Can lean live online?
Manual approaches to lean mix with ERP and bolt-ons in quest for better information flow
By Roberto Michel, contributing editor -- Manufacturing Business Technology, 6/1/2004 12:00:00 AM
The beauty of lean manufacturing—when it's working right—is that the flow of material and information is one. Under a "replenishment-pull" scenario, each lean work cell produces only to replace what is consumed by the previous operation, with manual signals called kanban cards triggering material flow.
The problem with this nirvana, apart from semantics over what constitutes lean, is that the manual information flow can fall out of sync with enterprise data. Peter Lemon—materials manager with Leupold & Stevens, a Beaverton, Ore.-based manufacturer of riflescopes, binoculars, and other optical products—says such a disconnect led to deployment of a lean solution from the company's ERP vendor.
"We had been using kanban for three years, but our manual methods weren't tied to the ERP system," says Lemon. "You end up with a disconnect between what's going on in your cells, and what the ERP system is telling the rest of the business."
Lemon and others believe it makes sense to deploy software that brings lean online, but some experts and end users contend not every company needs packaged software for lean (See sidebar, Lean about software). But as users progress with lean techniques, they often bring in new modules or bolt-on solutions, so the issue becomes: just what type of software is needed to bring lean online?
For certain, ERP vendors are putting more focus on lean, says Brian Zrimsek, a VP with Stamford, Conn.-based analyst firm Gartner. "There is a lot more activity from the ERP vendors with lean solutions, especially manufacturing-focused vendors," he says. "They are responding to the high interest in lean, which resonates with managers pressured to do more with less."
Software requirements vary with what your definition of lean is, says Dave Pytel, a partner with FlowVision, a lean manufacturing consulting firm based in Dillon, Colo. "Lean often is used as an umbrella term, meaning less waste," says Pytel.
Under this broad view, ERP—the core transactional and planning system used by most manufacturing companies—can reduce waste, but Pytel says the requirements narrow when looking at the type of lean production pioneered by Toyota and referred to as the Toyota Production System, or flow, or lean. With Toyota-style lean, kanban is used to regulate production and material flow, rather than using traditional production control mechanisms such as work orders.
According to Pytel, lean manufacturers want packages to handle kanban management, line design, and daily resource planning. "Managing kanban without the right tools can drive you the craziest because kanban periodically needs to be recalculated," says Pytel.
Even pure lean shops use ERP to hold core data such as item masters, says Pytel, but look to customized reports or newer packaged solutions to address areas like kanban.
Lean & ERP
At Leupold & Stevens, the Avante ERP package from Epicor was first deployed about 10 years ago, says Lemon. Epicor later built lean functionality for its ERP systems—including Avante—and last August, Leupold & Stevens deployed the system's lean module to automate kanban.
Before deploying the module, says Lemon, the company used a spreadsheet to make kanban calculations. The trouble with that approach, says Lemon, was a lag time between when the data was downloaded from ERP, and when it was actually used. "I know the purists say MRP [material requirements planning, the traditional material planning engine found in ERP] is evil—to stay away from computer systems—but if you do that, you're missing the latest requirements from the system, and you still need ERP for reporting and costing."
Under a broader approach to lean, some manufacturers are mixing lean techniques with Theory of Constraints (TOC) and Drum Buffer Rope (DBR) concepts. Link Manufacturing, which makes cab air-suspension systems and other products for transportation equipment OEMs, is using a production management solution based on DBR. Tim Draftz, CFO and CIO for the Sioux Center, Iowa-based company, says he does not see lean and TOC as antithetical.
"Lean systems seek to eliminate waste and build to demand, and so do the software tools we use," Draftz says. "Before we implemented this system, we had a supervisor spending a couple of hours a day devising a pull schedule. That in itself was a waste of valuable human resources."
Link's overhaul of its systems began in July 2000, when it picked VISUAL Enterprise from Lilly Software Associates as its ERP system. Draftz says the implementation improved Link's visibility into production bottlenecks, but Link's plant-floor supervisor was still taking information from the system and "massaging" it in a spreadsheet to generate a pull schedule.
Late last year, Link decided to deploy Lilly Software's DBR module to automate the generation of a pull schedule. The software vendor's work with Link and several other DBR clients led to the creation of a solution called VISUAL Easy Lean that supports what Lilly Software calls Simplified Market Pull, or SMP. Lilly Software pitches SMP as a means of converting to pull scheduling and using market demand as the trigger for material release and work prioritization.
Draftz confirms the tool has been effective. The system paces the plant around its key bottleneck—its paint shop—to increase throughput. Lilly Software customized the DBR software to configure it to support pull scheduling for Link. Draftz credits the tool with helping cope with a 50-percent sales increase over two months in early 2004. Using the pull-based system, Link was able to meet 100 percent of this increase without adding capacity, and with only a slight drop-off in on-time delivery.
While TOC emphasizes throughput more than lean—which focuses on level production and waste elimination—Draftz says Link's system zeros in on waste reduction by prioritizing work, and in procurement, by highlighting material orders.
Carol Ptak, a VP with ERP vendor PeopleSoft, says more manufacturers are taking a "mosaic" approach by mixing techniques such as lean and bottleneck management. At the same time, she notes, support for purer lean is needed, and to that end, PeopleSoft acquired a set of lean software tools last fall from JCIT, a "Demand-Flow" education company.
Even under pure lean, says Ptak, an enterprise suite is still desirable for functions such as order and financial transactions, long-term demand planning, and supplier management. Forecasting may still be done by lean manufacturers, says Ptak, but rather than trading partners setting "one-number forecasts," they'll forecast within a range, tightening the range up until a shorter time when kanban takes over the procurement execution.
Supplier portals will help lean manufacturers collaborate, says Ptak. "The technology is there, but the biggest limitation is establishing the symbiotic relationship between a manufacturer and its suppliers, and establishing how to get needed information quickly."
Basics first
Some lean experts remain wary of ERP. Jim Womack, president of the Lean Enterprise Institute, a Brookline, Mass.-based education firm, says the root problem with most ERP systems is their "cognitive" approach in which a central plan is sent down to each work operation, with little or poor feedback on execution.
With lean, says Womack, kanban regulates material and information flow under one mechanism, creating a "reflexive" system. "With lean, if you used a box of green parts, you make a box of green parts. There's not much confusion there. The IT guys have sought to disconnect the bits from the molecules, and it hasn't worked."
Womack doesn't rule out the need for some reporting tools or software to help manage lean, but says to get lean, companies first have to answer basic questions such as how to buffer operations against instability, and how to level production. Lean experts also support value-stream mapping, which diagrams, evaluates, and rearranges production steps.
Link Manufacturing isn't pure lean, says Draftz, in that it uses work orders and shop travelers. However, he says, kanban is used on a couple of feeder lines, and shop-floor operators have instituted a set of lean practices known as the Five S's, which focus on work-cell disciplines such as cleanliness. In addition, Link holds kaizen events for continuous improvement.
Draftz sees no problem in synthesizing TOC and lean concepts, and questions whether a pure lean approach would work as well for Link. "I think you can go a bit crazy trying to value-stream map and balance every little bit of your operation," says Draftz.
Software evolves
Other ERP users also support a broader view of lean with ERP. Mike Mitsch, VP of Operations at Keihin Aircon North America—a Muncie, Ind.-based manufacturer of heating, ventilating, and air conditioning components for the automotive industry—says its ERP system from Glovia supports lean, especially its ability to automate precise and frequent material flow.
"The newer ERP systems introduce a time granularity with planning and materials procurement that is much more supportive of lean than the old MRP systems that only ran daily or weekly," says Mitsch. "Today you can take in orders and execute around them down to the hour and minute."
Mitsch says Glovia's Supplier and Customer Releasing modules are adept at taking in customer requirements and converting those to supplier requirements that can be communicated via the Web without generating purchase orders. "This is key for just-in-time procurement," says Mitsch. "We don't have paper running all over the factory."
Best-of-breed software vendors for lean also are gaining users. One of these is DemandStream, an offshoot of ERP vendor SoftBrands.
Alfmeier Corp., a Greenville, S.C.-based manufacturer of automotive components, uses the DemandStream suite. Dean Davidson, VP of operations, says the system handles kanban calculations and pull signaling, automating what had been done manually before.
The lean functions reach forward into receiving, where integrated bar coding automatically receives materials. "We were keying in a lot of data before," says Davidson. "The bar coding took errors and time out of the process and made an immediate impact."
As Gartner's Zrimsek sees it, the lean enterprise software space is growing up. Initially, ERP vendors could only offer some electronic kanban signaling, or perhaps repetitive manufacturing algorithms, but over the last few years, more vendors have built specific tools for kanban management and line design. Says Zrimsek, "It's a maturation process, with vendors responding to users' needs for more systems support for lean."
