By Gerry Schneggenburger, NWIRC

Is your business reliant on an ERP/MRP system to automate or reduce work-in-process costs and durations? If so, you may want to reconsider your use of IT systems versus custom-built logic made specifically for your type of operations and product lines.

Lean continuous improvement is well known for its system of ‘pulls’, like Kanban, and results in the reduction or elimination of ongoing work, plus it represents a more decentralized and participatory approach to production (Fig.1)

On the other hand, ERP [Enterprise Resource Planning] systems are known as ‘push’ systems whereby production is triggered based on due dates of customer orders or desired restocking to inventory levels. ERP managed production is well suited to a mixed product line, infrequent orders, or custom work3. (Fig.2)

While it’s true most recognized ERP systems currently adopt lean principles, in reality it’s impossible that a one-size-fits-all approach can materially impact your business. Why? Because Value Stream Mapping and other lean-related activity are custom developed for your product line(s), for your equipment, for your cells – and it’s rare that any two operations are exactly the same.

So how can your firm develop an optimal mix? Research findings1 show the benefits of ERP systems can be attributed to quality process improvement activities prior to IT implementation. In other words, adapt your ERP system to match your optimized production system based on lean principles and design.

ERP systems contribute the highest value by automating data and paper flow while providing visibility to pertinent processes. Some manufacturers go so far as to relegate their ERP systems only to processing of orders outside the plant [i.e. customers and suppliers]; all other production aspects are based on lean principles with custom applications or processes2 .

To move your business forward, if you think your production processes are out of balance, consider:

1. Having a lean continuous improvement expert Value Stream Map a production line of concern;

2. Within an improvement team process, ensure a designated IT professional who can affect ERP changes is an active team member [they’ll see firsthand the identified production issues, the future desired state, and develop IT requirements and processes to accommodate]; and

3. As with any operational initiative, a lean continuous improvement cultural mindset is required by leadership and must be continuously pursued.

If you’d like more information, perspective, or IT systems assistance, don’t hesitate to contact your NWIRC Business Advisor.

Gerry Schneggenburger has 30 years of executive business management experience with an IT foundation of systems development, programming, database administration, systems network engineering, and IT lean continuous improvement.

Sources:

1 Radboud Universiteit Nijmegen, Supporting Lean Transformation with IT, by Samiaji Alief Kayadi, August 2018

2 Industry Week, Can Lean and ERP Work Together?, by Doug Bartholomew,
Apr 12, 2012

3 Kenitra Ibn Tofail University, Lean ERP: A Hybrid Approach to Push/Pull, by Drrs. Houti, Abbadi, and Abouabdellah, May 2016