Taking a fresh look at lean manufacturing strategies. By Pam Records
If you are one of the veterans of manufacturing, you’ll remember the days in the 1980s when lean manufacturing was a revolutionary new concept. It’s been at least 30 years since terms like kanban and kaizen entered our manufacturing vocabulary.Where do lean strategies stand now? Are the principles still relevant in light of the drastic changes in operational processes, global markets, and technology?
Lean is one of the most well-known process strategies in modern manufacturing. It migrated to the US in the 1950s and began to draw serious attention in the 1980s. Since then, it has become the industry’s default best-practice approach and has been widely adopted in manufacturing facilities worldwide. But many manufacturers now question if new technologies have made lean irrelevant? Or if the retiring Baby Boomers, yesterday’s lean pioneers, have taken the secrets of lean success with them into retirement?
Lean manufacturing has two main building blocks: reducing waste and creating customer value. Continuous improvement is the ultimate goal.To achieve this, manufacturers strive to eliminate information silos and optimise the flow of products and services across departments, processes, and equipment to customers.
Lean became synonymous with modern manufacturing, until economics derailed the transformation journey for some companies. As the world economy plunged into recession in 2009, manufacturers were forced to cut back on spending and use of resources, covering only the bare necessities. While this eliminated every last bit of excess, it also tended to eliminate the proactive continuous improvement projects that were part of the early lean initiatives. Projects that required investment in training, upgrades in equipment, or investment in technology were often put on hold.
Fast forward to today
Today, lean processes are still at the heart of most manufacturing operations worldwide and are increasingly important in other industry sectors, including distribution and financial services. As manufacturing continues its current growth phase, analysts are starting to once again pick up the lean dialogue, as though it simply had been paused.
In response, managers are starting to review their original lean strategies in light of today’s changing market demands. Questions are now a hybrid of established lean ideas and new technologies: ‘How does a lean enterprise also embrace investment in new technologies like 3D printing and the Internet of Things?’
When many companies first rolled out their lean initiatives, the internet was in its infancy. Few imagined today’s mobile devices, online portals for customers and suppliers, and real time collaboration with suppliers in other continents. How do lean principles use this new paradigm?
On the surface, it may seem that advanced technologies are contrary to the lean principles of simplicity.This is not helped by the fact that since the early days of lean, IT managers and production managers have often clashed, as they struggled to find the balance between big powerful ERP systems and streamlined minimalist processes with as few steps as possible.
The monolithic ERP systems that tried to impose a one-size fits all structure were not always lean compatible. “Early pioneers of Lean systems pursued strategies of removing IT from production processes, viewing this technology as an additional step which could be ‘leaned’ out of processes to remove waste.
“This philosophy was probably reasonable in the 1970s when technology was in its early, nascent stages; today, however, is a completely different situation with a level of complexity that necessitates reliance on IT systems to remove the waste of manual processes,” says blogger Fred Thomas in his post ‘The Lean Manufacturing Makeover.’
“You have lean purists who think that enterprise resource planning (ERP) gets in the way of business improvement,” adds Mark Edwards, manufacturing expert at business consultancy, KPMG. He proposes that lean programmes and ERP solutions may follow different routes, but the goal is the same: continuous improvement.“People have started to realise that there can be a virtuous circle. ERP brings in common nomenclatures and data standards, so you have a fact base to apply lean thinking to.”
In the age of IoT, smart devices create smart production lines, changing the role of lean mandates.Today the manufacturer must, above all, be able to connect customer needs with a company’s ability to deliver a product – on demand.
Multiple tactics and tools are required to make on demand manufacturing feasible – and profitable – from product configuration solutions to component subassemblies, co-manufacturing partnerships, and late-stage assembly strategies. Modern ERP solutions align these tactics and tools into one streamlined process flow.Today, the highly flexible ERP system acts as the central nervous system, connecting process flows and making a lean philosophy attainable.
Elsewhere, Big Data has dramatically transformed reporting and analytics. Now, data can be used to predict market demands, rather than just report on historical trends. Reporting tools are also easier to use, bringing KPI tracking to users throughout the organisation. Users no longer need the help of the IT team to simply obtain a performance report.This ease of use brings a new challenge: data overload. Here, lean guidelines for ‘keeping processes simple’ can help managers control the temptation to over-analyse.
Just-in-time inventory concepts, part of the lean philosophy, also need a refresher. Expectations over delivery dates have escalated greatly. In 1990, a six-month delivery wait may have been tolerated; today, six hours may be too slow. Raw materials can be shipped faster, received sooner, and put into the production value chain with remarkable speed, reducing even further the need to inventory raw materials.This doesn’t mean lean principles can be ignored by warehouse managers. On the contrary, it is more important than ever to manage the complexity, minimise steps, and optimise resources.
Shop floor scheduling also requires a new chapter in the lean manual. Early lean consultants didn’t address technologies, such as 3D printing, smart sensors, and the Internet of Things (IoT), because they were little more than ideas. Now they are a reality. Can manufacturers reconcile these disruptive innovations and lean efficiency? How can a manufacturer balance innovation, which brings some natural waste as ideas are tried and discarded, with the lean mandate to minimise waste? On the surface, the two precepts seem incompatible.
Manufacturers must strive to overcome this fallacy that branching into uncharted territories to develop new products is wasteful, and against lean philosophies. Innovation can’t be curtailed, as it brings the next generation breakthroughs that will continue to inspire growth and investment. Manufacturers are still on the upward slope of the learning curve. Lean concepts can be used to guide the workflows and keep waste in check, without totally restricting some tolerance for the trial and error and experimentation that come with any new approach.
Bringing lean concepts to a new generation
A new generation of manufacturing personnel is being introduced to the lean vocabulary and striving to put the lean concepts in context for their jobs, their roles, and their priorities.This isn’t always easy, but it’s necessary.The lean manufacturing philosophy is so entrenched in manufacturing today that it isn’t going away completely. It’s time to polish up some of the lean concepts and recognise that they are still relevant, and valuable.
Pam Records is Digital Manager at Infor. Infor builds business software for specific industries in the cloud. With 16,500 employees and over 90,000 customers in more than 170 countries, Infor software is designed for progress.