I had breakfast with a team of folks from one of the big enterprise software outfits while I was at the Lean Accounting Summit – they got to pick my brain on how to better incorporate lean into their ERP offering, and I got a free plate of bacon and eggs. I got the better end of the bargain.
While the prospects of them making the fundamental changes needed to really understand and support lean are slim, I have to give them credit for wanting to talk to me. They specifically looked me up at the Summit because of the reputation both Kevin and I have earned for being frequent and vocal critics of ERP, in fact, asked me point blank why lean advocates are so down on information technology.
My answer – it is not information or technology lean folks rail against – it is numbers. Far too often the two are assumed to be the same. In fact, lean is all about information. Having lots of it, widely disseminated, is necessary for success and to the degree technology helps accomplish this, so much the better.
The problem with most information systems is that, rather than empower people on the shop floor to make better decisions, they are used to empower executives, accountants, buyers and schedulers to make decisions far away from the scene of the action. They do so by attempting to boil the reality of the factory down to numbers, and thereby creating a theoretical picture of things. These managers and technicians then make critical decisions based on the theory of the factory, rather than the reality.
Not all numbers are bad or wrong. The customer ordered 26. The machine produced 31. Those are facts and make for important information. It is the derived information to substitute for the lack of facts that create the problem. Standards, budgets, forecasts, ratios, averages, and everything coming from the realm of statistics are dangerous, and describe theory instead of reality.
An old boss of mine had a plaque on his desk that said, "There are few things in life more tragic than to see your beautiful theories murdered by a gang of brutal facts." It was quite true, but the overwhelming majority of poor decisions are rooted in having made them based on such theoretical information. Bad management is too often rooted in holding people at the point of the action accountable for the gap between reality and the theory. Things didn't happen the way the forecasts, standards and averages implied they would – and it is the shop floor's fault.
There is nothing wrong with blasting the accurate, known facts far and wide throughout the organization. That is good, common sense management. It is plugging in calculated or derived numbers where facts do not exist, or assuming the few hard facts paint the whole picture that is wrong. This, of course, is why lean companies focus on making decisions at the gemba and empowering people closest to events. No computer and no arithmetic are good enough to define reality for people removed from the action, and attempts to overcome this basic principle, or management operating under the illusion of knowing reality from some remote location, lead to nothing but trouble.
Gary Epp says
Great post, Bill. Reminds me of a quote from former Vietnam POW, Admiral James Stockdale, hangs over my desk…”Never confuse the faith that you will prevail in the end with the discipline to confront the most brutal facts of your current reality.”
David Hallsted says
Amen Brother!
My boss was always being beaten up in meeting because the monthly and daily reports from the ERP were never accurate. I finally put together a three page visual of the monthly report, the daily report, and the daily standup board to show folks that the most accurate information was the daily standup board out in the area where the work was being done.
The ERP pushes work out to numerous folks who simply don’t see it or can not keep up with it or are doing work arounds to make it work. We then generate ERP report to figure out what did the ERP did to us. Then we spend more time to fix it or just forget it because we can’t figure it out. I see countless hours being wasted to make a process work that we have no control over when a simple daily stand up board is all you need to know what is happening in your business.
Thanks for writing this.
Jim Fernandez says
I always knew that Lean manufacturing and ERP/MRP systems where not very compatable. But I could never express the reasons. Thank you for making it more clear……
web design Bangalore says
I finally put together a three page visual of the monthly report, the daily report, and the daily standup board to show folks that the most accurate information was the daily standup board out in the area where the work was being done.
Bill Papantoniou says
Top-down planning with no regard to the complexities of real life/work is always doomed to failure. But there is a problem of incentives here – most ERPs are commissioned by accountants not operations people (manage complexity by hiding it). On the other hand there are no alternatives for a reasonably large outfit.
DJ Crane says
Thanks for encouraging this dialog [=thinking together]. Neither Lean or ERP are “the right answer” for all problems or needs. Given the tendency above to offer favorite quotes, here are two that seem to apply to this discussion:
– “things should be made as simple as possible, but no simpler” Einstein
– The Flaw of Averages “plans and decisions based on averages turn out, on average to be wrong” – Sam Savage
So, it seems helpful to use ERP or similar information processing tools [scnearios, modelling, etc] to inform thoughtful lean perspective and decisions … along with direct engagement at the gemba to make plans and decisions. Pretending that these projections of the future should become certainties seems like folly. Similarly, pretending that you can deal with actual uncertainty in complex situations without some analytical tools beyond paper, pencil and flip charts similarly avoids using the best tools for the job.
Ben Benjabutr says
I think ERP can be useful resource if people properly justify why they need it in the first place. Moreover, they should have enough knowledge to use ERP wisely. In short, “people” is the most important element.
In contrast, lean initiative tries to educate “people” to make continuous improvement.