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The Lean Benchmark Report

Figure 7 illustrates moderately improved performance for those companies that use ERP systems in four key areas: reductions in manufacturing and supply chain costs, improved customer service, inventory and asset reductions, and improved product quality. In gen- eral, packaged ERP solutions should provide a more stable platform from which to run extended processes; however, in many Lean organizations, there are unique requirements either within manufacturing or across the supply chain that demand custom or in-house software, often supplementing ERP.

Figure 7: Exceeding Expectations by Software Category

Reductions in manufacturing and supply chain costs

17%

22%

Improved customer service

14%

19%

Reduce inventory and assets required to produce and deliver product

13%

18%

Improve manufacturing and supply chain flexibility

16% 16%

16%

Improved product quality

7%

0%

5%

10%

15%

20%

25%

ERP

Homegrown

Source: AberdeenGroup, March 2006

Driving Operational Performance with Metrics

Much of the success attributed to Lean is based on its unrelenting focus on process stan- dardization and continually looking for ways to improve. Process standardization re- quires performing the same task time and time again, measuring standard performance on that task, and continually investigating ways to improve future performance. This prem- ise is based on the ability to measure, set standards, and work toward improved perform- ance. There are multiple levels of metrics:

First, individual metrics capture task or activity performance. Examples include through- put on a particular piece of equipment or SPC (statistical process control) results on a particular test. Individual metrics are designed based on the objective of one or multiple processes. Second, process metrics are designed to capture performance across a group of activities. Examples include order-to-delivery time and product-to-volume time. Finally, metric clusters aggregate the individual metric and metric sets to link with strategic ob- jectives such as quality, safety, and customer satisfaction.

During the course of this study, we asked study participants which metrics were most important to achieving success. Close to 80% of best-in-class companies cited on-time delivery among the top-three metrics, followed by 52% for inventory terms and 39% for

All print and electronic rights are the property of AberdeenGroup © 2006. AberdeenGroup 17

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