The Vehicle Needed to Drive ERP Optimization and Digital Transformation is called Lean!
Lean Manufacturing was built on the Japanese model of efficiency and has been tried and proven by many of today’s top performing companies worldwide. While many assume Lean only benefits large, mass-production type manufacturing operations, the fact is that small to medium sized manufacturers have also benefited from these same Lean principles, regardless of size or type of production model (make-to-stock, make-to-order, or engineer-to-order). And the benefits extend well beyond just financial gains.
Lean “Thinking” in a manufacturing company effectively provides a platform for a sustainable competitive advantage by streamlining all front office processes from quote to cash, as well as the manufacturing processes from engineering, to the supply chain, to production and the eventual product or service delivery. And it is easy to understand why – Lean is simply based on the logical belief that if you reduce waste and non-value-added activity across the organization it will increase the total system efficiency and the company’s profitability. And it works!
What not every company realizes is that in addition to the front office and your shop floor, Lean has a place among your software and business systems as well! Lean has also been found to act as the vehicle to drive ERP Optimization in many ways. Reducing or automating transactions will reduce waste and improve productivity. Using your ERP to its fullest to support improving supply chain performance, inventory turns, and reducing production lead time reduces waste and increases cash flow. Kanban systems can be aligned with ERP functionality, and 5S and other Lean Principles provide all workers with an environment free of the normal stress seen in many manufacturing companies today. And of course, better data with reporting only increases an employee’s effectiveness and leads to faster and more effective decision making.
Once you understand how your ERP system can align with and support Lean Principles, it’s time to look outside of that core towards additional Digital Transformation and Process Automation tools which eliminate additional waste. Today, our more progressive and advanced Lean “Thinking” customers have leveraged the automation of EDI for order intake, embraced the automation of the 3-way matching process, deployed ACH automated payment processing and implemented supplier collaboration portals to reduce non-value added work, integrated CAD systems with their ERP, etc.
Are you seeing the full picture?
If your eyes, ears and minds are open to change, and if you are ready to embrace Lean, you will quickly begin to see the power and reason why Lean has become the vehicle that drives the Digital Transformation approach in highly successful companies. It’s time to take notice – ERP systems are good, and they are necessary. Digital Transformation is good and is necessary. But so too is Lean! In fact, it is the key to the vehicle that will drive your company’s overall improvement program and success!
By Martina Torsella
By Michele Shannahan
By Synergy Resources