18 July 2016

Lean 4.0

By Xavier Perrin (xperrin@xp-consulting.fr)

For some time, articles and posts about Lean 4.0 are spreading over magazines, blogs and social networks. This idea –  Lean 4.0 – is related to the concept of Industry 4.0, whose promoters explain that the emergence of new advanced technologies like 3D printing, robots, big data, and other digital applications, will dramatically change industry. Having recently read “The Second Machine Age” from E. McAfee and A. Brynjolfsson, I think they are right: the acceleration of innovation in these fields will definitively create new paradigms for industry. Lean 4.0, as it is presented, is in line with Industry 4.0. Authors explain that the emerging technologies allow to eliminate some wastes, by giving people more insightful information for continuous improvement. I just read, in a French magazine, an article about the successful digitalization of a big OEM of the automotive industry. Amongst other, they implemented an application which makes real time analysis and contextualization of machines parameters, and is able to detect weak signals which are immediately transmitted to operators, allowing them to react instantly. This kind of innovation is probably a great step for monitoring processes. Nevertheless, it is only a basic application of lean. And, using the suffix “4.0” fools the readers, as they will probably think that such innovations will revolutionize the “old Lean”, an idea which was born a few decades ago. Lean is about thinking. Besides, “Lean Thinking” is the title of the famous book of J. Womack and D. Jones. Most of the technologies which are associated with “4.0” allow people, in the best case, to get better information which are supposed to help them taking better decisions. I don’t think that it helps people to “think” differently. I know that this clarification will not count much against the wave of “4.0”. So, I will try, with your help if you accept to massively disseminate this post, to give another meaning to Lean 4.0. From my experience, I observe great differences in the maturity of companies regarding lean. I propose to define 4 levels of maturity. The highest level could be called Lean 4.0! The levels are summarized in the table below.

Lean 1.0 Companies which start with lean start by implementing tools. They generally view lean as a toolbox which promotes the participation of employees. For example, the tools are used for streamlining and clearing the workplace (5S), improving quality (Kaizen Circles) and improving productivity (TPM). We can find useful definitions and explanations in “The Lean Toolbox” of John Bicheno.

Lean 2.0 Managers of Lean 2.0 companies understand that, for greater performance, it is necessary to consider a “system” view of operations. Value-Stream-Mapping is the methodology which allow them and their employees to identify the value stream and to create the conditions of flow. Implementing One-Piece-Flow is the ultimate approach for reducing lead times by eliminating waste, starting with overproduction which is the worst muda. Reducing lot-sizes with the help of SMED, creating FIFO lanes, implementing supermarkets and pull systems are other steps, besides levelling (heijunka), for reducing lead times and increasing efficiency. “Learning to see”, the indispensable book of Mike Rother and John Shook, and “Creating Mixed Model Value Streams “, of Kevin Duggan, which addresses the context of high-mix, low volume operations, are among the better references for learning to become a Lean 2.0 enterprise.

Lean 3.0 Short lead times, improved flexibility and responsiveness, and efficient use of resources is not enough. These improvements only bring value if they are perfectly aligned with overall targets of the company. This cannot happen spontaneously. It is necessary to create a process by which all value streams and processes are aligned with the “true North” of the company. Such a process starts with top managers and involves all layers of the organization. It aims to create consensus between all stakeholders of the organization. It should be well planned and managed. Hoshin Kanri, or policy deployment, is the methodology which supports this process. It is well presented in the book of Pascal Dennis “Getting the Right Things Done”. As a result, one can expect increased efficiency and effectiveness.

Lean 4.0 Having created an organization where everyone, from employees to top-managers, perfectly knows what s/he has to do, isn’t sufficient. Everyone has to know how to find solutions for overcoming the obstacles which stand on the way to targets. This necessitates, for everybody in the organization, to “think scientifically”, that is, to overcome the biases and pitfalls of first ideas and fast solutions. This behavior isn’t natural or organic, as it was brilliantly demonstrated by Daniel Kahneman in is famous “Thinking fast and slow”. Adopting scientific thinking goes well beyond using PDCA and A3 reports. It should be a way of life. Everyone in the organization should learn this behavior from a teacher. And the teacher should not come from outside the organization. This is the role of managers to coach their teams in systematically thinking scientifically. Like Japanese martial-art practitioners who repeat, under the watchful gaze of their sensei (Master) codified series of gestures – so called kata – in order to make these gestures become natural. This learning process – improvement kata / coaching kata – has been well described and analyzed in the excellent book of Mike Rother “Toyota Kata”. This is obviously the secret of the success of this company, whose performance and ROI remain on the top for years.

Industry 4.0 undoubtedly refers to new paradigms and a new age for supplying goods and services. It will necessitate to deeply rethink our way to plan and monitor the supply chain. The suffix “4.0”, when placed after “Lean”, suggests the same kind of revolution. Paradoxically, if we consider the nature of improvements that it is expected to provide, it would only help in maturity levels Lean 1.0 and 2.0. This is the reason why I suggest to give another meaning to Lean 4.0. Lean 4.0 should be the highest level of lean maturity, the one which is about the way people think. I hope that Lean 4.0 will remain the privilege of humans for a long time.

One comment on “Lean 4.0”

  1. Hello,
    Again, interesting post!
    My five cents: What you call "Lean 4.0" (what's in a name?) should in fact be "Lean 101". Indeed: The evolution of Lean in our Western world has been the exact opposite of what Lean was/is all about: first get your culture (management style, long term thinking,goal dissipation, etc.) in order and then go ahead with the tools and techniques to get your "system" in place. It has taken quite some time, but let's hope that the spirits are getting there to understand the true force of Lean and the correct implementation (do not forget the five steps and apply them in order!). Last but not least: "Lean 5.0" might be the insight that implementing Lean is a long-term, never-ending effort that is based on a long-term vision and can not be measured in terms of €, $ or Yen alone and even less in "next quarter results"!!

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