The Concurrent Application of Lean Production and ERP: Towards an ERP based lean implementation process

Prepared by:
Raja Bharat Anurag Busi

Debrup Ganguly

Towards an ERP based lean implementation process

ERP Systems integration across functional areas improved workflow real time data

Lean production based on Toyota Production systems(TPS) Elimination of waste goals- highest quality, lowest cost,shortest lead time. Meant for continuous improvement

organized record keeping structures

process transactions efficiently

ERP proven path

Wallace and Kremzars ERP Proven path

PHASE-0

PHASE-1 Create the project team and the executive steering committee. setting of performace goals. Includes the selection. Configuration and installation of the basic ERP package. Also includes Sales and operations, demand management, apps for finance and accouting and ends with ERP system go alive or Cutover. Takes 9-12 months to complete

situational analysis-access current problems, opportunities and strategies. Executives and top managers lean the basics of ERP and its implementation
Cost benefit analysis is final step and should end with a go/no-go decision

PHASE-2
Supply chain integration

PHASE-3
Corporate integration
Consists of extensions and enhancements that are made to support corporate strategy .

Consists of processes that extend ERP backwards and forwards in the supply chain. It takes 3-6 months depending on the scope and intensity of applications

This phase could not involve the implementation of other modules not absuutely necessary for phases-1 and 2, like advanced planning and scheduling (APS) systems and MES.

Hierarchical lean transformation

Cell and Line Design Design the Lean scheduling system Improve and sustain Performance measure and costing Implement Lean Distribution Implement Lean Supply Build a lean culture Implement foundation stones

Value Stream implementation cycle

Product rationalization and lean design Understand the system Strategy, planning, and communication Understand your customers Understand the lean principles

ERP Initiative
Motivation to implement ERP
Increasing complexity in product requirements,

extensive and comprehensive supply chain and a greater mix of product offerings Noca selected Jeeves Universal
Implementation Strategy
Planning Phase Implementation Phase Go-Live/ close phase

The Lean Initiative

Motivation to implement Lean
Rising international competition Increasing customer demands

Implemented Practices
Started as part of a project NCEi lean, followed by 5S

implementation Positive results- 17% improvement in delivery schedule, 10% reduction in production lead time Focus on zero defects

 Implementation Strategy
Based on stable processes and establishing basic foundations

of lean Two fundamental pillars 1) JIT 2)TQC

Obstacles Finding time and resources for learning, development and deployment Concurrent courses of action to reduce time and resource requirements

ERP Based Lean Implementation Process

We have seen that ERP implementation process can act as a

catalyst for implementation of lean practices

Goal- to accomplish the implementation in reasonable time

2 Fold Strategy:
1. Divide the total implementation project into several major

phases to be done in series

2. Within in phase, accomplish a variety of tasks in parallel

FRAMEWORK

Process Task 1. Leadership. Education, Training

Desired Activity 1. Top management Education in basic elements of lean and ERP 2. Operations Management>First Line Supervisor>Support staff->Everyone

Step taken by Noca 1. Interactive lecture on lean and 7 sources of waste 2. 7 Super users trained 3 months prior to go-live

2. Cost-Benefit 1. Consider the relevance of Analysis and Go/Noboth ERP and Lean for the Go company and decide 3.Define and Establish Teams 1. Teams-an important for success of both ERP and Lean 2. Required sr mgnt inputs

1. Cost-benefit analysis carried out before vendor selection 1. Top management attendance at all meetings 2. Formation of an effective lean-ERP team

4. Implement Lean Foundations

1. Use of basic lean elements to eliminate wastes 2. TQC approach to support Zero Defects Quality Program by use of SPC and RootCause-Analysis tools

1. Began to implement 5S before software selection for ERP 2. Started education on TQC techniques while vendor was configuring according to specification

FRAMEWORK

Process Task
5.1. Software Selection

Desired Activity
1. Software should not lose modifications due to future upgrade 2. There are 15 areas where ERP system can be used to support Lean implementation 1. Product Family Analysis 2. Process Identification and Value Stream Analysis 3. Formalization of S&OP process

Step Taken By Noca

1. Used the Jeeves ERP system which used a metadata based infrastructure that makes the system simple to modify without being affected by future system upgrades 1. Formalized the S&OP process greatly supported by the new ERP system 2. Did not use any Process ReEngineering and hence required accurate process data

5.2. Defining Products and Processes

5.3. Data Integrity

1. Follows GIGO 1. Quality assurance of data 2. Needs to create a zero defect entered into ERP system like culture for both production BOM, inventory status data system and supporting ERP etc system 2. IT Controller role created 3. Checking of random samples
1. ERP system configured to client specifications and installed at Clients Location 1. This stage took 6 months at Noca, giving them time to investigate other Lean principles

5.4 Software Configuration and Installation

FRAMEWORK

Value System Analysis

Process Task Organize for Flow Desired Activity Step taken by Noca 1. Optimize shopfloor layout and 1. Evaluated current reduce need for transportation shopfloor layout and 2. Synchronize operations to made relevant changes realize continuous flow 2. Applied SMED and 3. Reduce changeover times reduced changeover between machines by use of SMED times to less than 30 mins 1. Effective flow of materials and products 2. Rapid feedback and corrective action 3. Eliminates need to micromanage 1. Performance and Demand information displayed on notice boards in production areas 2. This information is often outdated-need for future reconfiguration of ERP

Vertical Information Systems

FRAMEWORK

Process Step Cutover

Desired Actviity

Step taken by Noca

Either carry out using a small Big bang cutover with a pre pilot area or do a big bang test switchover 1. High volume low varietyKanban System 2. low volume , high variety-POLCA system Interested in Quick Response Manufacturing (QRM) and POLCA

Pull System

Lean Accounting

1. Lean Accounting by 1. Deployment of Workflow minimizing number of module will support lea transactions and account by reducing increasing efficiency of number of transactions accounting 2. Plans to use an 2. Company should create a alternative accounting Lean Accounting System system in future based on ABC or Product Based Costing 1. Also known as Kaized 2. Plan-Do-Check-Act improvement cycle 1. Identified PDCA and introduced a continuous improvement programme

Continuous Improvement

FRAMEWORK

Audit and Assessment Process

Process Task Audit 1 Desired Activity Covers all activities in the initial Preparation phase Steps taken by Noca

Audit 2

1. In-Process check 2. Assesses success of implementation till date 3. Verification of performance to the goals set 1. First formal assessment of the ERP based Lean Implementation process 2. Have the Lean foundations been sustained? 3. Does performance meet the goals?

Audit 3

Discussion
This process emphasizes the importance of capturing human

dimensions at an early stage and not letting IT be dominant

Recommends establishment of basic foundations of Lean

Systems before go-live of ERP systems

Treats Lean and ERP as complementary rather than Competitive

systems