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Give your ERP a Lean Boost

ERP drives enterprise-wide planning and scheduling of resources to satisfy your organization’s needs of manufacturing, procuring and shipping of goods. The planning and scheduling outputs that an ERP provides, is based on the various input parameters fed to it such as lead times, safety stocks, order modifiers, product structures, supply and demand, stocking levels, etc. Based on these input parameters, an ERP plans for the short-term and long-term resource requirements for your organization. However, in order to derive the maximum benefits out of your ERP deployment, you need to validate that your organization is efficiently managing these input levers to your ERP. It is here that Lean manufacturing and Lean supply strategies can help you in reducing the fat that often accumulate in these input parameters.
This is where Lean operating principles that focus on eliminating waste from the processes can help an organization streamline its operational levers to derive the best benefits out of an ERP implementation.

There are several ways in which ERP can complement a Lean initiative. For example, a Lean organization would focus on reducing demand variability not by raising inventory stocking levels or padding up lead times rather by increasing the flexibility in manufacturing to reduce cycle times. A Lean organization rather than promoting fixed lot multipliers to reduce ordering inefficiencies would focus on collaborating with suppliers to do intelligent and just-in-time procurement. ERP enables sharing of data with suppliers, whereby an organization can look at the available capacity of its suppliers and in turn the suppliers can look at stocking levels of their customers to decide on when to replenish. An ERP can go a long way in developing such collaboration.

When it comes to Lean material replenishments, most ERP packages have built-in support for Kanban planning and execution. Kanban is a self-regulating replenishment cycle which can operate extremely well through visual signals. However, visual signals may not be the most efficient across large shop areas due to difficulty in viewing these signals. When supported by an ERP, the Kanban system can become even more powerful and overcome the space limitations that visual Kanban signals might face. Similarly, ERP packages have built-in support for other Lean methods such as in-process quality checking, pull-based replenishment, backflushing, vendor managed inventory, etc. Oracle Apps provides a Flow Manufacturing module that provides customers with support for flow schedules, mixed model maps, takt time calculation, line balancing and flow schedule managing and execution. In fact, the unified data model that ERP packages uses, can be used to develop some custom tools that can utilize the data stored in ERP and yet meet some Lean initiative needs that the ERP package of choice might not offer. We did such a customization to help an industrial manufacturer classify incoming order lines into value streams – a Lean concept.

While ERP can support some Lean initiatives, as is well known, Lean planning and execution is a cultural and operational change that an organization needs to commit itself to. But once done, ERP can be a powerful ally to it and vice versa. So if you already have or are planning for an ERP implementation, see how best you can derive benefits by examining your processes to eliminate waste and get leaner in the process!

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