4 Ways Your Legacy ERP is Holding Back Lean Manufacturing Processes
Lean manufacturing is about eliminating waste of every kind. Many principles of lean have been described over the years - some of the most common being Just In Time, Kanban, 5S, and Value Stream Mapping. If you are still using legacy ERP that is more than a few years old, you can easily run into conflicts between ERP and your plans to become lean.
1. Your Legacy ERP is Internally Focussed
The goal might have been to eliminate variations such as purchase price and the steady absorption of costs into inventory and cost of sales. Lean, however, tends to look outside of the enterprise. Value Stream Mapping is a process to understand where value is added to the product from a customer perspective. If your customer wouldn’t want to pay for that overhead anyway, lean finds a way to eliminate it rather than the internal focus of accounting for it.
2. Your Legacy ERP is Set Up Primarily to Reduce Costs
Your legacy ERP might also have the goal of reducing costs over steady, long-term, even repetitive manufacturing. Lean principles, such as Just In Time and Kanban, are more concerned with process agility and meeting the needs of a customer when the demand exists and not necessarily next year when it fits into our master production schedule.
Your Legacy ERP Uses "Push" Processes for Scheduling
Many legacy ERP systems use a push design for production scheduling. The materials needed to begin are now on hand and we have available capacity, so it is time to begin the first operation. When that operation is complete, the second operation shows up on our dispatch report.
Recommended Reading: Process Manufacturing ERP Selection: 7 Steps to Success
Pull systems are a given in any lean manufacturing process flow. The customer wants it Tuesday and it takes one day to make so we start on Monday. All operations are deferred until the latest possible moment and triggered only when required by the downstream operation.
Your Legacy ERP isn’t Geared for SMED
You could have set your legacy ERP with an eye toward long production runs to minimize the costs of setting up equipment and people for the job. Another lean manufacturing principle is SMED or single minute exchange of dies. This process aims to maximize external setup vs. internal setup so that as much of the setup is done while a previous job is still running.
If the tool you need today just isn’t in the box, an upgrade might be better than a work around.
Yes, your legacy ERP might be holding back your move toward lean manufacturing. But your legacy ERP can probably be configured to improve your lean processes. Any ERP is only a set of tools and we can usually select a different one from the legacy tool box or find a more effective way to use our existing tools.
It might be time to consider upgrading or replacing your legacy ERP too. If the tool you need today just isn’t in the box, an upgrade might be better than a work around. Understand your unique requirements and take the best action.
Featured white papers
Manufacturing ERP requirements template
Over 120 critical manufacturing ERP features in one downloadable spreadsheetDownload
7 steps to selecting discrete manufacturing ERP
17 pages of ERP selection advice and industry requirements analysisDownload
Manufacturing ERP Failure: 6 Common Causes
Get your comprehensive guide to the causes of manufacturing ERP failureDownload
3 new features for your manufacturing ERP requirements list
Up-to-date feature recommendations to streamline operations and improve your bottom line
How to tell if your electronics ERP is letting your company down
These signs will give you an idea of when it’s time to upgrade
Three manufacturing ERP selection errors that project managers make
Some traps to watch out for when project managing a manufacturing ERP selection effort