational processes such as financials, human resources, and purchasing. Great benefit to the business results from bringing these two together. At this stage in market evolution, and remote work integrating the corporate ERP and PLM systems offers product companies a golden opportunity to realize a competitive advantage. This paper discusses a framework to achieve successful integration between ERP and PLM systems for maximizing PLM investments for footware and apparel companies.
As product oriented companies expand into global marketplaces with remote capabilities, they face increased consumer demand that requires more complex products of high quality, delivered in ever shorting time frames. The ability to manage the flow of information within their different business processes becomes critical. Specifically, product oriented manufacturers must better manage the design, development, scheduling and distribution of their products.
Integration of corporate ERP and PLM systems can gain the company competitive advantages that can lead to a higher percentage of market share such as:
- Faster time to market- resulting from PLM product design and data assisting ERP related production schedules
- Improved order-invoice processes, – translating to better cash flow management
- Improved material inventory and management – translating to less cash tied up.
- Shorter lead time with its suppliers, – translating to quicker order fulfillment
Flowing and sharing information between the PLM and ERP systems requires well structured technology solutions. Companies realize that the technology is a key driver of their success. Awareness is also growing that the ability to electronically integrate data from different systems is no longer a barrier; thanks to the availability of XML, JSON, Web Services and industry wide standards, as well as other integration products such as ThingWorx from PTC. The open questions thus become:
- What interfacing strategy will maximize PLM investment? ERP Investment? Given the relative size and expense, ERP systems requirements will tend to lead, but PLM systems can respond by offering high degrees of flexibility. The focus of this paper is from the PLM perspective in the footwear and apparel market.
- What interfacing patterns and architectural guidelines can be identified that would be most useful?
- What challenges and negative patterns could become bottlenecks in the interfacing process?
This paper presents a strategy by which companies can maximize their PLM investments while integrating with their ERP systems.
The Realization
Interfacing PLM to ERP involves more than moving data from one system to another. Interfacing PLM to ERP requires business process and data integration. Ultimately the application taxonomies and data dictionaries must reconcile, most likely through a common vocabulary introduced by the interfaces.
PLM in itself is a large scale product manufacturing process. Any person or anything that physically changes the product is part of the PLM process. For example, a designer working at an office in New York or London, drawing sketches of T-shirts, and a sewer at a factory in Bangladesh are both part of the product development and manufacturing process. The sketches are the first part of the product development process and the sewing is part of the product manufacturing process. The product material sourcing phase in PLM is a process that is also data intensive. This process might start with the designer selecting from available fabrics and carries all the way to a sample request being sent to factory accompanied by the appropriate data. During this phase of the PLM, data is generated, collaborated, and synchronized among several people. For example:
- Designer attends fabric shows
- Color information received and standard sheets generated
- Design information received to begin design plan
- Trim, fabric selected and first sketch and line plan opened
- Buyers Line plan defined, reviewed and approved
- Size specification sheets produced, reviewed, and approved
- Technical sheets produced
- Color dips and samples requested from suppliers and factory
At some point in the process, this data must become visible to the company’s core operational systems including Enterprise Resource Planning (ERP). The preparation work process determines the financials, human resources, material requirements, scheduling for timely delivery, purchase orders approvals and manufacturing order approvals. As part of this, the PLM system must make available product and material data to the ERP system in a timely fashion in order to schedule and manage the following:
- Ordering of salesman sample fabric(s)
- Issuing letter of credit to the factory or suppliers
- Directors or management approvals of fabric purchase
- Ordering of stock fabric and material
- Payment for stock fabric and material
The flow of data must be triggered according to workflow business rules that synchronize between the PLM and ERP systems in keeping with the company’s product development strategy. For example, materials in PLM exist in the context of a supplier. Each “material-supplier” in the system goes through a series of lifecycle states in its course of development prior to that material being sent to the ERP. Once a material moves to an “Approved” status, the material information would be required in the ERP system to start the material ordering and inventory management process. At this time, the underlying data interface must pass material records from the PLM system to the receiving ERP system. The data includes all changes since the last time the interface was triggered, consisting of records for both new and changed materials. PLM products with “In Progress” status go through a sourcing workflow; eventually moving to “Production” status. This transition in a company’s business processes may represent the upload of data or interface to ERP.
It is easy to realize, from the above scenarios, that business processes from each system must be synchronized and the associated data be encapsulated for the information content to flow meaningfully in a simple and accurate manner. The diagram below shows part of the intricate workflow processes data and a high level of interface between the parties involved.
The Strategy
This section examines the challenges related to the business and data integration between PLM and ERP. These challenges can be categorized into specific integration issues discussed below. For an organization to maximize its PLM investment it should take a closer look at each integration issue and address each one of them. By dealing with these issues, the organization will realize immediate business benefits. This also helps to establish a longer term integration strategy that will help deliver information to their suppliers, and create products for their customers in a more effective way.
Issue 1: IT infrastructure for Data Exchange and Integration
Many product development companies have made large investments implementing PLM and ERP solutions, easily reaching total expenses in the hundreds of thousands to million of dollars. IT executives at these companies want to achieve maximum return on their considerable investment. To do this they want to leverage both systems by integrating them to provide data visibility from one system to another. New integration technology must be provided to bridge between the systems. The additional investment required must be minimal enough to avoid repeating the high cost of the original PLM and ERP systems. Hence, the integration solution must be able to fit within the current existing company IT infrastructure without requiring a large investment. Consequently, the company must begin with evaluating the current IT infrastructure’s ability to support their future business requirements for data integration and exchange between their current PLM and ERP systems.
Issue 2: Data Transformation
Once a company decides to make data visible between the business systems, the data will have to move back and forth between applications. Users will analyze the data and will be making decisions that have monetary impact on the business. Most importantly, the company should look into the quality of the data being transferred and consciously decide on the appropriate level of investment. It is not enough to be able to perform a single transformation from one data format to another. More generally, the interface must be able to handle multiple data and document formats. These include any formats used by the company’s internal applications and by e-business standards like those based upon XML. This requirement stems from the simple reason that different processes need different information in different formats.
Issue 3: Data Validation
Beyond data transformation, the company also must look closely at data validation. Like data transformation, data validation is mission critical. Data validation has several key aspects such as data cleansing, data discrepancy, data matching and data structure:
- Data cleansing – Data that is not clean will cost the organization hundreds of thousands of dollar in claims, and mistakes. Companies are well advised to spend time and effort validating the data. For example, it must be determined first if the product and material classifications and codes in the PLM system are correct. If so, they must be guaranteed to map to the product and material classifications codes in the ERP system. Otherwise, later it will simply be the case of garbage in, garbage out.
- Data discrepancy – once the information is transformed or interfaced between the systems users will analyze the information. If any invalid data is found at that stage, there needs be a strategy to handle exceptions and proactively send notifications to the effected parties, preferably by means of an automated system. Failure to notify the different parties of any invalid data would lead to incorrect data analysis which in turn could easily cost the company a lot of money.
- Data matching – this is the process of being able to validate that the action taken on data in one system matches the incoming data from the other system. For example, if product data is sent from PLM to ERP, the incoming invoice in the ERP system for the products ordered via a PO must reconcile with the record of requested products for that season kept in the PLM system. Otherwise, payment could be made in error.
- Data structure – This could be as simple as syntax verification making sure that the data was received or rejected between the systems. More complex relationships are possible such as those that enforce the rules of object oriented or relational data management.
Issue 4: Process Management
It is not enough to just build an interface for moving the data between the systems. The solution needs to interact with the business flow. By sharing the business processes among the two systems (PLM and ERP) the users of the systems have visibility into the company operational model. Product information flowing from PLM will have a new meaning to the users of the ERP system. The users will be able to much better identify invalid information and data errors because they will have visibility into the information in both systems. Companies should look into providing the users with a portal to correct and manage the information.
Once the information transfers correctly, the organization will have the ability to analyze the data, and to apply decisions and logic that lead to greater business benefits.
Conclusion
Where PLM information is critical to the success of a product manufacturing company, the ability becomes essential to provide the means to make information visible to the company’s core operational systems, especially ERP. Flowing information effectively via interfaces becomes the key to leverage and maximize their PLM investment across the organization.
A business and data integration solution must provide:
- Flexibility and simplicity to accommodate the existing IT infrastructure
- Functionality to accommodate the business requirements
- Well engineered and effective interfaces between systems
- A solution that interacts with the business flow, produce business benefits and reduces operating costs.
In order to achieve the above objectives, companies must consider carefully a long term strategy when integrating their data and processes. This strategy must address some common integration challenges such as:
- Analyzing existing IT infrastructure in regards to data and integration
- Providing a strategy for data transformation and validation including a strategy handling exceptions
- Complete coordination and management of the business processes
- Being able to define the end to end data exchange
- Ability to visualize the data using business intelligence and reporting tools