What does lean mean in an ERP context?
When you hear the name Lean, you first think of Lean Software Development. This term is based on lean production and transfers the principles of this process to the development of software. The principles of lean production include avoiding waste and using production factors from all areas of the company sparingly and efficiently. Production factors can include equipment, personnel, materials, but also the planning and organization of corporate activities.
In software development, lean development primarily includes an agile approach taking into account the following factors: avoiding waste, integrating quality, creating knowledge, rapid action and continuous optimization.
But what does Lean ERP mean?
An ERP system stands for software for resource planning in a company or organization. ERP integrates a wide range of business applications and operational data, which are processed and stored in a central database.
As a rule, an ERP system is a very powerful and comprehensive piece of software, as it includes and can map all operational processes. The maintenance, operation and use of such a system is also associated with a lot of effort. Can an ERP still be lean? The clear answer: Yes. Because in recent years, more and more “lean” ERP systems have established themselves on the market.
Lean, flexible and automated
Similar to lean production, a lean ERP focuses on the key areas of a company and deliberately avoids the unnecessary. Lean ERP is characterized by a lean architecture. The aim of these lean systems is to optimize, streamline and automate processes within the company.
Because of this flexibility, Lean ERP is particularly suitable for companies that are growing and whose processes are changing rapidly. Due to its architecture, a Lean ERP is designed to flexibly grow with requirements by connecting external systems. Existing or new systems can often be easily integrated into a Lean ERP. It is therefore particularly interesting for young companies that do not yet have fixed processes and systems.
For these companies, Lean ERP creates added value in the following areas:
- Process optimization
- Simplifying administration
- Homogenization of IT infrastructure
- Centralize reports and information
ERP implementation: Time and money play an important role
In contrast to large ERP systems such as SAP, Lean ERP is implemented relatively quickly. We cannot give an exact time frame here, but as a rule, a Lean ERP can be set up and running in around twelve weeks, depending on existing structures and processes. If you plan to hire a market leader, you have to expect up to twelve months (or even much more). Of course, this is also reflected in the costs for the project.
Speaking of money, ongoing operating costs are a not entirely insignificant factor. In this regard, too, lean ERP is geared to the needs of small and medium-sized companies that are growing. There are often three to four versions with different ranges of functions. If the company grows, users can be booked flexibly.
For large ERP providers, on the other hand, the pricing structure looks more complicated. In addition to the basic monthly costs for each user, there are additional costs. These include license costs, hosting, application servers and additional functions. In total, the top dogs pay many times over; both for implementation and ongoing operation.
Lean ERP - for whom?
Lean ERP is out of the question for large companies that want to map their production, purchasing, accounting, many locations and international business units as well as their CRM and other systems in an ERP. Lean ERP is aimed more at companies that are facing the first growth thresholds and are wondering how they can optimize their structures and establish lean processes. Companies that need a system that helps them create clearly defined workflows and gain an overview of existing and future processes are addressees of a Lean ERP.
Take the manufacturer of dietary supplements More Nutrition or the fashion label MYMARINI, for example. Companies that are growing rapidly and, using Xentral's Lean ERP system, have transformed their growth into homogeneous structures and optimized processes. By switching, they were able to centralize decentralized corporate structures, absorb peak loads on orders, or integrate external systems that were previously silo solutions. Lean ERP was developed precisely for this type of company.
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