ERP and Lean Manufacturing: The Perfect Match

ERP and Lean Manufacturing Go Hand in Hand

Manufacturers have long sought out to refine their lean practices. Although the concept of lean manufacturing originated at Toyota’s automotive corporation, the benefits of lean principles can be enjoyed in 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’s processes on the finished product and customer experience. Businesses that follow lean methods increase productivity while decreasing expenses, making it a lucrative approach to manufacturing.

So how does one get started on moving their business to the lean side? The first step: implementing an excellent enterprise resource planning (ERP) system. Some may say that ERP and lean manufacturing methodologies are inherently opposed to one another. However, ERP serves as the core of your enterprise, managing your shop floor’s workflows and providing real-time insight into demand. These are critical components for carving out waste. 

Whether you’re bringing in a whole new ERP system to support your business’s move towards leaner principles or just looking to restructure your ERP strategy to slim down your manufacturing process, read on for more on how ERP and lean principles can work together to transform your company.

Pull Production

Accurate planning in line with lean principles relies on precise, real-time data and forecasts. ERP provides you with the rich data you need to schedule your shop floor processes according to lean techniques such as Kanban or pull production. Epicor ERP includes Kanban workflows which automatically trigger production lines to manufacturer goods once an order has been made. This strategy ensures you meet customer demand while avoiding excess inventory and materials.

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 accurate scheduling. 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 that your output is not affected. Waiting and unnecessary work are two of the wastes outlined in lean principles; proper scheduling and pull production provide the means to avoiding these inefficiencies and increasing your bottom line.

Quality Management

You might expect quality management and lean manufacturing strategies to conflict with each other. After all, quality management might encourage you to pile on more checks and processes while lean principles strive to eliminate unnecessary steps. However, ERP systems come with quality management modules that allow you to maintain the integrity of your products without introducing waste into your operations.

Use this module to review your quality strategy with the tough eye of a lean manufacturer. Leverage your ERP metrics and tracking tools to analyze and prioritize each 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 on the customers and their experience with your product. But you must remember that customers are expecting your services at a certain price, and you must carefully manage these expectations when you are mapping out a quality strategy. ERP enables you to simultaneously keep quality and lean manufacturing principles in mind so you can execute superior products without driving costs. 

Demand Planning

To truly reduce waste from your shop floor and shrink the amount of product you may have languishing in your inventory, you must utilize 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 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.

With a well-implemented ERP system and lean manufacturing methodologies in mind, you can precisely forecast your purchasing and stocking needs by leveraging historical demand data to map out well-informed quotas for every season and period. This kind of sophisticated planning can also account for fluctuating prices, availability of your raw materials and predicted storage space. In this day and age of modern enterprise systems, it’s simply no longer acceptable to use “reasonable guessing” for your demand planning strategy. ERP and lean manufacturing are a natural fit. ERP data gives you the information and predictions to power your lean principles.

Wrap Up

By making your 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. It’s in your best interest to start connecting your ERP and lean manufacturing principles now.

Datix is a valuable partner in your journey to optimizing global manufacturing strategies. We’re an Epicor Platinum Partner with over 20 years of experience in providing enterprise software solutions for manufacturers and distributors. Epicor has been serving businesses around the world for over 45 years, making them leaders in ERP for international manufacturers. We’ll align our ERP, CRM, eCommerce and integration solutions with your specific needs to make your enterprise lean and powerful. 

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!

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