There is great enthusiasm and expectation around Industry 4.0 and Digitalisation driven by government policy, academic research and latest fashion. Last week I attended the 2018 Predictive Simulation Conference at the Factory 2050 which is part of the Advanced Manufacturing Research Centre in Sheffield. Some excellent Speakers explained the benefits of Industry 4.0 but more importantly their vision of what it may mean to organisations now and in the future.
Much of the discussion was targeted at “what” can be implemented which is great progress on the theoretical presentations published to date which have simply presented a more connected and faster communication between business processes. However, the next phase of discussion needs to be targeted at the “how” of how such technologies might be successfully implemented.
Flagship implementors like Rolls Royce, BAe Systems and Airbus et al. have invested significant sums over the years in implementing process improvements and culture change. Lean Management has played a fundamental part in the great results achieved from their respective continuous improvement programmes by helping to build the foundation on which any improvement programme is constructed.
By delivering better, more streamlined processes they now have something to connect and drive faster under an Industry 4.0 banner.
Unfortunately, not all organisations, especially SME’s have made the same investment. As a result, there is a gap between SME’s process capability and prevailing culture to those of Flagships.
These SME’s, who are typically part of the Flagship Supply Chain, continue to rely on their established, “informal” management processes on a day to day basis manifesting in lower than expected delivery, cost and quality performance.
Despite the capability gap, the Flagships are now embarking on the next stage of their development with an Industry 4.0 strapline which can only result in a growing gap unless SME’s build some foundations on which they can catch up.
Imagine then a debate over coffee when a view that Industry 4.0 had superseded Lean and those principles were now out of date and of little use!
Such discussions were evident as part of the rise of Lean in organisations during the 80’s and 90’s. It was thought by many that Lean was to replace failing ERP systems with Kanban type systems rather than using the highly complex Master Production or Material Schedules.
Another example of this is around ERP implementations themselves. How many times have you heard that an ERP system “doesn’t work”? Optimum performance may not be achieved from ERP, but this is due to lack of foundation on which the ERP is constructed rather than inadequate software. This lack of foundation could be poor or inaccurate data, lack of understanding of the importance to work within the system and the bravery to ensure we do not revert to the safe Excel Spreadsheet.
Many SME’s started their Lean or continuous improvement initiatives partly because their customers demanded it. However, lack of resource or management commitment meant that important foundations for implementation were not completed thus initiatives failed.
As the gap widens, the lack of foundation in processes and people will continue to frustrate real progress in adopting Industry 4.0 technologies.
In summary: –
- The principles of Lean have been proven as a key tool in the implementation of most continuous improvement initiatives.
- Success of any continuous improvement initiative is dependent on the implementation of foundations.
- Many organisations are not business ready for Industry 4.0 as they do not have adequate foundations in place.
- If Lean is now superseded, how are the foundations required for Industry 4.0 to be constructed?
- The continuous improvement implementation gap between the Flagship implementors and the SME Suppliers is significant and likely to grow leaving our larger organisations with Supply Chains that do not support their strategic objectives.
- Closing the already significant gap between Flagship requirements and the capabilities of SME Suppliers is fundamental to maximising the benefit fromIndustry 4.0 initiatives.
Unless businesses ensure they have the foundation on which to construct their continuous improvement or Industry 4.0 strategies these initiatives will fail.
My conclusion therefore is that Industry 4.0 has not superseded Lean but relies on its successful implementation if it is to be successful itself.