Organizations of every kind want to get lean. Adding value, eliminating waste, and automating are some current buzzwords. ERP, on the other hand, is sometimes considered a necessary evil or even a creator of waste. But these two disciplines can get along quite nicely as complementary tools in our toolbox.
The best definitions of lean consider it to be an endless cycle. We identify value and define it in terms of value to our customer. We map the value stream; we identify all the activities that create value and place them along the stream of our processes. We create flows where our products and services move easily from one step to the next. We establish pulls; nothing is completed and passed along the stream until the downstream operation is ready to receive. We seek perfection, practicing every step until it is automatic and eliminating any unnecessary steps. Then we do it all over again.
Today’s ERP systems have wonderful reporting capabilities. Once we have identified value, we need to measure it and report on where value is found and created. A dashboard visible to all that shows value can help keep an entire enterprise on track. Localized dashboards help all functions working together creating value.
Once we map the value stream, ERP will help us eliminate anything not on the stream. We can backflush production materials and eliminate transactions. We can automatically pay charges from selected suppliers, even crediting their banks directly eliminating the need to write a check.
ERP systems today allow workflows where a series of individual transactions are linked becoming a single transaction completed by one person. A workflow can set up a new customer in the master data file, enter necessary financial and credit information, remind us to set up contacts and reminders in the CRM, and accept the first order in a single session, there is no longer a need to pass a file from department to department hoping each one completes the work on time and in relation to another.
Production kanbans are commonly used to pull a product through to completion. When one person is ready to ship an order, the person before puts the product in a box. Only then does the prior person apply the finish paint to the next one coming along. We avoid the first in line finishing ahead of need and building inventory that cannot be moved along and sold yet. No longer is a kanban a card requesting delivery from the upstream operation. Now the kanban is an electronic signal generated by our ERP.
ERP is a powerful tool we can use to help us meet our goals. If our goal is lean, we can set up and use our ERP to help achieve that goal.