Lean Manufacturing: What It Is and 7 Ways ERP Can Support Its Success

Lean Manufacturing: What It Is and 7 Ways ERP Can Support Its Success

Lean manufacturing comprises a collection if ideas and practices aimed at minimizing waste while simultaneously improving product quality. It’s often implemented as a complete, systematic approach to running a manufacturing operation. ERP software for manufacturing can help you realize the benefits of lean manufacturing.

The software alone does not guarantee this outcome, however. Rather, when companies deploy ERP software in accordance with well thought-through and company-specific lean practices, results start to emerge. To illustrate how ERP software can support the success of a lean manufacturing effort, we thought it would be worthwhile to highlight the applicability of software to seven critical principles in the lean manufacturing discipline.

What is Lean Manufacturing?

To understand lean manufacturing, it’s useful to know where it came from. Though the words “lean manufacturing” have only been with us since the late 1980s, the lean philosophy actually originated in the early days of Toyota, in the mid-1930s. At that time, car-manufacturing was relatively wasteful and inefficient. It’s not that people weren’t trying to make car assembly lines efficient. The problems stemmed from poor assumptions about how things should be made.

Kiichiro Toyoda, the legendary founder of Toyota, was one to challenge prevailing ideas about how to make cars. He applied a new set of principles to manufacturing. His ideas evolved and matured into what we now call lean manufacturing. Among other things, Toyoda identified seven areas of waste that contributed to high costs, low quality and inefficient operations:

  • Transport, e.g. moving items that are not needed for the actual processing
  • Inventory, e.g. keeping inventory at a minimum, including components, work in progress and finished goods
  • Movement, e.g. wasteful motions of people or equipment
  • Waiting, e.g. delays between production steps
  • Overproduction, e.g. making goods ahead of demand
  • Over-processing, e.g. excessive work due to poor product or tool design
  • Defects, e.g. the work required to inspect for defects or worse, recalling them after shipment

Each of these forms of waste has a negative impact on product quality as well profitability. For example, overproduction can tie up cash in goods that may never be sold. Similarly, stockpiling components in advance of manufacturing not only ties down cash, it can conceal defects that will appear later in the manufacturing cycle. In contrast, the “just in time” approach, which involves receiving components close to assembly time, enables the manufacturer to catch defects in real time.

How Manufacturing ERP Software Helps Manufacturers Avoid the Seven Wastes

Used the right way, manufacturing ERP software, can help you avoid, or at least reduce, the seven wastes of traditional manufacturing:

  • Transport—Software enables you to track the movement of components across the entire manufacturing process.
  • Inventory—Stay on top of inventory and procurement in real time, aligning component delivery with manufacturing operational plans.
  • Movement—Optimize your manufacturing operation using process analysis and planning.
  • Waiting—Organize your production schedule to minimize waiting.
  • Over-production—Estimate demand using data analytical tools in the software, making it possible to avoid over-production.
  • Over-processing—Manage the production process at a granular level to detect and then reduce over-processing.
  • Defects—Use reporting and data visualization to determine root causes of defects, so they can be remediated.

All of these actions contribute to the ultimate ethos of lean manufacturing, which is continuous improvement. The idea that propelled Toyota into one of the world’s largest and most respected brands for quality was that everything can be done better—always. The lean manufacturing practice means constant observation and improvement. With data analytics and other specialized tooling, manufacturing ERP gives your organization this potential.

To arrange a demonstration of Acumatica cloud ERP software for manufacturing and discuss how it can drive lean manufacturing at your business, let’s talk.

6 Reasons It’s Time for Manufacturers to Give Up Excel

6 Reasons It’s Time for Manufacturers to Give Up Excel

Excel has been a mainstay of work environments for some time. While Excel is good for listing data, and to some extent calculating prices, it’s not ideal for a manufacturing business. Excel lacks many features of Acumatica Manufacturing Edition. Today’s manufacturers need maximum visibility into projects, pricing and business processes. Here are six reasons to give up Excel for Acumatica’s all-inclusive solution.

1) Lack of Integration

Acumatica Manufacturing Edition offers seamless integration with Acumatica’s software suites for distribution, financial and customer management as well as project accounting. All your business activities can be coordinated in real time and all data are available in a centralized location. Excel does not offer this functionality on its own. Also, it’s only available for Windows and Mac OS X operating systems, often making compatibility an issue.

2) Pricing Rules Are Hard to Manage

Excel does not enable an effective value-based pricing system. It only supports simple pricing strategies. On the other hand, Acumatica supports multiple costing methods, provides sales integration and enables users to estimate non-inventory items. Production orders can be created from estimates, while the software includes complete accounts receivable and accounts payable systems. And, to mitigate issues with formulas, Acumatica integrates formula validation.

3) Lack of Security

Data security, fraud and corruption are issues with Excel. It lacks user friendliness. Breaking down large data files can lead to losing or misplacing information. Excel does not integrate with other business systems or provide a means to spot mistakes quickly. Acumatica minimizes the risk of human error. It automates the entire fulfillment process, provides a complete audit trail and includes CRM integration and revision control.

4) Tracking Information on Excel Is Difficult

Spreadsheet data are often scattered across multiple sources and locations. Tracing the logic of formulas from one cell to the next can take time that impedes high volume production. Acumatica lets you track production steps, expiration dates and lot and serial data. Users can also manage production order changes and financials from a single location. The software even streamlines integration of sub-accounts and allows for intercompany accounting.

5) Excel Isn’t for Collaboration

Manufacturers often collect information from different departments and corporate locations. Spreadsheets can only be exchanged via email, so tracking all the files going back and forth can be tedious. There’s also a risk of sending out-of-date file versions. The lack of collaborative support can make quick decision-making a challenge. But with Acumatica, all the information stakeholders need is in one place.

6) Excel Doesn’t Grow with Your Company

Acumatica adapts to every step of the manufacturing process and supports project-centric tasks, batches and repetitive manufacturing. Engineering changes are handled seamlessly, from change requests to change notices and approvals. There’s no guarantee an Excel spreadsheet will provide the required accuracy and dependability. Plus, data recovery can be difficult, so Excel does not support business continuity very well.

If your manufacturing company is still relying on Excel, these are just some of the reasons you should consider switching over to Acumatica Manufacturing Edition. Contact us today.

Additional Manufacturing Resources

How Configurators Help Manufacturers Expand Their Product Lines

7 Signs You’ve Outgrown Your Old Manufacturing ERP System

The Best Software for SMB Manuacturers

How Configurators Help Manufacturers Expand Their Product Lines

How Configurators Help Manufacturers Expand Their Product Lines

A product configurator is software that enables you to configure a complex manufactured product. Manufacturing ERP solutions like Acumatica have product configurator modules that port configuration data directly into sales quotes, order management, supply chain management and operational scheduling. Configurators help manufacturers run more efficiently. They have another benefit as well, which is to smooth the process of expanding a manufacturing product line.

How Configurators Work

A configurator lets you establish options and rules for a manufactured product. To take a deliberately simple example, let’s say you make two types of electric pumps: Wall-Mounted and Free-Standing. As shown in the grid below, the Wall-Mounted model can take a 1” diameter hose, but not a 1/2” hose. The Free-Standing pump is the opposite. It can only take a ½” hose.

Wall-Mounted Free-Standing
Takes 1” hose Yes No
Takes ½” hose No Yes

If a salesperson wants to create a quote for a Wall-Mounted pump, the configurator will not allow her to configure it with a ½” hose. That’s a configuration rule. In real life, the rules and options can be extremely extensive and complex, so the configurator is essential for ensuring accuracy and preventing accidental combinations of parts that won’t fit together.

Where Configurators Help Save, and Make Money

Configurators save money partly through avoiding configuration errors. There are many other opportunities to save and make money with configurators. For example:

  • Reduce or eliminate manual processes in the configure-to-order workflow—If you take a close look at your quote-to-order process, you may find manual hand-offs between people and systems. For instance, once the configured product is set for production, a procurement person may have to take the specifications and input them into a supply chain management system. This not optimal. People become more productive throughout the manufacturing process once configurator are in use.
  • Close more deals—Configurators make salespeople more responsive to customer inquiries. In so many cases, the winning manufacturer is the one that is “fastest on the draw” with accurate specifications and pricing.
  • Avoid vendor problems and supply shortages—Having accurate manufacturing specifications and parts requirements in advance enables your team to stay in top of ordering and steer clear of situations where vendors can’t come through with needed manufacturing inputs.

How Configurators Facilitate the Expansion of Product Lines

Configurators facilitate product line expansion in several ways. For one thing, configurators allow product managers to mock up multiple hypothetical versions of a complex product. With sophisticated version management features, configurators like the one found in Acumatica make it possible to show prospective customers or market researchers different editions of a product—determining which will sell the best and make the most profit, before any actual manufacturing is done.

With a configurator, the complete manufacturing team can participate in the development of an expanded product line. For example, with configurations readily available for discussion, every stakeholder can look at proposed new products and offer their input. Issues might include problems with manufacturability, supply chain, shipping and more. If a proposed product is too big to ship or has parts that experts know won’t work in real life, the configuration process will save a great deal of trouble later on. Alternatively, if everyone signs off on a proposed new product configuration, that can lead to productive, profitable additions to the product line.

Adding a configurator could be a good way to add on to an existing ERP system. It could also be the pretext you need to think about updating your legacy ERP. We have worked with many manufacturers on the implementation of configurators. If you want to learn more about how a configurator can help your business, let’s talk.

Additional Manufacturing Resources

7 Signs You’ve Outgrown Your Old Manufacturing ERP System
What Is the Best Software for SMB Manufacturers?
5 Things Manufacturers Need in ERP

7 Signs You’ve Outgrown Your Old Manufacturing ERP System

7 Signs You’ve Outgrown Your Old Manufacturing ERP System

How can you tell you’ve outgrown your old manufacturing ERP system? Chances are, if you’ve implemented ERP for your manufacturing business, you have a system that works relatively well. It gets the job done, more or less. The “or less” part can become increasingly problematic as older systems age, however. Here are seven signs that you’ve outgrown old the ERP.

1) Quality suffers

ERP in manufacturing should give you very fine-grained control over manufacturing processes and material inputs. If a customer returns an order, you should be able to go to your ERP and quickly gain a firm understanding of what went wrong. That way, you can recall any other orders that were shipped with the same same defect or intervene with a supplier that contributed to the problem. For example, if you manufacture a food item, and you discover that a particular lot contains a harmful chemical, your ERP needs to give you complete information on where the chemical came from and who got shipments of the tainted product. Older ERPs can struggle with this level of control and insight.

2) You’re spending a lot to keep it going

Legacy ERPs are like old cars. You love them, but they take a lot of care and feeding. If you notice your ERP management and admin budget climbing every year, even if you’re not adding new functionality, that’s a sign you need to replace it.

3) You need specialized people on staff just for ERP

If you have to keep people on staff because they are the only ones who can administer the ERP and get data out of it for reporting, you need a more modern solution.

4) Inventory is holding things up, tying up cash or both

Modern ERPs like Acumatica give you many nuanced controls over inventory management, including tracking of lot and serial numbers, expiration dates, transaction reason codes, inventory bin locations and item class hierarchy.

5) Integration is clunky or nonexistent

Is your old ERP linked to your accounting system, HR or CRM solutions? If it isn’t, that’s already a tip off that you can do better. Acumatica comes with simple, fast integration with related systems. These enable more efficient business management overall. Alternatively, if managing such integrations is a cumbersome, expensive proposition, it’s time to make a change.

6) Reporting is a chore

How hard is it to generate timely, in-depth reports with your legacy ERP? If reporting is time-consuming or incomplete, you should know that you’re missing out on insights that can make your manufacturing business more competitive and profitable.

7) Security is weak, costly or both

Is your data secure? Do you feel confident you can protect your digital assets from Denial of Service (DoS) attacks? If you’re not sure, or you are being told you will have to spend a lot of money to get secure, you might do better with a modern ERP. A cloud-based ERP like Acumatica is hosted in a secure cloud data center. This doesn’t make it 100% bulletproof—nothing is—but this architecture takes a huge security burden off of your plate.

We have worked with many manufacturing companies on ERP upgrades. If you are curious about how a new ERP could help your business run better, we should talk. Or, to arrange a demo of Acumatica, please visit our website.

Additional Manufacturing ERP Resources

Manufacturing Challenges—How Acumatica Can Help

The Advantage of True Cloud Manufacturing

What Is the Best Software for SMB Manufacturers?

What Is the Best Software for SMB Manufacturers?

What Is the Best Software for SMB Manufacturers?

When we think of manufacturing, we may imagine big factories, assembly lines or fast-moving, automated processes. This is the world of big company manufacturing, however. Not all manufacturers are like that. Small-to-midsized (SMB) firms are often engaged in more flexible, custom manufacturing. This creates a different set of needs for manufacturing management software, prompting the question, “What is the best software for SMB manufacturers?” Acumatica, which offers specialized Enterprise Resource Management (ERP) software for manufacturers, has published a useful whitepaper on this topic. We will explore the subject here.

First, What Kind of Manufacturer Are You?

There is no “best” manufacturing software for two reasons. For one thing, manufacturing software is always adapted for your unique business. It’s better to talk about manufacturing software suites that can be customized for your needs. Also, manufacturers vary significantly in the kind of operations they run.

type manufacturing software

Figure 1 – Different kinds of manufacturers, as categorized by their relative levels of variety and volume – which also correlate to speed and flexibility

The best manufacturing software for SMBs will vary according to a company’s manufacturing operation. The chart shown in Figure 1, which is taken from the Association for Supply Chain Management (www.ascm.org), offers a great way to categorize different kinds of manufacturing business. It plots manufacturers according to the relative levels of variety and volume, which also correlate to speed and flexibility.

A project shop is one with low volume and speed but a high degree of variety and flexibility. A company that makes custom equipment falls into this category. A job shop moves a little faster, but has less variety. Job shops usually sets of similar products, known as “jobs” for individual clients. A batch operations business is sort of like a job shop, but it has less variety and flexibility, but higher volumes and faster speeds. A mass, or continuous manufacturing operation is high speed and high volume, but with low variety, e.g. makers of soda cans or mass-production auto parts.

Matching Software with Manufacturing Category

In our experience working with manufacturers, software selection and configuration flows from a detailed, nuanced analysis of the company’s operations. In this context, operations span the full gamut of the business, not just the shop floor. The analysis should include a close look at the sales process and how the company supports customers after orders have been placed. All of these have a bearing on how manufacturing software is set up. And, the end results will vary based on the type of manufacturing that’s being done:

  • A project shop will likely need manufacturing software that’s configured for in-depth project management and project accounting capabilities. This may mean integrating software modules for manufacturing management, supply chain and project accounting. A software suite that doesn’t offer this should not be considered for a project shop. Depending on the complexity of the project, the software may need sophisticated supplier management and scheduling, e.g. if components are expensive and manufactured abroad.
  • A job shop needs similar functionality to a project shop, but, in our experience, usually also requires more customer relationship management and logistics features. Delivery of finished jobs may be time sensitive, split into multiple sub-orders and so forth.
  • A batch operations business tends to need strong supply chain management capabilities. They’re moving quickly and cannot afford to run out of manufacturing inputs, nor do they want to hold inventory longer than they need to.
  • A mass, or continuous manufacturing operation needs good supply chain management and logistics support in its manufacturing software. These companies also may need effective financial management, particularly if they’re running at lower margins. They’re often managing money as much as they are inputs and end products.

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Getting Manufacturing Software right for the SMB

The challenge with getting manufacturing software right for an SMB is to provide the feature depth they need without overwhelming them with the complexity of an enterprise ERP system. After all, a large manufacturing enterprise might have more IT admins on staff than an SMB has employees. The SMB manufacturing software package has to be scoped right for the customer in question.

Acumatica Cloud ERP is a good option for SMB manufacturers in most cases. It can adapt to the needs of the four kinds of manufacturers. It’s also flexible enough to meet the specific requirements of a given firm—while offering ease of implementation and management that suits the operations of a smaller firm. To learn more about how we can help you with SMB manufacturing software, contact us today.

Additional Manufacturing Resources

5 Things Manufacturers Need in ERP

The Advantage of True Cloud Manufacturing

Manufacturing Challenges—How Acumatica Can Help

5 Things Manufacturers Need in ERP

5 Things Manufacturers Need in ERP

Process management, inventory management and accounting are just a few important features of manufacturing ERP software. By implementing a manufacturing-specific Enterprise Resource Planning (ERP) system, you can streamline business processes while more accurately generating prices and calculating total costs. Acumatica Manufacturing Edition has what manufacturing companies need to operate efficiently. However, for an ERP system to work in manufacturing, it must have these five things:

1. A Way to End to Blind Scheduling

Blind scheduling, i.e. scheduling without reference to actual orders, can lead to excess inventory and inefficiencies in plant operations. To foster efficient planning, ERP software must use real customer orders and demand forecasts to plan purchases and create realistic production schedules. A manufacturer can then assure all materials, products and parts are available when needed, in the right quantities. Coordinating activities, completing work on time and using resources more efficiently can avoid this even as demand changes or unexpected disruptions occur.

2. Ability to Reduce Expediting

In the manufacturing sector, expediting is the least efficient way to run an operation. Costs quickly go out of control as companies pay premium prices for materials to accommodate favored jobs. Acumatica Advanced Manufacturing Edition integrates costing functions in all operational subsystems. An ERP system must also collect/manage cost data for materials, labor and overhead in a production environment, while offering traceability of items, barcode data collection and tracking of labor.

3. Ability to Control Engineering Changes

The demand for product complexity and variety has increased. Therefore, an ERP system must account for complex product designs in multi-level bills of material (BOMs). Detailed routing and support for multiple product revisions are needed to track anything being designed, assembled or fabricated. A revision control system improves coordination, record keeping and tracking of pending changes. With visibility into complete, accurate data, companies can better manage material procurement, production scheduling and field service in the face of engineering changes.

4. Elimination of Outdated Business Information

Manufacturers need the most current information to improve decision making. The visibility provided by ERP software supports the manufacturing of complex, customized products; adoption of new manufacturing methods and technologies; and balancing of supply with demand. Acumatica integrates information across applications while updating data immediately system-wide, via the cloud, and ensuring the required data are always available. It also has dashboards for reporting and viewing key metrics, which provides accurate decision support and insights into trends.

5. Ability to Grow with the Business

Scalability means the same dependable, feature-rich platform is available as a business expands. For example, a scalable ERP system can support your business if it expands globally (i.e. contains tax and regulatory compliance and language translation functions). It should also support significant changes in transactional volume and contain software modules that allow an expansion of services. Otherwise, an entirely different software package may eventually be needed, which can cause problems ranging from data compatibility to learning curves.

Acumatica cloud manufacturing ERP software has everything manufacturers need for production planning, cost management, engineering change control, data tracking and scalability. Learn more by browsing our website or by leaving a message with us today.

Additional Manufacturing ERP Resources

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Technology for the Mid-Sized Manufacturer