Does ERP fit in a lean world?

For the past decade, organizations have spent billions of dollars and countless worker-hours installing huge integrated software packages known as enterprise resource planning (ERP) applications. Now many manufacturing companies are realizing that the infrastructure they spent years creating is deficient on their plant floor. The ERP systems of the 1990s have become a liability for many manufacturers because they perpetuate some of the legendary material requirements planning (MRP) problems such as complex bills of materials, inefficient workflows, and unnecessary data collection. A new manufacturing model has emerged that's taking the place of the traditional MRP model. It's called Lean, Flow, or Demand-Pull.

Lean manufacturing, a concept with roots in the production processes of Toyota, aims at improving efficiency, eliminating product backlogs, and synchronizing production to customer demand rather than a longterm (often incorrect) forecast. According to a recent study by AMR research, companies are implementing Lean methodologies primarily to improve customer service, reduce procurement and plant-floor costs, and enter new markets. Tom Greenwood is director of the University of Tennessee's Lean Enterprise Forum, which has conducted more than 40 implementations worldwide. He says, "The Lean enterprise methodology is essentially a growth strategy for increasing sales by trimming the company's product delivery system into a competitive weapon. The primary goal is to make it easy for customers to get what they want, when they want it, by creating alignment across the business enterprise from customer through distribution, sales, engineering, production, and supply."

Until recently, the major ERP vendors had all but turned their backs on client demands for support of this new model. Now that smaller, more agile software houses are tapping into niche areas like Lean manufacturing, the major ERP vendors are also beginning to offer solutions aimed at bridging the gap between the shop floor and ERP These solutions come in the form of modules or add-on components that support Lean initiatives and include features such as design of flow lines, demandsmoothing logic, mathematical models for synchronizing daily production rate to demand, the ability to quickly address engineering changes on the line, Kanban replenishment calculations, graphical method sheets, and backflush and exception reporting.

These new solutions are promising, but many companies are stuck with their current ERP system for the time being due to...