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How ERP Systems Are Enabling New Business Models With Configuration Lifecycle Management Now And In the Future

  • Driving greater revenue from new product introductions becomes more achievable when product knowledge permeates every aspect of manufacturing.
  • Incomplete, inefficient and obsolete systems are the cause of many product and service quality problems today.
  • 70% of a new product’s cost is defined before the conceptual design phase is complete according to a Gartner survey on lifecycle costing.
  • Always looking for new business model ideas and more efficient ways to create them, many manufacturers are combining Enterprise Resource Planning (ERP), Product Lifecycle Management (PLM) and Customer Relationship Management (CRM) systems to gain greater customer- and product-driven ideas.
  • 2018 will the year manufacturers move beyond the constraints of legacy systems and embrace a more agile, open, Application Programming Interface API)-driven approach to getting the most out of their data. Legacy systems aren’t scaling fast enough to keep pace with how fast customer preferences, purchasing criteria and customized product configurations are changing.

Reinventing Manufacturing With Greater Product And Customer Intelligence

The hard reality facing manufacturers is that unless they’re actively reinventing themselves and making a deliberate attempt to improve how they design, sell and customize products for customers, they’ll be quickly replaced by those that are. The inflection point in manufacturing is more pronounced in build-to-order, configure-to-order, and engineer-to-order manufacturing companies than others as these are the companies most reliant on greater intelligence and knowledge. And it’s driving real-time integration across systems, processes, and platforms as manufacturers devise new systems of record that can scale at the same speed customers are changing. The following graphic provides a maturity model of how systems of record are changing fast in manufacturing today. Engraining the Voice of the Customer (VoC) into every aspect of the system of record is what brings it to life, makes it vital and drives customer-driven urgency and innovation. One can see how legacy systems of record, created and fine-tuned for business models long gone, lack customer-driven intensity and focus. And that is the essential catalyst, the fuel, that enables ERP systems to become engines that drive new business models.

Manufacturer's Systems of Record Are At An Inflection Point

Customer Intelligence And Configuration Lifecycle Management Drives Growth

Galvanizing Enterprise Resource Planning (ERP), Product Lifecycle Management (PLM) and Customer Relationship Management (CRM) systems together to enable greater customer collaboration is the future of manufacturing. Creating new systems of record that strive for greater customer insight to drive more profitable product strategies are where new business models are being created today. By combining the three systems shown below, it’s possible to find new business models quickly.

Capitalizing on a customer-centric system of record requires new analytics, metrics, and KPIs. The recent study, Industrial Analytics Report 2016/17 (58 pp., PDF, free, opt-in) from the Digital Analytics Association e.V. Germany (DAAG), in collaboration with research firm IoT Analytics GmbH illustrate how important customer-driven analytics are to the future of manufacturing. Creating a new system of record increases the ability of manufacturers to gain prescriptive and predictive maintenance on machinery, predict customer requirements better, and analyze product usage in the field. A table from the study is shown below, quantifying the value of customer insights measured as industrial data analytics in the next one to three years. The more real-time the integration across ERP, SCM and CRM systems the more accurate the predictive, prescriptive data on machinery performance, customers, product usage in the field and service levels.

Five Ways ERP Systems Are Enabling New Business Models with CLM

Designed to support, scale and track transactions, ERP systems by themselves don’t have a broad enough system of record to flex in response to changing customer order preferences and requirements. By integrating ERP, PLM and CRM systems into a single unified system of record, the data in all three systems can be unleashed and turned into new business models and product ideas. Here are five ways ERP systems are enabling new business models with Configuration Lifecycle Management (CLM):

  1. Use a single product model to launch product line extensions though exiting channels. By having a single system of record that includes customer and product information, it’s possible to create a single product model that can be the catalyst of product extensions. The transaction data from ERP systems can provide the basis for the business case with costs obtained from the PLM system. Forecasts can be determined from the CRM system. Orchestrating all three systems together provides the necessary information to create new products that scale across all channels.
  2. Creating Data-as-a-Service subscription models based on insights gained from CRM systems and turning them into products. The rapid adoption of Internet of Things (IoT) sensors, systems, and platforms there is the opportunity turn the data aggregated not a service that concentrates on predictive and prescriptive maintenance. It’s been estimated that nearly 60% of products will have an ancillary business model that is based on analyzing trends in predictive data. Only by having a product-based system of record can this be achieved, legacy ERP systems cannot scale to support this type of business model.
  3. Taking high-end mass customization beyond traditional build-to-order to a more interactive, rapid delivery model that scales globally. Manufacturers are pursuing mass customization today yet few are finding it as profitable as it could be. By creating a more product-centric system of record that including the entire configuration lifecycles of products, manufacturers gain economies of scale and can improve profitability. Scaling beyond the limitations of existing systems with a more open, API-based approach to creating a system of record will drive greater revenue growth. The key is to create a system of record that includes all configuration and constraint rules, and product models that can be replicated across product lines, selling and service channels. The following graphic explains how this can be done with a more open architecture to Configuration Lifecycle Management (CLM) which predicts the future of cloud-based mass customization systems.

(4 and 5 in next section)

Create and fine-tune CLM platforms that flex to customers' unique requirements

  1. Proliferating low-cost, simple build-to-order products that can be entirely designed online by customers and fulfilled in 24 hours or less. The greater the level of CRM, ERP and PLM integration the easier it is to launch entirely new product lines that can go directly from quote to the Bill of Materials (BOM) and production scheduling with no intervention. Voice-activated devices from Amazon, Google and others are following this production paradigm today, turning into $1B+ businesses in the next three years.
  2. Searching out new product ideas using PLM and CRM systems to capture where existing products are failing to meet customers’ needs. One of the best sources of new product ideas is the Return Material Authorization (RMA), product failure and customer complaint applications in PLM and CRM systems. The area where existing products are failing hold insights into which new product generations will have the greatest upside potential for success. When a single system of recrd is created using CRM, ERP and PLM systems these insights can be mined and turned into new products in new, more lucrative and growing markets than a manufacturer may be in today.

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