We’re pleased to have Derek Singleton present an article on Manufacturing Software and argue for how traditional ERP software can better support the principles of Lean Manufacturing. ERP and MRP have traditionally been at odds with the principles of lean. So, in his article, he also asks you, the reader, for advice on how else traditional ERP or MRP software can improve to better support the principles of Lean. Please chime in with your own thoughts.
Thanks to Derek and read more about him after the article.
Three Ways Manufacturing Software Can Adjust to Lean Principles
There’s a long-standing debate between manufacturing planning strategies. The debate is between proponents of material requirements planning software–better known as MRP software– and lean manufacturing advocates.
The crux of the dispute boils down to whether sophisticated software tools are needed to adequately plan production. Proponents of MRP software believe that today’s complex manufacturing challenges require formal planning tools to get an accurate picture of the production requirements. Lean advocates, on the other hand, argue that these planning tools actually get in the way of accurate planning because they’re too slow and transaction-intensive to pace to actual consumption, or adjust to demand fluctuations.
Three Components to Incorporate in Manufacturing Software
I see three main ways that manufacturing software can evolve to adapt to the demands of lean manufacturing. Each way focuses on bringing lean principles front and center of manufacturing software packages.
1. Make Value Stream Mapping a Core Software Component
One of the most important tools in lean manufacturing is create a value stream map to outline the flow of information and materials in the manufacturing plant. Modeling how information and materials flow through a shop floor will allow manufacturers to more easily identify production bottlenecks.
2. Monitor Cycle Times Intensely
The most important metric to know in manufacturing is how long it takes for materials to arrive on the dock and to leave in a completed product. In order to improve cycle times, these times need to be monitored and tracked. A subset of monitoring and tracking cycle times is keeping track of production status.
3. Locate Key Places to Add or Remove Inventory
While there’s ample functionality in manufacturing software for determining what to stock and how much to stock, there is little functionality to help manufacturers figure out where to stock. Functionality that can tell a manufacturer where to stock will help them figure identify the best places to protect against volatility, which will ultimately help avoid product shortages.
These are a few ways that I can see manufacturing software changing to adapt to the requirements of lean manufacturing. However, I’d like to hear your thoughts.
What needs to change in manufacturing software to adapt it to lean manufacturing principles?
About Derek Singleton
Derek is the ERP Market Analyst at Software Advice, which he joined after graduating from Occidental College with a degree in political science. He writes about various topics related to ERP software with particular interest in the manufacturing applications, such as manufacturing resource planning software. In his spare time he enjoys training in boxing and martial arts.
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Pete Abilla says
Lloyd Payton sent me the following comment via email, which I publish here:
Planning software is absolutely necessary–it’s just like budgeting and projections. Budgeting for variable expenses is never exactly accurate, but it gives a plan for available expenditures if revenues are at projections. It’s much different for production and delivery to customer requirements. If two budgeted variable and equal items come in, one at 15% over and one at 15% under, the budgeting accuracy looks great–100%. On delivery, if we deliver 15% of orders at or ahead of time, and then deliver 15% of orders late, we have an unacceptable 85% on-time delivery rate. Still, an overall plan is necessary to have a common plan and goals for everyone.
The problem we have is that people are attempting to use planning systems as tools they were not designed to be. In order to try and emulate lean principles we have instituted numerous methods to make planning systems become execution systems. They are designed to take top-down requirements, explode them, aggregate them and time-phase them to arrive at daily/weekly/monthly schedules. That’s great except for all the unforseen events that take place–that’s where an execution tool comes in.
I believe that you will see a way to perform excellent planning with your ERP/MRP systems and then use an execution tool to ensure execution to plan.
Lloyd Payton
Chief Executive Officer at Systems Plus, Inc.