- 30 June 2014
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An exploration of lean manufacturing and how an ERP system can effectively accommodate a lean supply chain.
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Lean manufacturing maximizes customer value while minimizing those activities that reduce value.
Lean manufacturing focuses on accommodating improvements in all aspects of the supply chain,
• Quality of product
Lean Manufacturing with ERP
1. Resolve the conflict between efficient manufacturing and sales.
Manufacturing tends to increase batch size for greater efficiency and to minimize cost per produced
The sales department’s success determines revenue and commissions.
If manufacturing is not tied to the sales demands, you may have trouble meeting the fluctuating
needs of your customers. For example, demand for a product may increase, but the iter may be out
of stock until the batch production schedule catches up.
Manufacturing in bulk can also lead to wasted resources for those finished products not requested
To resolve this conflict:
• Decrease batch sizes.
• Look into metrics that focus on customer service levels and inventory turns.
• Tie manufacturing schedules with sales projections.
2. Extend parts of your lean program to suppliers.
Encourage suppliers to adopt lean processes to improve cost, availability of materials, and product
Create a portal that informs your suppliers of production plans.
Set up a training program to help suppliers implement lean processes.
3. Run multiple parallel MRP processes.
Few manufacturers have a flat demand. Most follow the Pareto principle: about 20% of what you
manufacture will account for 80% of your financial rewards.
Running a make-to-stock (MTS) system in conjunction with a make-to-order (MTO) system
allows you to identify demand patterns and avoid large stockpiles.
4. Master demand forecasting.
By increasing the accuracy of your demand forecast, you can improve customer service and reduce
Instead of assigning demand forecasting to any specific department, appoint an independent party to
take a more holistic view.
5. Use reliable software.
Make sure your enterprise technology has the functionality to handle a lean manufacturing supply
chain. Your ERP application should:
• Support multiple modes of manufacturing, including MTO, MTS, configure-to-order, and
• Provide for multisite operation.
• Offer master data management.
• Have tools to adjust to a pull-based supply chain system.
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