The Facts on Some Commonly Held Misconceptions About Lean

The concept of Lean has been re-emerging in today's manufacturing world as companies strive to compete by eliminating waste and inefficiencies, and better managing their inventories, supply chain networks, planning and production for maximum productivity, profitability and customer satisfaction.

Clearly, Lean Manufacturing provides real opportunities to leapfrog the competition and drive significant performance improvements by incorporating the benefits and implications of demand-driven supply networks and build-to-order supply chains. However, prior to creating a Lean strategy, vision and "to-be" value stream process models, it is important to clear up some misconceptions about MRP, ERP, appropriate Lean applications and the Internet.

1. Lean Cannot Coexist with MRP and MPS

   One of the dominant principles of Lean is that production should be based on demand pulled through the system, and that anything in excess of that demand is considered waste and hence should be avoided. In the past, however, manufacturers used material requirements planning (MRP) and master production scheduling (MPS) to help them push their work through production. At first glance, it would seem that Lean's "pull" and MPS's "push" could never coexist because the purpose for one is a polar opposite of the other.

   Despite the perceived line between the two, a company that adopts lean practices does not have to part with the components of their "push" system. In fact, MRP and MPS can be used with Lean to create a balanced attack towards keeping inventories low and cycle times short. MRP and MPS can actually help automate wasted areas of motion, increase visibility and create avenues of heightened communication. If forecasts can be frequently updated and demand history is broken down into small homogeneous streams, MRP and MPS will be able to assist in the receiving and relaying of signals for procurement and production.

2. Lean Cannot Coexist with ERP

   As a product of MRP and MPS, enterprise resource planning (ERP) is also a target of many lean enthusiasts because of the centralized techno-bureaucracy that exists. They feel the concept of sending information back and forth, as well as the mass amount of reporting, would end up clogging a system that is intended to eliminate waste.

   In the end, as technology becomes better and faster with each passing day, the reasoning behind their logic becomes poorly grounded. Accurate data can be transferred in real time, giving everyone in the organization an up-to-date status report, regardless of time or place. Despite the fact that ERP, in its relation to Lean, was met with great skepticism ten years ago, advances in technology have now made it an essential tool for successful implementation.

3. Lean is Only for Large Corporations

   Smaller and midsized businesses (SMBs) feel pressure to implement cost cutting strategies as well, but think the strategies applied by large corporations are inapplicable to them. They believe the price tag for implementing Lean and the accompanying technology would be far too much for an organization that is more reactive and concerned with the total cost of ownership. This expectation and their need for short-term results often keeps them from evaluating the ROI or long-term benefits of Lean.

   As long as a company focuses on mission-critical areas and improves its core competencies, there should be no reason why Lean Manufacturing and technology cannot benefit SMBs. Lean is a scalable solution that requires a great deal of personnel commitment; however, the technology can be worked in so it is cost effective and manageable.

4. Lean and the Internet Do Not Mix

   Another dichotomy that exists within common understanding of Lean is its apparent conflict with the natural capabilities of the Internet. While Lean tries to create efficient manufacturing by keeping the variety and flexibility of a product limited, the Internet and technology enable companies to provide the variety and flexibility customers desire.

   Because of this, the Internet and IT are sometimes labeled as inhibitors of Lean - but nothing could be farther from the truth. The two are actually great facilitators in helping to reduce and eliminate a large amount of waste, whether on the shop floor or in customer/supplier management processes. The Internet and IT allow Lean principles to be implemented, both directly and indirectly, throughout the supply chain, as communication and visibility are created on a real-time basis. With suppliers on board, the role that the Internet plays for Lean and its "pull" principle is clear. Demand driven manufacturing is triggered through customers on the Internet on a real-time basis, allowing everyone one involved in the supply chain, even the outsourced suppliers, to receive updated information on the materials and parts required.

Glovia Services, Inc. is a wholly owned subsidiary of Glovia International, Inc., a subsidiary of Fujitsu Limited (Tokyo Stock Exchange: 6702), one of the world's most experienced and solidly backed providers of extended ERP solutions for businesses of any size-from small and midsized companies to global enterprises. Glovia Services offers GSInnovate web-based manufacturing software from pluggable point solutions to a comprehensive on-demand ERP suite that provides for the unique needs of engineer-to-order, make-to-order, high volume and mixed-mode manufacturing environments through comprehensive, end-to-end functionality for the entire product life-cycle. Headquartered in El Segundo, California, Glovia Services has helped manufacturers to cut costs, improve productivity, and meet customer demands for over 30 years. For more information please visit www.gsinnovate.com, or call 310-563-8700 or 877-474-8896 (toll free).

Fujitsu is a leading provider of IT-based business solutions for the global marketplace. With approximately 175,000 employees supporting customers in 70 countries, Fujitsu combines a worldwide corps of systems and services experts with highly reliable computing and communications products and advanced microelectronics to deliver added value to customers. Headquartered in Tokyo, Fujitsu Limited (TSE:6702) reported consolidated revenues of 4.6 trillion yen (US$47 billion) for the fiscal year ended March 31, 2009. For more information, please see: www.fujitsu.com.

Glovia Services strives to equip manufacturers with the expert knowledge and best practices gained from our own manufacturing and technology experience. The GSInnovate Industry Insight Series provides manufacturers with the latest resources to effectively manage their business on demand.