How ERP Can Reduce the Waste in Manufacturing

This article has been provided by NexSys.

Not all waste is physical and according to lean manufacturing theory, there are seven types of it. Any action that the customer wouldn’t be willing to pay for is “muda” or waste to the proponents of lean manufacturing, so keeping these actions to a minimum forms the basis of lean. Although initially designed for “just in case” rather than “just in time”, manufacturing management software such as ERP can be an effective way of reducing waste in these seven areas.


The unnecessary movement of items not only wastes time but can potentially cause damage or loss too. Three things customers definitely don’t want to pay for. This can be tackled through the inventory modules such as inventory optimisation and inventory forecasting. Together they reduce needless transportation by ensuring stock is in the right place at the right time. Materials can be delivered directly to point of use (whether that be storage or manufacturing) bypassing the usual receiving inspection.


This is the area ERP really shines in waste reduction. Materials, work in progress, and finished goods sat on a shelf are no value to the customer. The longer capital outlay remains in one of these three states, the longer it takes for that capital outlay to produce an income, i.e. be sold, therefore more wasteful. SYSPRO ERP can reduce this with the inventory planning module and an accurate Bill of Materials. Minimum stock levels can be calculated based on historic usage and notifications can be triggered when stock reaches the set minimum level, meaning inventory consists of only what is necessary and arrives just-in-time. Maximum level triggers can also be set to avoid overstocking. Depending on your industry, stock may have an expiry date or could be temperature sensitive. An inventory management system, combined with the correct sensors and IoT integration, can log and track these criteria and provide assurance that the stock is stored in the required conditions and consumed before expiration.


There are two main wastes created by motion; time and wear and tear. Poor layout of a shop floor or warehouse causes staff to work inefficiently as they to and fro through their working day. SYSPRO’s warehouse management solution, Orchard, takes layout into consideration and is able to calculate the best way to move around the warehouse while picking. The unnecessary motion of tools and machines causes avoidable wear and tear so is also considered waste of motion. SYSPRO’s Manufacturing Operations Management (MOM) solution is able to reduce this waste of motion by facilitating better distribution of machine work load. MOM optimises the distribution of work based on set up and break down times so there is minimum waste motion.


If you’re not making progress, you’re waiting. This could be a product not in a state of process or transportation, waiting for a machine or tool when operations are not properly planned or even waiting for information. The previously mentioned MOM module is able to analyse the “Overall Labour Effectiveness” of employees and the “Overall Equipment Effectiveness” of machinery, providing a clear view of productivity and inactivity. This allows for better planning to reduce waiting. ERP will probably never fully eliminate the physical bottlenecks of the shop floor but can eliminate bottlenecks of information. Although ERP was once a system of record, it has evolved to be a system of insight and facilitator of action. Information is easily accessible and offers one version of the truth so there is never a need to wait.

Over Production

The worst kind of waste! Over production is a waste of all the other six of the seven. Every action taken to produce the product was unnecessary. The problem of over production is as much down to culture and habit as it is process. Tooling setup can be time consuming so it’s understandable manufacturers would want to maximise throughput (particularly in an On Time In Full business). However, this leaves your capital tied up in stock which isn’t required, eating into profits and potentially getting sent to landfill. The same modules that can streamline your inventory can also reduce over production too. The single data source that ERP provides across the entire supply chain combined with successfully forecasting demand means manufacturers never need to err on the side of caution and over produce.

Over Processing

The antidote to this is doing the bare minimum. Granted, that sounds lazy but doing anything more is wasteful. Painting areas that will never be seen or exposed to the elements, using a £10 component when a £7 one is sufficient, or extra turns of screws and nuts – all forms of over processing waste. Over processing can be caused by an overzealous workforce. This is a double edged sword; it’s great to have an enthusiastic workforce that want to do a great job, but by over processing they’re costing the business money. If this is the case, Standard Operating Procedures (SOP) need to be implemented on the shopfloor to provide instructions and specifications for what is and is not required for tasks. Monitoring overall labour efficiency with the Manufacturing Operation Management module delivers an insight into which areas of the business are in need of SOP reminders and training.


The need to discard or rework a product due to defects will probably never be fully eliminated, but the earlier you discover the defects, the more they can be reduced! The Advanced Quality Management module of SYSPRO is great for making sure defective products don’t reach the customer but it only measures and records the quality of outcomes. If an ingredient or component is found to be defective or not to the required quality, SYSPRO has a “where used” function to identify all of the parts or products that might be affected and quickly mitigate any risk or further waste. To truly make a difference, defects have to be detected before they happen. Industry 4.0, the elephant in the boardroom, has the solution if you’re willing to put the time and effort into making it happen. Cyber-Physical Systems can gather information on abnormal activity and relay it to the relevant people via your ERP software. For example, an accelerometer can detect abnormal levels of vibration in a machine which could be causing defects and be in need of repair. An engineer can be sent to inspect the issue before it causes too many defects or downtime.

Greater Than the Sum of its Parts

There is a lot of cross over with the problems and solutions to the seven wastes of manufacturing which is precisely why all seven need to be addressed together. They’re all connected, so if you’re going to do it, do it right! ERP was once the enemy of lean manufacturing; ERP is all about planning and scheduling whereas lean is about reacting to demand. But as manufacturing software has developed and advanced, the more the two have been able to work in conjunction.

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