BLUEBOX BUSINESSES SYSTEMS & THE LEAN MANUFACTURING OPERATION
There is no doubt that the business software industry is fraught with anagrams, jargon and terminology. This can result in a lot of confusion, debate and interpretation as to the meanings of certain concepts. Combine with this the manufacturing specific names and terminology and one can have a tough time holding ones own in a conversation involving system specialists, engineers and business analysts in a manufacturing environment.
Lean manufacturing is one of those terms that along with JIT, Kanban, Kaizen etc. has very specific meaning that is not necessarily fully understood by business system providers who purport to offer them.
With businesses continuously looking for ways to optimise their operations, make them more efficient and reduce running costs, it is little wonder that the idea of “lean” manufacturing would attract manufacturers attention when referred to in marketing material or technical specification documentation. What do they mean by 'lean manufacturing', and who does it apply to and when should it be implemented? What software providers need to be tested on is whether their understanding of the terminology they punt is accurate, and whether they can 'deliver the goods' to an operation wanting to run a lean environment
Why Organisations Want to be Lean
Although the terminology might be considered to be relatively new when looking at the history of the industrial age, the concept isn't really new. Every organisation has at some point or another intended or attempted to make their operation as efficient as possible. From Henry Ford, the Western Electric's Hawthorn Works experiments conducted by Elton Mayo, and in every organisation before and since, people have tried to optimise manufacturing processes one way or another. What organisation wouldn't strive to be more productive and less wasteful, aim for shorter cycles or production time, increased inventory turnover and improved responsiveness to customers? The basis of a business striving to be productive is a recognition that lowering costs and increasing profit is a necessary goal. In times of stiff competition or struggling economy, there tends to be a reinvigorated focus on getting leaner, being more efficient and more profitable.
Although Lean Manufacturing traditionally had the greatest area of impact in repetitive manufacturing operations, with time, even discrete manufacturing businesses have seen the benefits of lean environments and adopted many of their principles. This had lead to the refining and adaption of the lean philosophy to a variety of different industries and business types. Ultimately however, the goal remains true to original intentions; to convert organisations into more effective, less wasteful, more responsive and more profitable enterprises.
The Lean Manufacturing Philosophy Understood
Lean manufacturing has its roots in the 'Demand Flow' and 'Just in Time' disciplines which were popularised in the West in the last two decades of the 20th Century. Similarly it is not so much a business system as much as a management philosophy; a means of viewing and managing a manufacturing organisation that can be quite different from other business approaches. A lean approach can, and arguably should, change the entire culture and operation of a manufacturing company. In fact, the vast majority of Lean implementations involve conversion of existing manufacturing facilities, not just their management style and processes. What separates other manufacturing philosophies from Lean Manufacturing is it's focus on waste reduction (namely reducing: waiting times; transportation costs; processes; over-production; inventory; motion and scrap). It could also be viewed as a mission with a specific purpose, but without a conclusion . The goal is continuous improvement and greater leanness. Once internal processes have improved and settled, the next step is often to extend Lean processes and techniques upstream and downstream in the supply chain to suppliers and customers.
The key lean manufacturing principles could be described as:
Getting it 100% right, first time (often described as the quest for zero defects) and revealing & solving problems at source;
Waste elimination including all activities that do not add value & safety nets, maximize use of scarce resources, and outsourcing those areas of the business that can be delivered better, cheaper and/or faster;
Continuous improvement, reducing costs, improving quality, increasing productivity and information sharing;
Pull or demand driven process flow:, where products are “pulled” through customer demand, not “pushed” at the production end;
Overall Inventory Reduction, only obtaining raw material as needed, moving material through Work in Progress with minimal restocking and shipping Finished Goods as quick as possible on completion;
Production Flexibility, being able to produce different mixes or greater diversity of products quickly, without sacrificing efficiency at lower volumes of production;
Developing long term relationship with suppliers through collaborative risk sharing, cost sharing and information sharing arrangements.
Lean is basically focusing on getting the right things, to the right place, at the right time, in the right quantity while minimizing waste, being flexible and open to change using tools such as constant process analysis (kaizen), "pull" production (by means of kanban) and mistake-proofing (poka-yoke).
The BlueBox ERP Base Module - Facilitating a Lean Manufacturing Philosophy
The increasing availability of effective business systems has without question had a positive effect on the ability of organisations to implement a Lean Manufacturing philosophy and assist in systemising these principles and tools. Although some Lean supporters claim that Enterprise Resource Planning (ERP) and planning and scheduling systems are generally old fashioned or even detrimental to a manufacturer trying to get lean, in actual fact, nothing about BlueBox ERP conflicts with the Lean philosophy. BlueBox Base ERP is actually designed to function according to lean principles in it's default state!
Restricting a business system to a single business philosophy would be a very limiting move for a software development business unless it was operating in a vertical space. ERP systems should, after all, not dictate how businesses function, but should allow a level of flexibility. Indeed, many businesses today have recognised that they may need a mix of, for example, sales driven and forecast driven manufacturing styles to anticipate demand, keep stock flow constant and remain in business. Thus, although this document deals with elements of the system which may be specific to Lean operations, other configurations of The BlueBox Business System will support different business philosophies and manufacturing styles (fat, lean, process, repetitive, discrete and hybrid), and has sophisticated Material Resource Planning (MRP), sales forecast and backflush functionality which purists might say has no place in a lean operation. (We would disagree in light of a lean philosophies aspirations of simplifying processes and reducing unnecessary time and motion. Anticipating demand through systems prompted by previous trends for example, where supplier lead times are lengthy, can be the difference between your survival versus that of competition.)
Probably the most basic requirement a business with true lean aspirations has is that of a business system. Certainly there are a multitude of even medium sized enterprises that run day to day on either a manual 'system' or a mix of legacy and outdated and aging systems; but it is doubtful that they would be competitive with a business with a central, fully integrated and end-to-end ERP system. How else would one even begin to track ones progressive leanness? It is on this type of foundation that the BlueBox provides functionality that supports the the lean operation.
Below are just some of the ways that BlueBox does this:
Demand Driven Stock Movement & Projects
Central to the Lean manufacturing philosophy is the idea of a 'pull' or demand driven process flow, where products are “pulled” through customer demand, not “pushed” from the production end of the business. Elimination of excess inventory is the goal here. The BlueBox Base ERP, with it's default configuration operates on exactly that principle. Stock movement processes are consequently an important focus area, as are any stock holding vehicles. At it's most basic Sales Orders call for stock from Finished Goods, which prompts Works Orders, which calls for stock from Raw Materials, which prompts Purchase Orders. Stock is literally moved through the business from a single dashboard (Stores Dashboard) which in turn is prompted from order fulfillment needs, or bin level topup requirements.
The concept of the BlueBox project is of importance here as this is the primary vehicle controlling and avoiding inventory bloating in the system. Projects are one tool at the heart of our system which can ensure that every item of stock in the business belongs to a demand generated order. The impact of this might take a while to sink in, but in essence it means that a business can have an excess inventory of zero!
Expense Type Bin Links
Time wastage is reduced dramatically through the implementation of a few critical devices within the BlueBox Base which remove the need for decision making. One of these devices takes care of a few things. The BlueBox Expense Type Bin Links section of the system dictates where stock lives within the business, facilitating routing of stock through the system and business, and saving time by prompting users where to send stock from receiving, and whether to route it through, for example quality control. Users, therefore don't have to waste time deciding where stock should be sent to, but are still able to take the initiative of overriding system suggestions in unusual situations. Leanness is supported through both saving time and simplifying the processes needed to route stock.
Bin Top Ups
Setting bin levels on stock might be considered by some to be contrary to the ethos of a kanban oriented, lean manufacturing philosophy, in respect that. This however is not the case, for two reasons. Firstly, minimum bin levels can continually be pushed down as the business becomes leaner and leaner (right down to one), as can reorder levels, where maximum bin levels can be set to ensure that stock never exceeds capacity. Secondly, bin levels facilitate the “pull” model by acting as the catalyst for stock movement and order (works or purchase) prompting within the system. Properly managed bin levels and bin 'topping up' greatly improves the efficiency of the system.
Dynamic Bills of Material
Production flexibility, and being able to produce different mixes or a variety of products quickly, without sacrificing efficiency at lower volumes of production, is one of the core tenets of being lean. To this end, BlueBox has ensured that every manufactured item has the ability to be set to have a dynamic Bill of Material (BOM). This allows not only the substitution of different raw material types on the fly, but also allows the flexibility of complete reinvention for once off production requirements.
Dashboard Driven Works and Purchase Order Creation
Systemising areas of a manufacturing business where human intuition or calculations have traditionally played a role is a necessity. There is no place in a lean manufacturing organisation (or, we would argue, in any manufacturing organisation), for a buyers 'gut feel' or “knowledge of the business” determining what is to be procured and in what volumes. Likewise, demand, not human predictions, should be the driving force behind determining what should be manufactured. This is the basis for the logic behind the BlueBox dashboards that drive both the production and procurement processes. The information feeding these dashboards comes from a combination of data in respect of raw material and finished goods stock on hand in the business, back orders and current bin levels, and essentially tells the buyer what to buy and the production manager what to manufacture. The value of this is again reducing time wastage, time being a very expensive resource and one of the core wastes that lean manufacturing aims at reducing; removing the danger of over or under ordering, or manufacturing; improving information sharing and reducing costs.
CRM & SRM
Effectively managing information sharing has a number of benefits. Sharing appropriate data with customers and suppliers not only entrenches the relationship, but also has efficiency spin offs where account information, order information, job progress and status information are effectively communicated. Browser based systems such as the BlueBox are obviously perfectly suited to disseminating this kind of information and consequently reaping these kind of benefits. Add to this the ability to produce event driven communications such as e-mail and sms notification, and one has a very powerful tool which incorporates the up and downstreams of the supplychain into the very heart of the operation.
The BlueBox has put a lot of energy into creating the perfect SME manufacturing suit, fully embracing the philosophies of the Lean Manufacturer and allowing an organisation to maximise efficiency, reduce time wastage to a minimum and, probably most importantly, reduce inventory through using kanban, demand driven approach.
Commitment to providing this type of solution works comfortably in conjunction with our provision of more traditional manufacturing solutions and custom solutions, where our broad experience in the business system world allows us to adapt our system to customer needs.
For more BlueBox White Papers, Newsletters and other Resources, please visit www.blueboxonline.com or e-mail Carl Verster at email@example.com