ERP DRP Lean Manufacturing are not compatible.
Below is a MRR and PLR article in category Business -> subcategory Marketing.
Why ERP, DRP, and Lean Manufacturing Aren’t Compatible
Introduction
Over the last decade, many companies have invested heavily in Enterprise Resource Planning (ERP), Distribution Requirements Planning (DRP), and Advanced Supply Chain Planning solutions (APS). Their motivations range from merging IT systems after acquisitions to enhancing capabilities for specific supply chain strategies. Yet, the implementation often leaves businesses with rigid IT solutions based on outdated principles from the 1960s, incompatible with today’s competitive supply chain demands.This article explores why current IT solutions fail to support efficient supply chains and how a new planning approach is essential for realizing the benefits of Lean Manufacturing.
The Problem with Forecasting
Most ERP/DRP systems support business processes like finance and HR but fall short in planning tools. These systems often rely on a basic Material Requirements Planning (MRP) engine, sometimes supplemented with Advanced Planning Systems (APS). However, the core issue is their dependence on forecasts, which are at best 70% accurate. APS systems offer slight improvements?"but at a significant cost?"and fail to deliver promised outcomes. The reliance on flawed forecasts results in unpredictable inventory levels, costs, and inefficiencies.Where 'Push' Meets 'Pull'
As businesses struggle with ERP/DRP systems, they recognize increasing customer demands for flexibility and responsiveness. Many companies adopt Lean Manufacturing, which focuses on 'pulling' inventory based on customer service needs. This method clashes with the 'push' signals of ERP/DRP systems, causing friction and increasing resource demands in planning and purchasing departments. This mismatch can negate the cost benefits of Lean Manufacturing.A 'Back to Basics' Approach
New IT planning solutions often focus on complex statistical models to improve forecasting, but this approach is misguided. MRP planning logic is not only inappropriate for most batch manufacturing businesses but also harmful to their profitability and growth. We need to reevaluate supply chain best practices and adapt IT tools accordingly.Lean Planning: Complementing Lean Manufacturing
For the past 20 years, much attention has been on Demand-Driven Lean Manufacturing. Yet, planning tools to support Lean principles are lacking. Lean Planning bridges the gap between traditional forecast-driven systems and demand-driven Lean Manufacturing. It leverages existing IT investments and aligns with best supply chain practices.Lean Planning differentiates between Conditioning (building and agreeing on a plan) and Execution (managing demand-driven orders). By separating the two, it avoids the inefficiencies typical of MRP logic.
Conditioning: Build and Agree on the Plan
Conditioning involves creating a capacity and inventory plan aligned with Sales & Operations Planning. Lean planning requires segmenting SKUs based on forecast volumes and demand variability, applying appropriate replenishment rules, and calculating inventory targets.Execution: Managing Demand-Driven Orders
Once the plan is set, Execution focuses on raising and managing orders in line with it. Lean Planning provides tools for generating orders suitable for various replenishment techniques and configuring current MRP systems to mimic demand-driven tools.Orchestr8 Lean Planning
Orchestr8 Limited offers web-based Lean Planning software solutions to support demand-driven supply chains in environments dominated by ERP/APS systems.Orchestr8 Modules:
- Orchestr8: Supports Lean Planning by generating inventory and capacity plans, managing SKU segmentation, and facilitating Sales & Operations Planning processes.- Oper8: Manages orders based on appropriate replenishment rules, allowing planners to handle more SKUs efficiently.
- Simul8: Offers a workbench for simulating business cost models to evaluate planning strategies.
- Collabor8: Provides a web portal for reporting, metrics, and issue tracking, enabling a comprehensive view of supply chain information.
- Configur8: Allows dynamic configuration of Lean Planning modules to support complex client supply chains and interfaces with major ERP/DRP products.
For more information, contact: [sales@orchestr8.com](mailto:sales@orchestr8.com) or visit [www.orchestr8.com](http://www.orchestr8.com).
You can find the original non-AI version of this article here: ERP DRP Lean Manufacturing are not compatible..
You can browse and read all the articles for free. If you want to use them and get PLR and MRR rights, you need to buy the pack. Learn more about this pack of over 100 000 MRR and PLR articles.