Manufacturers look to ERP for the "granularity" needed for lean, global supply chains

There is consensus that software applications are necessary to support Lean operations, especially for global supply chains. The question surrounds what ERP vendors are doing in response.

Says Colin Masson, director of supply chain operations for Boston-based AMR Research, "Not only are many of the simple lean calculations attributed to the Toyota Production System inappropriate for today's manufacturing realities of high-volume/high-mix, shared assets, and volatile demand, but what's called for are complex math and sophisticated visualization techniques that can only be scaled to mass adoption using software."

The Keihin Aircon manufacturing plant in Muncie, Ind., supplies heating and air conditioning units to two Midwestern Honda plants. Management executes lean production against its daily build of roughly 2,400 unit orders coming in from Honda—primarily for configurations of the Civic and Accord models—with recent ramping to support CR-V and Acura models as well. One production line is dedicated to variations of the Civic, the other to Accords—with a half-dozen daily changeovers on each line.

Keihin Aircon delivers between 10 and 12 daily multiple-sequenced shipments to Honda per day, and gets daily multiple sequenced shipments from its suppliers. Planning of material flow is supported by its ERP system, Glovia International's glovia.com. The system receives orders—in essence, kanban signals—direct from Honda, and translates those into sequenced production orders for line release. The ERP system simultaneously generates daily sequenced requirements for suppliers.

"Instead of issuing one purchase order every day, the granularity in glovia.com enables us to tell our suppliers exactly when we want the trucks to arrive throughout the day, says Matt Snyder, IT manager. "We use the release module to signal scheduled delivery in hours, minutes, and seconds. When Honda changes an order, it generates an MRP run in the Glovia system, and the charges are soon found on our Web site for suppliers to view."

Glovia, a subsidiary of Fujitsu Limited, is an ERP provider to engineer-to-order and high-volume manufacturers. The company sees the recent release of glovia.com version 9 as so significant that it refers to it as "the next generation" for Glovia. It also says a powerful impetus for the solution's development efforts came from parent company Fujitsu's need for a system to accommodate emerging manufacturing requirements. And finally, Glovia says what's significant is that the entire solution is pervaded with lean thinking, and not merely a tacked-on lean module.

"Our customer base is asking us to get into the nitty-gritty of planning and scheduling for today's global manufacturer," says Jim Errington, director of marketing and sales support. "We've responded by completely rewriting our order-management and supply chain planning capabilities."

Major enhancements in version 9 are to be found in factory planning, supply chain planning, inventory operations, and master production scheduling/materials requirements planning (MPS/MRP).

For example, "Improved granularity—in the plant, warehouse, loading dock, or in transit—allows scheduling critical events and posting real-time status reports," says Errington. "Lead times can be expressed in days or hours; fixed lead times can be set in units as little as 15 minutes; and variable lead times can be calculated and rounded to the quarter hour."

Item substitution capabilities enable one-to-one substitution, prioritized one-to-many substitution, and prioritized one-to-multiple substitution. All three can be used in sales orders, work orders, and local structures, with the capability for either automatic system assignment or manual substitution.

Consequently, MRP/MPS has been modified to include the appropriate planning considerations based on these items and their exclusions and exceptions. Additional allocation flexibility lets the system plan orders on a first-in, first-out basis, and to do so as they are entered in batches, taking priority into account.

"Operating in a demand-driven, global environment," explains Errington, "requires detailed production planning, synchronized production, progressive operations, and enhanced visualization throughout a company. The system supports lean manufacturing through heightened clarity, improved information flow, and detailed data gathering."