EXECUTIVE SUMMARY
Manufacturing companies are adopting Lean because of its efficiency—lowering costs and lead-time, while improving quality and performance. In today’s highly competitive and challenging markets, companies need every available advantage.
Many people equate Lean manufacturing with the use of kanbans: physical or visual signals that trigger replenishment. While kanban use is indeed a part of many Lean programs, it is not the only solution for triggering the movement of material. Kanban has its place, but there are more appropriate alternative approaches in situations where kanban is not a good fit.
It is important to remember that Lean is an approach and an attitude—not a specific set of techniques or tools. The most important aspect of Lean is a focus on the elimination of “waste” (i.e. anything that does not contribute directly to making the product). Kanban and kanban alternatives focus on inventory reduction, proper staging of parts and materials (reduced handling and delay), and efficient procurement/production of replenishments
Time waste differs from material waste in that there can be no salvage. The easiest of all wastes and the hardest to correct is the waste of time, because wasted time does not litter the floor like wasted material. Henry Ford
KANBAN AND LEAN
Kanban is a replenishment signal that acts as the primary linkage in a “pull” environment. Typically a substitute for a manufacturing order or purchase order, the kanban signifies that an item, material, or assembly has been used and that another can and should be made, moved or acquired to replace it. When properly applied, kanbans help reduce inventory and shorten lead-time, reducing waste in support of demand-driven “pull” operations.
Kanbans work best where demand is steady for a given period of time. Once the appropriate number of kanbans is put into circulation, material flow is timed to usage, inventory remains constant, and shortages should be eliminated. However, the kanban system is not designed for frequent demand changes. If demand increases, shortages occur; if demand decreases, there will be excess inventory. Management must continually monitor the number of kanbans in circulation and make the appropriate adjustments.
Where there is a varying demand and/or a mix of products being produced, particularly with small quantities, computer techniques do a much better job of having the right parts available with minimum inventory investment. In addition, computer techniques are designed to track changes in demand and usage and automatically adjust activities to accommodate those changes.
ERP—NOT A FOUR-LETTER WORD
People tend to define ERP as a traditional system. In reality, these so-called traditional systems plan inventory availability quite precisely, based on the forecast. Best performance is achieved when the forecast is accurate (or at least closely managed), and execution is carried out effectively. Also, ERP can be a lot more forgiving of challenging business conditions, such as rapidly changing forecasts, supplier schedule changes, and the like.
In a make-to-order or assemble-to-order situation where kanban does not fit, ERP with a product configurator offers the most effective approach. Components, materials and/or assemblies are planned and stocked according to a forecast. The configurator captures customer specifications and generates the production
or assembly work order for quick completion and shipment. Planning systems coordinate replenishment of components used in accordance with minimum inventory/maximum availability objectives. Such a system is not hampered by the variation in demand of products and configurations. In fact, it is designed to operate in this environment and generate minimum inventory consistent with availability and customer service objectives.
Hose Master of Euclid, Ohio successfully pursues this strategy. This 200 employee firm makes both custom and standard hose products for domestic and export sales. The company uses a configurator-enabled ERP system to process 6,000 quotes and 2,500 orders each month. Since implementing the system, Hose Master has improved service levels and maintained or shortened delivery times, while handling an increased quote volume.
Hose Master Benefits:
• Faster, more automated configure-to-order quoting system led to improved service levels, faster quote delivery, and quicker new hire training
• Able to handle increased business with previously publicized lead times; improved lead times in some instances
• Offered self-service features via the Web
BECOMING LEAN
Lean is all about eliminating waste—cutting unnecessary costs like excess inventory levels, reducing lead time and handling, and focusing on doing things right the first time. A variety of techniques and tools can be applied across the wide range of manufacturing situations to control material flow, reduce inventory, and shorten lead-time.
For materials and parts with relatively steady usage, kanban offers a paperless- and orderless-approach. For custom manufacturing, a configurator integrated with a full-function ERP system is the answer. In the vast area between these two extremes, the following provide the best tools for reducing waste, lead-time, inventory, handling, scrap, rework, and other non-value-adding activities:
A modern, integrated ERP suite that supports not only manufacturing, but also financials, supply chain, and customer management—and is supported by functionality for tracking a company’s performance—can help support the proliferation of lean throughout the enterprise. Excerpt from: “SMBs: Embrace Lean as Part of the Current Business Transformation” by Simon Jacobson
• Integrated ERP system with comprehensive applications that address the full range of a manufacturer’s activities, including customer service and supplier relationships.
• Solid forecasting and master scheduling processes that keep close track of demand and ensure that execution is fully in sync with customer needs.
• A focus on process improvement and waste elimination, heavily reliant on empowered workers and responsive (and responsible) management.
• Automation where it makes sense—shop floor data collection, RFID, electronic ordering, self-service web, and more.
• An open mindedness toward new and innovative approaches like Theory of Constraints, demand-driven strategies, and collaboration—consistent with the company’s position, products, customers, and capabilities.
In today’s highly competitive world, success is all about satisfying the customer, controlling costs, and maximizing profits. Every improvement program can achieve these goals when capitalizing on the best of lean manufacturing and overall best practices.
A textbook Lean implementation can be quite daunting—value stream mapping, intense training and implementation, radical changes in processes and company culture. But you don’t have to do all that to take advantage of Lean thinking and gain Lean benefits. All it takes is openness to new ideas, trust in the knowledge and experience of the workers, and a willingness to make changes. You can adopt Lean practices incrementally and continuously in a gradual, extended journey toward improvement.
When software capabilities are key to achieving your business objectives, Intuitive ERP and Made2Manage ERP software and services meet the wide range of manufacturing and business requirements. They are matched closely with specific customer needs, incorporating deep industry knowledge and experience. Plus, each is continually enhanced to meet evolving customer requests and suggestions.
Notable for ease-of-use, fast navigation, tailored views and tight security, Intuitive and Made2Manage applications deliver the functionality without the fuss, permitting manufacturers to focus on process improvement and their Lean journey.
Intuitive offers rich functionality for a broad range of manufacturing environments, including electronics, medical devices, aviation and others, and makes implementation easy for small to midsized companies. Made2Manage provides full ERP capabilities for custom manufacturers centered on a “casual” bill-of-material for making complex products, while continuing with design and engineering activity.
Active product support and enhancements deliver the capabilities and technologies that customers want and need in their specific industries, including ERP, Business Intelligence (BI), Customer Relationship Management (CRM), Advanced Planning Systems (APS), Manufacturing Execution Systems (MES), and configuration from one supplier.
Intuitive and Made2Manage are backed by an experienced management team and deep financial resources, combining high-fit solutions, solid customer relationships, and a strong balance sheet into a value proposition unmatched by other vendors. Both are ready to provide the information management solutions and support you need to keep your business lean, productive, and ahead of the competition in today’s rapidly changing market environment
More than 9,000 customers around the world rely on us to give them a competitive edge. By providing innovative, industry-driven enterprise application software, Aptean helps businesses to satisfy their customers, operate most efficiently, and stay at the forefront of their industry.
For more information, visit: www.aptean.com