Research Rap: PLM Overtaking ERP as Product System of Record

A quick peek into some research on
…
how PLM fits into the enterprise system ecosystem from Aberdeen
Group shows that PLM is playing a much larger role in Best-in-Class
companies at housing product data for the corporation.

ERP
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PLM

The Research
The research was targeted at understanding how companies are
integrating the “PLM Ecosystem” in relation to business processes,
applications, and data. Today, I am focusing on the data aspect, in
particular which system is the “master” or “system or
record” for specific data related to a company’s product.
Some of the information wasn’t a surprise, such as engineering
bills of material having their system of record in PLM. After
all, it is typically developed in the PLM suite. But some
surprises came out. For example, the “as built” BOM. As you would
expect, most companies store this in ERP and consider that the
master. It is transactional information, after all. On the other
hand, but about 1/3 of Best-in-Class companies (the research
defines these as those that are hitting specific product
profitability metrics) are storing as-built in
PLM.  Don’t get me wrong, 1/2 of the Best-in-Class store
it in ERP. But only 13% of all other companies use PLM, leading to
the conclusion that Best-in-Class companies are rethinking the
“obvious” choice of ERP as the master for as-built data.

This is just one example among many. These leading companies are
shifting to PLM to house their product data for the enterprise,
ranging from engineering information to marketing, service, and
sourcing data. The information is fascinating, and spans the
product lifecycle.

The Results
In the interest of keeping this short, I will simply
share the following snipit from the research. I focused on things
that weren’t obvious like “items” and “BOMs” but on the
areas traditionally outside of PLM (until now, I
guess). The raw percentages are in the appendix of the report
if you are interested. What is most interesting is where the
Best-in-Class differ from the Industry Average in how they view
their system of record. In cases where the Best-in-Class
take a different approach than the Industry Average, the
Best-in-Class are much more likely to be using PLM as their product
system of record.

• Costs /
  sourcing. ERP is the most common SOR, but 42% of the
  Best-in-Class use PLM (three-times more likely than others). The
  Approved Material List (AML) SOR is about split between ERP and PLM
  overall, but 75% of Best-in-Class use PLM. The Approved Vendor List
  (AVL) SOR, on the other hand, is more evenly split by the
  Best-in-Class between ERP and PLM (42% versus
  50%). 
• Manufacturing.
  The SOR for manufacturing processes is split between ERP, MES, PLM
  and others / none overall, while ERP is the most common SOR for the
  Best-in-Class (50%). For the production model and process
  specifications SOR is scattered overall, but 42% of Best-in-Class
  store both in PLM.
• Quality. Over
  half of the Best-in-Class store quality plans in PLM, over
  two-times more than others. The Best-in-Class are most likely to
  use PLM as SOR quality results as well (33%), with QMS close (25%),
  and ERP not far behind (17%).
• Service. Service
  instructions are scattered in regards to SOR, but the majority of
  Best-in-Class (55%) use PLM as SOR. 

So PLM is taking over as the “one source of
truth” for product information, as many have predicted. I will
share more about integration of processes, applications, and data
as I can. Does the research reflect reality? Do you see it
differently? Let us know what it looks like from your
perspective.