Lean Principles in ERP Practice: Maximization of Manufacturing Efficiency


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In today’s manufacturing environment, enterprises must operate their businesses with an eye toward becoming evermore “lean and mean", as well as taking full control of every aspect of the system. This means bringing greater efficiencies into their job shop or make-to-order manufacturing operation. However, such gains in efficiency are not easy to achieve in long-entrenched production operations, and are often the result of either a complete overhaul of a total manufacturing environment or a more nuanced approach to improvement in specific parts of the process. In either scenario, the manufacturing system is analyzed for nonproductive operations, places where wasteful functions in the manufacturing process can be leaned of their inefficiencies. These nonproductive aspects are the focus of change in the system, and the central point where enterprise resource planning (ERP) meets lean objectives.

For example, lean configurations in an ERP operation realize greater efficiencies in areas such as set-up time, labor costs, and materials handling. In set-up, the problem has always been the time it takes an operator to set-up and break-down job-specific machine tooling rigs. Employees often waste significant (yet valuable) time searching for tools or preparing for multiple nonrepetitive set-ups on a single machine. With lean principles in operation, resource planning means that tools are readily accessible and in place on shadow boards, and when possible jobs with similar set-ups are scheduled together to reduce diverse set-ups (and their attendant break-downs).

The efficiencies gained in the ERP produced reduction in set-ups, and other shop floor time management processes, means direct labor costs are also maximized. Through the use of time-clock devices such as graphical user interfaces (GUI’s) to account for time spent “on the clock" and nonproductive time spent “off the clock", time itself is considered a valuable resource of the enterprise, and wasted in-direct labor costs are monitored and reduced. Indeed, direct versus indirect labor costs are significant considerations of manufacturing efficiency usually brushed aside by management. The traditional thought has been that wasted indirect labor time is simply an inevitable part of the manufacturing process. ERP no longer holds this position as a given. In a properly designed and implemented ERP operation, using robust ERP software, indirect labor is reduced and direct labor time recovered instead for the benefit of maximized production.

Finally, as ERP operates in alliance with lean pull-production principles, the maintenance of reduced material inventories is necessary to achieve just-in-time (JIT) goals. In the lean ERP configuration, especially one utilizing lean cell production techniques, there is less handling of material. In other words, when the job is started on the shop floor, production material flows through the plant rather than sitting idle for any significant length of time. Inventory cycles through rapidly and depreciation of unused material is reduced. In short, in a leaned ERP system, material moves from station to station, and then right out of the shipping door in one continuous movement. Therefore, with the greater efficiencies found in leaned labor costs, set-up times, and materials handling, a fully implemented ERP program enhances both shop floor manufacturing productivity and the positive return on the ERP software investment.


Dusty Alexander is the President of Global Shop Soultions. Global Shop Solutions is the largest privately held ERP software company in the United States.

Copyright 2007 - Global Shop Solutions. All Rights Reserved Worldwide. Reprint Rights: You may reprint this article as long as you leave all of the links active, do not edit the article in any way, and give the author name credit.


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