Using ERP for Lean Principles: 5 Ways to Make it Work

In yesterday’s blog post, I fought back against the notion that employing ERP for lean principles in manufacturing was not a compatible situation. Now, on the surface this might seem true—lean is all about trending your business towards zero waste and you’ve no doubt heard about disastrous ERP implementations that can end up millions of dollars over budget and months behind schedule. Surely, the two cannot work hand-in-hand? Wrong—and that’s a point we attempted to make in our last blog. The fact is, you can leverage ERP to streamline and reduce waste within your business right in line with lean methodologies. From precise and historical data for accurate demand planning to total quality management with the customer constantly in mind, ERP can be a great resource for the lean-focused business.

So, now that you’ve been convinced of the perfect pairing of manufacturing ERP and lean principles, how do you go about getting that marriage to go off without a hitch? Here’s 5 ways that you can blend ERP and lean manufacturing together in order to get the best of both worlds.

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 the enterprise software for exactly the opposite effect. Utilizing your in-depth ERP data for accurate demand planning will allow you to operate on lot-by-lot sizing basis and only produce as much product as will be taken off shelves. You can also map out a system that will structure a workflow that ‘pulls’ product through your shop floor and connects each stage to those preceding and proceeding it—by connecting all of your manufacturing stages together, you reduce the opportunity for waste or backlog at each link of the chain.

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 aforementioned 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.

Task Automation

Modern ERPs are experts at automation; you can use them to manage, implement and track all automated processes within your facilities. By using your software to automate those everyday, rote processes on your shop floor you will free up your time to focus on value-producing activities that will impact the quality of your final product, not just the fact that it gets made. This falls exactly into line with the lean focus on reduction in waste in focus of the final goods and customer experience. This will cut back on non-productive time for your workers—and handing it over to machines that you are able to track through ERP. 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.

Scale Down Shipping and Delivery

Your ERP will be able to accommodate for a scale down in your delivery and shipment requirements as you streamline your business processes to align with lean manufacturing principles. Smaller, more frequent movement of your raw materials and final product in and out of your facility will cut back immensely on waste in inventory and investment in shipping; you should be moving product that is in demand and thus only ordering enough materials to make that amount of product. Using your ERP for lean shipment concepts will ensure you have only what you need, exactly when you need it.

Routine Maintenance

Using your ERP for routine maintenance is one of the easiest ways to reduce wait time when it comes to work station breakdowns and malfunctioning machines. We all know too well the consequences of line shut-downs and breakages within a process, and the effect in can have on both revenue and product quality. Because ERP can track the productivity of every stage on your shop floor, it can also monitor any slowdown; alerting you to possible upcoming problems. With this information, you can schedule maintenance ahead of time, when it will have the least effect on your productions and before it causes an unplanned (and wasteful) disaster in your workflow.

Wrap Up

One of the most foundational tenets of using ERP for Lean to revolutionize the industry is the idea they must work together, not merely one for the other. 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 enterprise software in order to support your adherence to 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 in order to power lean production methods throughout every aspect of your business.

For more advice on lean manufacturing principles or help implementing your ERP for lean manufacturing principles, contact an expert at Datix today. We have consultants with expertise in Lean Six Sigma and certified in a multitude of ERP systems like Infor and Epicor. Let us know how we can help you!

Now, Read These:

• Achieving Closed Loop Quality Management With ERP
• Your Legacy ERP Software Is Damaging Your Business
• ERP and CRM Integration Best Practices
• Visit ERP-Demos for Epicor® video training
• Visit ERP Training for Infor video training