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For many large and midsize manufacturers, the challenge of enabling the corporatewide enterprise resource planning (ERP) system to mesh with their lean initiatives on the plant floor requires a delicate balance.
Implemented by the vast majority of manufacturing firms over the past two decades, ERP is as ubiquitous today as machine oil was in the 1950s. Over the same time, tens of thousands of manufacturers have adopted the tenets of lean management based on the Toyota Production System.
This shotgun wedding between lean's employee-driven mantra of continuous improvement on the production line and the corporatewide materials planning software has put manufacturers in a bind.
"When we first implemented our lean initiative, we felt we were stuck between a rock and a hard place," says Amar Randhawa, general manager at Durabuilt Windows and Doors, an Edmonton, Alberta, manufacturer of doors and windows for commercial and residential buildings. "ERP and lean are quite conflicting. For example, the workflow on our production floor was set for ERP, and we had to make changes to the ERP to enable us to do lean."
A prime conflict between lean and ERP lies in materials planning and production scheduling. ERP, with its top-down approach, depends on sales forecasts for materials planning. Conversely, lean adheres to a pull-based production-scheduling mantra, with inventory kept to a minimum via an in-plant kanban system that replenishes materials and parts as needed. In effect, it's the classic clash of "push" vs. "pull" manufacturing.
|A Durabuilt employee records data into the company's proprietary ERP system on a finished product being prepared for shipping to the customer.|
Despite these differences, manufacturers are finding creative ways to enable their lean initiatives and ERP systems to coexist, and even work together. Some manufacturers, for example, have found it useful to utilize ERP primarily as a records system, recording orders processed, materials consumed, and finished products shipped, all the while keeping ERP outside the plant. Others are using "middleware" to bridge the gaps between lean and ERP. One company has succeeded in marrying ERP and lean by ordering a customized ERP and then tweaking it to work with lean on the production floor.
For their part, many ERP software firms have incorporated lean functionality, including support for flow manufacturing, electronic signaling of kanbans to suppliers, and sequencing. But the attitude among manufacturers that lean and ERP are estranged is so prevalent that software vendor Ultriva, based in Cupertino, Calif., has found a thriving niche by positioning its supply chain software as the bridge between lean on the plant floor and ERP.
"We have about 150 plants now using our software with SAP and other ERP systems," says Ultriva CEO Narayan Laksham. "Several ERP vendors have tried to retrofit their software for lean, but their demand forecasting drives their system, whereas actual demand is what drives lean."