Can ERP support the implementation of lean production?

Yesterday, my colleague Daryl Powell successfully defended his PhD thesis titled “Investigating ERP Support for Lean Production” at the Department of Production and Quality Engineering at NTNU, Trondheim, Norway. Over the last three years, Powell’s research has received much interest from the international Operations Management research community and from industrial companies struggling with the mismatch between lean production and ERP (Enterprise Resource Planning systems). Is lean production and ERP solutions for pull production mutually exclusive?

Powell defends his thesis “Investigating ERP Support for Lean Production”5-9-2012, NTNU

PhD Powell—a Briton with experience as a Continuous Improvement Champion in the Schäffler Group in the UK—has since 2008 conducted qualitative research in Norwegian and Dutch industry as part of the SFI Norman research project, funded in majority by the Norwegian Research Council. His in-depth case study of four Dutch SMEs has analyzed how to make the most out of simultaneous implementation of card-based pull production systems (such as Kanban and Polca) and bolt-on “lean solutions” to ERP. He has also conducted a three-year action research project at the Trondheim-based company Noca.

The paradox between lean and ERP
Historically, lean and ERP has been seen as opposites, and the simultaneous implementation of both ERP and lean has been called a paradox. The paradox stems from the ERP planning module’s focus on fixed lead times, lot-sizes and need for buffer inventory, whereas lean focuses elimination of lead time, one-piece flow and just-in-time supply. On the other hand, others have argued that ERP and lean can—and should—coexist. Powell concludes that “modern ERP systems can support lean implementation, and even make its implementation better!”

Powell’s argument that ERP supports the implementation of lean in companies can be a hard message to accept for “lean purists” who traditionally avoid all use of IT and prefer simple paper-based planning and control systems. In his research, Powell found that lean and ERP are not contradictory in nature any more; modern ERP solutions have evolved much from the MRP-solutions that were at the heart of the debate in the 1990s. “ERP and lean production fundamentally offer the same benefits to an organization”, he says, and points to: (1) Inventory reduction, (2) lead time reduction, (3) quality improvement and (4) customer service improvement. He finished his defense with the following remark:

“The paradigm shift from mass-to lean production was a revolution. Now we are witnessing the evolution of lean as we know it. We are moving towards an era of ICT-enabled lean production!”

But, no PhD defense without a few quarrelsome questions from the opponents… Professor van Landeghem from Ghent University asked if the coexistence is really a paradox; he argued that ERP can be seen as an overall system that supports long-term operations, while lean is ultimately about shop-floor operations. Dr. Pauline Found from the Lean Enterprise Institute in Cardiff wondered if the issue at hand is more of an academic debate than a real problem in industry; after all, companies have used both ERP and lean for more than two decades now. Whatever the question, however, the candidate had a reasonable answer. The PhD committee concluded the defense with a unilateral praise of the research conducted and awarded the candidate with his well deserved PhD title.

So what? Practical guidelines for industry
PhD Powell’s thesis has practical relevance. His research concludes with “15 keys for ERP-support for lean production” (see Powell, 2012; p. 77), and the proposed ERP-based lean implementation process framework (shown below) is useful for any company that wants to become leaner with the use of ERP.

Framework for an ERP-Based Lean Implementation Process (Powell, 2012; p. 84)

References

  • Powell (2012) Investigating ERP support for lean production, Doctoral thesis at NTNU, 2012:199, NTNU, Trondheim, Norway
  • This blog post has also been posted at www.sfinorman.no

3 thoughts on “Can ERP support the implementation of lean production?

  1. I came to know some important aspect of lean and ERP from this blog. Thanks for sharing this informative blog with us.

    • What could happen if we could provide waiting times (and thus lead times) that are dependent upon the utilization of equipment, lotsizes, down times (not just %down), demand level, setup times and run times etc. ? And if it included randomness and variability (width of those bell shaped curves) of the arrivals and setup and run times ? Maybe we could get a reasonable MRP 2 or ERP mrp2 module ? and if the lotsizes are set so as to minimize $ WIP or avg. lead times ?

      We could then see what the lean changes and how lean work benefits the business. This would resolve any issues about MRP 2 and lean working in the same direction…

      It is possible .. even the problem of 3 people running 7 machines where sometimes equipment ‘waits for labor’ – determine the % of time equipment waits for labor.

      ‘Show me the numbers’ after I do all that lean stuff…

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