Lean for Wholesale Distribution
Lean is quickly becoming the next significant improvement initiative for manufacturing and distribution.
As major manufacturing companies move to lean systems, it will require that wholesale distributors follow to achieve manufacturers' requirements. Adopting lean processes in their own businesses will also benefit distributors through significant improvements in asset utilization, cost savings, and profitability.
The good news for distributors is that lean is relatively easy, fast, and inexpensive to deploy with quick and high payoffs. The bad news is that it takes tremendous discipline, rigor, and cultural change to succeed.
Distributors have to be careful, older ERP systems can inhibit lean activities through wasteful and tedious processes. Newer ERP systems are designed to support lean practices to enable pull and continuous flow for driving out waste.
At its most basic, a lean-focused ERP system provides business intelligence tools capable of providing graphical key statistics on orders, inventory, and costs. ERP systems are the visual source for driving and identifying where distributors are lean or need to be leaned out. This data is absolutely essential for continuous improvement initiatives such as improving workflow, minimizing variation, and improving quality.
ERP systems can also streamline processes. For example, a solution integrated with wireless handheld guns assure correct inventory items are selected and more importantly reduce the steps to pull, pick, or put away inventory by automating once manual processes. Among the hundreds of small processes modern ERP systems can streamline for distributors are automated faxing and e-mailing, receiving confirmations, making collection calls, and generating purchase orders.
They can also assist in minimizing variation and reduction in lead times. This reduction is the key to decreasing inventory while increasing customer service levels. Lean teaches that inventory should be treated like a precious resource, something that wholesalers know instinctively. Great ERP systems optimize inventory levels and drive down replenishment times though effective processes and reporting.
The savings obtainable through lean distribution is staggering. Entire tasks and processes can be eliminated with the resulting revenue used for expansion or taken as straight profit. The right ERP system can provide wholesalers with the tools they need to embrace lean practices and strengthen their businesses. Lean combined with and an effective ERP system, can lead to significant competitive advantages for distributors.
Posted by Kevin Roach Executive Vice President & General Manager, Epicor Software