PLM and ERP: what's the difference and do you need both?

In the 21^st century’s headlong rush toward figuring out how to automate everything while doing as little physical work as possible, software developers have both expanded ERP operating capabilities, along with creating numerous other systems that lie within the prevue of enterprise resources planning. Of late, many business folks have latched on new variants known as Product Lifecycle Management (PLM) products.

It should be understood from the outset that while these systems may appear to be ‘a poor man’s ERP’, they aren’t. Their core values exist as tactical, rather than strategic solutions. Unfortunately, however, many folks miss the difference and, in time, they may actually harbor a significant risk of creating operational havoc unless these dissimilarities are resolved.

Guide: 70 features to look for when selecting your next ERP

To help nip this black rose in the bud, we thought it might be a good idea to discuss the differences between the two system types, in hopes of creating a bulwark against misunderstanding.

Comparing PLM and ERP

To get to the heart of the matter quickly, let’s look at the formal definitions of ERP and PLM.

• “Enterprise resource planning (ERP) is defined as the ability to deliver an integrated suite of business applications. ERP tools share a common process and data model, covering broad and deep operational end-to-end processes, such as those found in finance, HR, distribution, manufacturing, service and the supply chain. ERP applications automate and support a range of administrative and operational business processes across multiple industries, including line of business, customer-facing, administrative and the asset management aspects of an enterprise.” (Gartner)
• “Product lifecycle management (PLM) is a philosophy, process and discipline supported by software for managing products through the stages of their life cycles, from concept through retirement. As a discipline, it has grown from a mechanical design and engineering focus to being applied to many different vertical-industry product development challenges.” (Gartner)

Immediately note that the differences in operational scope should be fairly obvious. In the case of ERP, functional orientation is largely driven by organizational precepts, whereas PLM systems are based on the efficient management of single ‘products.’ Consequently, and if anything else, this dissimilarity alone should be enough to accept that one system is subordinate to the other operationally, but more importantly, in terms of overall enterprise business value.

However, there are a host of other issues associated with various densities of function and/or process. For example, in the case of ERP, record handling is largely unconstrained in terms of type, particularly in the case of today’s cloud environments where multi-channel data comes and goes throughout ERP platforms constantly.

On the other hand, PLM tools are more discrete and are primarily suited to particular elements associated with necessary ‘production cycles’ that move and manage materials records, while maintaining specific sets of ‘steps’ that come together to create a final ‘product’. So in simple terms, the differences are really goals related to enterprise operations at-large, versus a goal driven by a more singular resolution called a ‘product.’

Your key requirements

Does an enterprise need one, both or neither? That remains to be seen, particularly since every company is different. For example, if your operation is a small shop where a fast moving production cycle leverages a multitude of parts in sequence; there may be some PLM utility in the offing, while an ERP platform may be a bit of a bridge too far.

On the other hand, if you are a large-scale enterprise managing multiple production lines in parallel, along with a need to meld manufacturing detail with pure volume, in order to understand what’s going on every day, both values can easily apply. As I said, it just depends on the enterprise and how you want to use the technology for your own purposes.