“The Hidden Cost of Underfunding PLM: Why Balancing PLM Investments Matters”

In the corporate landscape, both Enterprise Resource Planning (ERP) and Product Lifecycle Management (PLM) systems serve very important yet distinct roles. ERP systems streamline and integrate core business processes such as finance, human resources, and supply chain management, ensuring operational efficiency. On the other hand, PLM systems oversee the complete lifecycle of a product, handling from initial concept and design through manufacturing, service, and disposal. A well-established PLM process in an organization helps emphasizing innovation, collaboration, and product quality.​

Despite the critical importance of both systems, one of the most common scenarios is where organizations often allocate more substantial budgets to ERP implementations while underfunding PLM initiatives. These differences can lead to significant challenges, including data inconsistencies, inefficiencies in collaboration, and increased errors during product development, which in turn affects the organization’s competitiveness in the market.​

Several factors contribute to the budget imbalance between these systems, few scenarios listed below but not limited to are,

• Visible Immediate ROI: ERP systems are often viewed by organizations as essential for daily operations, providing immediate and tangible returns by enhancing efficiency and reducing operational costs.​

• Complexity and misunderstanding of PLM: PLM’s benefits, such as improved product development processes and innovation is a long-term benefit and are sometimes less understood or harder to quantify. This often leads to reduced funding and attention.

• Historical Budget Patterns: In the past, many organizations have heavily invested in ERP systems to establish operations across various departments, including finance, human resources, and supply chain management. This significant allocation of budget often left limited funding for PLM initiatives

Underestimating the importance of PLM can lead to significant challenges like,

• Data and Collaboration Inefficiencies: When companies do not have a good PLM system, their product data can become messy and disorganized. This means different teams like design, manufacturing, and purchasing might use different versions of the same information without realizing it.

• Increased Errors: Without a good PLM system, companies often rely on manual processes and isolated systems to manage product information. This makes mistakes more likely because people may have to enter data manually or transfer information between different tools that do not talk to each other.

A notable example highlighting the consequences of underfunding PLM is the case of Airbus and its A380 aircraft. ​The Airbus A380 program experienced significant delays and financial setbacks, primarily due to design and production issues.

A key factor was the use of incompatible versions of the CATIA design software across different Airbus facilities. Specifically, German and Spanish teams used an older version, while French and British teams had upgraded to a newer one.

The mistake was only discovered after production had begun, forcing Airbus to halt manufacturing while they manually redesigned and reinstalled thousands of miles of wiring.

This discrepancy led to severe integration problems, notably with the aircraft’s wiring systems, resulting in production delays and increased costs.

These issues led to a two-year delay and an estimated €4.8 billion in additional costs. ​

Source: https://aviationweek.com/shownews/dubai-airshow/what-went-wrong-airbus-a380

A well renowned automotive company in which engineers spend months working on the design, running simulations, and preparing for production. However, due to poor data management and lack of good PLM processes in place, a small but critical design change in a in braking system did not get updated in the production documents.

As a result, thousands of cars roll off the assembly line with faulty system. The issue is only discovered after vehicles have been shipped to dealerships and customers. Later, the company followed

• A full-scale product recall to fix the defect.
• Millions in warranty claims and compensation for affected customers.
• Damage to brand reputation, leading to lower future sales.

Had there been a robust PLM system in place in such cases, the design change update would have automatically been reflected in all relevant engineering, procurement, and manufacturing data ensuring that only the correct design made it into production.

Companies that cut PLM budgets to save money often end up spending much more later fixing preventable mistakes. A strong PLM system ensures that design updates, engineering changes, and manufacturing processes remain aligned, significantly reducing the risk of costly errors. Instead of reacting to problems when they appear, companies can proactively prevent them from happening in the first place.

In today’s competitive market, every mistake comes at a price. The question is, Would companies rather spend on PLM now or spend even more later cleaning up the mess?