ERP and Lean
ERP systems are the vehicle for linking what you do in production to your company’s overall financial performance. Rudimentary data like the cost to produce an item versus the price you sell it should be found in a good ERP. These costs can have many components – labor, machine hours, yield, scrap and setup.
Traditional thought is that as machines run longer, setup costs are amortized better. The higher the volume, the lower the per piece cost. However, Lean espouses set up reduction. Why? Many manufactures today are handling lower volume and wider product lines to satisfy customers. So if you over produce, in the interest of spreading set up cost, it can hurt you in a couple ways. This includes excess inventory and missed opportunities to use production capacity to make what your customer really wants.
There are set up reduction methodologies (not detailed here) including quick change dies, videoing, delineating internal vs. external set up activities, value stream mapping and elimination of non- value adding activities. Just You tube “SMED”.
ERP can support your Lean setup reduction initiative in a number of ways. The cost data mentioned above should be item fields in your ERP. Thus the effect of lower set up times and shorter production runs can be modelled. Revised costs and inventory positions can be considered. A well-executed set up reduction program, supported by ERP information can help you review cost, price, margin and profitability and the effect of the following:
- lower inventories
- lower production costs
- improved production efficiencies
- elimination of errors
- improved quality
- increased customer satisfaction
So what are you waiting for?
If your business is considering an ERP solution to support Lean, the experts at Acuity would love to hear more about your current business and help you find the solution that meets your business needs! Contact us today for more information.