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PLM vs ERP: Know the Difference

By: Team Backbone | Oct. 29th, 2021

At a Glance:

What is PLM? 

What is ERP?

PLM vs ERP: Capabilities & Comparisons

Benefits of PLM Integration

Frequently Asked Questions 

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For Direct to Consumer (D2C) brands designing, sourcing, and building a high volume of products, implementing a development platform to manage essential business operations can boost productivity and efficiency. Emerging companies may choose to streamline vital development processes with the help of product lifecycle management (PLM) coupled with enterprise resource planning (ERP) software. While each solution compliments one another, PLM helps facilitate the complete development and design cycle, whereas ERP assists more directly with supply chain organization, including accounting, inventory, and logistics. 

Integrating each tool is beneficial in its own way; however, their capabilities are substantially different. Before you utilize each platform, let’s further discuss what these systems are, how they differ, and their potential impact on your business. 

What is PLM? 

A PLM solution manages the product development lifecycle from conception and design to sampling and production. It is a collaborative solution that allows designers and product developers to seamlessly integrate data, such as colors, size specs, and materials, as well as communicate with adjoining team members to ensure sample changes are demonstrated to the supply chain. In a way, PLM is the pre-production tool that enables ERPs to process work through the manufacturing process.

What is ERP? 

In comparison, ERP ensures products are manufactured in a timely, cost-controlled manner once a product has been designed and approved. This procedure uses a database to automate the various core processes of a company related to finance, manufacturing, technology, services, and human resources. It’s seen as a catch-all solution for larger companies to manage business functions in a central location. While modern ERP systems have evolved to offer more visibility across business ventures, ERP often includes an “add-on” PLM solution that does not encompass the depth required for an effective product development process. 

Related Article: Product Development Reimagined

PLM vs ERP: Capabilities & Comparisons

To simplify the information above, PLM allows design teams to focus on the ideation, innovation, and development of a product, whereas an ERP’s role is executing that product and managing cost-control during the supply stages. A PLM solution allows design teams to highlight the correlation between each component of a product, while an ERP platform handles the transition of materials for inventory, production schedules, and logistics.

PLM tools are used primarily by technical designers and product developers, and ERP systems are more often used by manufacturing or operations personnel. Each system is diverse in its function and cannot be replicated with the other’s capabilities. 

Follow the chart below for an easy-to-read breakdown of both PLM and ERP solutions.

Benefits of PLM Integration

The ability to share product data and sampling changes in real-time is vital for a successful development process. Whether you’re sharing past or current product renderings, having an accurate forecast of materials will reduce errors, cut costs, and centralize data to establish an efficient workflow throughout each stage of the development lifecycle. 

Some of the main benefits of a PLM system include: 

  1. Efficiency Rates: PLM integration enhances productivity and provides access to real-time data, meaning you are always updated on the most current version of a product and can easily make changes as needed. Updating and transferring data is automated, so designers can better utilize their time creating new products rather than manually inputting product information. 
  2. Reduced Cost: Product data is moved effortlessly across departments without interference; thus, the margin of error decreases and reports are far more accurate. Increased data accuracy allows businesses to reduce sampling and confidently place orders, helping to save money on additional materials and avoid supply shortages.  
  3. Improved Customer Satisfaction: When errors are reduced, the process becomes much smoother for everyone involved in the product development lifecycle. While a PLM supports internal development teams, it also leads to increased customer satisfaction by placing orders to factories faster and more accurately, also ensuring better fit for the final customer. 
  4. Fine-tuned Collaboration Efforts: Clear communication across all departments is necessary for success. Any disparity in product data or confusion in the way records are uploaded by team members can lead to miscommunication, errors, and lost revenue. An integrated PLM solution provides a single source of truth for all product-related data, encouraging the collaboration and exchange of information among internal teams and stakeholders. Having a clear understanding of how each product evolves throughout the development cycle better aligns departments and increases performance. 

However, if your organization is considering an “add-on” PLM system within a larger ERP system, there are some risks to consider: 

  • Lack of collaboration across departments 
  • Costly errors not being communicated effectively
  • Designers going outside the system to complete tasks due to user interface constraints 
  • Missing data creating inaccurate financial planning
  • Mismanagement of capabilities due to lack of functionality
  • Costly implementations make it difficult to make changes when needed

Frequently Asked Questions

If you’re comparing a PLM vs ERP, you probably have some questions. Let’s discuss a few frequently asked questions regarding product development software.

Should PLM and ERP Systems be Combined?

If your company tries to combine both tools into one product, you will most likely utilize fewer features and sacrifice the unique characteristics that make these tools successful. As a best practice, we recommend separating PLM and ERP solutions as their application structures are opposing. There is a significant difference between sourcing product data for design and sourcing product data for sales transactions. By allowing each system to operate on its own, both solutions can function as intended and deliver the best possible results. 

Do You Need Both PLM and ERP? 

If you’re a smaller company, you probably don’t need both PLM and ERP. Depending on your size and product catalog, many companies still get by with spreadsheets and manual reporting tools. However, if you’re an evolving brand looking for a more modern development solution, Backbone PLM has ongoing partnerships with ERP providers to ensure companies have a cost-effective, best-of-breed approach to their systems’ infrastructure.

What Makes Your System Unique? 

For a system that stands out from other PLMs, consider Backbone PLM. Backbone is a next-generation solution designed to be highly user-centric. We’ve thoughtfully designed the platform to facilitate the needs of designers, tech designers, and product developers as they bring products from design to production. Backbone becomes the centralized platform for a brand’s product data, as production teams manage their entire workflow without additional solutions needed to fill in the gaps. By offering an easy-to-use platform and outstanding customer support, we reduce the cost of implementing a PLM so our customers can experience an immediate return on investment.

    Explore PLM Options with Backbone

    Now that you know all about PLM vs ERP, it might be time to start searching for your very first PLM solution. If you’re a designer or product developer in need of an all-encompassing tool to manage iterations and product data, Backbone PLM empowers brands to operate smarter, faster, and at scale. 

    Related Article: How to Choose Your First PLM System

    Keep your eyes peeled for case studies, blogs, and customer reviews so you can be confident in your PLM system of choice. A PLM platform should always encourage collaboration and creative innovation, but it should also be functional and user-friendly for all team members.

    For more information, download our guide highlighting the core differences between PLMs and ERPs to help you determine which business solution makes sense for your brand.