October 2012
Advice and Assistance for Manufacturers
In the earlier days of the spread of Lean Manufacturing, there was a perception among many that you have to make a choice – Lean or ERP. Not both. After all, Lean is focused on flow production, make to demand, physical inventory and production activity triggers, and a replacement/replenishment orientation. This is all quite different and quite incompatible with ERP’s planning-based approach and limited support for flow manufacturing and one-piece movement.
After the initial hype died down and companies got some hands-on experience with the good things about Lean (and there are many) as well as its limitations, it became clear that the two approaches, while incompatible in some areas, can be very complementary.
Many companies today have complete and functional ERP systems in use, supplemented by Lean techniques and tools to deliver the best of both worlds.
There are many aspects to Lean Manufacturing so the definition of Lean can be different depending on the definer’s experiences, orientation and needs. For the sake of this discussion, let’s focus on the demand-driven production and physical triggers (kanban) for inventory movement and replenishment.
ERP is focused on planning. The heart of ERP, what I like to call the central nervous system of ERP, is the planning “stack” – Sales and Operations Planning, Master Scheduling, and Material Requirements Planning, supplemented by the resource planning applications: resource planning, rough-cut capacity planning, and capacity requirements planning. It is a mistake to assume that you don’t need planning in a demand-driven, kanban-oriented world. The ERP planning stack is responsible for getting the materials in place or en route to meet the planned production rate, manpower and equipment planning, and coordination of all aspects of the business including feeder lines, receiving, shipping, financial management, engineering, etc.
The flow lines and kanbans are execution tools – not planning. And, yes, plans and forecasts are still essential parts of a successful flow/kanban factory operation. It’s true that ERP systems include a variety of execution tools – production activity control, scheduling and dispatching, and even repetitive (flow) management applications – that might not be needed for the parts of the plant that are strictly demand driven. But most plants have a combination of flow and traditional batch production so there’s room for both approaches.
Lean should be seen as a partner with ERP, the two approaches providing their best capabilities to the efficient operation of the manufacturing business. It is perfectly okay to use ERP and Lean techniques side-by-side. In fact, it’s just smart business to do so.
