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Introducing Lean Manufacturing with Microsoft Dynamics AX

So, let's understand what is Lean manufacturing?

Lean manufacturing is a business model simply put,a collection of tactical methods that considers expenditure of resources to preserve value and consider doing this in 'less'  time to create value for the end customer

There are some important concepts to understand how Lean manufacturing works:

In Ax you can setup the production flow as a set of activities:

Production Flow AX


In Ax you can set up 2 types of activities:

  • Process: This kind of activities add value to the flow, typical process activities are painting, assembly, packaging..
  • Transfer: You can manage the movement of the materials between warehouses, locations, activities or you can manage how replenish the cell. These activities do not add value to the flow.

3. Cell

A (work) cell is a “manufacturing or service unit consisting of a number of workstations and the materials transport mechanisms and storage buffers that interconnect them” (APICS, 2005, p. 16).

In Microsoft Dynamics AX 2012, you can create a cell as a resource group and thick the work cell check:

create a cell as a resource group AX





The work cell represents the effective capability of all resources assigned to the cell. It is handled as a black box, meaning that the internal structure of the cell is not documented in the system.

You can control the capacity of the cell by time or by units. You also can create subcontractor cells linking a vendor resource to the work cell.

4. Kanban

Kanbans have been adopted by many industries as a method of controlling production and internal supply. A Kanban can apply to a paper ticket or a physical container.

In Microsoft Dynamics AX 2012, a Kanban is a pull signal that represents demand and triggers process and transfer activities for a unit of a specific item or item family. Lean manufacturing in Microsoft Dynamics AX provides two Kanban types that are used to define how the empty signal is filled: manufacturing and withdrawal

Kanban Replenishment Strategies

Microsoft Dynamics AX 2012 Kanban rules can be set up to support a variety of make-to-stock and make-to-order scenarios through various Kanban replenishment scenarios:

  • Fixed Quantity - A fixed quantity Kanban is a “make-to-stock” scenario
  • Scheduled - Master Planning creates scheduled Kanbans automatically for planned Kanban.
  • Event - Event Kanbans are only created out of the related demand, so event Kanbans belong to the category “make-to-order”

With all this setup you can manage a new kind of document, the kanban document, in lean manufacturing instead of production orders you must use kanban documents.

Microsoft Dynamics® AX 2012 has fully integrated this new document, for example to the MRP calculation:

Microsoft Dynamics AX 2012

Now, we have a new Document, Kanban order, and MRP takes in consideration this document and allow us to generate it to cover the MRP demand:

Kanban Dynamics AX Overview

To manage the kanban documents you have a schedule board:

And for the daily use, lean manufacturing has 2 forms specially thought for operators, one to manage process activities and another for transfer activities:


lean manufacturing


Lean manufacturing can be introduced in different ways. While some companies start with the Lean philosophy and try to apply the Lean principles, Value Stream by Value Stream, others take a more local approach and start from specific work cells where resources and demand structure allow or even require a Lean approach.

Microsoft Dynamics AX 2012 supports mixed mode manufacturing environments where both Lean manufacturing and traditional manufacturing exist. Mixed mode scheduling within Microsoft Dynamics AX 2012 uses Master Planning to reconcile and manage master planning approaches where a mixture of traditional production orders and Kanbans are used.


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