| This article is also available on our
| |
| | WHAT'S WRONG
|
| website: PROACTION - Generating Best
| |
| | What "They" Hate About Traditional ERP
|
| Practices. It is an excerpt of a paper
| |
| | Those who badmouth ERP raise some valid
|
| originally written by George Miller,
| |
| | points which must be addressed. Here are
|
| Founder of PROACTION. It has been
| |
| | the most common complaints we have heard.
|
| modified and updated by Paul Deis,
| |
| | • Proliferation of Screens,
|
| PROACTION CEO.
| |
| | Transactions
|
| Introduction
| |
| | • Cumbersome Transactions/Release
|
| Some pundits have opined that ERP
| |
| | Procedures
|
| (Enterprise Resource Planning) or ERM
| |
| | • Batch Process Orientation
|
| (Enterprise Resource Management) is dead
| |
| | • Fixed Lead Times, In Day or Longer
|
| and that Lean replaces it. That's like
| |
| | Increments
|
| saying that the car chassis is replaced
| |
| | • Poor Constraint Planning/Management-
|
| by the new engine. ERP is the backbone
| |
| | Set-Piece MRP, with Disconnected Resource
|
| system of a modern enterprise. Lean is a
| |
| | Planning for Multiple Constraints
|
| management philosophy, with supporting
| |
| | • Failure to Manage Non-Recurring &
|
| tools and techniques to run a business
| |
| | Non-Production Activities
|
| much faster, cheaper-better. They are
| |
| | • Weak Document Management
|
| NOT mutually exclusive, but Lean ERP must
| |
| | • Hard to Extract Information
|
| differ from the traditional approach.
| |
| | • Weak, Inflexible Workflows
|
| The chassis needs some design changes.
| |
| | • Lack of Lean tools such as KanBan,
|
| Is ERP Obsolete? Points to be Made:
| |
| | VMI, etc
|
| • ERP has evolved considerably and has
| |
| | Earlier ERP approaches had additional
|
| almost ceased to exist as we knew it
| |
| | problems, somewhat better addressed now,
|
| years ago
| |
| | such as:
|
| • Lean and newer ERP can coexist
| |
| | • Lack of financial systems integration
|
| • Lean still needs an IT
| |
| | • Lack of support features, such as
|
| infrastructure- ERP can help provide it
| |
| | maintenance, QA
|
| • ERP is compatible with Lean, but
| |
| | • Lack of project management
|
| software vendors need to improve lean
| |
| | integration
|
| features
| |
| | What Have Vendors Done About This?
|
| • Industry needs to learn to use ERP
| |
| | In our experience, software usually lags
|
| better to support Lean
| |
| | the development of new business
|
| Contents
| |
| | philosophies and techniques by a number
|
| • Lean ERP: Not an Oxymoron
| |
| | of years. It took an infuriatingly long
|
| • ERP Definitions and Evolution
| |
| | time for even very basic JIT concepts to
|
| • EPADSIG Body of Knowledge Areas
| |
| | percolate down into business software and
|
| • Lean Definitions
| |
| | corporate practices. The job still isn't
|
| • What are Customers Looking For?
| |
| | complete. Newer Lean concept
|
| • Lean Aerospace Initiative
| |
| | implementation is still lagging. It
|
| • Lean Principles
| |
| | takes years for new ideas to be
|
| • ERP Weaknesses
| |
| | understood and accepted. Then companies
|
| • ERP/Lean Enterprise
| |
| | need to insist on their adoption and
|
| • Summary Functional Requirements
| |
| | organize planning and implementation
|
| • Conclusions
| |
| | activities. Software companies need to
|
| DEFINITIONS
| |
| | discern customer requirements, even
|
| The evolving definition of ERP ...
| |
| | anticipate them, then provide software
|
| "An accounting-oriented information
| |
| | tools and support services for them.
|
| system for identifying and planning the
| |
| | Finally, industry needs to learn and
|
| enterprise-wide resources to take, make,
| |
| | effectively implement the new tools.
|
| ship and account for customer orders. An
| |
| | WHAT TO DO ABOUT IT
|
| ERP system differs from the typical MRP
| |
| | More proactive companies aren't waiting
|
| II system in technical requirements such
| |
| | for software vendors. They're devising
|
| as graphical user interface, relational
| |
| | manual approaches or writing their own
|
| database, use of fourth-generation
| |
| | software. Some are advising their
|
| language, and computer-aided software
| |
| | software vendors on what they need. A new
|
| engineering tools in development, client
| |
| | sub-industry of dedicated Lean software
|
| server architecture, and open system
| |
| | tools has also emerged.
|
| portability." - APICS Dictionary 8th Ed
| |
| | Don't wait for the ideal software. Move
|
| I always thought that was a very poor
| |
| | ahead to develop and implement cost
|
| definition. Don Frank agreed with me and
| |
| | effective approaches early. Your ERP
|
| offered a better one at an EPADSIG (APICS
| |
| | system can be extended by manual
|
| Engineered Products and Aerospace/Defense
| |
| | procedures, interfaces with other
|
| Specific Interest Group) presentation. It
| |
| | systems, home-grown software, third party
|
| was subsequently adopted in newer APICS
| |
| | add-on software and/or enhanced
|
| dictionaries.
| |
| | functionality from ERP suppliers. Early
|
| APICS newer definition of ERP:
| |
| | attempts can serve as prototypes for more
|
| A method for the effective planning and
| |
| | elegant ERP enhancements later on. Try to
|
| controlling of all the resources needed
| |
| | develop add-ons and modifications in a
|
| to take, make, ship and account for
| |
| | way that will not harm maintainability
|
| customer orders in a manufacturing,
| |
| | and upgradeability of ERP software later
|
| distribution or service company. - APICS
| |
| | on. Some of the add-on application
|
| Dictionary 10th Ed.
| |
| | vendors will ultimately be swallowed up
|
| That definition is very valid for a Lean
| |
| | by the enterprise software suppliers,
|
| environment. What isn't valid is the
| |
| | when they finally see how important these
|
| design of most ERP software and
| |
| | applications are becoming.
|
| management systems to utilize it.
| |
| | In selecting ERP software, add-on
|
| Lean Definition 1:
| |
| | software or undertaking your own
|
| Lean Production-A philosophy of
| |
| | projects, look for the following .....
|
| production that emphasizes the
| |
| | What to Look For (High Level):
|
| minimization of the amount of all the
| |
| | • Embedded Business Philosophies (Lean,
|
| resources (including time) used in the
| |
| | Six Sigma, TOC, JIT, etc.)
|
| various activities of the enterprise. It
| |
| | • Flexible, Rapid
|
| involves identifying and eliminating
| |
| | • Technology/Platforms (Open, flexible,
|
| non-value-adding activities in design,
| |
| | low cost)
|
| production, supply chain management, and
| |
| | • E-Business/Web-Enabled
|
| dealing with the customers. Lean
| |
| | • Ease of Integration
|
| producers employ teams of multiskilled
| |
| | • Support Lean Operations
|
| workers at all levels of the organization
| |
| | • Support Lean Finance/Costing
|
| and use highly flexible, increasingly
| |
| | • Support Lean Product/Process
|
| automated machines to produce volumes of
| |
| | Development
|
| products in potentially enormous variety.
| |
| | • Support Industry Oriented Application
|
| It contains a set of principles and
| |
| | Savvy
|
| practices to reduce cost through the
| |
| | What to Look For (General):
|
| relentless removal of waste and through
| |
| | • Easy to Set Up, Flexible to Change
|
| the simplification of all manufacturing
| |
| | • Basic Structure/Discipline
|
| and support processes. Syn: lean, lean
| |
| | • Simple to Extract, Process Data
|
| manufacturing. - APICS Dictionary, 9th
| |
| | • Able to Define and Control
|
| Ed.
| |
| | Straightforward Processes
|
| Lean Definition 2:
| |
| | • Supports Needed (and Required)
|
| A systematic approach to identifying and
| |
| | Business Processes
|
| eliminating waste (non-value-added
| |
| | • Simple as Possible to Learn and Use
|
| activities) through continuous
| |
| | • High Quality Software, Documentation,
|
| improvement by flowing the product at the
| |
| | Support
|
| pull of the customer in pursuit of
| |
| | • Strong Future Product Plan to Stay
|
| perfection. - The MEP Lean Network
| |
| | Competitive
|
| Lean Definition 3:
| |
| | • Best and Better Practices
|
| Perform in the Optimum Value-Added Manner
| |
| | What to Look For (Set-Up,
|
| Each Step of the Delivery Process for a
| |
| | Implementation):
|
| Product or a Service to Optimize the
| |
| | • Rapid Implementation Tools
|
| Total Value Chain." - Dr. Dan Shunk,
| |
| | • Guided, Template Set-Ups
|
| ASU
| |
| | • Vertical Market (A&D) Versions
|
| Lean Definition 4:
| |
| | • Model Implementation Plans/Set-Ups
|
| Set Up and Run Processes to Minimize
| |
| | • Simple Table/Parameter Setups
|
| Defects, Time, Cost/Investment, While
| |
| | • Template Data Maintenance
|
| Optimally and Profitably Serving Target
| |
| | • Simple, Flexible Report/Inquiry
|
| Markets. - George Miller, PROACTION
| |
| | Writing
|
| Lean is a business philosophy, not just
| |
| | • On-Line, Context-Sensitive Help,
|
| techniques. Lean means doing things as
| |
| | Tutor
|
| simply and cheaply as possible, while
| |
| | • Easily Customized Workflow, Screens,
|
| providing superior quality and very quick
| |
| | Options
|
| service. An old joke about this is that
| |
| | What to Look For (Operations):
|
| you can pick any two. But, that's no
| |
| | • Flow Manufacturing
|
| longer acceptable. The organization
| |
| | • Cellular/Line Support/Line Balancing
|
| needs to absorb thinking Lean to be Lean.
| |
| | • Kanban/Pull
|
| It needs to embed it in its culture,
| |
| | • VMI (Vendor-Managed Inventory)
|
| metrics, policies, procedures and
| |
| | • Minimal Transactions Needed, Simple
|
| finally, its tools.
| |
| | Data Entry
|
| Some worry that Lean can't be built upon
| |
| | • Near Real Time Scheduling
|
| ERP. The real problem is that the vast
| |
| | • Cycle Time Management
|
| majority of companies have not even
| |
| | • Exception Management
|
| successfully embraced ERP yet, so they
| |
| | • Quality/Process Management
|
| would be building on very shaky
| |
| | • Constraint Management
|
| foundations. I smile to myself after
| |
| | • Cross-Contract Planning (with Soft
|
| visiting some company claiming to have a
| |
| | Pegging/Allocation)
|
| "certified Class A ERP system." Then I
| |
| | • Non-Recurring and Recurring
|
| talk to the workers and start hearing the
| |
| | Activities
|
| real story, namely that the Emperor isn't
| |
| | • Rapid/Efficient Transaction Input,
|
| wearing any clothes at most of these
| |
| | Defaults, Automation
|
| companies. Some companies may try to
| |
| | • Interface/Integration With Process
|
| leapfrog ERP, but they will first need to
| |
| | Control Systems
|
| master the basic disciplines of an
| |
| | What to Look for (in More Detail):
|
| organized system. No shortcuts there.
| |
| | Engineering/BOM/Routing:
|
| LEAN CHANGES TO ERP
| |
| | • Coding to Promote Group Technology
|
| While our fathers' ancient MRP-centric
| |
| | Sourcing
|
| ERP is largely obsolete, an evolving
| |
| | • Model the Manufacturing/Service
|
| Enterprise System approach definitely
| |
| | Process
|
| lives on, mutating and adapting to a new
| |
| | • Facilitate Alternate Config.'s,
|
| world of shrinking: cycle times, budgets,
| |
| | Process Def.'s
|
| non-value-added activities and
| |
| | • Reduce Defects Through Accurate,
|
| headcounts.
| |
| | Timely Configuration and Process Spec.'s,
|
| Some companies are implementing Lean
| |
| | Release and Change Management.
|
| tools manually. Some are modifying ERP
| |
| | • Manage Documents, Workflow
|
| software, or incorporating third party
| |
| | Program/Contract Management:
|
| Lean add-on software/systems to enhance
| |
| | • Support Timely, Accurate Estimates
|
| functionality. An isolated few are still
| |
| | • Support Competitive, Profitable
|
| trying to do homegrown applications.
| |
| | Pricing
|
| Cultural change, education and leadership
| |
| | • Record, Flow Down, Contractual
|
| are also needed to help alter how
| |
| | Commitments
|
| organizations are run. Lean tools are
| |
| | • Tight Tie-in To Program Schedules
|
| gradually being incorporated into
| |
| | • Operations, Finance Integration
|
| standard ERP offerings, but are lagging
| |
| | • Comprehensive Budget Definition and
|
| behind the pace of the overall Lean
| |
| | Tracking
|
| movement. Some ERP vendors are now
| |
| | • Timely Identification/Correction of
|
| addressing it more through white papers
| |
| | Problems
|
| than product development. As mentioned
| |
| | • Ensure that Proper Configuration Used
|
| previously, third party vendors are
| |
| | • Efficient Transaction Processing for
|
| helping to fill the gap. Some of these
| |
| | High Volume Environments
|
| may be ultimately acquired by the
| |
| | Planning:
|
| enterprise software vendors.
| |
| | • Group Requirements- Same, Similar
|
| Some vendors, to differentiate themselves
| |
| | • Consume Excess, Alternates,
|
| (and confuse us all) are now referring to
| |
| | Substitutes
|
| themselves as "Supply Chain," "eBusiness"
| |
| | • Time-Phase-Granular
|
| or even ERPII suppliers.
| |
| | • Optimize Constraints- Time, Material,
|
| Major things needing to be incorporated
| |
| | Labor, Equipment, Manpower, Technical
|
| into most current ERP systems to improve
| |
| | • Respond, Adapt Quickly
|
| Lean support:
| |
| | • Reduce Related Administrative
|
| • Rapid system implementation
| |
| | Indirect Costs
|
| • Flexible business modeling and system
| |
| | • Ensure Proper Configuration Used
|
| configuration
| |
| | • Help Manage Inventory, Production
|
| • Very simple operation
| |
| | Resource Usage and Disposition
|
| • Built in process mapping, help and
| |
| | Procurement:
|
| training
| |
| | • Improve Sourcing
|
| • Very rapid response processes, from
| |
| | • VMI, POU (Point Of Use), KanBan,
|
| marketing, proposals and design, through
| |
| | E-Business
|
| order processing, planning, procurement,
| |
| | • Speed Up Procurement Process
|
| production and shipping.
| |
| | • Highlight Requirements, Specs.
|
| • Strong quality assurance support
| |
| | • Facilitate Competitive Pricing
|
| • Tools to slash administrative,
| |
| | • Reduce Defects Through Sourcing,
|
| material and production costs
| |
| | Requirements, Metrics, Communication
|
| • Facilitate integration with other
| |
| | • Administer PO's, Contracts, Releases,
|
| systems- internal and external
| |
| | Outsourcing, Processing
|
| • Fast and simple information
| |
| | • Reduce Related Administrative Costs
|
| visibility
| |
| | • Help Manage Supplier Partnerships,
|
| • True built-in constraint management
| |
| | Including Supplier Certification
|
| • Integrated product and process design
| |
| | Evaluation
|
| management tools
| |
| | Quality Management:
|
| • Lean accounting and administration
| |
| | • Define/Deploy Quality Requirements,
|
| Some Lean tools needed by many
| |
| | Quality Plan
|
| businesses:
| |
| | • Support/Track Certs., Inspection
|
| • Flow scheduling
| |
| | • Track all Defects, Reduce Process
|
| • Cellular/focus factory support
| |
| | Variation
|
| • KanBan, consignment, point-of-use
| |
| | • Quickly Identify and Highlight
|
| inventory
| |
| | Actionable Exceptions, Highlight
|
| • Rapid supply chain management
| |
| | Corrective Action
|
| • Supplier management, VMI,
| |
| | • Ensure that Tooling, Personnel
|
| • Near real time, flexible scheduling
| |
| | Qualifications, Documentation, Materials,
|
| • Six-sigma tools for quality planning,
| |
| | Processes, are Correct
|
| monitoring, improvement
| |
| | • Maintain Traceability, Accountability
|
| • Standardization/group technology
| |
| | Operations:
|
| • Project management for production,
| |
| | • Schedule, Control Activities
|
| capital and development projects
| |
| | • Accurately, Efficiently, Track
|
| • "Control panel" metrics
| |
| | Material Movement, Storage, Usage- VMI,
|
| Although some of these can be supported
| |
| | POU, KanBan, E-Business
|
| by software, these approaches first need
| |
| | • Help Ensure That Proper Items
|
| to be built into an organization's
| |
| | Configuration are Used
|
| overall management system. Even if
| |
| | • Help Manage Release, Issue, Staging,
|
| software was ready for Lean, we still
| |
| | Management of Work Flow and Needed
|
| need to get most companies' management,
| |
| | Resources (Material, Labor, Equipment,
|
| employees and implementation support
| |
| | Tooling, Documentation/Specs.
|
| ready for it. The rarest and most
| |
| | Instructions)
|
| important resource needed for changes of
| |
| | • Record Work Performed, Configuration,
|
| this magnitude is still executive
| |
| | Processes Used.
|
| leadership and management support-it's
| |
| | • Record Costs, Variances
|
| not really about software.
| |
| | Financial/HR:
|
| LEAN OBJECTIVES
| |
| | • Manage Funding, Billing, Collection,
|
| To understand what Lean is about, we
| |
| | Disbursement
|
| first need to fathom what it is supposed
| |
| | • Keep Timely, Accurate
|
| to accomplish.
| |
| | Books-Enterprise, Business Unit, Cost
|
| To understand what Lean attributes we
| |
| | Center, Program, Project, Part, Cost
|
| need or don't need in ERP, first start
| |
| | Element, for Budget and Actual
|
| with stakeholder expectations ....
| |
| | • Quickly, Efficiently, Track Costs and
|
| What Are Customers Looking For?
| |
| | Variances for Products and Processes
|
| • Fast Turnaround, for inquiries, order
| |
| | • Manage Assets, Cash,
|
| processing and delivery, changes,
| |
| | Investments-Improve Cash Flow
|
| information requests, new designs,
| |
| | • Manage Human Resources- Skills,
|
| engineering changes and other great
| |
| | Benefits, Payroll- Improve Employee ROI,
|
| customer service.
| |
| | Employee Satisfaction
|
| • High Quality- very low defects in
| |
| | Universal Requirements:
|
| product, process and administrative
| |
| | • Effective Leadership, Commitment
|
| activities.
| |
| | • Effective Plan
|
| • Good Price- Not just low unit price,
| |
| | • Data Integrity
|
| but low total cost, considering unit
| |
| | • Excellent Education, Training,
|
| price, other landed cost factors, cost of
| |
| | Support, for Qualified, Motivated People
|
| quality, cost of development, changes,
| |
| | • Effective "Upstream" Systems:
|
| maintenance, support, procurement-related
| |
| | Forecasting, Engineering, Sales
|
| costs.
| |
| | • Streamlined, Flexible Processes
|
| • Easy to Work With- Simple,
| |
| | • Metrics
|
| straightforward service, no endless
| |
| | IMPLEMENTATION CONSIDERATIONS
|
| waiting on hold and convoluted voice mail
| |
| | Software is maybe 20% of the equation. A
|
| menus, no runaround,
| |
| | "system" is an organized way of
|
| What Are Stockholders Looking For?
| |
| | accomplishing and objectives and may
|
| • Profits- Competitive return on
| |
| | consist of:
|
| investment.
| |
| | • Mission
|
| • Equity Growth- Short/Long term.
| |
| | • Leadership
|
| • Security of Principal
| |
| | • Goals, Objectives
|
| • No Legal, Ethical Hassles- No
| |
| | • Metrics
|
| "Enrons."What are Employees Looking for?
| |
| | • Organization/people
|
| • Security of employment, income,
| |
| | • Policies
|
| benefits
| |
| | • Procedures
|
| • Interesting, worthwhile work, sense
| |
| | • Education
|
| of purpose
| |
| | • Training
|
| Lean Aerospace Initiative Objectives, as
| |
| | • Tools, such as software, hardware and
|
| promoted by The Lean Aerospace
| |
| | other technologies
|
| Initiative:
| |
| | Successful Lean implementation often
|
| • Promote a lean leadership at all
| |
| | requires all of the above for success,
|
| levels
| |
| | although some success can result with
|
| • Continuously focus on the customer
| |
| | only some of it. Many Lean improvements
|
| • Development relationships based on
| |
| | can be accomplished without any software
|
| mutual trust/commitment
| |
| | and computers, but these are required for
|
| • Optimize capability and utilization
| |
| | best results and integration with other
|
| of people
| |
| | systems in more complex environments. In
|
| • Make decisions at lowest possible
| |
| | the meantime, significant improvements
|
| level
| |
| | can be made through adoption of Lean
|
| • Nurture a learning environment
| |
| | philosophies and techniques, with manual
|
| • Implement Integrated Product/Process
| |
| | or semi manual systems. But if a
|
| Development (IPPD)
| |
| | company's competitor already has Lean IT
|
| • Identify and optimize enterprise flow
| |
| | systems and the company doesn't, it's
|
| • Ensure process capability and
| |
| | like knives vs. guns. An outstanding
|
| maturation
| |
| | knife fighter may prevail over an inept
|
| • Maintain the challenge of existing
| |
| | gunslinger, but why risk it?
|
| processes
| |
| | Other Points
|
| • Assure seamless information flow
| |
| | The sun does not rise and set on Lean.
|
| • Maximize stability in a changing
| |
| | Although its principles are widely
|
| environment
| |
| | applicable, they tend to revolve around
|
| Lean Principles (Generic):
| |
| | operational matters. Marketing,
|
| We put these together based on experience
| |
| | Development, CRM and Human Resources are
|
| and exposure to Lean thinking:
| |
| | equally pressing areas needed for
|
| • Identify Product Value Stream
| |
| | success.
|
| • Rapid Response to Customer Needs,
| |
| | Lean is simplicity. It is much less
|
| Competition, New Tools and Technology
| |
| | complicated than almost any other
|
| • Flow- Single Piece
| |
| | philosophy of running a business. Yet
|
| • Pull
| |
| | some people, more specifically, certain
|
| • Eliminate Waste
| |
| | vendors, consultants and academics, are
|
| • Lean Product and Process Design
| |
| | trying to make it more complicated. They
|
| • Responsiveness to Change
| |
| | are developing complex new algorithms,
|
| • Continuous Improvement
| |
| | new terms and techniques at a dizzying
|
| • Elimination of Defects
| |
| | rate, in a frantic attempt to gain
|
| • Standardize- Eliminate Process
| |
| | "traction" and visibility. Resist this.
|
| Variation
| |
| | Keep it SIMPLE, keep it LEAN.
|
| • Visual Management/Control Systems
| |
| |
|
