Five Ways ERP Can Help You Implement Lean

Five Ways ERP Can Help You Implement Lean
By Dave A. Turbide, CFPIM, CMfgE, CIRM
An Epicor White Paper
WHITE PAPER
Table of Contents
It's All About Value 1 Reducing Waste 2 Continuous Improvement 3 Sales and Customer Service Opportunities 4 Orderless Manufacturing and Kanban 4 Collaboration 5 The World is Getting Leaner 6
Five Ways ERP Can Help You Implement Lean i WHITE PAPER
It's All About Value
Becoming Lean has been a goal of most companies over the last few years. Why is Lean so popular? Lean delivers what companies really need in today's highly competitive world - shorter lead times, improved quality, reduced cost, increased profit, improved productivity and better customer service. But there are about as many definitions of Lean as there are companies trying to get there. Before we enter into a discussion of how Enterprise Resource Planning (ERP) can help in a Lean initiative, it might be helpful to put Lean in perspective and agree on some basic definitions. Lean is a western adaptation of what started out as the Toyota Production System. Viewed by many as models of efficiency and productivity, Toyota has achieved remarkable success through a singular focus on adding value. A simple enough concept, indeed, but difficult in practice because it takes a change in perception and focus that at times may seem counterintuitive. To become Lean, a company must take a hard look at processes and practices to identify those things that truly add value for the customer and eliminate those that do not. The continuous pursuit of waste elimination is the essence of Lean. Production processes and production activities can be directly addressed in this value vs. non-value campaign. What goes directly into the product, and what doesn't add directly to product value is fairly easy to see. But Lean can and should extend beyond the plant. Indirect activities such as logistics, administration, engineering, and warehousing, as well as other non-manufacturing activities can benefit as much from Lean thinking. So, eliminating waste and fostering continuous improvement are what Lean is all about. But how does a company embark on a Lean transformation? The first step is to make a firm commitment Trite as that may sound; Lean projects seldom succeed without a high level of organizational commitment and resolve. Next is to map out processes and identify value and non-value components, with a focus on enhancing the former and eliminating the latter. Lean is not an overnight quick-fix; it is an unending commitment Now that we've established what Lean is all about, it may be somewhat difficult to envision how ERP supports Lean. In fact, early thinking on Lean often dismissed ERP and other information systems as inconsequential or even inappropriate in a Lean-focused company. Why? As Lean thinking has evolved and the concepts broadened, Lean advocates have come to recognize that ERP and Lean work together very well - each supporting and enabling the most important objectives of the other. Lean purists point to several basic ideas that are the foundation of Lean. The 5 lean principles of value definition and specification, value stream mapping, uninterrupted flow, customer pull and the pursuit of perfection are all supported and enhanced by comprehensive information control and the management tools that an end-to-end enterprise software suite delivers.
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Reducing Waste
The nebulous Lean definition of waste - anything that doesn't add value - allows plenty of opportunity for enterprise systems to contribute to the cause. In the most general sense, it is difficult to act on or improve what you don't know or can't see. ERP systems are the central nervous system of the organization. They carry the definitions, the data, a record of the activities of the organization, and provide the measurement systems for determining where opportunities for improvement lie - and for measuring progress of efforts to reduce and eliminate waste. In addition, most ERP systems also provide the ability to model and test alternatives - so-called 'what-if?' scenarios - that help focus efforts on the highest payback activities. More specifically, processes and procedures are embedded within the ERP system's routings and workflows. This existing "documentation" allows organizations to clearly see w... [download for more]