Digital lean: Leveraging a proven philosophy as the foundation of a digital transformation strategy
In the past, lean management was the mainstay for shop floor execution in complex manufacturing environments in nearly all industries. Even today, with its focus on waste elimination and tracking of root causes, it’s still a powerful toolbox on the production floor. Continued investment in lean and other CI programs will lay the foundation for a successful digital transformation and, if properly embedded, is possibly the most crucial component of this transition. But with the advent of digital manufacturing and future factories, lean has to become digital too.
Traditional lean is based on the idea that tasks should be executed faster, better and more cost-effectively, with employees engaged as full partners in continuous improvement. A digital lean approach constitutes a combination of lean management practices, design thinking, advanced digital technologies, and analytics. It’s an integral part of digital manufacturing which, in turn, is one of the key pillars of the digital supply chain. Indeed, a whole suite of new methods and tools are changing the economics and pushing the frontiers in operational optimization.
Some of the questions that digital lean addresses include:
- How can digital tools assist in optimizing material flow across every step of the value chain?
In any manufacturing organization, there are several participants in the flow of material – procurement, material planning, production planning, sales, finance and fulfilment. These teams often work in silos with siloed processes, databases, systems and dashboards, which prevent end-to-end visibility to the material process. The first step, therefore, is to break down the silos and enable end-to-end access to data by centralizing it. Complete visibility to the entire material flow is the key to significant cost savings, higher operational efficiency, better quality and improved productivity.
- What additional savings can be generated by making changes in the value chain?
Digital lean amplifies traditional lean benefits by enabling companies to synchronize improvement activities across their global organizations. As such, it can double the savings of traditional lean efforts in OEE, inventory reduction, labor productivity, plant logistics cost reduction, plant output improvement and production time reduction.
- How can manufacturing systems be made more robust?
The digital levers of Industry 4.0 range from digital performance management and remote monitoring to smart energy consumption and predictive maintenance. All these create added value by generating improvements in quality, asset utilization, resource management and time to market.
- Where do the highest failure rates occur?
The surge of digital transformation will inevitably result in misguided efforts. Organizations that introduce technological solutions without considering the value stream holistically run the risk of failure. Digitization may still happen, but only in silos, meaning that such companies will struggle to make the most of their digital potential.
Planning a digital transformation
Blending lean and digital can help companies identify and apply the most effective levers for digital transformation. Digital lean allows you to simulate scenarios (digital twinning), systematically test hypotheses, and calculate detailed costs without the risk of pilot tests or actual implementation. This approach proves instrumental at three levels when planning a digital transformation:
- It spots complexity in the design phase
Lean identifies redundancies before digitization even starts. It singles out unnecessary process steps that will not add client or overall business value.
- It optimizes existing systems and operations
Applying the digital lean approach to managing infrastructure and legacy technologies makes enterprise operations more cost-effective and agile. It also helps release resources for investments for the future instead of locking them into maintenance.
- It simplifies the building phase
Lean practices support a simpler transformation with less displacement of legacy technologies, people and processes. This helps companies move faster and with fewer risks of surprises.
With so many different moving parts, digital transformation projects require a rock-solid foundation from which to build. While the end goal is to create a digital thread connecting the virtual product design process with a compatible set of technologies for planning and testing production floor equipment, experts caution manufacturers to avoid taking on too much too soon.
Culture change is the hardest part of digital transformation and by ignoring it, an organization risks transformation failure. Many companies often do not have the necessary sophisticated change management capability to transform effectively and at the correct pace.
Only organizations with a sufficiently high level of operational excellence will gain any real benefit from this next stage of manufacturing evolution. To attain such a level of excellence, an incremental, maturity-based approach to operational excellence – as well as the fundamental people engagement practices – is needed.
The challenge is determining how to harness digital technology’s power to adapt and compete. When digital lean is implemented successfully, organizations can expect to reduce costs and improve quality, in turn leading to better productivity and a stronger return on investment (ROI) when compared with individual digital or traditional lean improvement projects implemented in isolation.