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Lean Management & ERP System

Lean Management and ERP System? How they collaborate together?

Are you a part of the industry world? So you you have probably heard about the Lean Management and the ERP software and their growing popularity in business world. What’s the relation between this two concepts? and how ERP can help in a Lean deployment?

Becoming lean is the first aim of today’s industrial companies. The main objectives of Lean Manufacturing are the highest quality, the lowest cost and the shortest time by identifying, reduce/eliminate non value added activities in the different departments (engineering and design, production, inventory, commercial…) and also simplifying all manufacturing processes compatible with the continuous improvement of the technical quality.

The ERP can be considered as a large software system to connect all parts of the company by promoting best practices business processes, it’s an integrated management tool, plays a fundamental role; it becomes the essential leader to centralize all this data and coordinate the exchange of information between the company and its system.

“Actually, Lean and ERP coexist in many companies, they work together very well . Each is supporting and enabling the most important objectives of the other.”

There are the ways that ERP system support the Lean system:

◎ Reducing Waste

The main goal of the Lean is to eliminate waste. The first step is to identify the source of non value activity or product. Therefore company must take a hard look at processes and practices to identify those things that truly add value for the customer and eliminate those that do not. ERP systems are the central nervous system of the organization that enable companies to track waste and alert responsibles. For example, the excess inventory is the major source of waste in industries. The logic of planning and optimization subsystems in ERP can help reduce inventory, make better use of transportation and storage facilities, taking into account the size and timing of work activities to avoid waste and minimize non-productive time (installation, handling), and provide other assistance to avoid non-value-added activities.

◎ Continuous Improvement

Lean is not a one-time project, nor is it ever “complete”. Much remains to be done: more improvements to be made, more efficiency to discover, more refinement of processes and procedures to eliminate waste and improve Lean Return Of Investment. ERP can support continuous improvement and streamline quality standards and business processes. These include order tracking and management, activities and in-store shipments... The ERP can act as a magnifying glass in your company's operations by creating detailed reports on key processes. From there, you can focus on the waste areas and work continuously to reduce the excessive costs.

◎ Sales and Customer Service Opportunities

Customer service must be at the center of any organization's concerns. Lean efforts can and should not only seek to eliminate waste from customer processes, but also to deliver better customer service results at the same time. ERP system gives as much focus to customer relationship management (CRM) as to internal operations. It speeds up ordering throughout the process, eliminating delays in transfers to all relevant departments. As soon as the order is entered, inventory, accounting, planning, production and delivery are immediately notified and can start running customer requests. All participant activities are synchronized to effectively respond to customer demand.

◎ Cooperation between departments

Improving productivity within departments is straightforward. Companies that are serious about adopting lean should consider the cooperation between departments a key part of the lean transformation journey. ERP provide a source of information for mapping out Lean strategies, a mechanism for implementing new and more effective processes, and a measurement system to track progress and document gains. Also, ERP generates an increase in volumes and flows of information, whether internal data (production tool, machines) or external data (suppliers, customers, etc.).

◎ Metrics and Dashboards

The ERP system includes a variety of measures and dashboards to facilitate the monitoring of production performance. Users monitor key performance indicators for which they are responsible, and often receive workflow alerts that let them know when results exceed predefined thresholds.

In conclusion, the ERP system integrates the all tools needed in lean management into a unique initiative through its various modules that offer prosperity and to the company.

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