There are two major strategies when it comes to improving production. Lean manufacturing involves eliminating waste wherever possible, thus saving companies energy, time and money. Enterprise resource planning focuses on predicting future needs and maintaining accurate data. Although the two are often seen as opposing ideas, they end up working well together. Businesses aiming to improve operations should combine ERP and lean techniques.
Lean versus ERP
Lean manufacturing focuses on the idea of pull – that is, taking demands from customers and fulfilling their needs as quickly and efficiently as possible. In essence, it’s a reactive process. Production doesn’t start until a customer submits a request. Once that happens, materials are purchased, a timeline is created and employees are given assignments. Thus, merchandise stored in the warehouse is kept to a minimum – manufacturers create only what the customer asks for. This prevents them from making products that don’t sell and saves supplies, labor and time.
ERP, on the other hand, is push-based and primarily concerned with planning. Its goal is to estimate – as accurately as possible – the materials, timeline, payroll and procedures needed to satisfy incoming orders and achieve maximum profit. It’s a proactive process rather than a reactive one, constantly recording and supplying information. ERP’s strength comes from its focus on data, collecting and comparing it to past trends to estimate future needs.
As Ceramic Industry noted, lean manufacturing’s biggest weakness is its inability to work with long-term planning. It demands quick decisions on the go, ordering parts only as they’re needed. This is cumbersome for manufacturers that must order materials from abroad. Lean techniques can’t predict future needs as well as ERP can, leading to a lack of available resources for a project.
At the same time, ERP has the potential for waste. At lot of energy is required for ERP implementation, and manufacturers may end up accumulating data they don’t need.
Combining ERP and lean
The best manufacturing practice is not to forgo one for the other but to integrate ERP and lean into one fluid system. Lean manufacturing cannot forecast production needs, and ERP can’t eliminate all manufacturing waste. A strategic mix takes the best from both practices.
Combining lean and ERP is an involved process, Ceramic Industry said. One standard hybrid isn’t able to accommodate every organization. Instead, businesses need customized solutions that suit their individual needs. They should start by implementing lean techniques to improve administrative and manufacturing productivity. Instead of focusing on resources, they’ll use lean to streamline action and reduce wait times. Then, companies can add ERP software with customized modules and add-ons that use past data to improve production and efficiency. The software will keep track of payroll, materials, orders received and products shipped, making sure everything meets its deadline. Business leaders can then use this data to create future goals.
Amar Randhawa, general manager of Durabuilt Windows and Doors in Alberta, Canada, spoke to Industry Week about his experience combining ERP and lean. Randhawa said he found the two contradictory at first – his production floor was set for ERP and had to be completely altered to adapt to lean principles. He used ERP to switch from paper to digital recordkeeping and used lean to reduce the amount of product his team created.
“If we didn’t have an ERP system, our lean initiatives wouldn’t work,” he said.
In short, lean and ERP are able to go hand in hand. While one is a reactive technique and the other proactive, combining the two reduces waste while simultaneously maintaining records for future goals.
Want to learn more about how ERP software improves productivity? Download the “DMS Physical Inventory Count Module” data sheet.