ERP for Lean Manufacturing: Why Lean Organizations Get the Best from ERP

Lean manufacturing organizations follow a world-class practice: they believe in a common language within the organization. Everyone describes work, materials, and performance the same way. This culture dominates lean enterprises — and it makes them the best possible fit for an ERP environment. This article explains why ERP for lean manufacturing works so well, and what a lean culture expects from its people in return.

Detailed Specifications Mean Clean Data

A lean organization keeps detailed specifications for every action required to bring a product from concept to launch, from order to delivery, and from raw material to the finished product in the customer’s hands — through its entire useful life. Consequently, complete and accurate data sets are always available to load into the ERP. The system then produces estimations and recommendations the business can actually trust, because the data underneath is clean.

Process-Based, Not Function-Based

The lean organization believes in a flat structure with empowered employees. Moreover, that structure rests purely on processes, not functions. Every business process or sub-process exists to provide a needed product or service for a defined customer, produced according to defined requirements, rules, or constraints. Suppliers provide the materials and information each process requires, and the process consumes the resources allocated to it.

This matters for ERP fitness. ERP conceptually integrates processes, not functions — so a process-based culture is the primary criterion for ERP success. In such an environment, ERP’s main job is to replace fragmented handovers with one seamless flow of information.

Open Information, Accountable People

ERP in a lean environment gives every authorized user access to information about the whole organization, instead of locking data inside departments and hierarchies. Employees can browse, analyze, and comment on the organization’s performance through the ERP system. In return, ERP expects something from them: every employee must be mature and accountable with the organization’s resources. Open information and personal accountability grow together — one does not work without the other.

The Empowered Buyer

ERP even changes job definitions. It calls the traditional purchase person a Buyer, and expects a Buyer to carry four types of skills:

• Technical skills — understanding what the organization buys
• Commercial skills — understanding costs, terms, and markets
• Negotiation skills — securing the best value from suppliers
• Integrated planning skills — buying against the plan, not in isolation

ERP assumes empowered people like this as its users. Then it helps them take accurate, cost-effective decisions in their daily transactions and planning.

The Best Practice: Share Information Freely

The best practice of ERP in a lean organization is simple to state: share the organization’s information with the entire set of users, without obstacles. Free-flowing information produces both productive daily decisions and the best mix of planning decisions. A web-based system like eresource ERP for manufacturing is built for exactly this culture — one database, one version of the truth, available to every empowered user wherever they work.

Also Read – 8 Benefits of ERP for the Manufacturing Industry