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Trends in Production Control
ERP Support for Pull Production
Daryl Powell,Researcher & PhD Candidate
Department of Production and Quality Engineering,Norwegian University of Science and Technology
SINTEF Operations Management
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Outline
• Enterprise resource planning (ERP)
• Lean & Just-in-Time: Pull production
• The lean-ERP paradox
• A research framework for ERP in lean production
• Researching ERP support for lean production
• ERP support for pull production: A capability model
• Conclusion
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Enterprise resource planning (ERP)
Vollmann et al. (2005) Mabert et al. (2001)
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Lean & Just-in-Time: Pull Production
• 3 fundamental principles ofJIT (Sugimori, 1977):
– Levelling of production(Heijunka)
– One piece production and
conveyance (Single pieceflow)
– Withdrawal by subsequentprocess (Kanban)
Liker (2004)
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Levelling of production: Heijunka
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One piece production and conveyance:
Single piece flow
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Withdrawal by subsequent process: Kanban
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Customer order decoupling point
PROCURE PRODUCE ASSEMBLY SALE
FORECAST
S U P P L I E R
C U S T O M E R
MAKE TO STOCK
ASSEMBLE TO ORDER
MAKE TO ORDER
ENGINEER TO ORDER
Customer order decoupling point
ALTERNATIVES
Cost efficiency andstandardisation
Customization
ORDER
Kanban
Kanban for MTS / ATO,but what about MTO / ETO?!
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Paired-cell OverlappingLoops of Cards with Authorisation:
POLCA
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Why POLCA?• Kanban requires a minimum amount of inventory to be held
between each workstation – LARGE NUMBER OF PRODUCT
SPECIFICATIONS?
• Custom designed products? – NO PREDIFINED FINISHEDGOODS.
• POLCA for material control in manufacturing environments withhigh variety or custom-engineered products
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What is POLCA?
• Paired-cell Overlapping Loops of Cards with Authorisation (POLCA)
• A Hybrid ”Card-based” Push-Pull Strategy
• Controls material flow through the factory (for minimal WIP)
Order release
(from HL/MRP)
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How is POLCA different from Kanban?• POLCA cards are paired-cell specific, kanban cards are product
specific
• POLCA cards are used to control material movements betweencells, not within cells
• POLCA cards are a capacity signal, kanban cards are an inventorysignal– POLCA cards signal production can start if there are orders waiting,
kanban cards signal that production must start regardless.
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Back to Lean & ERP…• Lean and ERP consistently rated as the most important
strategies for achieving competitive advantage in
manufacturing operations (Carroll, 2007)
• In lean, information technology (IT) has often been
viewed as non-value adding activity (Sugimori et al.,1977)
• Modern IT can be tailored to support lean production(Riezebos et al., 2009)
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Pull vs. Push: The Lean-ERP Paradox
• Lean and ERP have emerged from fundamentally differentapproaches to production…
• …Potential synergy in combining the two?
Powell and Strandhagen (2011)
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(Perceived) Benefits?LEAN PRODUCTION
• Lead time reduction
• Inventory reduction
• Productivity improvement
• Quality improvement
• Customer service improvement • Performance improvement!
ERP SYSTEMS
• Lead time reduction
• Inventory reduction
• Productivity improvement
• Quality improvement
• Customer service improvement • Performance improvement!
But ERP systems used with “traditional” operating practices:
• Excessive planned lead times = Increased inventory • Large lot sizes = MORE inventory
• Just-in-case safety stocks = EVEN MORE INVENTORY!!!
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A research framework for ERP systems
in lean production
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Researching ERP Support for lean
Production
• Action Research (Norway)– Simultaneous implementation of ERP
and lean practices
• Multiple Case Study (Netherlands)– ERP support for pull production in SMEs
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ERP Supportfor Lean
Production
ValueCRM
Automation of
necessary non-value addingactivities (NNVA)
Value stream
Process modellingSource of WIs
Information sharingacross the supplychain
Flow
Synchronized data flowLine balancing
Demand levelling
Rate-based planningDecision support
PullKanban
Production levellingJIT Procurement
PerfectionRoot-cause analysisVisual management
Performancemeasurement
ERP support for lean production
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ERP Support for Pull Production:Case Study Research, NL
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Overview of Case Studies
Company AgriCo
Industry Machinery Mechanical Electronics Mechanical
Product PotatoHarvesters
BespokeHinges
PCBs StepLadders
Employees 100 30 120 150
Turnover €20M €4M €20M €42M
ERP SystemMicrosoftNavision
Exact Globe SAP Infor
Pull System Kanban Polca Polca Kanban
CODP ATO ETO/MTO ATO MTS
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Development of a
capability maturitymodel for ERP support
for pull production
• aims to aid companies in benchmarking
the maturity of their operations relativeto industry best practice
• Used to compare the findings from
each of the cases
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Challenges and solutions
C: No kanban functionality in the ERPsystem.S: Functionality added to the ERPsystem for printing of kanban cards.
C: Basic ERP System is “only an accounting system”.S: Bolt-on “PROPOS” system developed to visualisereal-time requirements on the shopfloor.
C: The ERP system is too static, andproposes to build batches based on
historical batch sizes.S: Modification made to SAP withregard to parameterization and logicused for the calculation of batchsizes.
C: ERP system is unable to effectivelylevel the demand.
S: Periods of free capacity are utilisedto build up stock for promotions byusing temporary (green) kanbans.
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Conclusion & Further Work• Findings suggest a range of potential ERP support functionality for
lean production principles
• Our CMM highlights examples of ERP support functionality for pullproduction
• Further work should apply the CMM to demonstrate capability indeploying ERP-enabled pull production in Norwegian industry.
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Thank You
Questions?
email: [email protected]