Lean Supply Chain and Logistics Management, page 13
As mentioned previously, the team should have gathered some thoughts on improvement during the information-gathering phase of the current state map. When starting to actually “put pen to paper” (or on a whiteboard) for the future state map, they should ask some questions such as:
What does the customer really want or need?
This should include determining what “service level” the customer needs, response or turnaround times, required quality level of the output, expected demand rate and variation, and resources required to meet demand rate.
How often will we check our performance to customer needs?
This helps to define the frequency that the system will be reviewed to verify it is satisfying customer needs and the targeted cycle time or service level and how we will check the progress.
Which steps create value, and which are waste?
We should challenge every step and determine what is really needed by the customer, what can be done differently (or not at all). We also need to know if existing controls and administrative guidelines are appropriate and what knowledge and skills are truly required to perform the step(s).
How can we flow work with fewer interruptions?
We need to understand if we have continuous flow in areas such as customer service (e.g., from order to invoice), order processing (e.g., design-to-order), and warehouse and distribution for example. Identify bottlenecks in the process.
How do we control work between activities?
It is always useful to ask operators how they know what to do next when finished with a batch of work.
Can we better balance workload and/or different activities and how will work be prioritized?
We need to know if the “mix” (i.e., order/product/service type) impacts the ability of the system to flow, or impacts the responsiveness of particular steps in any way, and does the “volume” (i.e., demand variation) impact the system.
Finally, what process improvements will be necessary and which are most important?
The answers to these questions will drive the future state map and implementation plan. This is also where the team can consider applying many of the basic and advanced Lean concepts we discussed earlier in the book such as layout, visual workplace, setup reduction, JIT, pull/kanban, work cells, etc.
Where to Look
Overall, the focus should be on eliminating waste in the supply chain, while trying to improve continuous flow. There should be an emphasis on shifting from a push to demand-pull process based upon customer demand (using concepts such as takt time, load leveling, line balancing, and one-piece flow) to minimize inventory. You should target more visibility into both the demand and supply chain to help manage service and costs.
As purchasing can account for 50 percent or more of the total costs, Lean tools can be implemented such as visual material management (e.g., kanbans, simple bin replenishment), vendor-managed inventory (VMI) systems, and supplier reviews/assessments to see how Lean your suppliers really are. There should be an emphasis on partnering, collaborating, and long-term alliances with sharing of cost and technical data and, in some cases, risk. All of which will require mutual trust.
In warehousing, waste can be found throughout, including: defective products which create returns; overproduction or overshipment of products; excess (or inaccurate) inventories, which require additional space and reduce warehousing efficiency; excess motion and handling; inefficiencies and unnecessary processing steps, excess transportation steps and distances; waiting for parts, materials, and information; and inefficient (and manual) information processes.
The final future state map should be reviewed with the team, then presented to upper management for their approval and support.
In our example of the future state map for a purchasing function (previously shown Fig. 11.3), the team determined it would be an improvement to create separate dollar-value “thresholds” for purchase orders, so as to improve the approval process time for smaller purchase orders. Among other thoughts, they also came up with a longer-term idea to create work cells that would speed up the entire process by combining the order entry, planner, buyer, and accounts payable roles into one process and improve flow.
Implementation Plan
The final step (and really just the beginning) is to prioritize and plan for improvements identified in your future state map to be implemented in the next 3 to 6 months. There is usually some “low-hanging fruit” that can be done quickly and easily. The harder improvements, which may take some capital improvements and more time, need to be prioritized and planned for (see Fig. 11.4).
Figure 11.4 Value stream plan.
It is a good idea to tie the future state map to the overall business objectives as mentioned previously.
It is also sometimes best to break a future state map into easier-to-digest and easier-to-deliver loops. For example, you may create separate customer, warehouse, and supplier loops.
To ensure success, you will need leadership and support from upper management, a company business strategy that includes Lean, development of a culture that emphasizes a continuous improvement mentality, and ways to ensure that Lean becomes part of everyone’s job description and is discussed on a regular basis.
Additionally, it is always a good idea to benchmark key metrics within your industry and outside your industry and to always question the status quo.
Lean Teams
In many ways, the Lean journey by itself is a form of team building, especially when using a simulation training game early on in the process to help trainees transfer the general concepts and tools into hands-on learning (Fig. 11.5).
Figure 11.5 Team work.
In any case, much more progress can be made and maintained if Lean is part of everyone’s job, rather than just a few. While it is important to have a Lean structure, with Lean champions, Lean coordinators, and even in some cases, Lean subject matter experts (in areas such as VSM, 5S, etc.), it is more important and effective to have everyone involved from top to bottom. Companies where Lean becomes part of the culture tend to get greater, longer-lasting results. While those who just look at it as the fad of the month may get some good results, but usually go back to doing things the way they were done before the training. What you really want to do is to develop a culture that consistently defines and solves problems utilizing Lean tools.
There are many reasons to work in teams, and in fact, it is pretty much the norm these days, including everything from new product teams to quality teams and beyond. Teams are a great way to share ideas, and they create a support system for the members. They also use the skill set of all of the members as the sum of ideas is usually better than an individual person’s ideas. Besides, it is more fun to work in teams, and as a result, implementation is usually easier.
When creating teams and a teamwork culture it should be in a risk-free environment but should still be disciplined in terms of the process and rules. Trust is a critical factor, as well as selecting the right people for the team. I always prefer a mix of people from a variety of areas (e.g., production, supply chain, logistics, engineering, sales, etc.) to gain a common understanding and to avoid silo kind of thinking. I also prefer to take volunteers first.
Team Charter
It is always good to formalize things with a team charter (Fig. 11.6) so that everyone knows their roles and responsibilities.
Figure 11.6 Team charter form.
The Team Makeup
You should make sure that you have a fairly high-level sponsor/advisor for the team to help break through any roadblocks along the journey, as well as being able to arrange for support for the team during the event(s).
The team leader is kind of like the quarterback who determines session objectives, the process to be followed and the agenda, and should meet with the facilitator to review session objectives and process.
The traits to look for in a leader include any previous success as a leader, some knowledge of Lean Enterprise (preferably hands-on experience), and someone who is comfortable working in the targeted area(s).
The consultant/trainer should be more of a facilitator. I typically deliver Lean concepts and application training but usually end up doing consulting as well to help the steer the team in the right direction in general, as well as help to come up with and organize specific improvement ideas.
The actual team members should be a blend of people from inside and outside of the area, as mentioned previously, and they should understand the target area (may work in it or can learn about it) and be open to thinking about doing things differently.
When it comes to meetings and their rules, it is important to set them early and try to adhere to them as much as possible. They should include basic things such as showing up and starting on time, being prepared, listening attentively, participating, etc., as well as individuals assuming responsibilities and supporting any group decisions.
It can be very useful to have a place on the whiteboard (or large piece of paper) to use as a parking lot for good ideas that may be off-topic at the moment, but have longer-term potential later.
Kaizen Events
Kaizen is loosely translated (or commonly known) to mean continuous improvement. So a kaizen event is a team-based continuous improvement project. The goal of a kaizen event is process improvement through the elimination of waste at all levels of the process. Typically, prior to the actual event, there is a period of training in general Lean concepts and applications, as well as additional training in specific tools, such as setup reduction, work cells, etc.
As mentioned earlier in the book, the first kaizen event is usually either 5S-workplace organization or implementing the results of a VSM project. However, you can also create a kaizen event based upon feedback from your team members after some basic training.
For example, after some basic Lean training, the general manager at a client facility that functioned as both a private DC for a cosmetic contract manufacturer, as well as a third-party logistics services (3PL) facility had his team do some brainstorming to come up with ideas for kaizen events. We handed out a form similar to the one shown in Fig. 11.7 and asked the individuals to come up with improvement ideas.
Figure 11.7 Cost reduction kaizen implementation form.
The team came up with many good ideas including one idea for improving the cycle-counting process. Their current cycle-counting process was done manually, even though the DC had radio frequency (RF) scanning capabilities for receiving, picking, etc. Time studies showed that they were wasting an average of 108 minutes doing data entry per day and 54 minutes in wasted travel time to the office. The solution was to use RF devices for cycle counting, which would not only significantly reduce these wastes but also cut down on data entry errors.
In general, a kaizen event is appropriate in a number of situations including when there is a need for an urgent solution, competitive issues, customer service or cost issues, and bottlenecks.
A major difference between kaizen events in America and Japan is that in the United States there seems to be more of a rush to get results, versus the slow but sure way of continuously improving a process in Japan. That may be one reason that many Lean initiatives fail in the United States. They may make short-term gains, but don’t stick with it for the long haul as Japanese companies do.
Kaizen Event Management
When planning for a kaizen event, there are some general steps that are good to follow:
1. Prepare for the event by selecting the targeted area and team.
2. Define scope and goals of event with team members.
3. Train the team in various Lean concepts and relevant applications.
4. Walk the kaizen area with team members.
5. Collect data on the kaizen event area (varies depending on whether it is for a VSM, 5S, or other specific tools to improve the process by removing waste.
6. Brainstorm ideas as a group.
7. Prioritize the top ideas in terms of value to the customer.
8. Form subteams to implement the ideas.
9. Keep track of progress and check results.
10. Develop/review/update employee job instructions where needed (adding standardized work where ever possible).
11. Develop an action plan for remaining ideas.
12. Regularly report plan, progress, and results to management.
13. Recognize the team and communicate results to entire organization.
14. Follow up on open action items.
15. Measure area improvement versus goals and objectives.
16. Disband team when kaizen is finished.
From an upper-management perspective, whether from a steering committee or Lean champion standpoint, besides each kaizen event being organized similar to the list above, it is key that there is some kind of kaizen board to know what the kaizen schedules and progress are to keep track. A kaizen board is an ideal tool to make the events visible and can be a simple cork- or whiteboard. They are useful for controlling progress, sharing information, and keeping motivation going.
A great first step after some general overview Lean training, a VSM is a valuable tool for continuous improvement. It serves as a “road map” to the future and is a true foundation for the entire Lean journey.
CHAPTER 12
Lean and Technology: Why Can’t We All Just Get Along?
Historically, Lean has been viewed as a “pen and pencil” approach, one that is very visual and needs little help in the way of technology. However, if you think of technology “enabling” a process, then it can be of great help enabling a leaner process, especially in the supply chain and logistics management function, which is all about communications, collaboration, and visibility.
Lean and Technology: Background
A 2006 study by the Aberdeen Group entitled “The Lean Supply Chain Report—Lean Concepts Transcend Manufacturing through the Supply Chain,” found that “as Lean moves from the plant floor to the supply chain, it becomes more difficult to orchestrate activities without automation. Although the Lean early adopters were not proponents of technology, circumstances have changed. The majority of manufacturers rely on a combination of corporate ERP and semi-automated Lean processes to support their business operating models.” [www.aberdeen.com, 2006]
The study goes on to discuss the fact that less than 50 percent of Lean tools such as VSM, supply integration and planning (e.g., kanbans) and scheduling are “automated” using ERP, SCM, and “homegrown” systems with the remainder being more of a pen-and-pencil type of solution (this includes the use of spreadsheets).
However, the Aberdeen research noticed “…a consistent trend for IT solutions with the greatest impact on Lean strategies as customer facing: ‘integrated manufacturing and logistics solution’ and ‘integrated order configuration/management and manufacturing solution.’” [www.aberdeen.com, 2006]
This study indicates that while there has been an increased use of technology in Lean programs, there is still room for continued growth.
According to a more recent Aberdeen Group report from 2009, entitled “Lean Manufacturing: Five Tips for Reducing Waste in the Supply Chain,” organizations that have applied technology to Lean manufacturing today are improving speed, efficiency, and profitability.
Best-in-Class Use of Technology with Lean
In their survey of 117 companies, Aberdeen found that the “best in class” companies are using Lean principles and software solutions “as a long-term strategy for improving people, processes and business results.” [www.aberdeen.com, 2009]
Aberdeen concluded that these measures, along with supermarket sizing and order management integration (which gives added visibility into manufacturing constraints taking customer orders) are among the “Lean automation” tools being used by manufacturing firms today.
As far as top Lean-enabling technologies go, the study found that 63 percent of “best in class” manufacturers (which make up the top 20 percent of companies) have enabled Lean manufacturing practices through demand planning and forecasting systems to improve production planning and scheduling, while 43 percent have used manufacturing execution systems (MES) and 42 percent have used advanced planning and scheduling (APS) systems. [www.aberdeen.com, 2009]
It should be noted that an MES is a control system for managing and monitoring WIP on a factory floor and an APS is a system in which raw materials and production capacity are optimally allocated to meet demand. The outputs of an APS are production plans at different levels of detail.
For purposes of this book, it works best to break the Lean SCM technology discussion into two chapters: This one is focused more on your internal SCM operations, and the next chapter is focused “beyond the four walls” of your operation. There is some overlap as you probably already realize, but we will go with it for now.
There is a lot of technology available today so it is difficult to go through all of it. We will at least try to cover the most common technology elements and how they can enable a Lean supply chain.
Enterprise Resource Planning (ERP) Systems
Of course the most common technology these days are ERP systems. ERP systems are really an integration of all business processes of an organization in one common database, typically in “real-time.” They help to coordinate decision making all along the supply chain from customer to supplier. The (mostly) internal functions that ERP manages typically include: materials requirements planning (MRP), finance, human resources, SCM, and customer relationship management (CRM).
What does the customer really want or need?
This should include determining what “service level” the customer needs, response or turnaround times, required quality level of the output, expected demand rate and variation, and resources required to meet demand rate.
How often will we check our performance to customer needs?
This helps to define the frequency that the system will be reviewed to verify it is satisfying customer needs and the targeted cycle time or service level and how we will check the progress.
Which steps create value, and which are waste?
We should challenge every step and determine what is really needed by the customer, what can be done differently (or not at all). We also need to know if existing controls and administrative guidelines are appropriate and what knowledge and skills are truly required to perform the step(s).
How can we flow work with fewer interruptions?
We need to understand if we have continuous flow in areas such as customer service (e.g., from order to invoice), order processing (e.g., design-to-order), and warehouse and distribution for example. Identify bottlenecks in the process.
How do we control work between activities?
It is always useful to ask operators how they know what to do next when finished with a batch of work.
Can we better balance workload and/or different activities and how will work be prioritized?
We need to know if the “mix” (i.e., order/product/service type) impacts the ability of the system to flow, or impacts the responsiveness of particular steps in any way, and does the “volume” (i.e., demand variation) impact the system.
Finally, what process improvements will be necessary and which are most important?
The answers to these questions will drive the future state map and implementation plan. This is also where the team can consider applying many of the basic and advanced Lean concepts we discussed earlier in the book such as layout, visual workplace, setup reduction, JIT, pull/kanban, work cells, etc.
Where to Look
Overall, the focus should be on eliminating waste in the supply chain, while trying to improve continuous flow. There should be an emphasis on shifting from a push to demand-pull process based upon customer demand (using concepts such as takt time, load leveling, line balancing, and one-piece flow) to minimize inventory. You should target more visibility into both the demand and supply chain to help manage service and costs.
As purchasing can account for 50 percent or more of the total costs, Lean tools can be implemented such as visual material management (e.g., kanbans, simple bin replenishment), vendor-managed inventory (VMI) systems, and supplier reviews/assessments to see how Lean your suppliers really are. There should be an emphasis on partnering, collaborating, and long-term alliances with sharing of cost and technical data and, in some cases, risk. All of which will require mutual trust.
In warehousing, waste can be found throughout, including: defective products which create returns; overproduction or overshipment of products; excess (or inaccurate) inventories, which require additional space and reduce warehousing efficiency; excess motion and handling; inefficiencies and unnecessary processing steps, excess transportation steps and distances; waiting for parts, materials, and information; and inefficient (and manual) information processes.
The final future state map should be reviewed with the team, then presented to upper management for their approval and support.
In our example of the future state map for a purchasing function (previously shown Fig. 11.3), the team determined it would be an improvement to create separate dollar-value “thresholds” for purchase orders, so as to improve the approval process time for smaller purchase orders. Among other thoughts, they also came up with a longer-term idea to create work cells that would speed up the entire process by combining the order entry, planner, buyer, and accounts payable roles into one process and improve flow.
Implementation Plan
The final step (and really just the beginning) is to prioritize and plan for improvements identified in your future state map to be implemented in the next 3 to 6 months. There is usually some “low-hanging fruit” that can be done quickly and easily. The harder improvements, which may take some capital improvements and more time, need to be prioritized and planned for (see Fig. 11.4).
Figure 11.4 Value stream plan.
It is a good idea to tie the future state map to the overall business objectives as mentioned previously.
It is also sometimes best to break a future state map into easier-to-digest and easier-to-deliver loops. For example, you may create separate customer, warehouse, and supplier loops.
To ensure success, you will need leadership and support from upper management, a company business strategy that includes Lean, development of a culture that emphasizes a continuous improvement mentality, and ways to ensure that Lean becomes part of everyone’s job description and is discussed on a regular basis.
Additionally, it is always a good idea to benchmark key metrics within your industry and outside your industry and to always question the status quo.
Lean Teams
In many ways, the Lean journey by itself is a form of team building, especially when using a simulation training game early on in the process to help trainees transfer the general concepts and tools into hands-on learning (Fig. 11.5).
Figure 11.5 Team work.
In any case, much more progress can be made and maintained if Lean is part of everyone’s job, rather than just a few. While it is important to have a Lean structure, with Lean champions, Lean coordinators, and even in some cases, Lean subject matter experts (in areas such as VSM, 5S, etc.), it is more important and effective to have everyone involved from top to bottom. Companies where Lean becomes part of the culture tend to get greater, longer-lasting results. While those who just look at it as the fad of the month may get some good results, but usually go back to doing things the way they were done before the training. What you really want to do is to develop a culture that consistently defines and solves problems utilizing Lean tools.
There are many reasons to work in teams, and in fact, it is pretty much the norm these days, including everything from new product teams to quality teams and beyond. Teams are a great way to share ideas, and they create a support system for the members. They also use the skill set of all of the members as the sum of ideas is usually better than an individual person’s ideas. Besides, it is more fun to work in teams, and as a result, implementation is usually easier.
When creating teams and a teamwork culture it should be in a risk-free environment but should still be disciplined in terms of the process and rules. Trust is a critical factor, as well as selecting the right people for the team. I always prefer a mix of people from a variety of areas (e.g., production, supply chain, logistics, engineering, sales, etc.) to gain a common understanding and to avoid silo kind of thinking. I also prefer to take volunteers first.
Team Charter
It is always good to formalize things with a team charter (Fig. 11.6) so that everyone knows their roles and responsibilities.
Figure 11.6 Team charter form.
The Team Makeup
You should make sure that you have a fairly high-level sponsor/advisor for the team to help break through any roadblocks along the journey, as well as being able to arrange for support for the team during the event(s).
The team leader is kind of like the quarterback who determines session objectives, the process to be followed and the agenda, and should meet with the facilitator to review session objectives and process.
The traits to look for in a leader include any previous success as a leader, some knowledge of Lean Enterprise (preferably hands-on experience), and someone who is comfortable working in the targeted area(s).
The consultant/trainer should be more of a facilitator. I typically deliver Lean concepts and application training but usually end up doing consulting as well to help the steer the team in the right direction in general, as well as help to come up with and organize specific improvement ideas.
The actual team members should be a blend of people from inside and outside of the area, as mentioned previously, and they should understand the target area (may work in it or can learn about it) and be open to thinking about doing things differently.
When it comes to meetings and their rules, it is important to set them early and try to adhere to them as much as possible. They should include basic things such as showing up and starting on time, being prepared, listening attentively, participating, etc., as well as individuals assuming responsibilities and supporting any group decisions.
It can be very useful to have a place on the whiteboard (or large piece of paper) to use as a parking lot for good ideas that may be off-topic at the moment, but have longer-term potential later.
Kaizen Events
Kaizen is loosely translated (or commonly known) to mean continuous improvement. So a kaizen event is a team-based continuous improvement project. The goal of a kaizen event is process improvement through the elimination of waste at all levels of the process. Typically, prior to the actual event, there is a period of training in general Lean concepts and applications, as well as additional training in specific tools, such as setup reduction, work cells, etc.
As mentioned earlier in the book, the first kaizen event is usually either 5S-workplace organization or implementing the results of a VSM project. However, you can also create a kaizen event based upon feedback from your team members after some basic training.
For example, after some basic Lean training, the general manager at a client facility that functioned as both a private DC for a cosmetic contract manufacturer, as well as a third-party logistics services (3PL) facility had his team do some brainstorming to come up with ideas for kaizen events. We handed out a form similar to the one shown in Fig. 11.7 and asked the individuals to come up with improvement ideas.
Figure 11.7 Cost reduction kaizen implementation form.
The team came up with many good ideas including one idea for improving the cycle-counting process. Their current cycle-counting process was done manually, even though the DC had radio frequency (RF) scanning capabilities for receiving, picking, etc. Time studies showed that they were wasting an average of 108 minutes doing data entry per day and 54 minutes in wasted travel time to the office. The solution was to use RF devices for cycle counting, which would not only significantly reduce these wastes but also cut down on data entry errors.
In general, a kaizen event is appropriate in a number of situations including when there is a need for an urgent solution, competitive issues, customer service or cost issues, and bottlenecks.
A major difference between kaizen events in America and Japan is that in the United States there seems to be more of a rush to get results, versus the slow but sure way of continuously improving a process in Japan. That may be one reason that many Lean initiatives fail in the United States. They may make short-term gains, but don’t stick with it for the long haul as Japanese companies do.
Kaizen Event Management
When planning for a kaizen event, there are some general steps that are good to follow:
1. Prepare for the event by selecting the targeted area and team.
2. Define scope and goals of event with team members.
3. Train the team in various Lean concepts and relevant applications.
4. Walk the kaizen area with team members.
5. Collect data on the kaizen event area (varies depending on whether it is for a VSM, 5S, or other specific tools to improve the process by removing waste.
6. Brainstorm ideas as a group.
7. Prioritize the top ideas in terms of value to the customer.
8. Form subteams to implement the ideas.
9. Keep track of progress and check results.
10. Develop/review/update employee job instructions where needed (adding standardized work where ever possible).
11. Develop an action plan for remaining ideas.
12. Regularly report plan, progress, and results to management.
13. Recognize the team and communicate results to entire organization.
14. Follow up on open action items.
15. Measure area improvement versus goals and objectives.
16. Disband team when kaizen is finished.
From an upper-management perspective, whether from a steering committee or Lean champion standpoint, besides each kaizen event being organized similar to the list above, it is key that there is some kind of kaizen board to know what the kaizen schedules and progress are to keep track. A kaizen board is an ideal tool to make the events visible and can be a simple cork- or whiteboard. They are useful for controlling progress, sharing information, and keeping motivation going.
A great first step after some general overview Lean training, a VSM is a valuable tool for continuous improvement. It serves as a “road map” to the future and is a true foundation for the entire Lean journey.
CHAPTER 12
Lean and Technology: Why Can’t We All Just Get Along?
Historically, Lean has been viewed as a “pen and pencil” approach, one that is very visual and needs little help in the way of technology. However, if you think of technology “enabling” a process, then it can be of great help enabling a leaner process, especially in the supply chain and logistics management function, which is all about communications, collaboration, and visibility.
Lean and Technology: Background
A 2006 study by the Aberdeen Group entitled “The Lean Supply Chain Report—Lean Concepts Transcend Manufacturing through the Supply Chain,” found that “as Lean moves from the plant floor to the supply chain, it becomes more difficult to orchestrate activities without automation. Although the Lean early adopters were not proponents of technology, circumstances have changed. The majority of manufacturers rely on a combination of corporate ERP and semi-automated Lean processes to support their business operating models.” [www.aberdeen.com, 2006]
The study goes on to discuss the fact that less than 50 percent of Lean tools such as VSM, supply integration and planning (e.g., kanbans) and scheduling are “automated” using ERP, SCM, and “homegrown” systems with the remainder being more of a pen-and-pencil type of solution (this includes the use of spreadsheets).
However, the Aberdeen research noticed “…a consistent trend for IT solutions with the greatest impact on Lean strategies as customer facing: ‘integrated manufacturing and logistics solution’ and ‘integrated order configuration/management and manufacturing solution.’” [www.aberdeen.com, 2006]
This study indicates that while there has been an increased use of technology in Lean programs, there is still room for continued growth.
According to a more recent Aberdeen Group report from 2009, entitled “Lean Manufacturing: Five Tips for Reducing Waste in the Supply Chain,” organizations that have applied technology to Lean manufacturing today are improving speed, efficiency, and profitability.
Best-in-Class Use of Technology with Lean
In their survey of 117 companies, Aberdeen found that the “best in class” companies are using Lean principles and software solutions “as a long-term strategy for improving people, processes and business results.” [www.aberdeen.com, 2009]
Aberdeen concluded that these measures, along with supermarket sizing and order management integration (which gives added visibility into manufacturing constraints taking customer orders) are among the “Lean automation” tools being used by manufacturing firms today.
As far as top Lean-enabling technologies go, the study found that 63 percent of “best in class” manufacturers (which make up the top 20 percent of companies) have enabled Lean manufacturing practices through demand planning and forecasting systems to improve production planning and scheduling, while 43 percent have used manufacturing execution systems (MES) and 42 percent have used advanced planning and scheduling (APS) systems. [www.aberdeen.com, 2009]
It should be noted that an MES is a control system for managing and monitoring WIP on a factory floor and an APS is a system in which raw materials and production capacity are optimally allocated to meet demand. The outputs of an APS are production plans at different levels of detail.
For purposes of this book, it works best to break the Lean SCM technology discussion into two chapters: This one is focused more on your internal SCM operations, and the next chapter is focused “beyond the four walls” of your operation. There is some overlap as you probably already realize, but we will go with it for now.
There is a lot of technology available today so it is difficult to go through all of it. We will at least try to cover the most common technology elements and how they can enable a Lean supply chain.
Enterprise Resource Planning (ERP) Systems
Of course the most common technology these days are ERP systems. ERP systems are really an integration of all business processes of an organization in one common database, typically in “real-time.” They help to coordinate decision making all along the supply chain from customer to supplier. The (mostly) internal functions that ERP manages typically include: materials requirements planning (MRP), finance, human resources, SCM, and customer relationship management (CRM).
