ERP integration pros and cons

Introduction

I wanted to write a short article on the integration between ERP and PLM systems. I feel this topic does not get enough discussion and there are some considerations you need to make on what to do and how to be successful.
This topic should be read in parallel with an upcoming paper on bill of material management.

Why integrate PLM and ERP

So why should you integrate. In the next couple of sections I'll cover pros and cons, but before I do this some initial thoughts.
Integrating ERP and PLM should not be taken lightly. It is the endpoint of the value proposition of a PLM implementation. It fully completes the circle of the product development; linking design and manufacturing. As such it holds many benefits including building what you design and designing what you build. To successfully accomplish this needs a strong arm and a lot of concessions from the two major players in the business. Everyone will need to give up something if the implementation is to work, so everyone must understand the full ramifications of the project.

Pros

Reduced effort

I've met many large manufacturing companies with sophisticate PLM deployments who at the end of complex change management and new product introduction (NPI) processes print out a bill of materials on a drawing and hand it to manufacturing, and then the data is re-keyed into an ERP system. Yes this is true. There are variations on this such as exporting a bom to a spreadsheet and then emailing the file to manufacturing and others, but essentially the same.
What this does is mean

1. Someone has to key in the data again
   
2. It's very likely that the people receiving that data do some “manipulations” on the data e.g. restructuring the engineering bill of material (EBOM) in some way to make it more palatable or useful to manufacturing, transforming it to a manufacturing bill of material (MBOM).
   
3. Someone needs to check that 1 and 2 were done correctly!
   

Clearly this adds redundancy. BOM “manipulations” can be major efforts and insuring all data from the EBOM are in the MBOM correctly is no small task. I'm a big fan of Dave Garwood's book “Bills of material – structured for excellence” and it's newer edition “Bills of material – for a lean enterprise”. Both books explain how to streamline bills of material in an organization and I'll be re-reading them and talking about BOMs specifically in an upcoming paper!

Reduced errors

Re-keying is a really easy way to introduce errors into your processes. Why re-enter part numbers when you already have them digitally?
The impact of miss-typing any number of attributes can be huge. If you enter the wrong part number you will end up ordering the wrong components, this might not be caught until very late in the process; also wrong parts will need to be returned and re-ordered. In the just in time environment we live in that is a mess. Incorrect quantities can lead to incomplete products or excessive inventory.
Passing all the information straight from one system to another will reduce these errors significantly. Note I say “significantly” not completely since if the engineering data is wrong it will go to manufacturing wrong! Engineering and Manufacturing people need to both check the data before sending to ERP!

Traceability

When the information comes directly from one system to another there is no “interference”. You can get an audit from both systems to see the evolution of the data. There is no “over the wall” parts in the process. Of course there need to be additional checks an balances to insure that nothing was lost or an issue in the transfer prevented the data from reaching the other system.

Breaks down traditional walls in mfg companies

As I've mentioned a couple of times in this article the boundaries between engineering and manufacturing can be a huge issue in a company, especially in these globally dispersed days. Forcing engineering to produce a bill that manufacturing can use; and forcing manufacturing to insure that engineering knows what is needed to make the product can help to break down these walls. Of course that is not an easy sell to either side – so again referring back to my white-paper on successful PLM implementations is key here. I'd especially encourage high level executive support from both side of the house (engineering and manufacturing).
Not to labor the selling of Dave Garwood's book, but he also includes some objection handling for why you do not need multiple bills for manufacturing and other parts of the business.
I remember a long time back one of my bosses explained how a large company had a meeting that lasted days just to come up with standardized system of part numbers. The BOM discussions in your company could be as acrimonious as this (or more); but it is key to get a bill that everyone can work with before undertaking engineering to manufacturing bom transfers.

Cons

Data integrity

So in the cons column data integrity is one of the major players. You need to be 100% sure that the bill that one system sends is the same as the one the other system receives. Several tools do some manipulations as part of the transfer. I would encourage making the bom the same on both sides if possible so that you can validate that the data was sent across successfully. Insuring that the transfer mechanism has good audit facilities and also frequently (and randomly) validating bom transfers would a great risk mitigation strategy here.
I also feel that there should be some checks and balances in the transfer processes you define. It would be good to have change management or other workflow related processes that accomplish the transfers so there is a degree of traceability on the transfers.

What if link breaks/stops working

All inter-system connections are susceptible to breaking and you should insure that there are ways to
1. Debug connections quickly (at the network and application level). Support people in the team should have some knowledge of troubleshooting and potentially checklists for the “usual suspects” to enable quick resolution of common issues.
2. Manual transfers to keep the business working.
3. Understand your vendors processes for production system outages and work with the vendor to insure quick resolution.

Changes in business

When the business changes e.g. a takeover or merger you need to be able to quickly adopt your connections and integrations to cover new facilities and data. In the manufacturing world this can be tricky.

“Who owns what” battles

As mentioned in the pros section there will be data ownership battles. In my career I often ask groups of managers “Who owns the bill of material in your company?” The answers are often enlightening and sometimes frightening! Once the battles are over the benefits can be realized for ERP connections. As mentioned earlier the key to a successful ERP PLM connection is agreement between Manufacturing and Engineering on the “right” bill.
These discussions are usually territorial and not usually about genuine issues – Dave Garwood's approach is to insure that the bill satisfies the most demanding group in the company; so your mission should be to find that group and insure the bill has what they need. Also as mentioned in a couple of the papers getting executive level agreement can help in smoothing the waters!

Types of integrations

Whatever approach is done you need to insure that there is traceability (as mentioned earlier in the white-paper). Use the workflows in one or other system to insure that bills only transfer when “ready” and complete.

Push

A push integration is where the Engineering bill is pushed through to Manufacturing. This is a “simple” transfer and the assumption is that the push will overwrite whatever is in the manufacturing system. I'd not like to dwell on specifics of a particular connection in this paper. In one of my earliest integrations I wrote we had an “engineering” bill that we pushed to ERP; the ERP system had an engineering bill and the plants took this bill and worked/restructured it for each plant, making their changes. If an updated bill appeared they could do bom comparisons.

Pull

The ERP system pulls a bill as needed

Sync

Changes are made on both side – can be challenging to insure data integrity.

What to integrate

Parts/Material/Master data

Clearly the building blocks should be transferred, but insure only the required subset of attributes are passed between systems. Don't force attributes into the wrong system. If you do need to have attributes such as stock level in PLM insure that they get these from the ERP system and they are read only in the PLM tool!
You should also have mechanism for things like phantoms and also long lead time items in your integration strategy.

Bill of materials

As mentioned before deciding what bill(s) to pass and who updates are key. There are no right and wrong answers and often your decision will be severely influenced by the systems you are working with.
My guidance is keep it simple, pass only “valuable” data and structures.

Change

Some ERP systems only allow updates to BOMs via a change process. This is a good thing! Work with this and insure that PLM-ERP transfers are treated the same – if something is done incorrectly or there is an error in a bill that is passed the change process gives visibility to when the bill was changed and for what reason.

Closing comments

The main takeaways from this paper are…
1. Keep it simple
2. Insure agreement between organizations on what bom information is “useful” and needed
3. Choose carefully what information is transferred
4. Always transfer data through change process/gate