ERP to identify waste and increase business productivity

by Aaa Cas Auditors & Business Consultant in Dubai

Identify wastes in manufacturing companies

In the Lean philosophy, wastes are called muda , a Japanese term that indicates all those useless activities that do not generate value.

In manufacturing companies, such as the shoe factories we work with, there are generally seven types of waste related to:

time
overproduction
stocks
transport
actions
defects
processes

Integrated ERP software allows you to identify and reduce them by increasing the overall efficiency of the company, let's see how.

Unproductive time

How many times do you have the situation of having wasted too much time completing a task ? Just the fact that you think you have "wasted" time is emblematic: it means that you yourself are the first to perceive that that task is not really producing value. It is probably something you know you have to do because the management structure of the company requires it, but that does not affect the productivity and profitability levels of the company.

In this case the solution is to automate: with the help of an integrated ERP, in fact, it is possible to entrust the IT system to carry out those repetitive tasks that do not require human ingenuity. Like? We talked about it in this article on business automation.

Then there are the downtime, that is all those periods in which for some reason you cannot work on your duties. Downtime can occur when a production plant becomes saturated, when materials are not available, when departments are not well synchronized with each other. Even these wastes of time, however, can be reduced by using the production planning functions integrated into modern ERP systems.

Inventories due to overproduction

Overproduction generates inventories, that is, products manufactured but remained unsold: products that have a cost, but not a value. Indeed, in most cases it is necessary to pay to get rid of them and to be able to free the warehouses.

Overproduction occurs when production processes are disconnected from actual customer demand : perhaps they are based on historical data or statistical forecasts, but do not directly depend on the orders received. Why is this happening? Usually out of fear of failing to meet customer orders on time, some manufacturing companies tend to produce early. In reality, thanks to the integration between CRM, ERP and order collection software, planning production according to a pull and non- push logic is possible and desirable.

Excess stocks

For excess stocks, the discussion is similar to that of overproduction: for fear of running out of raw materials and having to block production, many companies order excess material ending up with warehouse stocks that take up space, have a cost and do not transform in value. To avoid this, it is necessary to manage the logistics , production and sales processes in an integrated manner.

Unnecessary transportation

Moving materials and semi-finished products from one department to another is itself a process to be taken into account in the value chain and must be optimized like all other processes. The integrated management of the production processes through the ERP allows you to move the goods within the departments according to the logic of just in time that is, making the materials arrive at the right point at the right time, with the least possible effort.

Unnecessary actions

This is perhaps the point where manufacturing companies are most virtuous: the economy of movement of machines and people.

Production defects

The errors cannot be cleared, but they can certainly be kept under control as long as the cause is known: for example, they can derive from malfunctioning machinery, sub-optimal working conditions and tasks assigned in an unclear way.

By analyzing the defects found in the final products in relation to the production process, it is possible to identify which are the most critical phases and optimize them.

Inefficient processes

Here we enter the field of Business Intelligence: monitoring and analyzing processes through an ERP system allows you to identify which are the best performing and which are the least efficient and to plan the investments necessary to improve them.

To find out how our ERP Software solutions in UAE can help you improve the productivity of your company, contact us by filling out  this form  and we will arrange a free interview.