12.21.2011

"Lean Versus MRP" or "Lean and MRP"?

I attend many Lean conferences throughout the year that focus on different areas of the supply chain. Presenters there often state how the concept of material requirements planning (MRP) is outdated and works as a detriment to Lean thinking. In addition, there have been many articles published that discuss the "Lean versus MRP" debate. I recently had an email conversation with Derek Singleton about this very topic. Derek is an enterprise resource planning (ERP) market analyst and writes for the Software Advice website. He has some interesting ideas about the use of software during the planning process, and I'd like to share his thoughts here:

Three Ways Manufacturing Software Can Adjust to Lean Principles

There’s a long-standing debate between manufacturing planning strategies. The debate is between proponents of material requirements planning software -- better known as MRP software -- and lean manufacturing advocates.

The crux of the dispute boils down to whether sophisticated software tools are needed to adequately plan production. Proponents of MRP software believe that today’s complex manufacturing challenges require formal planning tools to get an accurate picture of the production requirements. Lean advocates, on the other hand, argue that these planning tools actually get in the way of accurate planning because they’re too slow and transaction-intensive to pace to actual consumption, or adjust to demand fluctuations.

Three Components to Incorporate in Manufacturing Software

I see three main ways that manufacturing software can evolve to adapt to the demands of lean manufacturing. Each way focuses on bringing lean principles front and center of manufacturing software packages.

1. Make Value Stream Mapping a Core Software Component - One of the most important tools in lean manufacturing is create a value stream map to outline the flow of information and materials in the manufacturing plant. Modeling how information and materials flow through a shop floor will allow manufacturers to more easily identify production bottlenecks.

2. Monitor Cycle Times Intensely - The most important metric to know in manufacturing is how long it takes for materials to arrive on the dock and to leave in a completed product. In order to improve cycle times, these times need to be monitored and tracked. A subset of monitoring and tracking cycle times is keeping track of production status.

3. Locate Key Places to Add or Remove Inventory - While there’s ample functionality in manufacturing software for determining what to stock and how much to stock, there is little functionality to help manufacturers figure out where to stock. Functionality that can tell a manufacturer where to stock will help them figure identify the best places to protect against volatility, which will ultimately help avoid product shortages.

These are a few ways that I can see manufacturing software changing to adapt to the requirements of lean manufacturing. However, I’d like to hear your thoughts. What needs to change in manufacturing software to adapt it to lean manufacturing principles?

What do you think of Derek's ideas? What are your views on the role of MRP within a Lean initiative?

18 comments:

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Drew Locher said...

The issue is not always the software but how companies choose to use it. Just because the software comes with all kinds of 'bells and whistles' doesn't mean a company has to use them. Often there are simpler manual and/or visual approaches that can provide what is needed. Software providers can provide the needed flexibility that users require in this regard to pick and choose the functions that they really need. Large, tightly integrated systems tend to be too inflexible.

Alicia Weir (Recruiter for Food Manufacturing Jobs) said...

Curious to know what software vendors exist to serve small 'mom n pop' manufacturing companies? Everyone talks about delivery of these solutions on a SAAS platform, but many of the professionals I talk to in food manufacturing who work at mid-sized to smaller companies still have trouble with the price point of software packages.

Any ideas?

Alicia Weir

Patricia E. Moody said...

There is more software available, stand-alone, integrated, Cloud vs. local, to management mfg and scm, than they know how to use. So the question is not what MRP or ERP can give the lean folks, the questions are what software will offer strategic advantage, how much does it cost, is it seamless, and how long to install. Final question is how to tackle rusted out infrastructure with bad bills and Part Masters - big problem in bringing mfg back to The Americas - we unplugged the computers, and now we're having discussions about software yes or no. In the past 20 yrs we've seen a strong anti-tech bias build in the Lean Community, a fear factor. I'm with MIT Future of Mfg crowd that believes, as did Steve Jobs, that you can't do global mfg/scm without excellent tech. And we already have it. A Mill Girl at Blue Heron Journal

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Anonymous said...

My main issue is that the whole point of the value stream map, at least in my opinion, is that it forces the manager to walk the gemba. In my mind vsm software is counter intuitive to the lean philosophy, especially in any business trying to change a culture - there is likely enough friction already from managers without allowing an extra incentive to not properly carry out a core lean exercise.
The only way I could see vsm software working properly is if it was purely a method to formalising a handwritten vsm in which case case what would be the point? It's certainly not value added.

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