ERP VS PLM
THE COMPETITIVE EDGE

Copyright 2017 Centric Software, Inc. All rights reserved.

Companies continuously face tough decisions when it comes totechnology investment. One such decision: is it better to upgrade anexisting ERP system or will a PLM solution investment return as muchor more for the time and money invested?
TECHNOLOGY AS A COMPETITIVE EDGE
Today’s fast-moving fashion, retail, footwear, luxury, outdoor andconsumer goods companies must get trend-right products to market
faster and more efficiently than ever. And with more product cycles
squeezing into every season, these companies know that building andsustaining brand equity with high-quality, innovative products is just as
important as speed to market.
Searching for a competitive edge, executives look to different kindsof technology to serve as the foundation for digital transformation
initiatives to boost innovation, achieve an operational or strategic goalor get closer to the end consumer.
RETURN ON INVESTMENT
Two key technologies, Enterprise Resource Planning (ERP) and Product
Lifecycle Management (PLM), have become foundation systems forfashion and other fast-moving consumer goods brands, retailers
and manufacturers. While each technology brings unique value to anorganization, deciding which system is the better investment to make—and when—can have a dramatic impact on return on investment (ROI).
Inventory, warehouse and fulfillment managers, financial teams andothers all work directly with ERP systems. Their teams may suffer ill
effects if critical functionalities are missing or impeding their efforts.
With an upgraded ERP system, they argue, they could provide more
timely reporting or more accurate informational updates, thereby
enhancing the executive decision-making process and more efficiently
and effectively drive omni-channel and other retail operations.
At the same time, the entire product development organization ofmany consumer product organizations function with a cobbledtogether system of spreadsheets and emails, or with a Product DataManagement (PDM) system the company purchased years ago to vault
product data. Those teams—including design, development, sourcing,quality, line planning, collection management and marketing—may
now argue that they can’t continue using incumbent systems and needto upgrade to a modern PLM solution. But is that true? While some—or many— products may miss market windows, or while sourcing isproblematic, or while compliance management has become a realstumbling block, is this the time to invest in PLM?
An investment in PLM will deliver greater financial and strategic impact
than will a comparable investment in ERP. Perhaps more importantly,that investment in PLM will deliver competitive advantage in a way that
ERP cannot approach.
Copyright 2017 Centric Software, Inc. All rights reserved.

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THE MISSION OF ERP: MANAGE TRANSACTIONAL ENTITIESERP systems are oriented around business operations, covering customer service, finance, accounting,distribution, labour, manufacturing and more. At the process level an ERP solution might support sales
and purchase order management, handle fulfillment, help allocate human resources, and provide a single
source of cost, margin, and other commercial information.
In essence, ERP picks up from PLM and takes a finalized product forward. This means that design,development, sampling, fitting, approval, assortment planning and all the other activities essential tocreating great products have already been signed off by the time those products reach ERP. With thesecreative actions complete, and no more changes or collaborative decisions needed, an ERP system cantake a product to store shelves, handling operational concerns like logistics, warehousing, and inventory
management.
With its narrower focus, ERP can also provide a treasure trove of transactional data, which businesses use togauge their financial position and make informed decisions about their future. How much stock is selling atfull price? How are we managing markdowns when it isn’t? How are our supply chain partners performing?
What was our overall financial position for the past season?
All of this insight, however, hinges on a business having its design and development processes properlyaligned, and fully supported by PLM. While ERP can take transactional units to market with military
precision, the data it uses originates in PLM, which is home to the lifeblood of the product lifecycle: the corecollaborative processes that create market-ready, trend-right products.
ERP itself cannot house those processes. These systems are designed with a purposeful focus: cost, ship,sell, monitor, and repeat. That transactional data structure does not lend itself to the less predictable partsof the product lifecycle, where more freeform creativity and frequent collaboration with external partners
are essential.
This is not downplaying the role of ERP, but rather pointing out that, without modern PLM, its potential islimited. While ERP can be essential for the transactional stages of the product journey, PLM is where theheart of product development – and the heart of brand and retail business – resides.

Copyright 2017 Centric Software, Inc. All rights reserved.

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THE MISSION OF PLM: MANAGE THE BRAND FROM CONCEPT TO CONSUMER
So, whereas ERP focuses only on transactional entities, PLM encompasses all the iterative,collaborative and creative processes that make up the more vital elements of a product’s lifecycle:
creating and updating styles, determining product costs, adjusting fit, planning marketing collections,auditing suppliers, reviewing retail conditions, taking orders from wholesalers. PLM supports thesale of great products by supporting processes that define the brand, engage the consumer anddifferentiate the company’s products in the marketplace. But PLM also sets the foundation for ERP.
As products are born in PLM, then carry over to ERP, clean data from PLM onwards is critical to thehealth and efficiency of the ERP. Garbage in, garbage out.
PLM solutions originated to meet the needs of the automobile and aerospace industries. Althoughfeature-rich and complex, these systems work to manage products with multi-year lifecycles. Forindustries where product lifecycles are very short or very fast-moving, these PLM solutions often
prove unwieldy. Instead, a new generation of modern PLM solutions is now available, designed
specifically to manage product lifecycles that are very short, measured in weeks or months aswell as very high volumes of new product introductions. In particular, PLM systems that meet thespecific needs of companies in the fashion, retail, footwear, luxury, outdoor and consumer goods
markets have appeared. Approximate 80% of fashion is new products; there are fewer and fewer
carryovers.
Companies without PLM try to run their product development efforts using myriad spreadsheetsand e-mails. Teams rely on the spreadsheets and e-mail to track design files, supplier progress,
compliance status, delivery schedules, part number relationships, product cost projections,compliance information, bills of materials and margin calculations. Tracking and information flows
become increasingly complex.
A situation such as this wastes the precious—and expensive—time of valuable resources as
they sort out whether the product information in one spreadsheet is correct as opposed to theinformation in another spreadsheet. Inevitably errors and delay increase. Threats to quality rise.
Costs may be difficult to control. Margins erode. Products predictably miss market windows.

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COMPARATIVE IMPACT OF ERP AND PLM
ON BRAND AND REVENUEHIGH
PLMDesignDevelopment

PLM
ComplianceManagement

REVENUE IMPACT

PLM
Quality
Management
ERP
Sales
Processing

ERP
Inventory Managementand Logistics

ERP
Financial
Management

LOW
LOW

HIGH

BRAND IMPACT

ERP systems are vital tools. In fact, it is unlikely that a company can form and become fully operational without a basic ERP system. But PLM systems
manage the functions that define and enable brand development, market penetration and corporate success.

Fashion and consumer goods markets now accept PLM systems as best practice. As more companies
adopt PLM, they are reaping tremendous productivity gains. PLM allows everyone involved in a product’s
design, development and manufacture—from marketing professionals and product designers, to sourcing
departments and international suppliers—to work collaboratively with one set of comprehensive, accurate,up-to-date information. This flow even extends to wholesale and retail.
PLM’s essential value is that it delivers a “single version of the truth” about a product to everyone working
in any aspect of product development. People around the office, country and world can all work together inreal time on the same design. They can seamlessly exchange information with everyone in the supply chain,including partners, outsourcers and compliance experts.

Copyright 2017 Centric Software, Inc. All rights reserved.

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THE ERP-PLM CONTINUUM
Whereas ERP focuses on transactional history, PLM touches the iterative, collaborative and creative ERP
systems are vital tools for fast-moving consumer goods businesses. They have proven essential for growing
companies and have served a positive and crucial role in helping companies survive and thrive.

COMPARATIVE IMPACT OF ERP AND PLM
ON MARGINS AND PROFITSHIGHWhatproducts

Order 10kmini skirts

Whichsupplier

From Hung-wahin Vietnam
Cottonfrom Korea

Whatmaterial/trim

Shipwith Maesk

Whichshipper
Whichport

Portof LALOWLOWBusiness processes
Influenced by PLM

Business processes
Influenced by ERP

HIGH

Production
Commitment

Potential impact on revenue, margins and profits
PLM systems manage the critical “What” questions that steer the strategic success of a business and affect its margins and profitability. What products
should we develop? What supplier should we work with? What materials and trims will we use? ERP systems manage “How Many/Where/When” questions
that record and report transactions. PLM’s domain has a greater impact on margins and profitability than does that of ERP.

Companies poised for growth face challenges inherent in working with global supply chains. At the sametime, they must ensure that they retain existing customers and attract new ones by producing the products
the market wants. Staying competitive means actively managing brands, getting trend-right products tomarket quickly, working with ever-shorter product cycle times and increasing productivity throughout thesupply chain.
Today, brand differentiation and competitive advantage are at the heart of the product development process.
How does a company conceive products and empower its creative teams? How does it construct a product?
How does it increase gross margin through better design and development processes or through bettersourcing practices? These are the questions PLM can answer and this is why PLM technology investment
makes sense as the investment of choice on a fixed-dollar investment pool.
Affecting the profitability of the entire company, PLM creates benefits far beyond the incremental. Directly
working to more cost-effectively deliver more competitive products to market, PLM provides one of the best
rates of return on investment a fashion or consumer goods company will see.

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DETAILING THE IMPACT OF PLM
Today, companies know that they need to make smart, costeffective technology investments. Those investments must
be able to provide short-term meaningful returns on PLM
investments. How does PLM deliver ROI?
•Top line growth: increased income and sales up
to 5% to 10%•Faster time to market: by days or weeks which
results in increased sell through; 2% high sellthrough for each week cut from time to market•

Reduced operating costs: reduced stock by 2040% and cut down logistic costs by10-15%•More new products to market: style creation
time cut from half a day to 30 minutes•

Accelerated development time: Shorten
development by days. Reduce data entry time bydays or weeks.

•

Increased efficiency: Decreased data errors by
20-30 percent and reduced product information
search time by approximately 30%•

Improve supplier relationship: 20% decreasein questions from suppliers after initial tech packdistribution•Less waste: Cut material purchase errors by 30percent•PLM system deployment in 3-4 months

Copyright 2017 Centric Software, Inc. All rights reserved.

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LET’S GET IN TOUCH
Centric Software was founded on 3 pillars with a clear mission; hire the best team, build the best product,
get the best customers and keep them happy.
From its headquarters in Silicon Valley, home to the best tech minds in the world, and offices in trend
capitals across the globe, Centric staff, mainly comprised of industry and IT experts, builds technologies forthe most prestigious names in fashion, retail, footwear, luxury and consumer goods.
Along with the best team, we are on a mission to build the best product and work with the best customers.
Our focus is based on mobility, innovation and extending the value proposition beyond traditional PLM. Allof Centric’s innovations are highly market driven. Our products are inspired by the best brands and roadtested around the world. We work hand in hand with our customers and our product roadmap is driven
entirely by them. Centric was the first to offer mobile apps for PLM, issuing over 500 new features in thepast 3 years. Our adaptable, agile methods prioritize the things that matter, creating a sensitive, sustainableapproach to software deployment, with the industry’s fastest time to value. Recently, Centric launchedCentric SMB, which packages extended PLM functionality inspired by best-in-class technologies. Flexible,
mobile and fast to deploy Centric SMB makes innovation inclusive, giving businesses the key to improving
product design & development, merchandising, cost control, quality and compliance.
The benefits? Centric customers report an increase in sales from 5 – 10%, a reduction in stock by 20-40%
and a decrease in logistics costs of 10-15%.
Enthusiasm from the market has driven Centric’s massive growth and worldwide leadership position. Overthe past year, approximately 40% of Centric customers have spoken publically in support of their solutions
and approximately 95% have done so privately.
We are very proud of our customers and look forward to continuing to innovate the PLM solutions of thefuture. More than 400 fashion, retail, luxury, footwear, outdoor and consumer goods brands around theworld already trust Centric.
Want to learn more or see a demo?
Contact us to learn more centric
centric@centricsoftware.com | www.centricsoftware.com
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