Recently I posed the question of how Lean Manufacturing and Enterprise Resource Planning / Material Requirements Planning can co-exist under the same roof. I asked a lean expert and he spoke on and on about how much “better” Lean is than ERP, and how ERP was not needed any longer. I asked an ERP/MRP expert and he told me that MRP/ERP is the best planning system on the planet, and that it had been the best planning tool for 35 years.
Popular or not……I have to agree to disagree. I believe that Lean and ERP/MRP can work very well together and might be the answer to keeping manufacturing in the United States or bringing it back. Let’s take a look at how they can work well together. ERP/MRP has been a great planning tool since Joe Orlicky, Oliver Wight and George Plossl dreamed it up! ERP/MRP has gotten better and better as a planning tool as computing power and mobile accessibility have improved. Lean had its beginnings in Just in Time (JIT) concepts. Lean has value in many places but has great value for execution. Why not use them both? Why not use ERP/MRP in a Lean way? Why not eliminate waste in ERP/MRP? Why not leave planning to MRP/ERP and leave execution with less waste to Lean Manufacturing?
When using an ERP/MRP as a planning system, it is necessary to set up lot sizes, procurement lead times, manufacturing lead times (wait times, setup times, queue times, run times), and scrap / yield factors among other processing options. Let’s lean down the lot sizes and make them smaller and more flexible and vary them dynamically with demand. Using small dynamic planning lot sizes for procurement and manufacturing where possible will result in less waste while still having good future planning. You can lean down the lead time for purchase products by working to build long term agreements and relationships with suppliers. Manufacturing lead times can be reduced by up to 80-90% by reducing lot sizes, set up time, working on a better flow so that queue and move times are all but eliminated. Let’s learn from lean and JIT with continuous improvement, and create better processes so that we can have less scrap and, therefore, less extra planning and inventory for scrap in ERP/MRP.
Some companies use ERP/MRP to create excess waste…….that is, inventory, lack of flexibility, long lead times, etc. This is because some do not know how to use the tool. Using proper and lean set up parameters for ERP/MRP can result in it being a very accurate and cost effective planning tool. Using Lean Manufacturing as an execution tool will help reduce lead time while decreasing WIP. Lean pull techniques for shop floor execution will help lean down finished goods inventory, and lean continuous improvement thinking will help to improve quality.
Lean Manufacturing techniques and Enterprise Resource Planning work very well together and can be like Peas and Carrots – you just have to look beyond the party lines and use the tools for what they do best and in coordination with one another.
Posted By Roger Harris, CFPIM, CIRM, C.P.M., PMP, CSCP, CPSM