PLM vs ERP in Fashion: What’s the difference and which to start with?

PLM vs ERP in Fashion: What’s the difference and which to start with?

ERP, PLM, PDM, CRM, PIM, CAD, MES, CPQ... fashion software acronyms seem to go on forever. Yet CTOs in fashion focus their investment power into two software offerings as the cornerstone for a state-of-the-art tech stack: ERP (Enterprise Resource Planning) and PLM (Product Lifecycle Management).

Whilst decision-makers increasingly become aware of their positive business impact, they still have a hard time determining which to prioritize in these times of austerity. So PLM vs ERP in Fashion - Lets look at their differences and how they work separately or alongside each other. Read on to determine how your brand should start its digitalization journey.

What is ERP (Enterprise Resource Planning)?

ERP systems are designed to manage your business’ financial activities and enable reporting around operative areas such as accounting, logistics, manufacturing and sales forecasts. They allow fashion brands to accurately plan their orders, analyze their respective profitability and get a well-rounded financial picture of their operations at any point in time; from collection planning, to production, all the way up to product delivery.

The need for a fully comprehensive ERP system depends on several business factors with company size and the level of internal production involvement easily taking priority. For instance; large fashion companies that produce in-house tend to depend upon a high-level ERP system to keep track of myriads of information related to product sales, finances, margins, and resource planning. Whereas simpler solutions with more condensed functionality and financial level focus (inventory, accounts payable/receivable, etc.) might suit those companies that outsource the majority of their production processes.

What is PLM (Product Lifecycle Management)?

A PLM system helps to sufficiently coordinate all lifecycle stages of the product by aligning them with associated information, processes and people. These stages start with the conception of your initial idea, to the design, sourcing and production to ultimately end at the final distribution of your product.

Along that way, a PLM system provides full control over all your product records. Those with a cloud-based structure allow fashion brands to keep track of the latest changes to the status, supplier price negotiations, items, tech packs or BoMs (Bills of Materials), as well as giving the ability to directly navigate with their supply chain partners. That way, key product decisions can be executed in real time, which is why any fashion company that runs operations within design, manufacturing or distribution will benefit from integrating a PLM solution.

The difference between ERP and PLM

While ERP and PLM should definitely be seen as complementary systems that help you reach full control and transparent communication across your entire digital value chain, they still support different business needs. Being more focused on the financial side, the ERP system mostly records your “hard” product data surrounding your stock keeping units, inventory management, accounting, CRM and HR.

PLM systems, on the other hand, center more around the “soft” data in product development (BoMs, compliance, product & project documentation). As PLM captures your full product journey across the entire value chain, it is often framed as your “single-source-of-truth” that feeds all other systems with the needed data to perform – even the ERP system. This is why more and more fashion executives are starting to rethink the old  “ERP-first” mindset by prioritizing a PLM integration before moving to a new ERP landscape.

Where to start? A closer look from 2 tech scenarios

Scenario#1 - You’re starting from scratch and ready to make your first tech investment: ERP and/or PLM solutions?

When you start your fashion business, you obviously want to wait for proof-of-business before spending on your IT infrastructure. But as market interest grows and increasing demands need to be managed by ever larger teams, the time will soon come to build a centralized tech-stack to avoid getting lost in complexity. This especially translates into moving away from multi-channeled communication and fractured tools.

In this instance, prioritizing a PLM before ERP integration can yield far reaching benefits. Because an ERP integration requires that your collection concepts and product design capabilities reach an advanced level before making resource management essential. Therefore having a PLM in place to elevate your design and product concept possibilities with enriched data , gives an ERP integration more importance. Brands who exclusively run their operations on an ERP system can’t get the full value from their most essential assets: their product data, making way for inaccurate entries and flawed change tracking. In other words: you should first seek to build a flawless product before you can begin to optimize your financials.

Scenario #2 - You want to switch from on-premise solutions to cloud-based IT solutions.

Unbelievably, there’s still a tonne of established brands that rely on their (trusted but aging) on-premise ERP solutions. In most cases they’re not up-to-date nor scalable enough to match modern day requirements, forcing many brands to plan the long-overdue short to medium term transition. However, transitioning from an on-premise to a cloud-based ERP would be way easier if a modern PLM solution is already set in place.

Why is this the case? 

Transferring all the needed information from a variety of different data streams (ERP, PIM or even Excel sheets) into a new system requires a lot of developer work around scripting, integration and data migration - work that would be eliminated with a state-of-the-art PLM solution that stores, structures and “washes” your product data for smooth exporting. That way, all the essential data on items, styles and collections that currently lay around in your on-premises systems, can directly be transferred into the new ERP system with one simple integration. Making the PLM your “product data safe-haven” for future system migrations.

PLM AND ERP - Is it an either-or-decision?

Whether you want to make the switch from your on-premise solutions to the cloud or still to make the initial move into ERP or PLM, going for PLM & ERP should never be seen as an either-or-decision. We highlighted some of the reasons why prioritizing a PLM before an ERP integration is a viable strategy for achieving structured product & process data and achieve a strong tech-stack foundation. But to get full control over both your product- and financial data, we advise you to integrate cloud-based solutions for both ERP and PLM in the medium run.

See how a PLM system can help you with your individual business needs and book a live demo session to get a sneak-peek of the Delogue PLM platform.