Improving Operational Excellence - It's not Lean or ERP-Part 2

ERP , Lean Add comments

Author Lora Holman

Director of Marketing More ...

Here's the follow-up to our previous discussion with Eric Wagner, Manufacturing Consultant & CPIM, Partner at Agility Business Solutions, Inc.!


Questions:

  1. If a company had to tackle one or the other (ERP vs Lean), which should come first?

    Eric: "Since ERP encompasses the entire business and provides the tool to plan for required materials, this needs to be addressed first. Lean (KanBan) won't really help you if you're out of materials from poor planning. Still KanBan doesn't fit every type of manufacturer. It provides the greatest benefit in high volume repetitive environments like make-to-stock or even make-to-assemble. It doesn't typically benefit engineer-to-order type of manufacturing."

  2. Why isn't there an ERP software product designed to fit better with lean (flow principles)?

    Eric: "ERP has been well defined by professional organizations like APICS. Most of the ERP software products are similar in that they adhere to certain standards to meet certifications by these professional organizations. These standards do not address principles of Lean.

    The philosophy of Lean and KanBan are not as settled in definition and standardization. There are more variables involved. As an execution system, they are highly tailored to each manufacturer's environment (chemical versus automotive versus casting).

    For example, in order for KanBan to work the client needs to have a shop floor data collection system in place. Up until the last few years, this type of system required a considerable investment. Each handheld device used to cost up to $5,000 each with the base station costing $50,000.00. Not so today. More manufacturers have a myriad of devices on the shop floor including laptops, smartphones and RFI handhelds so the path to KanBan with data collection devices today is more affordable.

    So we've come full circle on this topic. Most ERP software developers don't understand Lean practitioners. They don't go to lunch together. The question whether to implement one or the other for a manufacturer (ERP or Lean) is similar to someone asking, 'Should we have sales or accounting in the business?'. Now that would be a crazy question wouldn't it? Of course, you need both."

  3. List the top 5 barriers to blend ERP + Lean

    Eric:

    1. People ? those in roles of both facets don't understand each other
    2. Cost ? investment in hardware or infrastructure
    3. Time ? investment of people's time to develop the right practice flow
    4. Logistics ? the right practice flow may require changes like moving machines, tearing down a wall or other physical changes to the shop floor.
    5. Decision ? we have led some manufacturing clients to streamline product development or production. Sometimes a client is trying to meet demand with too many options and it's not providing real ROI?.

Microsoft Dynamics AX is a robust ERP and Lean manufacturing enabler. The latest release, Dynamics AX 2012, combines the powerful planning and execution features required of comprehensive ERP integrated with the features of Lean to assist the "blended" manufacturer. Contact Agility Business Solutions, Inc. to learn more.

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