Strategy: Marry Lean principles with ERP

As I wrote in my last article about blending Lean and ERP while doing an ERP deployment for your organization, I thought of extending the whole thought and take it forward to usage of lean principles in ERP so that real benefits of this combination can be extracted. We all are aware about the 5Ss of Lean that are the basis of Lean application in any scenario in your organization, be it manufacturing or supply chain management or for that matter sales and operations management. Let us see how different and yet same, will be the interpretation of these 5Ss in both Lean and ERP and they guide us to similar benefits.

The first S stands for Sort: For Lean, it means to eliminate unnecessary tools, instructions, items etc. by tagging them red and disposing them off after final need disposition. If we apply this in ERP, we can articulate this like – Thoughtful usage of only those parts of the ERP that benefit the organization. The modules or functionalities need to be in sync with the overall business strategy and not just that it is to be used if it is part of the package or if it is coming as free with the package you just ordered. Also, eliminate the unnecessary and redundant processes, manual efforts for data entry, programs or reports as part of the Sort 5S execution in ERP.

Simplify is the 2nd S of Lean which suggests that there needs to be a place for everything and everything should be in its place. In ERP, this can be interpreted as straight forward business processes needs to be implemented as part of the ERP deployment and they need to be integrated with each other to enable automatic Lean methods like back-flushing. The customizations needs to be lowest and manual hand-offs should be minimum in the processes. Simplify also means that the code deployment for the custom components is as per established standards and it can be re-designed, de-bugged or modified easily in case of changed or expanded requirements.

The 3rd S for Lean is Shine, which simply means clean everything daily and in ERP also it has far reaching consequences if it is articulated correctly. ERP depends on data accuracy as much as Lean Manufacturing depends on cleanliness, hygiene and proper instructions. Applying Shine to ERP means that our data that goes into ERP or that stays in it or that goes outside ERP, needs to remain accurate, consistent and upto date. The duplicity or incompleteness in data will skew your results and as we know that one of the main functions of ERP is to help the top management take informed decisions – this function will get defeated because of inaccurate data and not only this, but this will have a cascading impact on other processes to create a chain reaction within the application. So shine your data regularly.

Next one in Lean Principles is Standardize which simply means in Lean to have documented instructions and rules to maintain the above Ss. It means to have same set of procedures for everybody for the same work so that the efficiency of the process can be consistent. This S in ERP is of biggest use as it goes with the whole purpose of ERP which is standardization of processes across the departments, countries, operations and distribution channels. Not only, we need to have a set of procedures (SOP) to run the ERP system from the users point of view but also the process mapping needs to be done as per the standard rules set by the implementation team. Any deflection in the process to accommodate exceptions in the processes will result in a sub optimal solution that caters more to exceptions and less to the major regular process activities. So standardize S can be used to make the most impact in an ERP environment.

The last S of Lean principles is Sustain and this means in Lean that the daily operations need to be carried out in a proper and pre-decided sequence, with utmost safety and minimizing waste in the process. Again, for ERP it holds maximum importance as after you implement an ERP, only after that you have a greater challenge to utilize it to the fullest to take out maximum advantages out of it and reach the level of target ROI sooner than later. It means for ERP we need to have a clear cut
strategy after Go-Live of minimizing the waste means the system bugs, data issues, or training bugs that waste the organization’s time are at a minimum. This will help not only in eliminating waste but also in improving the operations and information system for instant organizational benefits as well as for future mergers and acquisitions.

So I tried to explain 5Ss of Lean and apply them in ERP scenario so that we can take the best out of both worlds. I am sure, these can still be expanded further and it is one area where good research can bring ERP and Lean together and can usher a new era in both the fields.

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