How could Lean & Six Sigma accelerate Industry 4.0 and IoT?

By aligning Lean and Six Sigma with Industry 4.0 technologies, manufacturers can drive continuous improvement, maximise efficiency and enhance customer value.

How could Lean & Six Sigma accelerate Industry 4.0 and IoT - Graphic 1The data and digital technologies labelled as Industry 4.0 (I4) – or Fourth Industrial Revolution (4IR) depending on your preference – have been evolving for many years.

But perhaps not as long as Lean and Six Sigma approaches, which were “born” in manufacturing and have more often been applied in factory operations.

All have their devotees, often with very different types of expertise.

SAP hosted a vivid discussion facilitated by The Manufacturer between senior leaders in construction, automotive, aerospace, electronics, materials and printing sectors to consider the implications of Lean and Six Sigma on I4 and vice versa.

This experienced group considered how Lean and Six Sigma could enhance and be enhanced by the take-up and benefits of I4.

Peaceful co-existence is not an option 

Six Sigma is probably the best known, data-driven quality programme. New powers to analyse vast quantities of structured data from I4 technologies are already being exploited by Six Sigma practitioners.

It seems that while I4 data will inevitably increase the impact not just of Six Sigma but of quality programmes generally, which could create tensions with existing tools and techniques.

So, practitioners of Six Sigma could be challenged to adopt and adapt to I4 or be overtaken.

The potential synergies between I4 and Lean generated heated discussion in the SAP forum.

Lean is of course an employee-led continuous improvement regime, whereas I4’s advances were often considered to be from technocrats. The common ground is people – workforce and customers.

The scope therefore of new connections identified under the banner of I4 is comprehensive, and they all impact the way people do things including responding to customers.

These I4 connections include: 

  • Products; from predictive maintenance and accelerated product improvement to automated re-supply
  • Assets; from improved health and safety management to optimised service delivery
  • Fleet; from performance optimisation and usage based billing to compliance management
  • Infrastructure; from optimised energy usage to security and safety management
  • Markets; from dynamic agri-product pricing to individualised marketing

How could Lean & Six Sigma accelerate Industry 4.0 and IoT - Graphic 2The potential for positive influences of I4 on Lean continuous improvement and Six Sigma control are clear; but what about the roles of Lean and Six Sigma in accelerating the application of I4 and return on investment?

The SAP forum of senior manufacturers identified three key factors that will determine the speed and direction of change:

  1. Lean should ensure that customer engagement is connected by I4
  2. Lessons need to be learned from recent history to ensure I4 is embraces them
  3. Implementation of new digital technologies needs to be risk managed
  1. Lean should ensure that customer engagement is connected by I4 

There is unrelenting pressure for innovation and change, predicting and reacting ever more quickly to changes in customer requirements. “Leadership through quality” is also key to customer satisfaction and response time will continue to be an important metric.

However, new tools are needed to connect the world outside the factory to the operational world that has been the focus of Lean in manufacturing.

Internet of Things (IoT) and Supply Chain Management (SCM) systems need to integrate with and become part of existing Lean practices, including particular emphasis on providing forward-looking insight to complement existing mainly backward-looking measures of performance.

Machine-learning for instance could help to improve operational alignment with real customer satisfaction and business value.

Within the manufacturing environment, effective communication is vital to understand current performance and to check on the effectiveness of improvements.

Hence, I4 technologies that improve communication are a boon to Kaizen, as long as the skills exist at all levels of operation and management to exploit new technology.

Progress has often been frustrated by the constraints of existing tools and inertia in adopting new ones.

  1. Lessons need to be learned from recent history to ensure I4 is embraced 

How could Lean & Six Sigma accelerate Industry 4.0 and IoT - Graphic 3The right question is not whether but how to take advantage of I4 and make Lean and Six Sigma even more effective. All are now well-established and with proven value, but not so long ago the industry was concerned about ERP and Lean working together.

Now ERP systems are routinely supplying the data that fuels Lean continuous improvement and Six Sigma control, and distributing management information to the right level in the organisation.

How can advances in I4 make Lean and Six Sigma even better? The main lesson from earlier ERP implementations is perhaps that new technology brought in by the company (i.e. from the top, down) needs to be focused on the operational objectives of the workforce and the customer (i.e. from the bottom – upwards and inwards – outwards).

Workers are innovators by nature and will draw on new sources of information and technologies that help them handle the data that help them do their jobs better. The business case for I4 should credit top-line operational efficiency as well as bottom-line business and customer value.

Leadership of change is always a key factor in making new technology work, and poor leadership is the main reason why most technology projects fail. The same can be said of Lean.

Hence, a strong Lean leadership culture that aligns factory-led improvements with Boardroom decision making could also support I4 implementation. The workforce should be directly involved in I4 specification, design and roll-out.

Technology needs to measure value to a business. Processes may be efficient but not directly relevant to the customer or bottom line performance. Empowerment close to the point of delivery can be even more effective in generating improvements.

Virtualisation tools allow on-site matching of manufactured products with designs and specifications prior to costly implementation on site. I4 – when focused on what the customer values – offers perhaps the greatest potential to enhance or extend the influence of Lean and Six Sigma in manufacturing.

There is significant debate about whether the seductive call of I4 may need to be redefined in some bespoke manufacturing operations. For example, make-to-order with small batch sizes may not suit process automation.

There will probably always be room for these businesses to succeed without substantial I4 technology implementation. The question is: Can I4 provide the agility needed to help them find new markets and customers and hence to grow?

  1. Implementation of new digital technologies needs to be risk managed 

How could Lean & Six Sigma accelerate Industry 4.0 and IoT - Graphic 4There is a risk that implementing new technology may only enhance Lean, important though that would be. However, I4 has the potential to drive a whole new world of opportunity by aligning customer, supply chain and factory operations.

Again, effective leadership from top to bottom of manufacturing is key, ensuring that there is a vision for I4-enabled success and a roadmap of which enabling technologies will be used and when. Both I4 technologists and manufacturing technologists are vital team members but leadership implementing new technology also requires a business strategy mindset.

At the same time, careful management of change is needed so that I4 does not constrain flexibility or agility that had previously been a feature of Lean. For example, an ERP system may not allow “negative stock”. Implementation must always be tailored to the manufacturing business, not the other way around – one size does not fit all.

Adopting change is a challenge in any business, and technological change is no exception. People may hold back change for any number of personal reasons. New thinking introduced by new people may help to ease constraints overall, but at the risk of alienating core talented people.

We are all becoming more comfortable with new digital technologies and business models in the consumer world we live in, and it can only be a matter of time before these are the standard in manufacturing.

In summary 

The group of senior manufacturers hosted by SAP believe that Lean and Six Sigma and I4 could and should be integrated and aligned. Together these powerful paradigms can help manufacturers drive continuous improvement, maximise efficiency and enhance business and customer value.

More relevant and reliable data from customer and supplier interfaces will enhance existing Lean and Six Sigma practices by directing operations towards profitable growth (rather than merely driving out cost).

At the same time, established Lean and Six Sigma processes represent real pathways for I4 technologies to be implemented more rapidly and with greater benefits to manufacturers.

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