5 Reasons to Implement ERP for Lean Manufacturing

There’s an idea floating around the manufacturing world that a lean shop floor can’t include ERP software. Now, on the surface this might seem true. After all, lean manufacturing is all about trending your business towards zero waste and minimizing costs. You’ve no doubt heard about disastrous ERP implementations that can end up thousands of dollars over budget and months behind schedule. Surely the conclusion is that ERP and lean manufacturing can’t work together.

In fact, that idea is totally wrong. You can, and should, leverage ERP to reduce waste within your business in line with lean methodologies. From gathering precise and historical data for accurate demand planning to total quality management with the customer constantly in mind, ERP is the best resource for the lean-focused business.

ERP can go a long way in cutting waste, but it can also backfire and become a wasted investment. How do you bring ERP and lean practices together to boost your bottom line? Here are five ways that you can make ERP the core component of your lean manufacturing strategies. 

1. Inventory Reduction

Yes, some companies may utilize ERP to manage excess stock or to maintain an inventory buffer, but that doesn’t mean that extraneous product is a guiding principle of ERP systems. In fact, you can leverage enterprise software for exactly the opposite result. Utilizing your in-depth ERP data for accurate demand planning will allow you to operate on a lot-by-lot sizing basis and only produce as much product as will be taken off shelves. 

You can also use your software to map out a Kanban workflow that pulls product through your shop floor and connects each stage to the stages preceding and following it. By connecting all of your manufacturing processes together, you reduce the opportunity for waste or backlog at each link of the chain.

2. Discrete Order Quantity

Discrete order quantity allows you to plan for orders only as they come in and add to net requirements of your order period. This will greatly help in allowing you to achieve that zero-inventory goal—one of the quickest and most efficient ways to leverage ERP for lean principles and processes. As we mentioned in the above point, scaling down your inventory is a core foundation of becoming a lean manufacturer, and by only making product to order, you will be well on your way to hitting that goal.

3. Task Automation

One of the key advantages of modern ERP systems is workflow automation. You can use ERP to manage, implement and track a large array of processes within your facilities. By utilizing your software to automate those every day, rote processes on your shop floor, you will free up time to focus on value-producing activities to refine your operations and drive revenue. This will cut back on non-productive time for your workers and hand manual tasks over to machines that can be monitored. When that non-productivity is measurable and traceable, it will be much easier to report on areas of waste and get to work on fixing those leaks in your manufacturing process.

4. Shipping and Delivery Efficiency

Your ERP will be able to accommodate a scale down in your delivery and shipment requirements as you streamline your business processes. Smaller, more frequent movement of your raw materials and final products in and out of your facility will cut back immensely on waste in inventory and investment in large shipments. By only moving product that is in demand, you’ll ensure your business is ordering materials that will be used. Using your ERP for lean shipment will ensure you have only what you need, exactly when you need it.

5. Routine Maintenance

Employing ERP for routine maintenance is one of the easiest ways to reduce downtime resulting from work station breakdowns and malfunctioning machines. We all know too well the consequences of line shut-downs and breakages on both your revenue and product quality. Since ERP can track the productivity of every stage on your shop floor, it can also monitor any slowdown and alert you of possible equipment malfunctions. With this information, you can schedule maintenance before a broken machine causes unplanned disaster and disrupts production. 

Wrap Up

One of the foundational tenets of using ERP for lean manufacturing is that they must work together, not merely exist in the same space. While keeping lean principles in mind will help you to map out and structure how your business is using ERP, you can also wield your software to track waste and support your lean manufacturing methodologies. Whether it’s scheduling production in line with maintenance needs or demand planning, ERP can provide the goldmine of data you need to power lean production methods throughout every aspect of your business. 

If you’d like to learn more about implementing your ERP for lean manufacturing, contact an expert at Datix today. We are a certified Gold Partner of Epicor, the premier ERP vendor for manufacturers. For over 20 years, we’ve worked with manufacturers and distributors across multiple industries to implement and improve their software solutions from start to finish. Let us know how we can help you!

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