Integrative Improvement Blog

The integrative improvement blog discusses and provides commentary on the latest topics in the business performance improvement sector.

Will Industry 4.0 spell the end of lean manufacturing?

Will Industry 4.0 spell the end of lean manufacturing?

Start small, but think big seems to be the order of the day for organisations looking to brave the (still) murky waters of Industry 4.0, a discipline that encapsulates a slew of cutting-edge technologies that are transforming business processes from the supply chain to the shop floor.

First presented as a concept in 2011, Industry 4.0 is the current high-tech manufacturing strategy of Europe’s manufacturing powerhouse, Germany. Heralded as the fourth industrial revolution, it introduces new technologies in manufacturing, bringing together the digital and physical worlds of the production floor. The objective is to create the ‘intelligent’ or ‘smart’ factory during the next two decades.

Cloud computing, the Internet of Things, real-time sense-and-response technologies, cloud-based services, big data analytics, robotics, artificial intelligence, 3D printing and so on are expected to revolutionise how you design, manufacture and deliver products and services.

On the surface, it may seem that these advanced technologies are contrary to the lean principles of simplicity. So is the era of lean manufacturing coming to an end? The short answer is an unequivocal ‘no’. Lean will not fade. Quite the opposite, lean principles are likely to become more important as efficient and effective processes are the prerequisite for Industry 4.0.

Yes sure, Taiichi Ohno may not have mapped out an IT infrastructure that incorporated predictive analytics and closed loop feedback channels with customers, but that doesn’t mean he wouldn’t embrace them now if he were updating his concepts for today’s manufacturer.

shutterstock_163747199_webIndustry 4.0 as a lean enabler

According to international speaker and author Torbjørn Netland, the fourth industrial revolution can enable the true lean enterprise. “Industry 4.0 permits a much richer understanding of customer demand and allows the immediate sharing of demand data throughout complex supply chains and networks. Smart factories can produce faster with less waste. Industry 4.0 enables a much quicker one-piece flow of customised products. It has the potential to radically reduce inventories throughout the supply chain,” says Professor Netland.

On the other hand, with radical changes in the manufacturing environment come changes in lean as a practice. Presumably, there will be fewer physical Kanban cards, fewer andon cords, fewer whiteboards and similar technical lean solutions in future factories. But, according to Netland, that’s nothing to be regretful about: “Toyota has never looked at these tools and practices as objectives within themselves, but rather as technical solutions to minimise wasteful processes. One of the most promising advances in technology is the possibility of sharing – and acting upon – real-time information in a coordinated end-to-end value chain. This enables a radically improved form of instant, just-in-time pull production.”

Today’s manufacturer must, above all, be able to connect customer needs with the 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. The organisation must therefore become more responsive to changing market and operational conditions, without sacrificing prevailing efficiency.

While the big picture goal is to spin a digital thread connecting the virtual product design process with a compatible set of technologies for planning and testing production floor equipment, experts say manufacturers need to be vigilant about biting off more than they can chew. Read the article The impact of operational excellence on the looming transformation in manufacturing to find out how an incremental, maturity-based approach to operational excellence prepares your organisation to adopt new technologies at the correct pace.

5 steps to assess and create your digital manufacturing strategy

While technology and network convergence have occurred within many manufacturing companies, the bigger challenge is often organisational and cultural convergence. This convergence is essential to truly break down barriers and eliminate silos of information and isolated systems. Therefore, to manage change, mitigate risk and position your organisation for success, you need to craft a digital manufacturing strategy.

These five simple steps will help you formulate a strategy specific to your needs:

  1. Review your current environment and digital manufacturing strategy

Before crafting a strategy for the future, you need to assess your current environment by answering the following questions:

  • How is the work completed?
  • How are you currently managing manufacturing operations?
  • Are you collecting data during production?
  • Where have you automated processes to eliminate errors and ensure employees are focused on value-added work?
  • What KPI data do you collect?
  • Do you have access to real-time KPIs?
  • How much work is required to collect all this data?
  • Finally, how does critical information move through the organisation?

Your goal at this stage should be an honest assessment of how you are currently utilising data.

2. Identify weaknesses in your current workflows and digital manufacturing strategy

Once you understand your current environment, you can ask the following questions to start the analysis:

  • How do you get information to the shop floor?
  • Are you still printing paper manuals?
  • How do you collect information from operations?
  • Are you manually updating the ERP when work is complete?
  • How quickly and efficiently can you manage change in operations?

You’ll often find gaps and inefficiencies. The potential solutions then become the core of your future digital manufacturing strategy.

3. How are you collecting, storing and transferring information?

After reviewing your current strategy, look for silos where data can’t be easily accessed. Difficulty accessing vital information at the right time and place is a key source of errors and inefficiency for many manufacturers. Questions to ask include:

  • Is vital data sitting unused on disconnected machines across the company?
  • Do you use information from the supply chain?
  • Does customer service have real-time information on production?

A comprehensive digital manufacturing strategy should eliminate the barriers between employees and the information they need to do their work better, faster and with fewer errors.

4. How do you want your company to operate in the future?

Consider the opportunities offered by digital manufacturing:

  • Is increasing production speed or managing change a priority for you?
  • Will you be focused on eliminating errors and waste, or moving employees to value-added work by automating processes?

Prioritising goals helps you shape and refine your strategy, and allows you to implement change in phases. Remember, the digital strategy should align with the business strategy, and the changes you make will have effects far beyond the shop floor. Consider this as you prioritise your initiatives.

5. What early success can you find to jump-start your digital strategy?

Start off on the right foot by identifying the low-hanging fruit in your digital strategy. You will discover relatively simple items in your strategy that deliver an early ROI to help pay for and enable later phases.

For example, paper is a source of errors and costs for many manufacturers. A paperless manufacturing system can be implemented relatively quickly, depending on your current processes. The system adds value almost immediately and will become the foundation for your overall strategy, including collecting machine data via the Industrial Internet (IIOT) or adding visual work instructions.

In a nutshell, Industry 4.0 technologies may be exactly what you need in order to create lean supply chains and networks. Not only will your operations processes become more efficient, but new possibilities will assist in increasing your organisation’s competitiveness and will reduce risks in operations. After all, lean is about doing more with less – now and in the future.


The TRACC framework helps organisations build standardised and integrated good practice and performance capacity across their Plan, Source, Make and Deliver functions. Simultaneously it accelerates their collaboration and alignment capacity to build world class end-to-end value chains, enabling the organisation itself to become the ultimate source of sustainable competitive advantage.
Sign up to our monthly TRACC Community newsletter for CI insights, interviews and news!