PLM and ERP foundations to successful mergers, acquisitions, JVs

Using the VW-Rivian collab to examine five key PLM questions every company must answer to form a strategy for organizational partnerships and business integration.

Rivian and Volkswagen Group (VW) have announced a joint venture to develop next-generation software-defined vehicle (SDV) platforms for their future electric vehicles, with VW investing up to $5 billion, starting with an initial $1 billion. This collaboration aims to leverage Rivian’s advanced electrical architecture and software expertise to create a superior SDV technology platform. The venture will accelerate software development, enhance scalability, and reduce costs for both companies.

Through this partnership, both companies envision launching vehicles equipped with the new technology by the latter half of the decade, and VW will use Rivian’s existing platform in the short term. The joint venture is expected to finalize in the fourth quarter of 2024, pending regulatory approvals.

By pooling their expertise and resources, OEMs can accelerate collaborative return from innovation. Organizations can join forces in multiple ways. For instance, an established OEM can acquire or invest into a niche start-up. This can be achieved through creating a new legal entity like a joint venture (JV), investing into another organization to access given capabilities or capacity, or acquiring a competitor or a supplier to gain access to specific technologies. In this context, PLM strategies play an important role in realizing value from such co-innovation partnerships.

Let’s explore how PLM and ERP facilitate real-time collaboration, design reviews and iterative testing, ensuring swift integration of innovations into production.

How PLM powers collaboration, expansions and acquisitions

Organizations grow through both organic transformations and inorganic expansions. Inorganically, business acquisitions and venture capital investments present growth opportunities through access to new capabilities, markets and technologies. The initial challenges from acquisition are multifold and can be summarized in five key PLM questions:

1. How to leverage or scale one organization’s capabilities to drive value across one another?
2. How to drive synergies across organizations without damaging competitive advantage?
3. How to protect and expand on each organization’s intellectual property (IP)?
4. How to integrate PLM and ERP capabilities across two partner organizations to foster effective collaboration, building on each other’s strengths?
5. How to harmonize and consolidate business capabilities across parent and child entities, or across partnering entities, to remove duplication and address gaps?

Specific answers to these questions will depend on multiple strategic factors, including commercial agreements between companies. It’s also a matter of defining the relevant strategy to enable cross-organizational collaboration, drive business integration, leverage best practices across organizations, consolidate enterprise capabilities and ultimately seek simplification.

The first PLM capabilities to consolidate typically relate to core product and project data: from BOMs, materials, software, xCAD, quality standards, compliance requirements, business processes, supply chain integration—aligning processes and associated systems of record/engagement repository. Initial steps towards building a common PLM backbone often relate to data exchange alignment based on common formats and processes. Other the other side, ERP foundation includes aligning procurement, product costing, compliance, sustainability, financial and other core enterprise requirements.

How PLM fosters portfolio alignment and data protection

Partnering across organizations seeking to co-innovate implies a robust commercial alignment to capitalize on respective investments and related business commitments. Such partnership is often characterized by driving product portfolio synergies, sharing resources and value assets, sharing benefits and return on investments.

Business acquisitions and associated investments translate in five strategic perspectives:

• Market expansion: Acquiring businesses to expand into new markets or geographical areas to gain a competitive edge.
• Product diversification: Investing in acquisitions to diversify the product portfolio—including adding new product lines, enhancing existing products, co-developing new variants or product lines, or integrating complementary products to meet broader customer needs.
• Technology advancement: Acquiring businesses to gain access to new technologies, IP, or technical expertise—staying at the forefront of innovation and maintaining a competitive advantage in the market.
• Operational synergies: Focusing on acquisitions that offer operational efficiencies and cost savings—streamlining processes, achieving economies of scale, reducing redundancies and improving overall operational effectiveness.
• Strategic partnerships and alliances: Forming strategic partnerships or alliances through acquisitions to strengthen the company’s position in the industry—enhancing collaboration, share resources and drive mutual growth.

In PLM terms, this translates to integration of new market requirements and regulatory standards into the product development process. It involves managing a range of products and variations within a PLM ecosystem with broader access control to ensure cohesive lifecycle management. From a technical standpoint, stronger collaboration requires updating and integrating new technologies and knowledge into existing PLM frameworks to support innovation and product enhancement. Furthermore, it entails harmonizing processes and systems across merged entities to streamline operations and reduce PLM-related costs.

How PLM strategies support mergers and acquisitions

PLM strategies play a critical role in supporting business acquisitions by providing a structured framework for integrating and managing the combined entities’ product development processes. PLM value drivers contribute to business mergers and acquisitions in multiple ways:

1. Unified product data management: PLM systems consolidate product data from both acquiring and acquired companies, ensuring consistency and accessibility. This unified approach reduces data silos and enhances collaboration across teams.
2. Streamlined product development: By integrating the product development processes of both organizations, PLM strategies ensure that best practices are shared and adopted, leading to more efficient and innovative product development cycles.
3. Enhanced compliance and quality control: PLM processes help manage compliance with industry standards and regulations by maintaining comprehensive records of materials, processes, and product specifications. This ensures that all products meet quality and regulatory requirements.
4. Efficient change management: PLM strategies facilitate effective change management by providing tools to track and manage changes in product design, development, and production. This helps in quickly addressing any issues that arise during the integration process.
5. Improved resource utilization: PLM processes enable better resource planning and utilization by providing visibility into the capabilities and capacities of both organizations. This leads to optimized use of resources and improved operational efficiency.
6. Accelerated time-to-market: By harmonizing processes and leveraging system synergies, PLM strategies can significantly reduce the time required to bring new products to market. This is crucial for maintaining a competitive edge in fast-paced industries.
7. Innovation and IP protection: PLM systems ensure that intellectual assets from both organizations is protected and leveraged effectively, from products to data assets, processes, resources, etc. First and foremost, this fosters innovation by providing a secure environment for collaboration and knowledge sharing.
8. Scalable and flexible integration: PLM strategies provide scalable and flexible integration frameworks that can adapt to the evolving needs of the business. This ensures that the integration process is smooth and can accommodate future growth and changes.

By implementing robust PLM strategies, organizations can effectively manage the complexities of business acquisitions, driving value creation, innovation, and long-term success. This involves continuous simplification and consolidation, balancing control and flexibility to ensure cohesive operations while maintaining agility to respond to market changes and new opportunities.

Consultants often debate the challenges of PLM and ERP implementations as they are complex by nature, but these changes present opportunities to learn and break the status quo. This is especially crucial for companies serving multiple customers through hybrid PLM ecosystems or those aiming to enable mergers and acquisitions by building modular, “plug-and-play” processes, data flows and systems.

Robust PLM strategies align product development processes, leveraging the combined strengths of acquiring and acquired companies to unlock new value streams, enhance productivity, and reduce time-to-market. They provide a collaborative platform fostering continuous improvement and creativity, while ensuring access to a unified knowledge base and shared IP. Effective data management, compliance adherence, and quality control within PLM frameworks lay a strong foundation for sustainable growth, maintaining high product quality and meeting regulatory requirements.