ERP Systems Supporting Lean Manufacturing in SMEs

Abstract

Small and medium enterprises (SMEs), more than ever, are being forced to compete in a global economy with increasingly complex challenges. This new economy has forced SMEs to become more responsive and agile in operational, tactical and strategic areas while requiring thoughtful integration between business functions and manufacturing/ production/ service operations. Enterprise Resource Planning (ERP) and Lean manufacturing are two production control methodologies that have been implemented in various ways. In early incarnations, ERP systems were considered a hindrance to Lean manufacturing efforts and were criticized for encouraging large inventories and slower production. The explosive growth of e-business methodologies and the resulting pressure to become nimble and embrace rapid change forced many SMEs to rethink their production approaches, particularly in regard to where they stand in relation to these two methodologies. Over time, ERP vendors recognized the power and advantages of Lean manufacturing and developed ways to incorporate Lean-related features into their software. The main objective of this chapter is to explore how ERP and Lean methodologies can coexist in SMEs. The chapter discusses misconceptions about the fit between ERP and Lean then summarizes differences and synergies between the two methodologies. The chapter emphasizes how linking ERP and Lean methods can lead to competitive advantage then explores key Lean toolsets available in leading ERP systems used by SMEs. Further focus is provided with additional insight on several leading ERP vendors offering Lean-enabled software modules. These include Oracle, TTW WinMan and Pelion Systems.