Continuous improvement remains a high priority across many industries as companies seek to increase flexibility and dampen rising costs. As these efforts mature and expand through an organization, they can take many forms. For information technology professionals in a manufacturing company, it may mean ensuring the company is getting the best use out of its software tools by identifying valuable, unused functionality. For material and inventory managers, it may mean reviewing replenishment methods and tools to be sure that they support Lean principles and fit the current business.
As one of the largest providers of Enterprise Resource Planning (ERP) software, SAP® is widespread in the manufacturing community. However, SAP’s features that relate to consumption-based pull replenishment, namely reorder point planning and part-specific kanban, are often not well known. The consumption-based replenishment functionality in SAP can help companies who are struggling to expand their Lean implementation beyond a handful of manually managed items. Many practitioners will find that even with this capability built into SAP’s core ERP, questions often remain about how best to set the reorder points or size the kanban loop.
Supply chain groups in complex, highly variable environments – with thousands of products and significant demand variability – will likely run into limitations of SAP’s ability to directly support optimal replenishment processes.
There are three known limitations to be aware of:
1. SAP is dependent on forecast and ignores any variability in supply when automatically determin
ing the right Reorder Point level or Kanban size. Both of these aspects can be hurdles, especially for
companies that experience inconsistent replenishment lead times (e.g. suppliers that don’t deliver as
scheduled or internal production times that vary).
2. SAP ERP only supports part-specific kanban. This type of pull is not well suited to high-mix
make-to-order or engineer-to-order companies.
3. Transactional data must be available in SAP. This can be a problem for companies that have
some data in non-SAP systems, or companies who want to create tighter linkage with a customer or
supplier who does not use SAP.
For more information and details on the limitations of SAP when it comes to Lean implementations, you may download our new whitepaper: Configuring SAP to be Lean Friendly or call us directly at 1-800-601-3456 to schedule an appointment to discuss our experience.