Enterprise Software: Lean Gets A Software Assist

Sept. 21, 2006
ERP technology can support lean initiatives if you're willing to ride out the cultural shift.

They said it couldn't be done.

Mix enterprise resource planning (ERP) with lean, that is. Once viewed as total opposites that couldn't exist harmoniously beneath the same plant roof, manufacturers' lean projects are starting to catch a boost or two from ERP systems.

Lean proponents offer many reasons why the two strategies are incompatible. First, ERP is top-down, initiated at the corporate level, while lean is plant-based. Largely because of its predecessor material requirements planning (MRP), ERP tends to focus on material planning, while lean concentrates on improving production processes. The two appear diametrically opposed when a plant is run based on the lean "pull" model, while its suppliers are managed via the "push" approach supported by MRP.

One of the biggest disconnects is data gathering. ERP demands information, often requiring workers to utilize bar code readers. But time taken by plant workers to gather production data runs counter to lean, which eschews unnecessary activity in the manufacturing process.

Now there are signs that ERP is adapting, with some vendors adding modules that complement lean activities. Another reason for the shift is that while lean is fine for repetitive manufacturing models, for more complex supply operations, including complex product configurations, it starts to break down, requiring more than just spreadsheets for supply chain planning.

Ingersoll Rand Co.'s Thermo King division, for instance, is using Oracle's Flow Manufacturing system to augment its lean program at eight plants around the world. The company, which manufactures refrigerated transportation units for trucks and other moveable items, has made a major shift away from a build-to-plan to a pull approach.

"This flow-based operation is a different way of life and cultural approach to the way we work and how we do business," says Michael Macrie, global director of back office technology for parent firm Ingersoll Rand. He agrees that "the debate is pretty vocal" over whether lean and ERP can coexist, but he believes the technology is an aid to lean manufacturing. "The ERP system helps enforce and control our behaviors and helps achieve the desired outcomes," he says. "In the broadest sense it supports our lean efforts."

The information gathering aspect of ERP, while taking time from the individual operator on the line, has a payoff. "It's harder for one person but better for the whole plant," Macrie explains. "You have to fill in the data because the information is used to automate something happening three stations later."

Thermo King uses the ERP system's flow option to help run its flow manufacturing cells and sequence the movement of materials from feeder lines into the main flow line. It also plays an important part in helping the plant manage inventory via an automated kanban process.

In the kanban process, an operator scans an empty bucket, automatically releasing inventory from a storage area. Another employee handling line replenishment receives a pick slip specifying what to bring and where to bring it. If a case of parts in the storage area is empty, the employee scans the empty box, triggering a supplier kanban, with the connection made via the Oracle application's portal.

Thermo King is seeing some positive results. The company has experienced a 23% reduction in inventory, a gain of one-third in total production, and a boost in inventory turns from 6.2 to 10.

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