Enterprise Resource Planning (ERP) Solution is designed to deploy the lean manufacturing principles to its customers. Historically, lean thinking was adopted first in the high volume repetitive manufacturing industries, so much of the analysis of the benefits relates to these industries.
Lean principles can be applied equally, but with a different emphasis to complex Engineer to Order (ETO) organizations—the removal of waste is good for all, no matter what you do.
The trends for the early adopters of lean principles are encouraging. A recent survey conducted in 2009 of 40 companies who adopted lean concepts in their operating plants, typical improvement included:
- 90% reduction in lead time (cycle time)
- 50% increase in productivity
- 80% reduction in work-in-process inventory
- 80% improvement in quality
- 75% reduction in space utilization
Improvements within the manufacturing part of the enterprise are, in some cases, the effects of improvements in the commercial or administrative side of a business that are providing accurate and timelier data. The removal of waste on project planning, design, purchasing, contract management, and finance all contribute to the drive for improving customer value.
· Recorded improvements within the 40 sample companies include:
- Reduction in order processing errors
- Streamlining of customer service functions
- Reduction of paperwork in office areas
- Reduced staffing demands, allowing the same number of office staff to handle a larger number of orders
- Documentation and streamlining of process steps, enabling non-critical functions to be outsourced and allowing a company to focus its efforts more on customers’ needs
- Reduction in staff turnover and resulting costs of attrition
- Implementation of job standards and pre-employment profiling, ensuring the hiring of only above-average performers (consider the benefits if everyone performs as well as the top 20%)
Reduced customer lead-times, reduced operating costs, and improved quality provides business opportunities. They all provide a more competitive position to leverage market share from competitors who are less agile, have higher operating cost and poorer quality.
Lean Enterprise Benefits in Complex ETO
The benefits for adopting lean enterprise concepts in a complex ETO business will depend on the level of integration that exists from design through engineering into build, installation, and service. ERP software that enable integration, connectivity, and a single source of data opportunity. This will be the starting point for analyzing the removal of waste and activities that provide no real customer value.
Lean enterprise benefits for complex ETO organizations include:
- Improved bid management and win ratios from data re-use and business focus
- Better project control, risk mitigation, and cost management through the integration of project management activities with back office functions
- Improved design and delivery data through web-portal collaboration with customers and suppliers
- Reduced data input and errors through sharing common data from design to manufacture, installation, and service
- Increased business capacity through synchronizing delivery milestones with current work tasks
- Reduced customer delivery cycle times through parallel planning and concurrent activities
- Improved customer deliveries dates from common data and integrated design, build and install solution
- Improved customer satisfaction from better quality, lower prices and on-time delivery
- Improved quality and design by analyzing failures
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