Enabling LEAN manufacturing on SAP?

by / Tuesday, 28 October 2014 / Published in BLOG

Why are we busy pushing?

Pull your plants for a LEANER Supply Chain?Today!

At one of my supply chain conference meetings I asked the audience if they would prefer to build to forecast and ?push? the product to their customers or wait for customers to ?pull? and then build. To my surprise, not a single person chose the former. Everyone was in favor of building to customer demand.

?So how many of you in fact build to customer demand?? I asked.

There was a deep silence. I remained silent too. No hands went up.

?Why are we this helpless? If we all want to build to customer demand, why don?t we simply do it?? I asked.

?Well, we tried implementing KANBAN,? someone in the audience said. ?But we were simply overwhelmed by the maintenance of the KANBAN cards. We?d lose our cards sometimes. Resizing was a headache. Stock outages were rampant. We always found obsolete parts in the KANBAN?. Someone else mentioned their inability to plan in a pull environment. The list went on and on.

It was obvious that people believed they had only two choices. They could go big bang with pull, also called LEAN, working with their suppliers and customers and smoothing out variability, performing value stream analysis, implementing single piece flow, and so on. This involves a tremendous amount of upfront effort. The other option would be to simply build to forecast and be done with it. There was no path in between.

So despite the fact that no one?s preferred choice was building to forecast, everyone was doing exactly that. The audience consisted of over hundred highly qualified SAP? enterprise users involved in some way or another in managing supply chains for their companies.

It is a standard business practice in most manufacturing organizations to build excess inventory, report it as an asset on the balance sheet, and write it off later at an appropriate time. Until it?s written off there?s always the sales team to blame for the incorrect forecast. Then there are customers who would change their minds at the last minute. There are the micro and macro economic aspects? and the global economy. The list goes on and on.

As ridiculous as it may sound, organizations have developed many excuses for building to forecast and accumulating excess inventory and all the inefficiencies that come with it. It is much easier to build to forecast and be done with it than go the extra mile and implement a system that builds to customer demand.

In a series of five blogs, I?ll explain how you can build to customer demand even if you?re not in a perfect LEAN environment. There is indeed a third option that uses the best of both push and pull techniques. I?ll tell you how to implement this for your own business today. If you?re continuing to build to forecast because you believe there?s no better way, I?ll show you how to move to a LEAN state step-by-step and with no more effort than you?re expending on building to forecast. You don?t have to accept the inefficiencies of building to forecast?there really is a better way.

Please stay tuned for the following:


  1. Push Vs. Pull plan ?Can you plan using push and execute using pull!

If you want to build to customer demand, you will have to plan differently. I will explain how the two are different. To implement a pull system the first thing you need to understand is how to plan in a pull environment. You cannot plan using push and execute using pull.

  1. Managing variability ? It is much easier if you recognize them on time!

Variability is what leads to stock outs or for that matter excess. Your buffers are always sized to service a certain level of variability. There are two distinct ways of managing it. I will discuss the pros and cons of these two options.

  1. The infamous bull-whip effect ? Are you turning a blind eye!

We all know it is bad for our supply chain. But we rarely measure it or take steps to eliminate it. I will discuss ways you can smoothen and attenuate variability so that it is not passed over to components or suppliers.

  1. Return on Investment ? Why should you build to your customer demand!

As obvious as it sounds, it is necessary for us to quantify benefit of a demand driven supply chain. You have to make a business case to justify the change. I will discuss how to evaluate ROI and identify improvement opportunities.

  1. Implementation ? What does it take to implement it in your environment!

I will discuss availability of these solutions on SAP? from Lean Axis, Inc. (www.LeanAxis.com). You can have these implemented even in your own ERP environment.



About Lean Axis: Lean Axis, Inc. (www.LeanAxis.com) is an SAP? products and services company. From LEAN business strategy to its implementation on SAP?, Lean Axis combines LEAN industry experience with SAP? implementation expertise to create solutions that bring real, tangible business value.

Lean Axis welcomes the opportunity to interact with you to explore how we can assist you to be more successful with your supply chain optimization initiatives on SAP?. Please email info@LeanXis.com or call us at 408-802-1636.

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