RQ iii : What are the influences of the
6) The concurrent application of lean
5.4 ERP support for lean production
Purpose and overview – The purpose of this paper is to evaluate the support function- ality of a contemporary ERP system for lean production. By applying an action research approach and addressing the fundamental principles of lean production in the context of the capabilities and functionality of a modern ERP system, we develop a framework for ERP support for lean production, based on theoretical and practical insights.
Main findings – As a result of the first phase of the action research project (see Chapter 4.3.2), we develop “the 15 keys to ERP support for lean production”. By operationaliz- ing each of the five lean principles with practical examples, it was possible to identify the potential support functionality offered by a contemporary ERP system for lean pro- duction, thus making a contribution to the area “ERP support for lean production” iden- tified in the research framework (Figure 17).
Table 16: The 15 keys to ERP support for lean production (Powell et al., 2011) No. Principle An ERP system for lean production should: Reference:
1
Value
Support customer relationship management (Chen and Popovich, 2003)
2 Automate necessary non-value adding activities (e.g. backflushing) (Hamilton, 2009)
3
Value stream
Enable process-modelling to support standard work
processes (IFS, 2008; Prediktor, 2010)
4 Provide a source for easy-to-find product drawings and standard work instructions (Houy, 2005; Tjahjono, 2009) 5 Support information sharing across the supply chain (Bjorklund, 2009; Koh et al.,2008)
6
Flow
Create synchronized and streamlined data flow (internal
& external) (Hamilton, 2003)
7 Support line balancing (Steger-Jensen and Hvolby, 2008)
8 Support demand levelling (Hamilton, 2009)
9 Support orderless rate-based planning (e.g. takt-time) (IFS, 2010)
10 Provide decision support for shop floor decision making (Hamilton, 2009)
11
Pull
Support Kanban control (Hamilton, 2009; Masson and Jacobson, 2007)
12 Support production levelling (Heijunka) (Masson and Jacobson, 2007)
13 Support JIT procurement (Masson and Jacobson,
2007)
14
Perfection
Provide a system to support root-cause analysis and for
the logging and follow-up of quality problems (Bjorklund, 2009)
15 Provide highly visual and transparent operational measures (e.g. real time status against plan) (Prediktor, 2010)
By combining the 15 keys for ERP support for lean production with the conceptual framework identified in Chapter 2.7, we propose a framework for ERP support for lean production as a result of this paper (Figure 18).
ERP Support for Lean Production Value CRM Automation of necessary non- value adding activities (NNVA) Value stream Process modelling Source of WIs Information sharing across the supply chain
Flow
Synchronized data flow Line balancing Demand levelling Rate-based planning Decision support Pull Kanban Production levelling JIT Procurement Perfection Root-cause analysis Visual management Performance measurement
Figure 18: A Framework for ERP Support for Lean Production (Powell et al., 2011)
In terms of manufacturing planning and control, some of the keys relate primarily to planning (e.g. support rate-based planning); some primarily to control (e.g. support kanban control); whilst others serve both planning and control (e.g. support customer relationship management; support information sharing across the supply chain). All of the 15 keys give good practical examples of potential ERP support functionality for lean production.
With reference to current thinking, Singleton (2011) suggests three ways in which man- ufacturing software can be used to support the lean manufacturing philosophy in comparing MRP and lean:
1. Incorporate support for value stream mapping 2. Continuously monitor lean metrics
3. Identify key places to add or subtract inventory
Though aspects of all three of these points are incorporated within the framework illus- trated in Figure 18, we suggest that value stream mapping itself should still be carried out in the traditional sense – with pen and paper. When this technique was first devel- oped, it was called big picture mapping. As such, it encouraged those carrying out the mapping task to “go to gemba” – i.e. to go to the shopfloor and learn to see the process of actual material and information flows. We suggest that there is a great risk of forget- ting this basic lean principle by integrating value stream mapping functionality into the
ERP software. However, having first conducted the physical process mapping, we do suggest that the ERP system can be used more effectively to model the process flows, thus supporting value stream management.
As for the continuous monitoring of lean metrics, we identify “performance measure- ment” as part of the support functionality for Perfection. For example, as a part of the ERP system, a business intelligence (BI) module can be used to develop and manage lean metrics.
Identifying key places to add or subtract inventory is also covered by support for both
Flow and Pull. For example, the relevant planning module can be used to support both
demand levelling and production levelling (Heijunka), which involve decisions of where to locate strategic inventory so as to smooth out variations in demand.
In a Glovia whitepaper (Glovia, 2008), possible ERP support functionality for the tech- nical elements of lean production (such as visual control and continuous flow), is also discussed. The white paper takes a much greater focus on which modules of the ERP system offer support for each of the technical elements of lean. For example, it states that “the “glovia.com Shop Floor module” allows real-time data collection for contin-
uous improvement”. This falls within the realms of Item number 15 in Table 16, “An ERP system for lean production should provide highly visual and transparent opera- tional measures (e.g. real time status against plan)”. Another example is “the “glovia.com Factory Planning module” is able to smooth out variable demand, helping to establish and adjust takt-time”. Again, this is similar to item numbers 8 and 9 in Ta-
ble 16, which states that “An ERP system for lean production should support demand
levelling and orderless rate-based planning (e.g. takt-time)”.
Limitations – This paper presents a framework for ERP support for lean production that has been developed by comparing a selection of authors’ modern theoretical view- points with my own personal knowledge developed from my experiences gained in an action research project at a single case company. This may limit the generalizability of the findings, although measures have been taken to reduce any detrimental effects.