Thought Leadership

Successful business process integration via a digital transformation

By MatthiasSchmich

Companies have to respond to changing markets, increased product complexity and increased process complexity faster than ever before if they want to survive and stay ahead of the competition. To help companies respond to these new challenges, the answer to overcoming these challenges lies in digital transformation strategies based on:

    • Digitalization and the integration of product and production models;
    • Digitalization of enterprise processes; and,
    • Closed loops between the enterprise’s processes.

This digital transformation will cause companies to rethink their business processes as well as their supporting IT landscape. These processes have typically developed separately with the main focus on enterprise resource planning, or ERP. ERP can be a valuable inclusion in any business, but its drawback in being the monolithic and transaction oriented sole system is that most ERP systems are not capable of managing connected digital product data.

To undergo a digital transformation, companies will need to consider a digital enterprise platform that includes more specific functionality for digital data and processes than ERP. Companies need to create a digital enterprise that allows product lifecycle management (PLM) and manufacturing execution systems (MES) as the major components to be integrated with ERP.

PLM and ERP both manage master data, bill of materials information, documents and routings. They’re typically integrated in one direction, which means PLM “feeds” ERP with released data, depending on the product maturity in release steps.

MES and ERP are often integrated. MES manages the real-time process and data flows toward the machines, devices and the shop floor. MES is important to ensure “as-build” product information and provide traceability; it also has master data, bill of materials data and routings. MES and PLM use the same basic data, but exchanging data between both is not very common.

Today’s core enterprise systems — PLM, ERP and MES — are often distinct and separately used in different organizational functions. But, we see that they also have complementary and overlapping roles in IT support along the value chain. These complementary, overlapping roles are the key to completing this digital transformation.

Siemens PLM digital transformation business process integration 1

For more efficient business processes, PLM, ERP and MES have to be integrated with each other tightly in a closed loop. The integration of each component has to be aligned to the specific industries and their processes, so a clear positioning of mastering the data is important, particularly because the roles all systems will have in the future will be different than today. Closing the loop between these systems is basically driven by the integration of digital product data with digital production data. Once this business process integration and transition is done, closed loops for learning organizations can be established to provide valuable business information.

Today, specific IT tools are in place to support different industry-specific processes in companies. PLM and MES are the core systems, and they will have a much more important, strategic role in the future than they have today. In the future, companies will need a digital enterprise platform to manage digital models for product and production and to establish the digital twin, which is how these companies can use the digital representation of their products in a new way: companies can test and use their products in a combined virtual and physical world.

Every company will need a digital enterprise platform to connect and integrate the top floor to the shop floor. This platform will have to contain all information related to the product, such as mechanical, electrical, software design, equipment, manufacturing or automation systems and simulation data for validation and virtual commissioning.

Everyone in the company could have access to the actual product information, but not everybody will access the information directly from the digital enterprise platform. Some information will be available by authoring systems like CAD; other information will be distributed and shared with ERP or integrated with other legacy systems.

To achieve this goal, the separation of PLM, ERP and MES can no longer happen. Integrating MES, PLM and ERP is essential to creating a digital enterprise, and this is something Siemens PLM knows well. We have the solutions to help companies weave the digital thread they need in all phases of their products’ lifecycle so they can become more productive and to have more optimized products.

Siemens PLM digital transformation business process integration 2

Let’s explore how companies can move forward with this business process integration and how Siemens PLM helps companies complete this digital transformation.

This concludes part one of our series on creating a closed loop PLM, MES, and ERP process to complete a total digital transformation. In part two, Matthias Schmich discusses why it’s important for companies to see these three systems as part of a much bigger whole rather than three individual pieces. 

Tell us: How do you think a digital twin would improve your business processes? 

About the author:
Matthias Schmich has more than 30 years of experience in multiple management positions and has expertise in founding a company, managing IT and consulting. Matthias studied computer science in Karlsruhe from 1980 to 1984. He started his career at Robert Bosch and soon co-founded the Eigner Company, where he was one of its presidents. In 1993, Matthias moved to Müller Weingarten, where he was the IT manager for five years and was responsible for the company’s IT processes. He then joined Andersen Consulting and founded the company C´vis Consulting soon after, where he was responsible as the external program manager for global PLM initiatives. From 2004 until 2008, he was the head of business consulting at AGILE/ORACLE. Since 2008, Matthias has worked for Siemens Industry Software, first as the EMEA project management office manager and then as the vice president for services in Germany until 2014. He is currently the vice president for strategic business in the German Zone and focuses on Industry 4.0 and the digitalization of the value chain.

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This article first appeared on the Siemens Digital Industries Software blog at