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Importance of Demand Leveling
"This leveling stage is extremely important to make our pull-based kanban system within the plant communicate with ERP, which contains the customer orders," Berthelin says. "By doing this, we are balancing our production schedule with the customer takt time."
In other words, by aggregating orders across a month, TRW brake-division schedulers at each plant are able to flatten out the workload over time. This eliminates demand spikes that otherwise could wreak havoc on the lean effort, which functions best when there is a smooth flow of materials and a relatively flat production schedule.
The leveling also ensures that parts are being made at the right time to meet customer demand.
"We try to make the need for order sequencing not a problem for us, because we are building parts at the same pace that customers need those parts," says Berthelin.
Aside from the order process, ERP comes into play again at the end of the production process, as brake parts are finished and ready to be shipped to customers.
"When finished goods are taken and put onto a truck bound for the customer, they are barcoded to tell the ERP system that these components are going to the customer," adds Paul Ridealgh, TRW European Foundation Brakes Division logistics senior manager.
TRW's European managers believe the kanban-driven lean method of operating plants, combined with ERP to communicate with suppliers and customers, is an optimal approach to enabling lean and ERP to coexist.
"Using demand leveling and kanban cards, mixed with ERP, is a very successful way to monitor the use of working capital," says Berthelin.
Berthelin recommends that manufacturers utilize ERP-based materials planning with care.
"ERP needs to be monitored closely and constantly checked, because it can be quite unreliable -- sometimes customer orders, for example, may not be consistent. "Also," he says, "the boundary between the two systems [lean and ERP] needs to be clearly identified to avoid confusion."
Ridealgh adds: "If you're serious about your lean initiative, you're going to have lean and ERP coexisting. We've never seen a manufacturer succeed with both lean and ERP within the plant."