Digital Transformation vs. Lean Transformation | Bob Emiliani

“Corporate investment is increasingly shifting from machinery and employees to robots and software. Why? Because CEOs think digital transformation will be a source of competitive advantage. And it is a transformation that they think they can execute more rapidly compared to Lean transformation. CEOs also think that automation and artificial intelligence will take on greater roles, while the work of employees will take on less significance over time. They think technology is becoming more valuable than employees.”

Sourced through Bob Emiliani’s blog

Michel Baudin‘s comments: “Digital transformation” is a quaint way of describing the growing pervasiveness of software in business, with its infrastructure of computers, computer-controlled devices, and networks. Digital is normally opposed to analog, as in music CDs versus vinyl LPs. The early work on industrial automation was based on analog mechanical, fluidic, or electronic control systems, and its “digital transformation” happened decades ago with the advent of numerically controlled (CNC) machine tools and programmable logic controllers (PLCs). This is not what Bob is talking about, but I am not sure what he is talking about.

Bob sees Lean being displaced in corporate strategy but is not quite clear what is taking its place. He says that corporate investment is shifting “from machinery and employees to robots and software,” but aren’t robots machinery? And doesn’t the use of robots and software require investing in the development of employees who can use them?

Many other names have been used besides digital transformation. For example, the prefix “e” often designates electronic versions of previously existing tools, as in email, or eKanban, so you could talk about eManufacturing, but nobody does. “Cyber” is most often used for the dark side of this technology, as is cyber-attacks or cyber-bullying, but it hasn’t kept the German Industry 4.0 program from being based on cyber-physical systems, For lack of a better word, I just use “Information Technology” (IT) as an umbrella term for everything in manufacturing that is based on computers, from machine controllers to ERP.

“Interestingly, digital transformation of a business forces other people to change, such as customers, while Lean transformation requires managers to change. It seems clear, given the long history of technology in business, that managers vastly prefer other people to change. Changing someone else’s routines is much easier than changing your own routines because the value proposition is clear in the former and unclear in the latter. Business transformation succeeds when others must change. Business transformation typically fails when managers must change.”

Michel Baudin‘s comments: I don’t see it. The introduction of more IT into the operations of a business requires people at all levels to change, including managers. They may think they don’t need to, but they are mistaken. It takes work to become and remain IT-literate but the managers who don’t are likely to use it, at great expense, only to mechanize existing practices and make them more difficult to change. Many authors have pointed this out, including Bob in his article, and here are a few examples I have personally experienced:

  1. Many assembly plants prepare kits days in advance and, when the time comes to assemble a product unit from the kit, discover missing parts. To proceed, the assemblers steal the needed parts from other kits, which perpetuates the problem. It’s not an easy to eliminate this practice but part of the solution is to prepare kits just before use, so that components are not placed in kits earlier than necessary. The “solution” I have seen implemented in a Manufacturing Execution System (MES) was instead to include a “Steal from kit” transaction to track the practice.
  2. As discussed in earlier posts, IT has made “smart” numbering systems obsolete, but it is used instead to perpetuate them.
  3. A machine shop used a machining center to cut multiple copies of the same item from a slab of aluminum, when it could have made instead matching sets of different component going into the same product. It did not make this change, however, because its process planning system did not support making multiple items from a single slab.

“CEOs see technology as becoming the major corporate asset, while employees are an asset to the extent that they contribute to innovation. Innovation may be the business need that helps Lean management survive; especially, kaizen. Perhaps kaizen, more than any other aspect of Lean management.”

Michel Baudin‘s comments: A company’s specific product designs and processes are its core technology. They are intellectual property, invented by its engineers, often patented, and indeed a major corporate asset.  We shouldn’t equate “technology” with IT. It is only one form of technology, and not the major one in most corporations.

I am not sure that making Lean management survive as a topic is an appropriate goal. Lean management is a separate entity as long as it represents a departure from corporate practice. If successful, the approach now known as Lean management will replace the current practice and become the standard.  As “the way we do things,” it will be just management. If unsuccessful, it will be forgotten.

“[…]it seems that the current path we are on is one in which the leaders of large businesses favor investment in software over traditional machinery as a source of competitive advantage and productivity improvement.”

Michel Baudin‘s comments: The key point is that, whether it is software or machinery, the mere possession of an asset is never a competitive advantage. Anyone with money can buy a Stradivarius and it doesn’t make them violinists.  It’s only when combined with skills at using them that these assets can become a competitive advantage. There is no investment that eliminates the need to develop a skilled workforce.

The record of IT in Manufacturing is mixed. The direct and supervisory control of machines is a success, and so are Warehouse Management Systems (WMS), but ERP systems don’t have many enthusiastic users. These systems are, at best, perceived as an unavoidable cost of doing business but I have never heard a manufacturing executive credit a company’s success to the ERP system they used.

It’s not a question of whether IT should be used in Manufacturing but how.

In Part 2 of his post, Bob quotes Taiichi Ohno’s Toyota Production System on his thoughts regarding the use of computers at Toyota:
“The Toyota production system, however, is not just a production system. I am confident it will reveal its strength as a management system adapted to today’s era of global markets and high-level computerized information systems.” (p. xv)
“While we intend humans to control them, computers have become so speedy that now it looks as if humans are controlled by the machine. Is it really economical to provide more information than we need – more quickly than we need it?” (p. 47)
“We use the computer freely, as a tool, and try not to be pushed around by it. But we reject the dehumanization caused by computers and the way they can lead to higher costs… we want information only when we need it… An industrial mind must be very realistic – and realism is what the Toyota production system is based on.” (p. 48)

Michel Baudin‘s comments: The English translation of Taiichi Ohno’s Toyota Production System came out in 1988; the Japanese original, in 1978. For ideas on IT, it’s a bit long in the tooth. Ohno’s ideas about Manufacturing have aged well and retained their relevance but I would not look to him for guidance on IT. My smartphone today is a more powerful computer than the mainframes of the 1970s, and it is connected to the world. There were prophets from that era whose visions of IT came true but they did not come from the ranks of manufacturing experts.

#Lean, #LeanManagement, #IT, #ManufacturingIT, #Industry4.0, #CyberPhysicalSystems, #WMS, #ERP

3 comments on “Digital Transformation vs. Lean Transformation | Bob Emiliani

  1. To me, those are entirely different topics. One is about a deeper integration of IT to get richer and more timely data that help to make more informed decisions (Digital Transformation), while the other is a way to arrange capabilities and assets to maximize value-generation for the customer, business, and also employees (Lean Transformation). Joerg Muenzing

    • Joerg, it’s good to hear from you.

      I agree they are different topics but, depending on how they are managed, there can be interference or synergy. For example, when management makes ERP a priority, it is such a money pit and a time sink that there are no resources left to do anything else, not to mention that embedding the company’s existing processes in software makes them more difficult to change. Instead of deliberating on what are the right things to do, managers worry on how to get things done within the new system.

      On the other hand, the internet of things comes in handy when you are trying to mistake-proof the assembly of different products that go into the same cases and weigh the same. You cannot rely on taller products to trigger whisker switches or on empty boxes to be blown off the belt by a jet of air but, if the product can communicate its ID and configuration, the local controller can ensure that the right components are made available.

      IT isn’t just for decision support, but also for equipment control and transaction processing. Warehouse Management Systems (WMS) are popular become they make basic putaway and picking operations easier.

  2. for me the IoT is the progression of Lean Manufacturing, i.e. like Michel said it is in a sense synergy. Kanban, TPM, Poke-Yoke, etc.,applications are pre-forms of information gereration (sensors) and signal processing (big data)… I am still using these data in certain degree at every stage of value creation in Real Time by integratiing them into ERP, though it would not be possible without bar-code/RFID-systems (not lean manual data entry and time laps). Further, again as pointed out, digitalization contributed enormously in terms of traceability and Warehouse Management Systems, not only in incoming but also outgoing, i.e. shipping again in terms of error-free operations.
    On the other hand Lean Transformation or lean production system design (resource planning) is a must and can be done at any enterprise with any level of technical and financial capabilty to invest in many different ways as opposed to huge infrastructure, operating systems, software developments, etc. in IoT/Industry4.0 in a way from the very beginning.

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