It is not exactly breaking news that, due to the need for driving down costs and increasing efficiency, manufacturers (if not enterprises of all kinds) are increasingly subject to massive pressures. These pressures, however, often invalidate the traditional materials requirements planning (MRP) batch- and push-based production planning and associated economies of scale product costing approaches.

This is Part One of a multi-part note.

For this reason, there has been increased interest in the lean manufacturing support philosophy. To understand this trend, one need look no further than the enterprise resource planning (ERP) systems of the 1990s, which, unfortunately, are cognitive (i.e., sending well-devised “plans of mice and men”, which, without feedback from the real-world would “often go astray”) rather than reflexive in nature. In addition, there is a host of other well-publicized MRP-related problems, such as complex bills of material (BOMs), inefficient workflows, transactions and activities that add no value, and poor (typically manual) data collection. It is not surprising then that companies struggling to serve their customers using purely traditional planning and costing methodology are often unable to meet the demands for agility and responsiveness that consumers at the end of the supply chain are requesting.

Consequently, for some time now, almost every industry publication, consultant, analyst, and industry pundit has been touting the lean approach as the panacea to whatever troubles manufacturing and distribution across the globe. The early revolutionary efforts of a handful of manufacturers have indeed established that lean works, especially in terms of increasing customer satisfaction levels (i.e., ensuring they get exactly what they want, when they want it), decreasing costs, and improving responsiveness via shorter lead times and improved quality and consistency.

Nevertheless, manufacturers today face additional challenges in the form of increased customer expectations, shortened product cycles, product proliferation, foreign competition, and, occasionally, a declining economy. To make things worse, decreasing product life cycles mean that manufacturing and distribution are increasing in complexity, which, for the manufacturer, translates into a need to better manage customer demands and expectations and respond accordingly.

Hence, while several years ago most prospects inquired tentatively about lean capabilities, now they seem to be increasingly requesting these. An ARC Advisory Group’s strategy report from 2004 suggested that “today 36 percent of US manufacturers and 70 percent of UK manufacturers are using lean as their primary improvement methodology”, which should show how prominent lean thinking has become. Many of these companies may not yet be involved in full-blown lean manufacturing, but they are at least using some lean tools and principles as their primary improvement methodology.