Lean and Technology

by BILL WADDELL

I was interviewed yesterday by Industry Week on the ever lively topic of lean thinking versus technology. ... it seems this subject keeps churning so I thought I'd try to clear it up a bit.

First, let's be perfectly clear that IT is just about always non-value adding waste (not technology embedded in the product, but the information systems used to run the business).  It is waste because it fails the basic test - when I am looking at two virtually identical items in Walmart am I willing to pay more for Product A than Product B because the maker of Product A has to cover the cost of better computers and slicker programs than the maker of Product B?  Of course not.  I am only willing to pay more if that technology translates into superior product value - better quality, utility or reliability.

That said, IT has a role.  Just because it is waste doesn't mean you don't need some of it to effectively run the business.  It is important to recognize that just because something is necessary it does not follow that it adds value.  CEO's, accountants and even lean consultants from time to time may be necessary but they do not add value for customers.  The measure of them should be whether the money 'wasted' on them is enabling the real value adding efforts to perform more effectively.

It is also important to keep in mind that technology is a tool - not a strategy.  Like all tools, it can be used effectively ... or not; or used appropriately ... or not.

ERP and other management systems are often lean whipping boys.  That is probably unfair - they can have an important role in a lean enterpise.  The problem is that far too often they are used to create and institutionalize waste, rather than eliminate it.

Buyers, planners, schedulers and the like - the traditional MRP support infrastructure - add cost and slow things down.  Systems that are designed around getting these people more information and further institutionalizing their place in the process are anti-lean.  On the other hand, systems that enable cutting them out of the loop are very lean.  Most ERP applications fail this basic test.

Another problem with such comprehensive systems is their inflexibility.  Continuous improvement means continuous change.  Once put in, how easy or hard is it to make changes to the system?  Usually the answer is that it is pretty hard, and IT and/or the software provider become bottlenecks to the continuous improvement effort.

Of course, the most frequent problem with ERP systems is that they tend to formalize forecast driven push flow, rather than demand pull.    These days just about every decent system can support pull, but the companies using them have rationalized their uniqueness and use the system to 'optimize' unnecessary and wasteful push processes.  In fact, it is a very rare business that works best on forecast push, but far too many have rationalized that, because they are unlike Toyota and the basic card kanban method doesn't work for them, they must use a push approach.  There are countless ways to deploy pull processes, and it is not the fault of IT or the software if management doesn't understand this, but IT and software are wasted as a result.

Manufacturing technologies - robots, CNC machines and the whole range of factory automation devices - are similar.  They may or may not support lean.  This thing looks like a nice little robot and it goes for only $22,000.  Is it a lean tool?  I have no idea.  Like most automation the information describing it is fixated on how it can reduce labor costs.  Anticipated labor savings are rarely realized from such investments (just ask GM who spent $30 billion under Roger Smith on a strategy to automate their way to Toyota and Honda labor levels under and came up short).

Lean is about flow, so the critical questions about this robot - and all factory automation - are (1) how fast can it change from one task to another - how flexible is it?; and (2) what sort of quality tolerances can it hold relative to the specifications - the Cpk levels?  If it can change on a dime and maintain very high quality levels it is likely to help the lean effort - if it can't then it won't.

The technologies most powerful in aiding the lean effort are those used to shorten the product design processes - additive manufacturing and rapid prototyping tools, for instance - and the Internet.  Like all technology, product development technologies are effectively used after value stream mapping and optimizing the design process, else they are likely to end up speeding up things that shouldn't be done in the first place.  In the early days of Six Sigma's development the Motorola folks repeatedly drummed the principle that 'Automating a process without first optimizing it will only result in creating the ability to produce scrap at speeds you never before thought possible'.  The correlation in management information systems is that 'automating your business processes without first optimizing them will only result in wasting more money on non-value adding work than you ever thought possible'.

The Internet is very rapidly being seen as the vehicle for companies to communicate and often do business directly with end customers, enabling whole chunks of the supply chain that add time and cost - but not value - to be cut out.  Used in this manner, the Internet may be the most powerful lean technology of all.

At the end of the day, there is nothing inherently 'non-lean' about technology.  The lean versus technology issue strikes me quite similar to the gun control question.  Guns and technology are not good or bad - they are inanimate objects.  The goodness or badness attributed to them is a function of the intentions of the people using them.  I think many lean proponents who come across as ardently anti-technology are a lot like the ardent gun control advocates - simply driven by the fact that stopping all of the folks who use the objects for the wrong purposes is virtually impossible so they try to solve the problem by eliminating the inanimate object those people use to do damage.

Original: http://www.idatix.com/manufacturing-leadership/lean-and-technology/

Comments

[JM Fleck]

Great Post Bill. It reminds us to always ask questions rather than seek and apply an absolute rule about something. Nothing is going to relieve you from thinking about process and value. In our organization, particularly our lean support team, someone once decided that "conveyors are bad," "work cells are good." I witnessed individuals walk into an operation and say immediately "you need to get rid of that conveyor" without asking a single question about flexibility, adaptability, flow, or takt time. It even infected our design team. Another example, "we don't want to design this process with a conveyor, because we are a lean company." It seems some people are always looking for an excuse not to think, and pursue rules for this purpose. Sorry folks, this job requires you to use your brains. Let me teach you some general guidelines, ask you some questions, then lets discuss the process again.

[Scott Sorheim]

I echo Jim's sentiment...great post, Bill. "Technology" certainly and unfortunately has earned a bad rap because of plenty of waste-creating implementations. "Don't automate the mess" is a great phrase I learned from a mentor once, and I think David Kasprzak said something similar over on his blog. When people are adamant about not using "technology" (which they are typically referring to IT when they say this), I try to bring physical technology examples to light. E.g. when I was at Pella, we would never have asked operators to return to hand screwing screws into windows when a perfectly good piece of technology, a screw gun, does it faster, safer, and more effectively. Granted, that is improving a value-added operation, but since business can't escape some level of information flow, let's at least eliminate whatever waste we can from the information flow and make it as useful as possible (e.g. communicating abnormalities quickly, knowing where the "pain" is on the shop floor, and being able to respond to it).

There certainly needs to be a lot more lean thinking in IT departments. Sadly, it is a rare breed to find IT folks that recognize that the company they work for makes and sells widgets (and cuts their paychecks from the revenue of said widgets) and isn't in the business of making and playing with the coolest new technology.

[Scott Sorheim]

Oops, I said I echo "Jim's" thoughts, when I see it is actually "JM". Apologies to "JM Fleck".

[David Hallsted]

I agree it is an excellent post.
The reason why lean folks are so against IT folks is that IT is the one group that gets to do what they want to whomever it wants, whenever they want and it gets branded as improving my life. I have yet to find an IT person who knows who their customer is, which is ME! Ask me before you do it to me.
It drives me nuts.
Most all IT deployments of technology are top down. Let me say that one more time, “Top Down”.
Now put an IT person in head of the continuous improvement department and you get top-down deployments of programs that generate process waste “at speeds you never before thought possible”.
And if you are a technology company, they look at IT to help drive the business strategy and you get this desire to put everything in the “cloud”. Mind you, what the customer wants is to talk to a person. The customer does not want to go online to yet another site to look up information why the item they purchased is not here or their RMA is not repaired or look up a list of FAQs.
It just drives me nuts.
Yeah, I am done ranting for now.

[JM Fleck]

There does seem to be confusion with those managing corporate process in general in terms of what should be their true north and focus. When coaching these teams on kaizen, their is always a temptation to implement a countermeasure that makes their lives easier. The focus should be on those in operations, and keeping them focused on the value add. For example, IT purchasing describes a major problem for them is service time from order request to delivery to operations. The main problem analysis tells us a significant amount of time spent correcting the order form with calls and emails going back and forth to get the specs right. The proposed countermeasure is to create or improve a form for the operations manager to complete when new equipment is needed. Why not have the operations manager simply call you, and you, expert on hardware, can complete the form for them and ask them the relevant questions. What the IT people don't see is that they create a form, HR creates multiple forms, finance creates multiple forms, etc.., and the operations manager invests way too much precious time away from the operation trying to understand or rework the information. They don't realize it because the motivation is in the wronng place and priciples are not clear.

[David Bueford]

I agree great post. Its difficult for material planners to get around technology. While ERP systems are supposedly to plan material ultimately there for financial and labor reporting. Many instances I found we could have pulled the plug on parts of ERP and went with a 2 bin system. However finance hasn't yet learned lean accounting. So eventually what you end up with is hybrid system that compromises most of your guiding principles.

[Robert Drescher]

Bill you are right technology can be bad or good, it depends on how, when, why, for what, and by who, it is used. Unfortunately we forget to first fix the existing problems, and then apply technology to improve which would help reduce the cost of creating value. Instead to often technolgy has been used to simply just produce more regardless of how badly we do it.