Supplier management software added to Baan’s PLM

PLM (product lifecycle management) is a strategy that all manufacturers should pursue. It’s not bound to the engineering design phase; it’s there to track and trace all actions and activities associated with products from concept to production, sourcing, change management, installation, operations, field feedback, maintenance and eventual retirement. So says enterprise software (ERP) developer Baan which, driven by its more advanced users in the aerospace, automotive and electronics industries, has now extended its own iBaan for PLM suite (which sits on top of the ERP back office) to include SRM (supplier relationship management). Before you switch off, that means more than you might think. PLM is absolutely about managing the engineering data, processes, traceability, history and so forth behind the product, while supplier management is about establishing supplier relationships, terms and conditions, metrics and then the operational procurement, and behind that the demand planning and scheduling, call-offs, logistics, etc. And the point is that while each of these is independently valuable, there can be a real pay-off when you combine what are currently very separate applications and, most important, parts of the organisation. Patti Jeffries, who heads up Baan’s SRM product marketing, agrees that SRM is a concept, not a product. But she insists that enabling manufacturers to share deep engineering product information with buyers can transform the effectiveness of everything from supplier management throughout product cycles, to subcontractor operations and relationships. “70% of the cost of new products is determined in the definition phase, so sourcing and procurement should be in there reducing costs right at the start – providing access to approved supplier lists with quality metrics, corporate viability and so on as well as costs and discounts,” says Jeffries. And she points out that enabling suppliers to see what’s new and what’s modified, and getting procurement involved in change processes, managing effectivity dates, substitutions, after-sales support and planning for obsolescence, through that same PLM integration is a key route to efficiency, cost reduction and happier suppliers and customers. In fact, the so-called SRM extension of Baan’s PLM suite is an important addition for manufacturers wanting to box rather cleverer. Dennis van Bodegom, PLM marketing manager, says early adopters will be better placed to go through supplier rationalisation exercises, while also improving external capacity utilisation, quoting accuracy and procurement efficiency. Similar benefits will also apply to the whole community of suppliers, buyers and subcontractors. “Manufacturers need that ‘DNA’ of their business processes wrapped around their products and engineering with two way integration into the rest of the back office systems,” he observes. And while he accepts that most of the market doesn’t yet see the power of PLM to make a significant contribution, he says that once users have got over the history of expensive, big system PDM (product data management) systems from the big CAD-centric software vendors, it will come. With vested interest, he also points to the need for tight integration between what have hitherto been very separate systems – engineering design management and operational and business ERP. An argument with which rival SAP would certainly concur. As for the challenge regarding functionality in the face of the PDM experts (EDS, Dassault, IBM, Eigner, MatrixOne, SmarTeam, etc), he counters: “We will never be best of breed, but we have 85—90% of the functionality. It’s a strong solution.” Indeed he claims Baan has just won a deal over EDS Metaphase (now TeamCentre) for a combined enterprise system geared specifically for collaborative engineering. When we find out who that was, we’ll be able to judge the significance. Either way, returning to the SRM link, Baan says users can now link design, change management and purchasing teams by sharing product information, such as new components, engineering change orders, product enhancements, retirement schedules, and design documents, with buyers. Buyers will also be able to share product design documents and plans with business partners during RFQ negotiations and supplier development activities. John Moore, general manager, of analyst ARC Advisory Group, agrees the value: “There is a natural and very compelling reason to have a comprehensive PLM and SRM solution. It ensures that engineers are sourcing the right product from the right suppliers and also ensures that a company leverages its spend with key suppliers. Baan’s efforts to bring these two solutions together will provide their customers with a very attractive offering that should deliver impressive future ROI from more cohesive design and spend management.”