It’s been many years since this question of compatibility between lean practices and enterprise resource planning (ERP) was rigorously discussed and brought many controversial and opposite opinions to the table. Can these two work well together, or do they have no place in each other’s space? It seems like even after all this time—and discussion—the jury is still out the final verdict. The answer is not a simple “yes” or “no,” but rather lies somewhere between.
Advocates of lean concepts protect a lean manufacturing organization from technological invasions, propagating the principle that “simpler is better” and believing that almost any informational system is a waste (non-value adding). On the flip side of the coin, there are thousands of ERP vendors, users, and manufacturing managers that use traditional methods based on complex data and transactional systems who won’t accept any other alternative way of conducting business.
If you’re in the manufacturing industry, or if you are associated with manufacturing (e.g., as a supplier or distributor), you’ve heard all about lean principles, lean initiatives, or lean practices. While the basic lean principles are widely known, many organizations are still struggling with the question of how to make the transformation to lean.
In our opinion, the lean concept encompasses continual improvement wherein an organization constantly strives for more efficiency, which translates into bottom line profit. Each organization must approach lean based on its own internal capability and capacity balanced with the requirements of its customers and the practical reality of dealing with and coordinating a multitude of suppliers to create a smooth supply chain. Whether this “lean” initiative includes enabling technology is entirely up to the organization.
TEC’s research analysts are currently working on a Buyer’s Guide on the subject of lean. This guide will provide key information to software decision makers in the manufacturing market to find a solution they can leverage to help grow their business, balance IT costs, provide more accurate and up-to-date information for decision making while increasing productivity and improving customer experience.
We would like to ask our readers their opinion on both lean and ERP and the synergy (or disconnect) between the two in order to focus our efforts on some of the key issues that are important to you. Please take a moment to complete our Lean Manufacturing Opinion Poll.
So, what’s lean manufacturing really about? Training? Processes? Accounting? People? Continuous improvement? Let us know your thoughts in the comment section below.
[…] Visit link: LEAN OPINION POLL: Are Lean and ERP Still Antagonists? » The TEC Blog […]
Anyone who believes that Lean does not require an ERP solution does not really understand business. There are lean zealots out there who profess you do not need a system, but how does one manage the business…with spreadsheets? The key based on my experience implementing Lean in an ERP environment is to identify how to use the system in a lean way.
For example, how do you use the system to develop a forecast of demand, conduct rough cut capacity and determine how much material is going to be required to meet the demand. Kanban is a great tool, but it is not a planning tool. All to often, companies do not adjust kanban levels frequently enough or look at the difference between history and the forecast. In a complicated product line and component environment, MRP can easily take the demand and explode it through the BOM’s to get forecased requirements. In a lean environment, I do not need to take this information and create purchase orders for suppliers, I would use it to adjust my kanban levels.
The key differentiator between ERP/MRP and lean is planning vs. execution. MRP is great at planning and lean is great at execution. That is way I see it. For e.g. you use MRP for planning materials but execute through consumption driven replenishment. Lean deals with real time data, provides feedback loop (for e.g. resizing the kanban on change in consumption pattern), raise alerts when the stock goes below the defined threshold, provide visibility in to the supply chain simultaneously for buyers and suppliers and provide continuous improvement metrics.
Over the last 10 years we have provided lean execution software tools for every MRP you can think off - MAPICS, JDE, Oracle, BPCS, COPICS, PointMan, ManMan, CINCOM…..
This just shows that lean and MRP complement each other. MRPs don’t have execution in their DNA as they are based on batch and queue methodology. Execution centric solutions need to be real time, collaborative, cross business (engaging customers and suppliers) with built in continuous improvement tools. ERP will be the system of records because of financials, master data and accounting structures. Lean systems will interface with ERP for key transactional points to ensure that both the systems are in sync.
While various aspects of Lean Mfg techniques have successfully been deployed in all forms of Mfg, the answer to this question still depends on the circumstances of the actual environment. Speaking in generalities only, there are functions in core ERP and in Lean Mfg enhanced ERP solutions on the market today that can actually reduce waste in its various forms. Some examples would include:
- Fcstg/MRP for long range Supply Chain Sourcing and Vendor Agreements.
- Heijunka based automated scheduling tools can save many hours over purely manual methods.
- Electronic kanban functions, especially when leveraging electronic data distribution / notifications to get replensihment signals communicated with parties outside of a workcell (such as vendors supporting point-of-use material consignments).
- ERP solutions capable of supporting “black hole manufacturing” (pure inputs / outputs based material transactions and related WIP costs emulation) and the Lean Accounting methods that go with this production model.
- ERP solutions capable of supporting electronic workflow functionalities, especially when applied in areas such as Eng Change Mgmt to be sure real time information on changes and their implementation requirements are shared with the workcell from a single point of data control in a database.
- Automated data collection capabilities (such as bar codes) to help eliminate waste from “dirty data”.
These are just some examples, there are many others. The key is to evaluate each intersection of an ERP system and the Mfg operations it is meant to support (via Value Stream Mapping or similar) - make sure the overall benefits to the organization outweigh the incurred burden of each ERP functionality to be potentially deployed.
When I hear “LEAN” I hear six sigma and JIT in the same breath.
The first part is understanding OR understanding and optimizing your process and the system that supports it. In the old days (30 years ago when I was working in Carrier factory) we have work-study engineers station at every process to document and timed each and every process and then recommend the more efficient steps that minimize time and maximize efficiency. This was largely dome without any “Lean software” And yes, I do not get all wrought up when somebody will to suggest using excel sheets. Sometimes “good” is good enough.
So yes tools are tools and the tools offered by ERP software vendors are mainly based on push - SOP, MRP etc. So when deploying these solutions the final business operation must be designed around how these tools function.
I think Lean is a strategy and generally is not an ERP product function or feature.
However, I personally believe that ERP products are either Lean “sympathetic” or not.
It seems to come down to keeping inventory as low as possible and reducing waste at every step. Then ERP has been doing lean since before it was called Lean.
I dare say this because there are many conceptions of lean and there is no official standards body that defines precisely what lean is. So any software vendor can claim lean capabilities because their system can reduce non value added activities somewhere.
To the Lean purist – ERP & Lean don’t mix.
To the ERP vendor we claim that ours offering is Lean friendly or support lean operation somehow.
Without getting ‘too’ in depth, let’s just put it this way: when one does not know how, is not taught or directed otherwise, they will see things as ‘not related’ or compatible. In systems, and all research, we suffer from a serious lack of those who can ’see’ integrations or relationships. MRP, ERP, Lean, ITIL, E-commerce, etc. etc. You name it. They all have a proper place in the proper place of a proper organization. And some organizations need very little, if any. But for a first-class, large volume, multi-national, manufacturer to attain sustainable results and the ability to ‘tweak’ proficiency and profits, most of the above are needed. (and more.)
ERP/MRP/Lean/ITIL, POS/E-commerce/CRM/etc, etc. all need each other in order to pass intelligent, cohesive numbers to and fro; and create results that are meet all needed requirements, including legal, compliance, etc. Any one, without the other, likely will only create a result ‘in a vacuum’, not for the enterprise or corporation.
So much more to say, but this is an underlying message.
ERP solution providers have never taken uch effort to understand lean,ERP vendors i beleive have new understood manufacturing. therefore the ERP solutions for maufacturing are ineffective.
Manufacturing is string of hetrogenious process, lean simplifies the process to manage it meaningfully. ERP can atbest support the front endie the sales, despatch and receiving of the transactions , from then simple local solutions based on lean rules will execute the process satisfactorily
to conclude ERP is ueful for commercial side of the business, for operation side simple algorithm based IT enabled solution based on lwean principles are approriate
Homepage von Stewart…
LEAN OPINION POLL: Are Lean Concepts and ERP Systems Still Antagonists? » The TEC Blog…