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Enterprise Resource Planning Vendors Address Lean Manufacturing

Written By: Predrag Jakovljevic
Published On: February 20 2006

How Are Enterprise Resource Planning Vendors Addressing Lean Manufacturing?

Given the current massive interest in lean manufacturing, the time has come for prominent enterprise systems providers to communicate their views and experience in lean manufacturing, and the range of solutions and tools that they offer to support organizations with a lean manufacturing philosophy. What follows are some notable examples of vendors that support many lean tools and methodologies. Obviously, vendors will be stronger in some areas than others, depending on their original enterprise resource planning (ERP) system's suitability for more repetitive versus to-order environments. Note that the order of the vendors in this article should by no means be interpreted as the order of the best to the worst (or vice versa).

This is a continuation from February 16, 2006 of the Lean Manufacturing: A Primer series. It is Part Five of a multipart note.

Intentia

Intentia has been developing and delivering a wide range of lean manufacturing solutions to its customers for over a decade. The vendor first introduced support for kanban around ten years ago, while its theory of constraints (TOC)-based solution goes back fifteen years, and support for total productive maintenance (TPM) was first delivered approximately seven years ago. Intentia recognizes that one solution does not always fit all environments. For instance, while a lean solution using kanban is applicable in many situations, there are environments where TOC or material requirements planning (MRP) are more appropriate. In fact, some of Intentia's touted modules and capabilities are traditional ERP or supply chain management (SCM) ones that have been retrofitted to better accommodate just-in-time (JIT), lean, or flow principles. To view the results of Intentia's notable efforts to map Intentia Application Suite's (IAS, formerly Intentia Movex) modules and capabilities against the five lean transitional steps, see table 1. A more in depth examination of the Intentia TOC production planning solution and their recently introduced support for the drum-buffer-rope (DBR) scheduling technique will be provided later in this series, but for more information on this vendor, see Intentia's Movex for Food and Beverage: Gaining a Foothold in North America.

Fujitsu Glovia

Although Glovia originated in the US market, owing to parent Fujitsu's involvement since the 1990s, it has enjoyed its greatest success with Japanese companies. It also works extensively with Japanese companies in the US. glovia.com's support for kanbans, serial effectivity, and the seiban (an identifying number or label attached to all parts, materials, purchase orders, and manufacturing orders that identify them as belonging to a particular customer, job, product, or product line, which permits separate MRP groups within the overall planning process) lean or JIT manufacturing approaches, enable all sorts of manufacturers to handle configured items in batches as small as one. However, the vendor says that about 85 percent of its customers adopting lean practices come from the automotive industry. See table 2 to view Glovia's modules and capabilities mapped against several lean tools. Certain readers may note that, as with Intentia, some of Glovia's modules are retrofitted ERP or SCM ones. For more information on the vendor, see Fujitsu Poised to (Inter)Stage Glovia's Comeback.

Don't Forget About QAD Lean

Despite not having done diligent tabular homework like Intentia and Glovia, QAD is indisputably one of the lean thought leaders. It owes this position to its long repetitive (rather than to-order) manufacturing focus, and the resulting install base within the automotive industry and similar industries that lend themselves well to the lean concepts (see QAD Pulling Through, Patiently but Passionately).

There is interest within these industries (i.e., the automotive, electronics, industrial equipment, and possibly the consumer goods and medical devices industries) in leveraging kanban or supermarket sizing, using many different sorts of pull signals (e.g., visual signals, electronic kanbans, or a mix of signals) so as to ascertain how much inventory is in use, the customer service levels, and the buffer performance evaluation. Accordingly, buffer or supermarket master data within the QAD application identifies details of buffer stock calculations, such as current maximum buffer stock, the method used for determining buffer, the order point (either calculated as the sum of the demand over the lead time [DLT] and the safety stock or set manually), safety stock or safety time, service level, buffer evaluation limits (e.g., warning only or critical), limits expressed as percentage or quantity, and so on.

However, it is possibly load leveling techniques that excite the greatest interest in these industries. These techniques, which QAD solutions support, include calculating takt time to establish the drumbeat, volume and mix leveling, heijunka range calculations to schedule the finishing cell or final assembly line (i.e., the sequence and quantity of parts), and demand calculation algorithms, which are used to handle variability so as to configure product for different product lines. For demand calculations, demand master data identify the critical details of demand determination, such as the average daily demand and the template used for determining demand (i.e., the average over n days and the average over x forward days using historical method y and future method z). Customers typically tend to evaluate around thirty days of historical data with thirty days of forecast, but there are multiple methods for determining demand (e.g., historical, weighted, or future demand average).

Besides trying to accommodate trends in its target industries through the lean functionality described above, QAD has also been trying to develop Sarbanes-Oxley Act (SOX) support within the confines of lean manufacturing. Its efforts include the separation of duties and security by user, and the use of closed loop systems, such as radio frequency (RF) readers and poka yoke (mistake proofing) methods.

QAD MFG/PRO Lean Manufacturing

Introduced in 1999 and based on the widely accepted Toyota standards for lean manufacturing, QAD's lean manufacturing solution suite, QAD MFG/PRO Lean Manufacturing, integrates electronic representation of kanban processes with core ERP functions to provide comprehensive production tracking and visibility. The product has since been sold to over 120 customers at over 250 sites in 25 countries, though most of early adopters have come from the US, Germany, Mexico, the Czech Republic, Portugal, etc. On a high-level product description, the solution provides a streamlined approach to manufacturing and supplier communication, allows level loading, pull signal replenishment, and buffer management with integrated visualization tools. These capabilities aim at helping automate and streamline supply chain communication so that companies can better understand real customer demand and calibrate production to take advantage of advanced manufacturing techniques, such as continuous flow, pull replenishment, and supply visualization. A more detailed description of the solution's capabilities follows.

Kanban

One of QAD MFG/PRO Lean Manufacturing's more recent functions is improved kanban card management with greater automation and simplification of kanban card release, sequence enforcement (to ensure that individual kanbans are consumed and filled in the proper sequence), and more comprehensive kanban simulation. These functions augment existing features, such as creating kanban loops, defining production processes to supply them, and tracking kanban signals. The module provides computer-based support for managing kanbans, such as independent and dependent demand calculation for kanban assemblies and components, printable kanban cards, kanban card and loop sizing and recalculation tools, and kanban card consumption and reprint. All kanban transactions are integrated with production, labour, and material movement. The module manages and tracks internal or external kanbans (which can, in turn, be purely visual, electronic, or mixed), automatically generates inventory and general ledger (GL) transactions, and electronically communicates supplier delivery requirements.

Demand and Load Leveling

The suite enables both lean planning and execution processes, since efficient response to fluctuating customer demand requires real time analysis and the monitoring of lean parameters based on actual demand, future requirements, and the state of readiness of the extended supply chain. The following demand leveling tools are built into QAD MFG/PRO Lean Manufacturing.

  • Kanban pull signals, which allow inventory shipments to be dynamically optimized to the rhythm of customer demand, based on average demand calculation, sophisticated supermarket and sizing logic, and dynamic safety stock calculations. Sending kanban signals within the plant or to suppliers via electronic data interchange (EDI) or the Internet (either via e-mail or supplier and kanban visualization portals) to upstream operations allows manufacturers to monitor real time customer demand and adjust their operations when changes occur. This has the further benefit of synchronizing manufacturing processes with the extended supply chain. Moreover, kanban signals and Internet visualization facilitate lean by making accurate inventory replenishment information immediately visible, thereby reducing information lead-time and eliminating waste in the flow of material from suppliers to customers.

  • Every-part-every-interval (EPEI) calculations for lean lot sizing, which ensure a valid level schedule based on changeover frequency

  • Takt time calculations, which are used to synchronize the rate of production with the rate of sales (customer demand)

  • Supermarket (buffer) performance management, which optimizes a pull-based replenishment system and provides a mechanism for establishing and maintaining buffer quantities, including performance evaluation and adjustment logic and kanban-based activity management with an integrated visualization product. This is important as inventory buffers (supermarkets) are a primary technique for reducing the variability of demand across the value-stream. QAD MFG/PRO Lean Manufacturing in fact has multiple tools for evaluating buffer performance, one of which is a measurement of demand variability. Moreover, because its tools calculate a suggested daily level schedule by shift for each item based on the established process volume, mix analysis, pitch, and other parameters, buffer performance is evaluated and adjusted automatically.

  • Safety stock calculations, which minimize stock on hand. These calculations can be regulated based on average demand estimates, desired service level, or peak demand during a user-specified period. Furthermore, when the safety stock is calculated using any of these methods, the buffer will be adjusted automatically when the user requests it.

  • Mix analysis workbench, which provides tools for calculating daily production volume, determining the optimal mix of various inputs, aiding in supermarket evaluation, and updating the master production schedule (MPS)

  • Flow scheduling, which provides the ability to generate time-phased sequence statements of production requirement for production lines in a flow manufacturing environment

To recap, the QAD Lean software provides a longer term leveling (heijunka) calculation to establish a planned level volume and mix of production. In this calculation, done for each pacemaker process, the system calculates a suggested daily schedule leveled into shift increments. This planned schedule is based on takt time, product mix, production interval (EPEI), shift pattern, etc. The pacemaker leveled schedule becomes the MPS for all upstream processes, and drives both traditional material planning activities and lean planning (average daily demand for components, loop and buffer sizing, etc.). It also becomes the basis for cell design, operator balancing, and other important lean activities. The finishing schedule itself can be based on kanban pull signals using a type of first emptied, first authorized logic or on a conventional heijunka box in pitch increments. The QAD lean software also assists in establishing a level pull across all the upstream processes, with takt time, average daily demand, EPEI calculations, desired inventory buffers, etc. driving the kanban loop sizing calculations in the system.

Inventory Control

QAD lean manufacturing capabilities contribute to pull-based replenishment with new tools for greater control over inventory, including multiple methods for calculating and setting inventory supermarket quantities based on user-defined parameters and scenarios. The amount of inventory is tightly managed with automated techniques for continuous improvement, and is integrated with the above demand leveling system components. All replenishment methods are supported, including discrete purchase orders, schedules, vendor managed inventory (VMI), kanban, and JIT sequencing. Customer forecasts flow directly into production planning. Inventory alerts can be sent via shipping schedule, broadcast, kanban, or an inventory minimum or maximum signal. Shipping instructions can be received via traditional EDI. Supplier and kanban visualization modules allow suppliers to view shipping authorizations through a Web browser. All the above tools aim to enable lean enterprises to minimize inventory carrying costs and speed the flow of information across their extended supply chain.

Supply Visualization

QAD MFG/PRO Lean Manufacturing functions operate in conjunction with QAD Supply Visualization (SV), a software module with kanban functionality, which provides secure, real time access to inventory data for suppliers in order to better synchronize inventory with demand. SV facilitates VMI, a method through which the supplier is responsible for maintaining agreed upon inventory levels, by sending minimum or maximum inventory data via the Web. The product also facilitates partner connectivity and collaboration by allowing suppliers to access inventory information. This is key to establishing a true pull-based manufacturing system, one in which suppliers are able to track inventory from the customer's Web site in near real time and can be automatically alerted by pager or e-mail when inventory drops or rises beyond agreed upon levels.

With SV, rather than send information back and forth, customers and suppliers can access inventory balances and future demands through a convenient portal and the supplier can replenish stocks as required. When the customer gives the supplier access to more real time information and the responsibility for and authorization to replenish goods, the supplier can reduce administrative costs and possibly inventory levels.

SV can also be used with QAD's Inventory Consignment functionality, which allows inventory ownership to be recognized at the point of consumption with suppliers or customers. This makes processing less costly because inventory is received from suppliers as consigned goods, without actual transfer of title. The supplier maintains the consigned goods as finished goods inventory until a notice is generated that the inventory has been used. When a customer does not take title to material until it is actually used in manufacturing, raw material and purchased parts inventories are, in effect, eliminated. As a result, inventory turns typically increase and the use of capital assets is maximized.

Nonetheless, the SV functionality described heretofore really applies to organizations using traditional scheduling techniques. It is the Kanban Visualization (KV) component of SV that is important in terms of lean manufacturing. This functionality shows the status of all kanban loops and of the individual cards within each loop. It can be used as a primary means of communicating pull signals and of tracking all the shipping and receiving activities related to replenishment.

Sequencing

As mentioned in Part Two of this series (see Lean Tools and Practices that Eliminate Manufacturing Waste), the QAD JIT Sequencing Module (JIT/S) helps automotive suppliers produce and deliver configured vehicle components in the exact sequence they are required in the vehicles moving down the original equipment manufacturer (OEM)'s assembly line. It balances the forecasts and production schedules received from the OEM with real time customer requirements, on-hand balances, and production plans in order to manage activities from manufacturing to JIT sequential delivery.

The first step in this process involves receiving demand information. The module responds primarily to broadcasts transmitted directly from the OEM customer's assembly line, although it can also process EDI-based broadcast information in the form of daily JIT requirements. The broadcast point (or points) is triggered as a vehicle passes it. The information in the broadcast usually includes sequence number, vehicle identification number (VIN), and specific configuration attributes data to provide the appropriate part or subassembly description.

JIT/S explodes this incoming customer demand information (and every subsequent demand signal) to identify the item or items the supplier must produce and deliver. The module then either allocates existing inventory for delivery in response to the customer demand, or generates a series of production orders for new configured parts and assemblies, whereby each order is for the production of one configured item, specifying the exact configuration that is required. These production requirements are subsequently broken down into work orders for the manufacturing or assembly operation. These work orders initiate production (manual and automated through industrial controllers), poka yoke, and other quality control processes, as well as drive and control lot traceability. Moreover, JIT/S takes into account the manufacture of subassemblies and constraints for sequential production (for example work cell loading constraints) when scheduling item production.

JIT/S also manages the palletizing, racking, marriage checking (e.g., ensuring front and rear car seats are the same color, type, and family), and sequence shipment validation. As necessary, the module activates alerts regarding exceptions to customer orders, inventory availability, production overload, scheduling conflicts, and other planning and production constraints. The module also reads and writes to industrial controllers, as well as to quality verification, automatic identification, and traceability systems. Finally, it triggers any required ERP-based functions associated with the backflushing of inventory, shipment and advance shipment notice (ASN) processing, and financial processes. In effect, JIT/S is more than a work order-based system; it is an essential lean manufacturing component.

A Work in Progress

However, despite the impressively broad solution outlined above, QAD acknowledges that there is a notable amount of work in progress, and that it has planned future enhancements for the mid and long term. The first phase of this work has been completed, providing support to manage materials and production using kanban and flow schedules, typically where there is an existing flow manufacturing line or a design for a flow line. This phase will also provide extensive support for dynamically creating kanbans, buffer management, and enhanced pull techniques, as discussed above.

The second phase, which is currently in-process, deals with advanced flow management and demand flow management. On the planning and scheduling side, the focus has been on developing support for planning for product families, rate-based master scheduling, and the use of firm demand to populate the schedule automatically. On the execution side, work is being done to enable the management of demand pull to produce flow schedules. This management will based on the available-to-promise (ATP) and capable-to-promise (CTP) calculations that are part of the baseline MFG/PRO ERP functionality, as well as on kanban sequence enforcement, automatic card management, EDI, and heijunka scheduling (kanban sequence enforcement, automatic card management, and EDI were significant improvements released in service packs eight, nine, and ten).

The third phase, which is planned for the foreseeable future, will focus on standardized work elements that provide the information required to perform an operation on the line, such as standard operating procedures (SOP) or operation method sheets (OMS), pictures of the assembly process, work instructions, required materials, etc., to shop floor personnel. The idea is to provide a complete chain of demand-supply pull sequence of events (SOE), as well as to provide operator loading and balancing capability and proactive performance tracking with action recommendations. Also, this capability will provide a way to record standard work elements, which can be used to feed the operator balancing process and to calculate available operator and machine capacity requirements.

In the third phase, QAD also plans to focus attention on tools for designing flow lines, specifying material routing, and optimizing the use of these tools. Last but not least, it plans to tackle support for extended enterprises signaling (across multiple enterprise systems). The assumption here is that all signal generation logic (i.e., replenishment decisions) will be made in the appropriate application logic in the enterprise software, and that a separate messaging module will pick up and distribute signals to the appropriate source system.

SSA Global and Others

This extensive list of required future developments might incite hope in the slew of lean specialists that typically excel exactly at this type of functional nuggets and provide bolt-ons to transactional enterprise systems. These vendors include the likes of Factory Logic, CellFusion, Invistics, DTAKT Systems, Pelion Systems, Portico Technology Partners, DemandStream (part of SoftBrands), eBots, en'tegrate (a lean manufacturing product provider for Microsoft Axapta), etc. Of these, DemandStream's product is particularly interesting, as it was designed to be complimentary to traditional ERP and MRP systems, and is specifically intended to enable lean implementation in less than ideal environments, such as those with fluctuating market demand, a high mix of products, frequent engineering changes, bottleneck resources or long lead-time items, configured products, and complex supply chains.

Moving away from this list, SSA Global has been espousing an expanded lean manufacturing suite, following a number of acquisitions in recent years (see SSA Global Forms a Strategic Unit with Extended ERP Savvy). Gathering the best lean manufacturing capabilities of the likes of the former Baan and BPCS, SSA Leanware is a solution that supports the transition to lean manufacturing for organizations recognizing the value offered by lean concepts. The solution complements both SSA ERP LN (the next generation converged product for the UNIX-based former Baan, ManMan, and MK products) and SSA ERP LX (the next generation converged product for the IBM eServer iSeries-based former BPCS, PRMS, and KBM products). SSA Leanware serves as a stand-alone lean execution layer, providing a work order-less kanban execution system for production, procurement, ordering, replenishment, and Web-based supplier collaboration. Interactive visual graphical boards and advanced alerts for exception messaging are included to increase productivity, while support for integrated lean and traditional environments and hybrid execution (i.e., the co-existence of push-based and pull-based manufacturing) is provided to increase flexibility. In addition, the application is capable of translating an engineering view to an assembly view without the traditional MRP paradigm (i.e., BOM flattening). It supports a high number of transactions and was designed to minimize the system tasks performed by users. The recently unveiled SSA ERP LX also features many lean capabilities within its solution for automotive suppliers, such as automatic release management, self-billing, separate scheduling of firm and planned orders, retroactive billing, consignment inventory, lean orders (i.e., the system loads and levels demand the cell or line directly for production without planning purchase or production orders), lean hourly run rate, and variable dock scheduling.

There are numerous extended-ERP vendors besides the four detailed in this note that offer lean manufacturing solutions. These four were chosen because of their willingness at this stage to meet and share their experiences and approaches with us. This is by no means a reflection of any lack of lean capabilities in the offerings of the likes of Epicor Software, IFS, SAP, Oracle, Infor, Cincom Systems, SoftBrands, i2 Technologies, etc. Readers are advised to peruse all the above vendors' collaterals and discern their lean manufacturing capabilities, which should be either fairly apparent, or buried under a pile of traditional ERP and SCM functionality.

For example, Oracle has long had the standalone Oracle Flow Manufacturing product, as well as access to the lean capabilities of the former PeopleSoft and J.D. Edwards (see PeopleSoft Gathers Manufacturing and SCM Wherewithal). In terms of reducing the various types of waste, Oracle touts its well-integrated architecture that minimizes duplication of data as having an advantage over any lean solution from separate best-of-breed lean specialists. However, although Oracle has been striving to promote lean manufacturing principles throughout many enterprise-wide functions (e.g., procurement or product development), at this stage, their most notable native software modules for lean manufacturing have a particular emphasis on leveling production and pull-based execution. These modules include Line Design and Balancing (including Graphical Line Designer and Mixed Model Map), which is in tune with value stream mapping (VSM); Scheduling and Sequencing (including Self Service Sequencing and Line Scheduling Workbench); Flow Execution (including Flow Execution Workstation and Work Order-less Completions); and Kanban Planning and Execution (including Graphical Kanban Workbench), which includes both internal and external movement of materials.

This concludes Part Five of a multipart note.

 
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