Lean Scheduling - the missing link

Manufacturers have long since recognized the need for efficiency within their business and for decades have used IT as a tool to assist this

Monday, 5 November 2007

Traditionally manufacturing IT tended to focus on individual areas within the business - accounts, production, sales/after sales, logistics, distribution, supply chain - which led to complex linking requirements between disparate systems which were often never designed with interconnectivity in mind. Increasing global competition has driven the need for a new generation of seamlessly interconnected solutions which effectively allow the entire enterprise to be truly run as an enterprise, and not just a collection of information islands.

Developing alongside this has been the concept of Lean manufacturing with its proven focus on increasing efficiency by removing waste. Yet here's the rub. Traditional Lean techniques have been heavily critical of the very technology that manufacturers also rely on for interconnectivity and visibility. And while the results of pulling out technology typically within the actual production environment may achieve lean improvements this can often be at the detriment of the overall functioning of the business due to a reduction in interconnectivity and visibility.

Challenging the status quo

For years, Preactor International, the world's largest independent provider of planning and scheduling solutions has been challenging the underlying conception that Lean and IT are incompatible. In addition to doing this in practice by delivering Advanced Planning Scheduling (APS) and Finite Capacity Scheduling (FCS) solutions to manufacturers around the world, many also running Lean initiatives, Preactor has also carefully researched the interaction between Lean and IT.

Its most recent research was carried out by the widely respected AberdeenGroup and was based on a survey covering companies in North America, Europe and Asia/Pacific in the Automotive, Aerospace, Industrial Equipment, Metals, Food, Beverages, Hi-Tech and Pharmaceutical sectors. The objectives of the survey were to measure real world achievable benefits from lean manufacturing and also to find the top 20% 'Best in Class' implementers of lean.

The key requirements in the report for a company to be seen as 'Best in Class' were that decision makers needed to know a range of factors which are referred to as 'actionable data'. These include the need to know the current state of the production plan or schedule; the current state of execution against the plan; the current customer demand; and the current status of WIP (Work in Progress).

The most important metrics used to measure benefits were on time delivery - how well demand is connected to execution; throughput time improvement -how well execution matches the schedule; reduction in manufacturing cycle time - improvements in manufacturing process; and improvement in scrap levels - the degree to which quality levels are affected.

Research findings

Among the many research observations the following key findings have been found, all of which overturn the traditional understanding of Lean and IT. At the heart of this is the discovery that a new generation of Lean professional is emerging. Old ideas of IT-free Lean implementations using only manual systems such as Kanban squares have been superseded by a focus on specific KPIs (Key Performance Indicators) such as cost reduction.

The research also found that 'Best in Class' manufacturers are twice as likely to be addressing the pressure to reduce costs by adopting lean scheduling software applications and integrating them with ERP. The outcome of such an approach has been shown to provide genuine supply chain visibility - a tool which brings empowerment to Lean decision makers.

Research recommendations

The research didn't just make a series of observations however. AberdeenGroup, based on its findings in the research report, compiled a list of recommendations for companies wanting to maximize the effectiveness of a modern Lean manufacturing approach. The first recommendation is to standardize Lean scheduling and execution best practices across the organization based on the findings of a continuous improvement team. Secondly, the autonomy of decision makers needs to be maintained by giving them the visibility to make effective decisions. Lean software applications are to be adopted and tightly integrated with ERP. Finally, there is a real need to measure OTD (On Time Delivery), WIP and scrap on a regular basis.

Conclusion

So, far from being a hindrance to Lean as often ascertained, Lean Scheduling not only facilitates 'Best in Class' manufacturing, it also provides a link between Lean and the need for a seamlessly interconnected IT approach to a manufacturing business. Moreover, the value that Lean scheduling plays and its vital close link with ERP enables manufacturers to be both Lean while also retaining complete global visibility of what is happening at any point at any time. This in turn gives manufacturers the best opportunity to remain not just competitive in today's business climate, but to lead and be truly 'Best in Class'.

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