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ERP and Lean Manufacturing: A Surprisingly Perfect Pair

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Lean principles have been one of the most buzzed-about and sought after goals in manufacturing businesses for a while now. Although the concept of ‘lean’ originated in the automobile industry at Toyota, the benefits that come along with being a lean manufacturer can be enjoyed within any sector. Lean manufacturing is usually defined as a process which seeks to eliminate waste in all of its forms by focusing all of a business’ processes on the finished product and customer experience. In our lean manufacturing infographic, for example, we noted that businesses strictly following lean methods achieved cost savings of 65% higher per project than the average initiative, proving that there is much to be said for the effectiveness of process improvement when it comes to your end-product and revenue streams. So—how does one get started on moving their business onto the lean side? For starters; an excellent ERP system.

Although some may say that ERP and lean manufacturing methodologies are inherently opposed to one another—ERP is naturally rooted in the planning aspects of manufacturing and lean relies heavily on real-time demand and work flow—the fact is that the two can work together in perfect harmony.

So whether, you’re bringing in a whole new ERP system to support your business moving towards lean principles, or are just looking to restructure your ERP strategy so you can slim down your manufacturing process, read on for more on how ERP and Lean principles can truly form the perfect marriage.

Pull Planning

Accurate planning in line with lean principles relies on precise, real-time data and forecasts for your business. ERP can help you achieve this kind of value-rich informations simultaneously as you plan. ERP can provide you with the rich kind of data you need to schedule your shop floor processes according to lean techniques like Kanban or ‘pull-planning’ according to current commitment and capacity of your machines.  What’s more, by connecting your shop floor to the Internet of Things (IoT), you can get real time updates on productivity and processes from each of your machines and workstations. This data can be critical for a great schedule—if you know that one particular machine is slowing down and might need servicing soon, you can quickly schedule production on every other line around that planned downtime and make sure than your output is not affected. Waiting and unnecessary work are two of the wastes outlined in lean principles; proper scheduling and pull planning is one of the quickest roads to scaling back on them.

Quality Management

Although your quality management system and processes can seem like it would come into combat with lean principles (as quality might encourage you to pile on more checks and processes where lean wants to eliminate unnecessary steps), they don’t have to act in antagonism within your business. Most popular ERP systems come with quality management modules that allow you to organize and asses all of your current QM processes. Use this as an opportunity to review your quality strategy with the tough eye of a lean manufacturer. Prioritize each different process; what makes the most difference when it comes to the value of your end product? At what point are you looking at diminishing returns when it comes to time and money dedicated? Yes, your focus must always be the customer and their experience with your product; but they are also expecting your services at a certain cost for a certain price, and you must carefully manage these expectations when you are mapping out a quality strategy. Leverage both ERP and lean manufacturing principles with the same eye so that you always operate with both axes in mind, and optimize exactly where you need your product to be.

Demand Tracking

To truly reduce waste from your shop floor and shrink the amount of product you may have languishing in your inventory, you will need accurate demand planning. Too many companies view demand planning as a shot in the dark; informed guesses sometimes guided by strokes of luck. This kind of thinking is extremely damaging to not only your business but also your relationship with customers and clients. If your product is consistently out of stock at a store or you have to keep postponing services for paying clients, those customers will abandon you for competitors who can deliver more reliably. Period. With a well-implemented ERP system and lean manufacturing methodologies in mind, you can precisely forecast purchasing and stock needs next to historical demand data to map out well-informed quotas for every season and period. This kind of sophisticated planning can also include fluctuating prices and availability for your raw materials and predicted storage space for those materials purchased. In this day and age of modern enterprise systems, it’s simply no longer an excuse to be ‘reasonably guessing’ your demand planning strategy. In this case, ERP and lean manufacturing are a natural fit; ERP data gives you the information you need to powerfully drive the actions of your lean principles.

Wrap Up

By making your current (or planned) ERP system work hand in hand with lean manufacturing principles, you can eliminate waste, drive production and satisfy your customers more efficiently than ever before. ERP is an extremely valuable data mine and process planning tool, and these benefits can be leveraged in every area of your business, not just your shop floor. Imagine the power you could have when you integrate your back office with customer-facing systems like CRM or marketing automation. The future is truly that of the interconnected enterprise; and it’s in your best interest to start connecting your ERP and lean manufacturing principles—and making every process leaner along the way—now.

For more advice on lean manufacturing, ERP systems or any other enterprise software projects your business may be embarking on, contact an expert at Datix today.