Industry 4.0 Guide

Definitive guide to digital lean manufacturing: how to extend lean manufacturing tools with digital technologies

In this article, we explain how to extend your traditional lean initiatives with digital tools. We start by introducing traditional lean tools and explain the technological foundation of digital tools. We showcase some example applications of extending lean with digital technologies and conclude with the benefits of digital lean.
Definitive guide  to digital lean manufacturing: how to extend lean manufacturing tools with digital technologies

Chapter 1: What is lean manufacturing?

Lean manufacturing is a production method that is based on the continuous improvements of a manufacturing system. The goal of lean manufacturing is to eliminate waste from production processes to bring productivity to the highest level. Lean manufacturing is derived from "The Toyota Way", the operating model of Toyota. The Toyota Production System (TPS) was created between 1948 and 1975 by Taiichi Ohno and Eiji Toyoda. The term "Lean" was defined in 1996 by James Womack and Daniel Jones as "...a way to do more and more with less and less - less human effort, less equipment, less time, and less space - while coming closer and closer to providing customers exactly what they want". Lean manufacturing focuses on the value stream. This comprises all activities and information streams from the raw material supplier to the final customer of a produced good. Lean requires understanding and participation from all levels of the organization. It is about empowering all involved people to identify and eliminate waste in order to continuously increase the value delivered to customers. 

What are the 8 wastes of lean manufacturing?

In lean, the term “value” means anything that a customer is willing to pay for. In contrast, “waste” means anything that doesn’t add value to a product. Waste can take many forms, but at the core, it is anything that does not add value from the perspective of a customer. An often used acronym for the 8 wastes of lean manufacturing is DOWNTIME: Defects, Overproduction, Waiting, Not utilising talent, Transportation, Inventory excess, Motion waste, Excess processing.

8 wastes of lean manufacturing


Read more about the 8 wastes of lean manufacturing and how to eliminate waste with a connected worker platform

Chapter 2: What are the 5 key principles of lean manufacturing?

In their “Lean thinking” book, James Womack and Daniel Jones identified five key principles of lean:  “Precisely specify value by specific product, identify the value stream for each product, make value flow without interruptions, let customers pull value from the producer, and pursue perfection.” Let’s have a closer look at the five key principles of lean manufacturing:

5 key principles of lean manufacturing

1. Value 

Value means anything that is desired by a customer and what he is willing to pay for. For manufacturing, it is thus important to enter into a dialogue with the customer as early as possible to learn about the requested features. 

2. The Value Stream 

The value stream comprises all value-adding activities that create the expected result for the  customer. Value Stream Mapping is a tool to visually map the flow of production. It displays the current status of all process steps and allows to identify opportunities for improvement. Usually this includes all processes and physical goods across the entire supply chain from the raw material supplier to the end-customer. 

3. Continuous flow 

Continuous flow is about work-in-process flowing smoothly through production in alignment with takt time. Each produced item gets passed from one process step to another with minimal buffers or no interruptions at all. Continuous Flow helps to eliminate waste, e.g. unnecessary transports or waiting time between process steps.

4. Pull 

With Pull systems, manufacturers arrange their production sequence in a single flow based on the demand of customers. Thus, customer demand drives the production flow, as it pulls items from the production process. As a result, pull systems eliminate overproduction and reduce inventory.

5. Kaizen

With the concept of Kaizen, japanese for continuous improvement, manufacturers continuously improve their production processes and strive for an ongoing reduction of waste. 

Change should be approached in incremental steps: Instead of waiting for major changes to happen, the idea of kaizen is to start with small changes and improve on those. This reduces the pressures of implementing a major change and increases the speed for change. In addition, small changes are often less risky and thus less costly. The key for successful improvements is to identify the root causes of issues as early as possible. Small issues can therefore be resolved before they become larger, and it prevents the same problems from reoccurring.

Improvements must be measurable, standardized, and repeatable: Existing processes must be standardized and documented to allow objective measurement of success. It is important to evaluate improvement measures against existing benchmarks to demonstrate ROI from your kaizen efforts. 

Empower your employees: To improve overall motivation and productivity, a key idea of Kaizen is to engage employees to identify problems and suggest improvements in their individual work areas.

Chapter 3: The 15 most important lean manufacturing tools

Lean manufacturing can be considered as a toolbox with a very extensive collection of tools and methods. In this chapter we introduce the 15 most important lean tools, with a brief explanation of how each tool improves manufacturing operations. Most of these tools can be successfully used as stand-alone tools. However, by using more than one tool, the benefits will add up, because the different tools reinforce each other. In addition, most of the lean tools can be improved with digitalization. We will focus on the improvement of lean manufacturing with digital tools in the next chapter.  But let’s get started and have a look at the 15 most common tools used in lean manufacturing:

Takt time 

Takt time is referring to the pace of production (e.g. production of one piece every 30 seconds). Takt time is calculated by dividing the available production time by the rate of customer demand. Thus, takt time aligns production plans with customer demand.

What is the benefit of Takt Time?

Takt time offers a consistent method to pace production and align production plan with customer demand.

Heijunka / Leveling production

Heijunka is about leveling product variants and quantities over a defined period of time. The effect is that product batches become smaller and each product variant is produced more frequently. This minimizes inventories, optimises employee utilization and lead times across the value stream. Through leveling of volume and model-mix, manufacturing systems operate at a constant rate, which is more efficient than rapid ups and downs. An example of leveling is alternating between producing small batches of variant X and variant Y on any given day rather than producing all of variant X on Monday and all of variant Y on Tuesday. For more examples, please refer to our detailed article about Production leveling

What is the benefit of Heijunka?

Heijunka reduces inventory, as the produced batches are smaller. In addition, leveling production shortens lead times, because each product variant is produced more frequently.

SMED

Leveling volume, hence reducing batch sizes, can only be accomplished with lower setup times. The lean tool to reduce setup times is called SMED - Single Minute Exchange of Die. Its target is to lower setup times from several hours into single minute durations. Once setups are reduced, smaller batches can be produced. Typically SMED includes the following activities:

  • Push setup steps to be performed while the process is still running
  • Simplify setup steps, e.g. by replacing bolts with knobs
  • Eliminate operations that are non-essential 
  • Follow Standardized Work instructions

What is the benefit of SMED?

By reducing machine setup and change-over times, machine utilization increases and machines can produce more parts within a given time frame. Furthermore, products can be changed more often resulting in higher production flexibility and faster reaction to external demands. SMED also enables line-balancing on multi-product lines. As a consequence, SMED facilitates the production of smaller lots, reduces inventory, and improves customer responsiveness.

Centerlining

Each production process fluctuates in its output parameters. When executing a process multiple times, the output parameter should reach the demanded target value, with fluctuations within an accepted tolerance. The methods to shift the mean of the process output parameters to the middle of its tolerances while reducing the spread is called centerlining.

What is the benefit of Centerlining?

Centerlining is an approach to reduce process variability and increase machine efficiency in manufacturing. Read more about Centerlining and its impact.

Just in Time production

With Just-in-time (JIT) production you organize your processes to pull parts through production based on customer demand instead of pushing parts based on projected demand. JIT helps you to deliver what is needed, just when it is needed, and just in the amount needed. It is closely related to other lean tools, such as Continuous Flow, Takt time, Heijunka and Kanban.

What is the benefit of Just-In-Time production?

With Just-in-time (JIT) production you reduce inventory levels and space requirements. In turn, this improves cash flow.

Kanban

Kanban is a tool to implement pull systems. Kanban visualizes the flow of materials and information, most commonly using paper-based kanban cards. Thus, Kanban regulates the flow of goods and indicates when more goods or material is needed.

What is the benefit of Kanban?

Kanban allows automatic replenishment and thus enables Just-in-time production resulting in reduced inventory levels and space requirements. 

Total Productive Maintenance (TPM)

Total Productive Maintenance refers to a maintenance approach that focuses on proactive maintenance to maximize the uptime of equipment. It enables operators to maintain their equipment on their own and thus reduces unplanned machine downtimes.

What is the benefit of Total Productive Maintenance?

TPM empowers front-line operators and improves productivity. TPM increases machine up time, reduces cycle times and defects.

Overall Equipment Effectiveness (OEE)

The Overall Equipment Effectiveness (OEE) is a framework to manage the effectiveness of a given manufacturing process by measuring productivity losses. By definition, three categories of losses are tracked: Availability (e.g. unplanned machine downtime), Performance (e.g. slow cycles) and Quality (e.g. scrap). In exceptionally manual work-load heavy industries or segments where human labor can not be replaced by machines (e.g. assembly) the Overall Labor Effectiveness (OLE) is used to describe productivity. Its structure follows the same pattern as the OEE. 

What is the benefit of Overall Equipment Effectiveness?

OEE offers a baseline to accurately measure your manufacturing productivity. It helps to visualize and understand performance, by analyzing the correlation between performance and performance loss you can identify potential for improvements.

Andon

An Andon system notifies co-workers and management of a quality or process problem. Traditional Andon systems use light stacks or audio signals to alert about a defect, material shortage or other issue. Thus, Andon systems indicate the status of production and notify when assistance is needed. In addition, Andon systems empower operators to stop the production process in case an issue is identified.

What is the benefit of Andon systems?

Andon systems bring immediate attention to problems as they occur and enable rapid problem solving. The effect is improved productivity, increased material flow and improved OEE. Read more about the benefits of Andon systems in our definitive guide to Lean Manufacturing Andon systems.

Standardized Work

Standardized work is about defining precise operating procedures for the most effective way to produce a product. Standard work procedures capture best practices and include takt time, work sequence, and standard inventory. Standardized work is the foundation for continuous improvement, because all improvements require consistent and measurable processes as a baseline.

What is the benefit of Standardized Work?

The benefits of Standardized work include improved quality and safety, reductions in variability and faster employee onboarding times. Standard work eliminates waste by applying best practices in a consistent form and is the foundation for continuous improvements.

5S

5S is a systematic framework for organizing work on the shop floor. The core idea of 5S is that an optimized work environment results in excellent operational processes that enables better products. 5S provides five key elements for maintaining an efficient workspace: sort, set in order, shine, standardize, and sustain.

  • Sort (eliminate what is not needed)
  • Set In Order (organize remaining items, e.g. tools, material)
  • Shine (inspect and clean the work area)
  • Standardize (use standardized work procedures)
  • Sustain (revisit and update the standards)

What is the benefit of 5S?

5S eliminates all waste that results from a poorly organized work area.

Root Cause Analysis

Root cause analysis is an approach to identify the root causes of a problem instead of applying quick fixes that only deal with immediate symptoms of the problem. A common approach to implement a root cause analysis is the 5 Why method.

What is the benefit of Root Cause Analysis?

A root cause analysis allows to apply corrective actions to the root cause of the problem and thus ensures that a problem is truly eliminated.

The 5 Whys for Continuous improvement

A very common problem solving tool is the “5 Whys” to identify the core of a problem. By asking “Why?” five times in a row, you get to the root cause of a failure. 

A example for the 5 Whys consists of the following questions:

  • Why did the machine stop? -> Tools got to hot
  • Why did the tools get hot? -> The throughput of the cooling liquid was low
  • Why was the throughput low? -> The pump for the cooling liquid was not working
  • Why was the pump not working? -> Dirt in the filter
  • Why was dirt in the filter? -> Pre Filter was not replaced and needs replacement

What is the benefit of the 5 Whys?

Identify the root cause of a problem.

PDCA for Continuous improvement

A typical tool for evaluating improvement proposals is the PDCA-cycle. The acronym PDCA stands for Plan (establish a plan and list the expected results), Do (implement the plan), Check (verify if the expected results were achieved) and Act (review and assess). Thus, the PDCA cycle ensures that a process improvement is planned, executed and checked in running operations. If it didn't deliver the desired results the process needs to undergo another cycle.

What is the benefit of PDCA?

PDCA is an iterative methodology for implementing improvements. Read more details about PDCA and tools to accelerate problem solving in our article.

Gemba Walk

Gemba is the Japanese term for the “the actual place”. Doing a “gemba walk” means visiting the shop floor. The idea is to promote regular management visits at the shop floor to observe processes as they happen. 

What is the benefit of Gemba?

Gemba walks ensure a deep and complete understanding of the real-world manufacturing environment by first-hand observation and by talking to operators on the shop-floor.

Chapter 4: How to improve lean tools with digital tools?

Since many decades, lean manufacturing has played a central role in implementing manufacturing excellence initiatives to reduce costs, eliminate waste and respond to customer demands. More recently, the advent of “Industry 4.0” automation technologies in combination with digital technologies enabled new levels of speed, flexibility and automation in manufacturing. The advances in automation, robotics, IT technology and data analytics transform how manufacturing is organized today and will be organized in the future. However, it is important to note that digital tools are not a replacement for traditional lean tools. Digital technologies and lean tools are complementing each other. Digital lean forms a new and powerful combination to improve manufacturing operations and is built upon the following key enablers: Combined IT and OT technology as the digital foundation, a clear focus on the frontline operator with standardized and digital work instructions, collection of real-time data and digital workflows to turn that data into action.

Digital lean key enabler

The foundation: IT and OT 

Only 13% of companies are exploiting digital for greater efficiency because they do follow a holistic approach (Accenture research, 2017). Prior to Industry 4.0, operational technology (OT) and information technology (IT) formed two distinct areas with little overlap. To realize its full potential, digital lean requires an integrated IT/OT infrastructure that aligns control systems, industrial networks and connected machines with cloud computing, mobile computing, data analytics and AI algorithms. 

Focus on the human worker

However, it is not sufficient to only focus on automation technologies, instead companies need to invest in their most important assets: their people. Successful digital lean initiatives ease the access to plant and operations data for front-line workers and thus empower employees for rapid problem-solving. Connecting workers with their surroundings will boost production flexibility with faster and more proactive responses. It will also drive retention and build a knowledge foundation for the enterprise. (Gartner Hype Cycle, 2019)

Information provisioning with digital standard work

By digitizing standard work and distributing work instructions on mobile devices like e.g. smartphones and tablets, manufacturers empower their employees and provide an infrastructure for efficient production processes. Digital work instructions are highly customizable and allow for changes in real-time. In case customer requirements change, digital work instructions can be updated and distributed to employees in real-time, ensuring that work instructions are always up-to-date. In addition, operators can feedback data and make their knowledge available to all their colleagues. This facilitates collaboration and adds a layer of interactivity on top of standard work that is required for flexible and agile work processes.

Collection of real-time data to unlock value

Production processes generate data that serves as input for all improvement measures. But if processes are not standardized, accurate data can not be collected. Therefore, standardized processes and a holistic data management approach that encompasses both machine and human workflow data is important. By integrating Industrial IoT (Internet of Things) technology with manufacturing software, manufacturers get an real-time view on the production status. For example, the ability to automatically collect data from machines and IoT enabled sensors improves machine uptime and reduces defects: Connected machines generate real-time data on usage, maintenance history and all technical conditions that affect performance. This data supports predictive maintenance and root-cause analysis, helping to identify potential breakdowns early on, which minimizes machine downtime. Connected sensors with image recognition enhance quality control by detecting defects and alerting inspectors. In addition, Connected Workforce software integrates front-line workers with their surrounding and improves human data collection with mobile devices and contextual data acquisition apps. This allows the efficient creation of metrics such as production rate, scrap rate, defect causes, process and step cycle times.

Turn data into action: Improve Work coordination with digital workflows

To make the collected data actionable, an IT infrastructure is needed that allows to structure and analyze the data. It is important to not only display the insights on a data dashboard but directly trigger corrective actions. The combination of data analytics and workflow management ensures work coordination in real-time. For example, the WORKERBASE Connected Worker platform allows to notify employees in real-time on smart devices in case a certain data pattern was identified by the data analytics engine. Such advanced adaptive production planning functions, in combination with machine learning and simulation software bring lean tools to the next level and help companies to create the factory of the future.

Chapter 5: Example applications: How to extend lean with digital tools?

The technology enablers mentioned in the previous chapter are key to the digital lean transformation. The following examples provide more detail on how lean tools can be extended to digital lean.

Example: Digital Kanban

A traditional kanban system is typically using signaling mechanisms such as paper-based kanban cards to indicate the need for replenishment of e.g. raw material. Once such resources are consumed to a predetermined level, a kanban signal is triggered that informs operators from previous manufacturing steps that they have to replenish the needed resource, e.g. refill bins with components at a workstation. With digital lean, kanban systems can be digitized. For example, auto-id technology such as RFID can be used to track unit-level material consumption in real-time and automatically trigger replenishment. Connected Worker technology such as a tablet computer with kanban apps can complement RFID technology to enable operators to initiate replenishment actions by pressing the button on the tablet.  All replenishment signals can directly be transmitted to the workflow apps of the connected workers, thus forming a “digital kanban” using replenishment notifications within an app. In addition, machine learning algorithms can predict kanban bin quantities to further improve the replenishment process.

Digital lean example - digital kanban

Example: Continuous improvement with digital tools

Digital tools can boost the implementation of continuous improvement measures. Operators equipped with mobile devices can submit improvement proposals through mobile apps. For example, with the WORKERBASE platform, a custom improvement app can be configured to include a submission form, in combination with the ability to submit pictures and/or a short video. Further feedback loops can be created by commenting on existing proposals, allowing collective evaluation of improvement ideas. With such an approach your organization becomes truly innovative as it puts employees at the center of improvement and leverages the experience of  your operators. The digital lean way of conducting continuous improvement is faster, easier and less bureaucratic, introducing a playful way to rapidly grow buy-in and acceptance of operators.

Continuous improvement proposal with tablet

Example: Heijunka / Production leveling  with digital tools

With traditional lean, Heijunka is about leveling production, so that production in multiproduct environments is scheduled to alternate the different product variants. As finding the ideal run size for each production run is complex, the size of each production run is typically organized with a straightforward approach, e.g. by interchanging products in fixed intervals. In contrast, a digital lean approach incorporates advanced analytics using historical data from previous production batches. This creates optimized schedules based on machine availability, change-over times, process quality and workforce utilization. For example, digital workflows and checklists on mobile devices allow operators to collect process data by simply scanning a barcode or selecting a value from a checklist. The resulting human workflow data e.g. from loading and unloading a machine can be aggregated with machine data to provide a holistic view on the different process steps needed to produce a certain variant. By combining this data with data from shift planning allows manufacturers to optimize planning e.g. by identifying which variants can be produced with the available skills during a specific shift. 

Digital lean example - collect real time process data


Example: SMED with digital tools

Setting up a machine for the next product can be challenging for operators due to the vast number of parameters that need to be adjusted. To improve machine change over time with digital tools, WORKERBASE provides an App Suite for reducing setup times. Digital work instructions on the smartphone display the required steps in the fastest order and give operators guidance on how to execute steps. With the WORKERBASE AppBuilder, individual setup instructions can be combined to form step-by-step instructions for machine setup. The WORKERBASE rule engine allows to create flexible rules which in turn allow to split long setup routines into individual tasks that are automatically assigned to different persons. By using the machine setup app, SMED can be implemented and supported with digital tools. Digital work coordination to distribute setup activities based on skills supports time measurement of machine setups on an aggregated and anonymized level. In addition, production plan data can be incorporated to include priorities: the sooner an external setup needs to be executed, the higher its priority. With this data, setup matrices for each machine can be generated and the respective tasks are announced to the operators in real-time. Based on historic and real-time data optimized model sequences are derived, leading to efficiency gains through the whole production chain.

Digital lean example - machine changeover instructions

Example: Digital Andon

Andon systems facilitate rapid problem solving on the shop floor. Once an operator identifies an issue that disrupts production, the operator can trigger a workflow that informs the next available and skilled cross-function colleague. Opposed to traditional Andon system e.g. Andon lines, that only sends a notification about the disruption, a digital Andon system enables real-time collaboration across functions such as maintenance, logistics, and quality. With digital workflows, the Andon alarm becomes a dynamic alarm: alarms are enhanced with additional metadata and can be assigned to the right person at the right time based on configurable business rules. For example, a digital Andon system such as WORKERBASE allows to dynamically schedule tasks based on skills, e.g. a service technician receives a notification on his smartwatch for a specific machine, while Andon calls related to “Missing material” are shown on the smartphone of a logistic worker. This skill-based distribution increases response times and improves throughput. Due to faster response times, the issue can often be handled in-line without ejecting the product from the assembly line or slowing or shutting down the line. This  improves the availability of the whole line and allows smaller buffers in cycle times, reduced costs of rework, and more stable operations.

Digital lean example - Digital Andon


Chapter 6: What are the benefits of digital lean?

With digital lean, manufacturers can reduce costs, improve quality and productivity resulting in  a stronger return on investment (ROI) when compared with individual digital or traditional lean improvement projects.

According to the BCG study "When lean meets Industry 4.0", "the integrated approach allows lean management and Industry 4.0 to be mutually enabling, its improvement potential is greater than the sum of the improvements achieved by either approach independently. Mutual enablement promotes benefits beyond the typical limits of either of the two approaches."

Bain & Company argue that “Digital lean amplifies traditional lean benefits” and forecast that a digital lean approach can double the savings of traditional lean efforts. According to Bain & Company, combining digital and lean initiatives can reduce costs by up to 30% vs. 15% for traditional lean efforts. Deloitte has identified several categories for digital lean business opportunities. According to Deloitte’s Digital lean manufacturing study, the potential benefits include 10-20% improved asset efficiency, 10-25% improved quality, 20-30% reduced costs and 3-10% improved safety and sustainability. A 2017

Overcoming current challenges requires to re-think your operational stack from the ground up. If you are still relying on Lean tools only without adding digital capabilities, you will have an increasingly difficult time to stay ahead of your competitors. Winning your customers’ business means: acting fast and being flexible and focusing on the empowerment of your staff. We at WORKERBASE have identified 4 steps to introduce digital lean that make your company stay ahead of your competitors. Please see our Digital transformation playbook for manufacturing to read about the required steps for starting the digital transformation or contact us directly through the form below. We look forward talking to you!

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