Go lean or go gone: Enterprise Resource Planning--ERP--is part of the Lean strategy to boost bottom-line profits.

In today's manufacturing environment where the difference between financial success and ruin is often measured in pennies per part, enterprises must operate their businesses with an eye toward becoming increasingly "lean and mean" and in control of their system.

This means bringing greater efficiencies into the job shop. Such gains in efficiency aren't easy to achieve in long-entrenched production methods, and are often the result of a complete overhaul of a total manufacturing environment or a nuanced approach to improvement in specific aspects.

In either case, the manufacturing system is analyzed for nonproductive functions--places where waste in the manufacturing process can be "Leaned" of inefficiencies. These nonproductive aspects are the focus of change in the system, and the central point where Enterprise Resource Planning--ERP--meets Lean objectives.

For example, Lean configurations in an ERP operation realize greater efficiencies in areas such as setup time, labor costs, and material handling.

In setup, the problem has been the time it takes an operator to setup and break-down job-specific machine tooling rigs.

With Lean principles in operation, resource planning means tools are accessible and in-place on shadow boards or other organizational bins, and jobs with similar setups are scheduled together to better manage time.

By doing so, the efficiencies gained through the use of ERP means minimizing direct labor costs. Using time-clock devices, such as GUIs, time spent on the clock and nonproductive time spent off the clock can be accounted for.

Time is a valuable resource of the enterprise, and with ERP, it is possible to monitor and reduce wasted indirect labor cost.

Traditional thought has been that wasted indirect labor time is an inevitable part of the manufacturing process. ERP disproves this. In a properly designed and implemented ERP operation, indirect labor is reduced and direct labor time recovered for the benefit of maximized production.

Simply, ERP software gives focus to the manufacturing operation, bringing clarity through a single-source of data processing. It is here, in the coordination of information, that shop floor efficiencies are found by the manufacturer. Shop floor and manufacturing software bring together production and inventory data into one centralized location.

ERP software has the capability to forecast capacity high- and low-points, reduce bottlenecks, and improve on-time delivery. For the manufacturer competing in a global economy, it has an added benefit: consistent on-time delivery.

Because ERP operates in alliance with Lean pull-production principles, companies must maintain reduced material inventories to achieve just-in-time goals. In the lean ERP configuration--especially one using Lean cell production techniques--there is less material handling. When the job is started on the shop floor, production material flows through the plant rather than sitting idle for any significant time, reducing inventory cycles.

With the greater efficiencies found in Lean labor costs, setup times, and materials handling, a fully-implemented ERP program enhances productivity and provides a positive return on the ERP software investment.

The modern job shop must run Lean for positive returns on the efforts. For its part, an ERP software system that builds efficiencies into the production process is one that realizes the quickest payback in terms of the bottom line for both the manufacturer and the customer.

Dusty Alexander

President

Global Shop Solutions

Dusty Alexander is the president of Global Shop Solutions. With headquarters in The Woodlands, TX, it is the largest privately-held ERP software company in the U.S., according to the company. For more information, visit www.globalshopsolutions.com