5 Ways to Use ERP to Lean the Manufacturing Supply Chain

  • 30 June 2014
  • cre8
Categories: News

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,


• Cost

• Service

• Delivery

• 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

by customers.

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

your inventory.

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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• http://www.lean.org/whatslean/

• http://www.epa.gov/lean/environment/

• http://ebookbrowsee.net/wp-10-ways-use-erp-to-lean-supply-chain-pdf-d399946502

• http://spendmatters.com/2014/04/12/how-organizations-extend-lean-to-their-supply-