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Industry 4.0 and Lean Principles

Rob SummersBy: Rob Summers, Senior Business Advisor Manufacturing

My relationship with Industry 4.0 is much younger than my relationship with Lean principles. While Lean has been around in some form for decades, I learned these principles and began practicing them almost 20 years ago. My connection with Industry 4.0 began about 18 months ago; and since then, I have been working to catch-up with the pack--understanding the various technologies and concepts that fit into this space. As a serious manufacturing junky, these two areas gave me a lot of Kool-Aid to drink, but it wasn’t until recently I began to connect the dots and realize the close relationship these two genres share.

Inventories - Lean principles teach us to identify waste within our processes and seek to eliminate it. Often times we find the simple accounting buckets are showing us one set of data, but our wastes are impacting us in many different areas. Inventories are the classic example. We know if set-up times are long, we are not running parts and our machine usage is low. We like utilizations to be high and rather than focusing steadfastly on change-over process, we avoid change-overs by running large batches of parts. These parts are then moved about in our facilities, and we invest in shelving and floor space to store them. If we identify a defect, a customer issues an engineering change, or market demand unexpectedly decreases, we are hit with additional cost related to these issues. I often ask companies, “Where are the parts that you don’t sell much anymore?” Many have a warehouse full of obsolete parts which are then sold at a reduced cost or scrapped. The over-production of parts to keep our utilization high costs us in several areas in this example. The advent and advancement of additive manufacturing allows us to produce the right amount of parts for the customer order, inclusive of custom features and geometry otherwise not achievable by traditional “subtractive” manufacturing techniques.

Advances in materials have graduated us to a world where many parts of different alloys can be produced with additive, not just plastics and polymers. It will be easy for businesses to look at the cost of additive parts (today, they will continue to decrease) and say, “My parts are cheaper; additive doesn’t work in my business.” The true story will be deeper than basic part cost. What does it cost to store your inventory? To find it when you need it and retrieve it? How much do you obsolete at the end of a program or during a decrease in customer demand? When you produce a defect, how many parts need rework and what is that cost? Additive manufacturing itself gets to the heart of this lean principle.

Efficiencies – Manufacturing is a competitive space where companies often problem solve to find single-digit percent improvements in the journey to stay in front of their competition. In some businesses, the low-hanging fruit has been picked, and we now must venture into the deep, technical issues in our businesses that create variation. The digital components of Industry 4.0 align directly with this journey of continuous improvement by dramatically increasing the transparency of our processes’ technical characteristics. We can measure things we couldn’t before and look for trends with machine learning and system integration. We can share information globally with cloud computing and look for trends across sites. Devices can report easily as many are wireless enabled. Powerful simulation tools allow us to experiment with improvements prior to making significant capital outlays. Many new devices can be retrofitted to legacy equipment and are available as aftermarket add-ons.

This transparency gives the users new ground to pursue improvements that otherwise would be less quantifiable and tangible. I always say, “In the absence of data, we are left to a group of people with opinions.” Often these opinions don’t align, and the organizational improvement efforts can be stagnant while the team comes together. Digital applications of Industry 4.0 technology add tremendous velocity in quantifying our opportunities and helping align our teams on improving the most impactful opportunities.

Flexibility and Responsiveness – More than ever, today’s business environment demands businesses to be responsive and flexible. Customers expect short lead time for products and will seek alternatives if we can’t meet the need. Market conditions change fast, leading to the need to be nimble as a business. The longer it takes to turn your ship, the further behind you fall from the others that turned faster. Lean principles have always guided us to be flexible through the reduction of lead times, primarily to reduce the cash conversion cycle. The digital drivers of Industry 4.0 also help us to be nimble by providing a deep understanding of our business and improving real-time communication. Additive manufacturing helps put real parts in people’s hands fast which reduces product development cycles and quickens the pace of design iteration. The emerging world of collaborative robots now allows humans to work alongside industrial robots which can learn faster than ever and be programmed by anybody in the business that knows how to do a task. Autonomous Guided Vehicles (AGV) are beginning to replace assembly lines to move product through facilities as they can be tailored to demand levels and therefore, improving flexibility. As businesses seek to reduce lead times and improve their flexibility, this toolkit will provide opportunities for most.

As companies discovered lean manufacturing through the 80’s, 90’s, and into the modern century, manufacturing changed dramatically. The competition curve got steeper, and companies had to act to stay relevant and in front of their field. Just as these principles fueled significant steps forward in cost reduction, efficiency, and flexibility, Industry 4.0 technologies prove to propel us on fundamental changes to the ground on which we compete. Companies who remain idle, or for some reason are unwilling or unable to move forward, will languish over time and find it more challenging to compete. The companies which excel in identifying implementation opportunities, keeping their culture open to experimentation and change, and are eagerly pursuing the future will emerge as leaders in their industries. Lucky for us, the entrepreneurial spirit is strong in northern Michigan, and we have a history of pioneering. I look forward to our experiments and watching our businesses forge their way in this new and exciting space.

Rob Summers, Senior Business Advisor Manufacturing
MMTC-North Region at Northwestern Michigan College
1701 East Front Street; Traverse City, MI 49686
(231) 995-2015

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