Why lean is the foundation of digital operating systems

The recent statement by Toyota that even with digitalization, they would not do away with the principle of gemba walks unequivocally confirmed that lean principles are still a powerful toolbox on the production floor. That’s why continued investment in lean and other CI programs will lay the foundation for a successful transition to digital operating systems (DOS). Moreover, adding digital technologies to lean can open up whole new frontiers for future factories.

With its focus on waste elimination and root cause tracking, traditional lean is based on the premise that employees should execute tasks better, faster, and more economically while fully embracing and engaging in the principles of continuous improvement. More recently, Industry 4.0 and its associated technologies have forever transformed production in terms of speed and flexibility with automation, artificial intelligence and virtual reality, all poised to become part of modern digital operating systems. These digital technologies combined with timeless lean management practices, design thinking, and advanced analytics gave rise to the term ‘digital lean’.

A lean digital approach is an integral part of digital manufacturing, which is one of the main pillars of the intelligent, connected digital supply chain. It isn’t a new set of lean principles, but it boosts existing principles to strengthen their application and push the frontiers of operational optimization through a digital operating system. Using Industry 4.0 and other digital tools, digital lean fast-tracks waste identification and mitigation quicker than traditional lean methods by feeding detailed information directly to those who can take immediate action.

Shaping and starting a digital transformation

The combination of lean and digital can assist organizations with identifying and applying the best levers for digital transformation. Digital lean allows for the simulation of setups (digital twinning) without actual implementation or pilot tests. The benefits of this are three-fold:

  1. Lean spot complexity in the design stage by identifying unnecessary process steps that won’t add client or overall business value.
  2. Applying the digital lean approach to managing legacy technologies and infrastructure results in more cost-effective and agile systems and operations. It also frees up resources for future investments instead of restricting them to maintenance.
  3. Lean practices simplify the transition to a digital operating system by limiting the displacement of legacy technologies, people, and processes. As a result, an organization can move faster and smoother.

Culture change is the most challenging part of a digital transformation, and organizations who ignore it may derail their transformation journey. To transform effectively and at the correct pace requires sophisticated change management capability. There’s a saying that goes: “Technology won’t fix a bad process; it will only accelerate it.”

Questions that digital lean can answer

The rise of the digital era prompts several questions in terms of operational optimization and sustained competitive advantage. Digital lean answers four of the most prominent questions:

  1. How can operating systems be made more robust?

Industry 4.0’s controls range from remote monitoring and digital performance management to intelligent energy usage and predictive maintenance, all of which create added value. They generate improvement in asset utilization, quality, resource management, and time to market.

  1. What additional savings can value chain changes generate?

Digital lean extends the reach of traditional tools and benefits by enabling organizations to coordinate improvement activities across their global operations. As a result, it can double the savings generated by traditional lean efforts in OEE, inventory reduction, plant logistics and output improvements, production time reduction, and labor productivity.

  1. How can digital tools optimize material flow across the value chain?

Procurement, materials planning, production planning, sales, finance and fulfillment are all participants in the flow of material in a manufacturing organization. However, these teams’ activities are often characterized by siloed processes and isolated systems and databases, which obscure end-to-end visibility to material flow. Therefore, knocking down the silos and centralizing data is the first step to enable complete visibility of the entire material flow. This is the secret to higher operational efficiency, substantial cost savings, improved productivity, and better quality.

  1. What is the biggest contributor to a failed transformation?

Trying to keep up with the groundswell of digital transformation will inevitably result in misdirected efforts. For instance, introducing tech solutions without a holistic approach to the entire value stream will be at risk of failure as digitalization will occur in silos. Consequently, organizations will struggle to maximize their digital potential.

Operational excellence the key to a successful transformation

To gain any real benefit from this next stage of the manufacturing evolution requires a sufficiently high level of operational excellence, which is only attainable through an incremental, maturity-based approach and fundamental people engagement. The challenge is finding the right way to channel digital technology’s power to adapt and compete. Implemented correctly, digital lean will drive lower operating costs, higher efficiency, and improved quality. To top it off, organizations can expect to see a more substantial return on investment (ROI) when compared with traditional improvement projects implemented in isolation.