ERP and Lean concepts are always of interest to our team at Ultra.
To that end, I recently shared a previous blog post entitled “Why Go Lean in 2018?”
The blog post illustrated how simplifying business processes as part of a Lean continuous improvement effort works to eliminate waste in all of its forms throughout the organization.
We also offered the key principles of a lean approach, with a specific look at defining the value Lean can bring to an organization.
This blog post further explores the ideas of ERP and Lean.
All too often, the term “Lean” is applied to a company that has reduced its workforce, reassigned tasks and improved how things are done such that those who remain are able to do all that needs to be done. Improvement efforts in these organizations concentrate on how to do things better rather than concentrating on what things really need to be done.
By using a Lean methodology, the “how” part does not get addressed until the “what” part is defined, leaned and redefined.
A case in point: A company made improvements to the process of delivering documents between two departments (in this case, the receiving and purchasing departments in a manufacturing company). By installing a vacuum tube system, similar to that used by drive-up bank tellers, the company was able to improve the process of delivering paperwork between these two departments.
It was an admirable task with positive results: less manpower required to deliver documents, faster and more timely transmission of information and less risk of losing information in transit. The cost justification of this project determined that the benefits were worth the cost of buying and installing the equipment. Great!! Kudos to all those involved.
However, this was not a Lean approach to the problem.
In a Lean approach, the question that would be asked is “Why do we need this information to go back and forth?” As it turned out, the receiving department never used the purchase order copies they were sent as they received the product – they simply filed them in a file drawer. Purchasing did not take any action with the receiving documents they were sent – they simply filed them with the purchase order.
Payables rarely used either because when they did, the problem solving trail had usually gone cold, so they simply paid the bill from the vendor. AHHHHHHHH! The Lean approach would understand that this activity has no value to the customer and would concentrate on finding ways to eliminate it.
Succeeding with Lean
An ERP selection can be a fruitful time to evaluate a Lean approach. Successful project teams that manage to embrace employee empowerment and continuous improvement can realize the benefits of Lean forever.
What they have done is to change the mindset of the entire organization in order to assure the long term viability of the company with benefits such as:
- Alignment of operations and corporate strategy
- Improved quality and delivery to the customer
- Improved throughput and reduced costs throughout the organization
- Improved communication throughout the organization
- Increased flexibility in satisfying changing customer demands
- Focused attention of everyone to the needs of the customer
ERP and Lean Lessons Learned
By applying the lessons learned in manufacturing and focusing on the five principles of Lean, those who have embraced Lean and its disciplines have made an important change to how their business operates regardless of industry.
When it comes to ERP and Lean, getting administrative personnel focusing on continuous improvement and the customers’ needs is just as valuable as getting the shop floor to be Lean in regards to the organization being competitive and profitable.
Having those involved continually looking at processes to identify improvements is vital to the idea of continuous improvement and getting this engrained into the culture is the biggest change the organization needs to make. The key to success in a Lean environment is for the entire organization to concentrate on “Being Lean,” not just “Doing Lean.”
ERP and Lean Next Steps
As ERP selection consultants, we plan to keep Lean concepts on our radar in the year ahead. Watch for additional topics around Lean methodology addressed in upcoming blog posts.
Read a white paper entitled: “Lean, Six Sigma and ERP: Putting it all Together for Improved Performance.”
Looking to drive a Lean project at your organization? Contact the Ultra team.
This is a continuation of a multi-part blog series series. An upcoming post will present specific Lean techniques with details of how they affect the bottom line.