Is SAP PLM for Real?

Executive Summary

  • How SAP has been busy pushing a solution that does not exist as a distinct product.
  • An analysis of SAP PLM.

Pushing SAP PLM

For sometimes SAP has been promoting its product life-cycle management (PLM) solution. PLM is a problematic term that more than a few companies have had a problem defining.

Analyzing SAP PLM

When I perform an analysis of SAP PLM for a client, I learned that SAP PLM was not an actual product, but was, in fact, a “solution.” What his means is that various pre-existing modules have been created around the material master to meet PLM requirements. This is much like SAP’s non-existent digital asset management solution – where digital media are entered as materials into SAP. Digital asset management and PLM have a lot in common because both solutions require a lot of functionality regarding multi-media files.

For PLM these files take the form of images and schematics, while in digital asset management the files take the form of images, music, and video. However, the material master functionality in SAP is not designed to manage these files, or make them easy to find or reference. There is no big surprise why. The material management functionality was designed to hold textural data on products for accounting and supply chain management. Changing this functionality around to meet the needs of asset and document management is no easy task. When one goes through the BOM functionality and compares it to a real BOM management solution, the difference is like night and day.

Problems with Managing Changing Materials in SAP ERP

If a company makes changes to their material masters and they have SAP ERP, they have maintenance problems. SAP ERP has limited methods for making adjustments to materials, with the consequence that new materials are created as copies of old materials, and the old materials have no real way of being connected to the new materials.

The overall maintenance problems with SAP mean these materials that are no longer, or little used, clog up the system. This severe limitation for material master management was one of the motivations for bringing out SAP PLM. However, instead of bringing out a new “product” SAP should have just addressed the underlying material management functionality of the existing software their customers had already purchased. They, of course, did not do this. However, while the BOM management is one part of PLM, the solution from SAP is much more encompassing than just BOM.

Lifecycle Planning in APO

The confusing part about PLM, which SAP does not adequately explain is that SAP life-cycle planning exists in the supply chain planning suite offered by SAP. For instance, in Demand Planner, which is the forecasting module of SAP APO, life-cycle planning in incorporated. DP allows you to introduce an existing product at a different location – using profiles to base historical data from current locations. Phase in profiles allows the reduction of the forecast for the period of introduction. (more details)

However, this capability in SAP DP and the product interchangeability functionality that is available in other modules of the APO suite (notably SNP, CTM, PPDS, and GATP) is quite a bit different from the integrated SAP PLM solution that SAP presents to clients. Again, this gets back to the problem with the SAP PLM solution, confusing messaging from SAP and functionality which is PLM related but does not exist within the official SAP PLM solution. PLM functionality can exist in different areas of supply chain applications. However, it does not mean that the solution is offering an excellent bill of material management functionality which includes:

  • Multimedia file management
  • Document management
  • Engineering change management
  • Collaboration management (between marketing, engineering, and production)

SAP Has Had Its Shot in PLM

SAP PLM has not taken off, and it does not appear to be an area they have or intend to put real development effort behind. However, they still make their white papers available on the topic. SAP’s entry into the PLM market’s main effect has been to discourage companies from implementing real PLM solutions and damaging the PLM’s image more generally due to the problems SAP has in bringing SAP PLM live on accounts. Part of this is due to the limitations of the solution, but the another part is related to SAP’s positioning and messaging in the solution.

Here you can see one of the main graphics for SAP PLM (listed under Life-Cycle Data Management at the top). However, a major flaw in this diagram is apparent. PLM is based upon document management, but SAP does not have any serious document management capability. The best evidence of this is the state of SAP Solution Manager that is causing project heartburn on SAP projects globally.

PLM and Service Parts

PLM is, of course, imperative for service parts. Many of the service parts planning applications have built-in control fields in the form of things like shelf life, and of course, supersession is a manifestation of product lifecycle needs (out with the old – in with the new). While doing some research on PLM for service parts I came upon a company called Arena Solutions and I have tested their software extensively. I think it’s time more companies gave it a try. It is incredibly easy to use, offers hosted solutions and just has tons of PLM functionality.

I have over time interacted with Arena Solutions and always come way impressed with their solution and their people. I have written a series of articles and video interviews with them. You can find these articles at this link. However, the market is largely immune to such information and continues to believe SAP offers a solution where it has none, and to not use “real” solutions in this space because they don’t have a major brand name attached.

PLM and PDSs

SAP has an object in SAP APO called the Production Data Structure (PDS) that proposes to have PLM capabilities and ties with the rest of SAP’s “PLM” functionality. However, as companies do not use SAP for PLM, it makes little sense to use the PDS for that purpose. However, SAP still advises using this object on projects. Read about SAP’s message to clients in this post.

Conclusion

SAP’s has some disadvantages when it comes to competing in the PLM market. One is that the material master is not an active object for BOM lifecycle management. The material master lacks the functionality and is extremely far behind of the best of breed Arena Solutions in all functionality related to change and collaboration. Attempting to bring lifecycle capabilities as well as collaboration to the material master functionality is stretching it beyond its original design.

Secondly, SAP’s messaging is confusing and does not take into account the PLM functionality that is distributed throughout many applications including SAP APO/SCM, but without explaining how it leverage them or even interacts with them. Many analysts who write in the PLM/BOM management space seem to have no idea about the subject matter and cannot help clients differentiate quality solutions from vaporware.

In summation, PLM is a very high-risk solution and implementation and companies evaluating it must be extra careful to check what is there.

The Necessity of Fact Checking

We ask a question that anyone working in enterprise software should ask.

Should decisions be made based on sales information from 100% financially biased parties like consulting firms, IT analysts, and vendors to companies that do not specialize in fact-checking?

If the answer is “No,” then perhaps there should be a change to the present approach to IT decision making.

In a market where inaccurate information is commonplace, our conclusion from our research is that software project problems and failures correlate to a lack of fact checking of the claims made by vendors and consulting firms. If you are worried that you don’t have the real story from your current sources, we offer the solution.

Update

Since this article was written, SAP has attempted a reboot of its PLM solution. This article is still relevant to read, because, in many ways, things have not changed. However, to read the latest on this topic see this post.

References

https://www.amazon.com/Sales-Inventory-Planning-SAP-APO/dp/1592291236

BOM Book

BOM

Bill of Materials in Excel, Planning, ERP and PLM/BMMS Software

Areas of Focus of the Bill of Materials

The underlying message of this book is how the practical implementation of a BOM management system enables a variety of other applications that rely upon BOM information. An application such as Arena Solutions (a PLM BOM management system provider featured in the book) is a key enabler to the other applications that rely upon the clean and up-to-date bill of materials information.

An Integrated Approach

The book takes an integrated approach to the BOM. It explains the BOM, compares it across multiple enterprise systems, and demonstrates how different systems access different parts of the data stored in the BOM management system. The business applications covered are:
  • Production planning and scheduling with PlanetTogether
  • Supply chain planning with Demand Works Smoothie
  • ERP with SAP
  • The bill of material management system with Arena Solutions
  • BOM Management or PLM?
The book also clears up lots of confusion between a category of software called PLM (product life-cycle management) and BOM management software. It explains the history of PLM systems — where PLM functionality exists even in non-PLM systems — and why the term “PLM” shouldn’t be used alongside “bill of material systems!”

Chapters

  • Chapter 1: Introduction
  • Chapter 2: An Introduction to The Bill of Materials
  • Chapter 3: Understanding the Flaws in the Current Standard BOM Solution Design
  • Chapter 4: The Bill of Materials (EBOM) in Design/Engineering Systems
  • Chapter 5: The BOM in Spreadsheets
  • Chapter 6: The Bill of Materials in ERP and External Planning Systems
  • Chapter 7: The BOM Management System: The BMMS
  • Chapter 8: BMMS Software and Suppliers Versus Contract Manufacturer Management
    Conclusion
  • Chapter 9: Reasons for Poor BOM Management Design
  • Appendix A: The Supply Network and Simulation