How to Achieve 20% more in Performance Gains

eBOOK

How to Achieve 20% more in Performance Gains A Pragmatic Guide for Combining Lean + Industry 4.0 to Transform Your Business.

Table of Contents Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 The Convergence of Lean + Industry 4.0 Will Transform Your Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Lean Paradigm Shift: Automation = Growth, Not Cost Out. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Connected Factory: Bring Context to IIoT Data that Will Move the Needle in Your Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Connected Workforce: How to Create a Connected, Revenue-Generating Workforce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Connected Supply Chain: 5 Ways to Combat Supply Chain Disruption Now . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Stop Digitization Derailers: 3 Ways to Remove Technology Project Roadblocks . . . . . . . . . 18 Getting Started with Lean 4.0: A Practical Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Case Study: Lean 4.0 Journey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 About TBM Consulting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

The Authors

Ken Koenemann

Shannon Gabriel

Chip Barth

Vice President, Technology and Supply Chain Practices

Managing Director, Leadership Solutions Practice

Managing Director, Global Supply Chain Practice

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Introduction

Lean 4.0: The gateway to hidden performance improvement opportunities.

Go deeper into your manufacturing, supply chain, and talent management processes to identify and address sources of hidden waste.

If your organization is feeling “leaned out,” you’re not alone. Most lean veterans have already captured the low-hanging fruit — optimizing resources and minimizing surface-level waste. Performance, productivity, and quality gains that were once significant have now tapered off. Yet, you know there are still areas for improvement.

And, you’re right.

Lean 4.0 offers the fastest, most accurate way to take lean, and your performance, to the next level. Lean 4.0 integrates data, process, and technology to open up a new world of nuanced, strategic performance improvement opportunities—opportunities that lean practices of the past have overlooked.

If your business is looking for its next major performance leap, this eBook will help you understand:

For the average lean manufacturer, an additional 20% in performance gains remain untapped.

• The 3 critical pillars of Lean 4.0 success

But these gains are not always easy to see. They are often hidden in the inner workings of manufacturing processes. Variables like cycle time variances, work method differences, equipment parameters, and minor stoppages hold the keys to your next round of major improvement.

• Why, how, and where automation fits into a lean approach • The value of a connected Lean 4.0 model for the factory, workforce, and supply chain • How to take a pragmatic Lean 4.0 approach that generates immediate results • What a successful Lean 4.0 journey looks like 3

CHAPTER 1

The Convergence of Lean + Industry 4.0 Will Transform Your Business You can’t “lean” away talent and materials shortages. But you can up your Lean game to make what you do have more productive, realizing significant performance improvements along the way. + Key Takeaways • Lean 4.0 combines an organizational-wide commitment to lean with Industry 4.0 and the right advanced technologies to generate up to 20% more improvement for most manufacturers.

• Companies can efficiently and effectively tackle the productivity, talent, and supply chain issues that stand in the way of achieving production goals by using a Lean 4.0 approach.

• A prove-and-move mindset enables companies to quickly realize the performance advantages of Lean 4.0 by starting in the areas that are most critical to current performance.

Unleash up to 20% more improvement and give your business the edge it needs now with Lean 4.0.

This is a big oversight. With the evolution of Lean 4.0, now is actually the perfect time to recommit to lean, in a bigger and deeper way, and dig into your as-yet-uncovered performance improvement opportunities as a way to tackle and offset the heightened challenges you’re facing now.

It’s no secret that manufacturers continue to struggle with global supply chain disruptions and talent issues exacerbated by recent global events. They face shortages of everything from raw materials to people to get the job done, even as pent-up demand is putting more pressure on production schedules. Like never before, companies must find new ways to do more with less.

So, what is Lean 4.0 anyway?

In our recent article, Use Lean 4.0 to Tackle Hidden Performance Improvement Opportunity, we take a deep dive into the topic. As a relatively newer buzzword, there’s some debate about what, exactly, it means. But pretty much everyone agrees that Industry 4.0 and connected equipment are central to the idea.

Manufacturers that are lean veterans have an advantage.

After all, they already have a waste-reduction and efficiency focus and are wired to make the most of every resource they have available. However, many companies feel they have already captured most of the surface-level performance improvement opportunity and are only realizing incremental gains from current lean initiatives.

So, they aren’t necessarily thinking about getting more lean as the answer to their current woes.

TBM, however, sees the Lean 4.0 opportunity as much bigger than data. Like everything else, we look at it through the lens of solving real business problems—like the talent and supply issues currently keeping you up at night. And while data most certainly plays a role in resolving these challenges, it’s just one pillar of the solution stool. In other words, data can point you in the right direction. But it’s what you do with the data to ultimately resolve problems that really counts.

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3 critical areas that Lean 4.0 encompasses.

at our roundtable quipped, “In our warehouses and manufacturing plants, we’ve come to the realization that in the past, automation was a cost reduction opportunity. But now it’s a revenue generator because we don’t have people to run the lines. So, where we can, we’re using robotics and more enhanced technology.”

1. 100% % Institutionalizing Lean Across the Organization. Lean is a journey that never really ends.

No matter how lean you are, there are always opportunities to do more within pockets of your organization where waste remains—or where it’s creeping back in.

Replacing non-value-added manual work with technology is one way to address the labor crisis, get leaner, drive efficiencies, and improve quality.

But technology can also make the people you have onboard more efficient. Manufacturers are leveraging digital standard work, workstation robotics, advanced analytics, and AI to drive assembly line teaching and expand skill sets, and it’s enhancing the productivity of the team, tying right into the lean culture and mindset.

Before you start looking for uncovered or hidden performance improvement opportunity, it’s worth a checkup to see what’s readily available on the surface.

Look especially at lean processes that may have become lax during the COVID crisis, such as root cause identification, problem solving, and standard work. A little tune up in these departments can go a long way in making your team much more productive.

AI and machine learning can also be used to optimize supply chains and to help manage complex networks.

As one leader shared with us, his company is working with a leading digital fulfillment provider to help leverage AI and machine learning to better manage 50+ plants and warehouses. To keep transportation and warehousing costs low, the organization invested heavily in the provider’s warehouse management and transportation management control modules. “Before we had too much inventory, too much cost, and then everything was affected by COVID. Now we have a better handle on the supply chain across the board.

We’re about 90% through implementation, and it’s been very successful.”

2. Marrying Lean Culture with Industry 4.0. When you’re ready to dig deeper for new performance improvement opportunities, this is where the data comes into play. There is waste hiding in your manufacturing processes, work methods, and equipment parameters, and you need data to show you where it is.

When paired with analytics, Industry 4.0 data that comes from connected machines can lead you to the root cause of the minor stoppages, wasted seconds, and nuanced inefficiencies that can add up to major gains in productivity.

Connected workers and connected supply chains help, too, by giving insights into where such things as standard work may need improvement or where supply chain disruptions are going to lead to future problems.

As one manufacturing executive told us in our recent Operations Roundtable, “S&OP [processes and data] is helping us see the bad news better than we did before... and at least we see where the train’s going to derail. Especially with the long lead times when you’re looking 12 months out, it gives you the ability to react.

It’s the windshield.”

Set a Lean 4.0 pace that works for your business.

While we estimate that most manufacturers have 20% more improvement opportunity to gain through a Lean 4.0 approach, we believe that realizing those gains requires a pragmatic, prove and move approach. That starts with identifying challenges that are most critical to the business, such as cost-effectively meeting demand and quality expectations with limited resources. Implement a Lean 4.0 approach here first, and you’ll quickly see how rolling out lean processes, gathering the right data, and strategically leveraging new technology works on a smaller scale to make a big business performance difference. Once you’ve proved the value from your initial steps, you can move on to the next area with confidence.

Click here for more detail on the approach go to Getting Started with Lean 4.0: A Practical Approach.

3. Adopting Advanced Technologies to Understand And Address Areas of Improvement Opportunity In Business Processes. When you know where the culprits lie, you can then determine the best way to solve for the problems. Very often, this involves technology and automation. As another executive 5

CHAPTER 2

Lean Paradigm Shift: Automation = Growth, Not Cost Out Automation is now part of the lean equation. It’s time to stop viewing advanced technologies as cost-out opportunities and start strategically leveraging these capabilities to accelerate productivity and revenue growth. + Key Takeaways • Lean and automation have traditionally been viewed as mutually exclusive. But a Lean 4.0 approach brings them together to unlock significant improvements for both your top and bottom line.

• Three of the key areas where lean and automation work together to drive results are operations, talent, and supply chain.

• Strategically leveraging automation within the context of lean processes can help you address talent and material shortages and meet your throughput and productivity goals in the most efficient way possible.

Keep a lean focus during automation roll out to accelerate throughput, drive growth, and resolve business challenges faster.

The good news is automation can and should be part of a next-generation lean strategy.

Thanks to advancements in both lean thinking and automation technology, the two concepts are no longer mutually exclusive. With the emergence of the Lean 4.0 philosophy, lean methods are leveraging technology to become more digitized and more effective. At the same time, lean is becoming more closely tied to connected machines, IIoT data, and—at least in our view—the enabling technologies that let you act on that data.

For many long-time lean thinkers, automation is traditionally not a go-to-solution. They follow the mantra of creativity before capital and look for improvements they can make without investing in additional equipment or technology.

But times are changing. Challenges—especially around labor shortages and the struggle to find enough people to keep lines staffed—are tougher than they’ve ever been.

And lean alone, in its conventional sense, can only go so far in boosting capacity and solving the problem.

Automation is different today, too. It’s becoming increasingly affordable and readily available in bite-sized doses. That means it’s possible to implement automation pragmatically while leaning out the processes that surround and support it, thus increasing the value of the investment exponentially: You’re not just growing, you’re growing with less waste and more strategic intent, solving key business challenges in the process.

Today, there are new technologies that digitize lean methods and improve efficiency. Many manufacturers are finding that they have to automate to survive and consistently meet customer demand. And that’s shifting the view of automation as a cost reduction method to automation as an essential investment in growth.

All of this has leaders rethinking their approach to automation in ways that will usher in fundamental shifts in the way next-generation lean facilities operate.

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3 ways to marry Lean 4.0 and automation.

they can put automation where there’s real value to be had and where it can improve quality and increase the throughput and capacity of existing machines, supporting top line growth.

When you buy into the fact that automation can and should be lean, the opportunities will start to show up quickly. Three of the key areas where we regularly help clients get leaner and more automated are:

For example, we work with a manufacturer that recently automated a riveting process that used to be done manually with the operator holding the case and the latch to be riveted, pressing a button, rotating the unit, and repeating the entire process seven more times.

Now, the operator simply loads a machine, and all eight latches are riveted simultaneously, allowing the job to be completed faster and driving additional throughput.

1. Operations and Processes. Connected machines are a primary tenet of Lean 4.0. The operational technology (OT) data and insights they deliver can point you to machines that may be in need of maintenance or in danger of breaking down. And they help you hone in on the nuanced inefficiencies and root causes of minor stoppages that are adding up to significant waste in your processes.

These sorts of changes build upon themselves over time, ensuring that all machines on the shop floor ultimately perform to the best of their ability. And when each machine is capable of more quality output, it paves the way toward becoming a less assetintensive, leaner business overall.

There are several solutions available today that can help you access and use the invaluable data that’s stored in your machines. For example, we work with clients that use Dploy Solutions Factory Floor Connectivity software to aggregate data from disparate systems and ensure that root causes of failures are easily identified. They can then go a step further and use the tools to ensure countermeasures are put in place and effectively executed. Essentially, the software enables a digital Plan, Do, Check, Act (PDCA) sequence that helps drive out the waste.

2. Talent. In some cases, automation can completely replace the non-value-added work currently being performed by human beings, freeing up those people for revenue generating work. They can start making more things or new things instead of moving them around, increasing your output.

One client recently introduced a small robot into an assembly line specifically to attach a vent to a case.

Operators continue to work on either side of the robot.

However, the person who used to attach the vents is now available to perform value-added work. When you can eliminate tedious tasks and move humans to more productive efforts, it often improves worker satisfaction and safety in addition to productivity.

Dploy Solutions Factory Floor Connectivity dashboard

Often times, we find that automation can or should be part of the countermeasure solution. Because automation is now more widely available in small, flexible pieces of equipment or technology, solutions can often be quickly and relatively easily adopted and implemented to fix specific problems. In other words, companies don’t have to (and usually shouldn’t) invest in automating an entire line from end to end. Instead,

AviX resource balancing dashboad

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Establishing a connected workforce by automating things like digital standard work, maintenance instructions, work orders, drawings, checks and audits, and performance boards improves productivity and efficiency, too. People process the information and learn faster, and they stay focused on the right work.

Consider the fact that as much as 80% of what you are still doing on paper can be automated, and that is a significant amount of time you stand to save by switching from paper documents to digital ones. The switch also frees up your trainers—often your best people on the line—so they, too, can stay focused on producing.

Dploy Solutions, Supply Chain Control Tower dashboard

Of course, automation can and should also play a starring role in warehouse management and transportation management systems, especially those that are continually leading to fulfillment problems.

3. Supply Chain. Like talent shortages, supply chain disruptions are a leading cause of manufacturers’ headaches today and a problem that can seriously hamstring your business’ ability to produce and sell.

While Lean 4.0 and automation aren’t going to magically turn up more semiconductors or other materials in short supply, they can certainly help you respond to the shortages in more efficient, productive, and profitable ways.

The right technologies in these areas can help eliminate any waste while speeding up the process of getting goods into your customers’ hands.

Automation may be your most powerful lean tool yet.

The challenges manufacturers face today are more daunting than they have been in recent times. Addressing them effectively means leveraging every tool available. In some cases, this requires a paradigm shift and a broader view of traditional concepts like lean and automation. If you’re willing to take the leap, continue your commitment to lean, and embrace a next-generation Lean 4.0 approach, what you stand to gain in both performance and productivity is well worth the shift in mindset it will take to get there.

Again, data plays a key role in a connected supply chain. When you automate the ways in which you collect, access, and view data, you can make better decisions, faster, and you can work to mitigate the impact of supply constraints. Imagine a supply chain control tower that works a lot like the air traffic control towers that give the FAA a view of every plane in the sky. When you can see the status of every order, inbound and out, and view delays at ports as they develop, you can make real-time decisions that can help ensure your products arrive on-time.

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CHAPTER 3

Connected Factory: Bring Context to IIoT Data that Will Move the Needle in Your Operations There is an abundance of data manufacturers could leverage from connected machines to identify opportunities to propel ahead of competitors. But data is just numbers unless you have a practical way to drive meaningful insights into factory floor performance.

+ Key Takeaways • Industry 4.0 and connected machines are giving more manufacturing executives more data, but not necessarily more results.

• Adopting a four-step Lean approach to IIoT brings context and purpose to your IIoT data to move the needle on key performance metrics, prefect processes, and eliminate waste.

• Successfully marrying lean and IIoT generates up to 25% improvement in quality, efficiency, and performance.

Adopt a lean approach to extract real business value from your connected machines.

A lean approach brings context and purpose to your IIoT data.

Right now, the machines on your shop floor are producing thousands and thousands of data points. Some of that data holds the secrets to your performance problems and the keys to untapped efficiency gains. Thanks to Industry 4.0 and IIoT, it’s now possible to easily access that data, as much of it as you want, as often as you want.

IIoT data on its own can and does deliver valuable knowledge. For example, it can tell you if a machine is about to break down so you can take action to prevent downtime. But adding lean to the mix takes it to another level, enabling you to improve process capabilities and performance long-term.

But, then what?

The key to Lean 4.0 is to use the data specifically to identify the nuanced inefficiencies and waste hiding within the inner workings of manufacturing processes and related to variables like cycle time variances and equipment parameters. By tying the IIoT data directly to KPIs like throughput, quality, and cost per unit, you can quantify the business impact of that waste and then set about systemically tackling the problems and perfecting your processes.

As one manufacturing executive quipped in our recent Operations Executive Roundtable, “Digitalization for the sake of digitalization doesn’t help you at all. If the data going into that process isn’t good data, you get garbage in, and garbage out. You have to be able to sort the data down to what is actionable and then have some way to implement those actions.”

Brava, we say! We couldn’t agree more. And it’s why were so excited about the emergence of Lean 4.0 philosophy.

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For most manufactures, this type of strategic Lean 4.0 approach can lead to performance, quality, and efficiency gains of as much as 25%, which can have a profound impact on both the top and bottom lines.

A digitized daily management system can help enable this visibility by displaying the data in dashboards and interactive charts for all to see. Team members and decision makers know right away where problems exist and can then set about proactively addressing issues to optimize operations.

The problem is, too many manufacturers are just adding more sensors. They’re getting lost in the data, and they are not generating the results they expect and want.

3. Make More Meaningful Connections Through the Power of Analytics. Seeing IIoT data within the context of your KPIs is one thing. Getting to the root causes of misses and problems is the next step.

4 keys to doing IIoT right.

If you’re looking to make your connected factory floor a truly invaluable business asset, the answer is not more sensors. Look beyond the data you can collect and start thinking strategically about what you should collect, and what you will ultimately do with that data, to usher in long-term performance improvements. Here’s a roadmap that can help you make the transition:

When a powerful analytics engine is baked into the digital daily management solution, it helps identify meaningful correlations between variables and equipment settings (such as speed, temperature, pressure, flow rate, and material thickness) and your critical operational performance metrics including throughput, quality, and productivity. You can then determine if, how, and to what degree your equipment settings affect your outcomes.

1. Adopt A Lean Mindset. In TBM’s view, the impetus behind any Industry 4.0 initiative should be business performance improvement. Very often, OT data is the key to pinpointing the root causes of the quality, production, delivery, and cost issues plaguing your business and holding you back from hitting your KPI goals. By approaching IIoT as a way to gain insights that help remove specific areas of waste, you can set the stage for taking lean to the next level in your organization.

2. Don’t Just Collect the Data. Visualize it within the context of metrics that matter. Programmable logic controllers (PLCs) are continuously gathering equipment parameter data from your machines. Seeing that data in real time and in relation to critical performance metrics gives you the insights you need to make the right adjustments and changes for optimal performance.

Dploy Solutions, OEE line performance analysis

Dploy Solutions, OEE performance overview dashboard

For example, with Dploy Solutions Business Analytics, you can test hypotheses and view correlations between different metrics, can identify patterns, understand trends, and pinpoint root causes of performance issues. Watch the two-minute video below to see how it works.

Dploy Solutions Factory Floor Connectivity

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Remember, more data isn’t always the answer

4. Prove and Move. When you know the performance problems you want to solve, and you have the data visualization and analytics capabilities you need to understand correlations between variables and outcomes, the remaining piece of the puzzle is a controlled or methodical approach to identifying optimal processes.

As with any technology, just because you can put IIoT sensors on everything doesn’t mean you should. Marrying lean with IIoT for a true Lean 4.0 approach is fundamental to getting the real value out of your Industry 4.0 journey.

While it can feel like a slower, more tedious process, time and again our clients find that it’s the key to getting better business results faster and more affordably by keeping the focus on what truly moves the needle for the business.

We’re currently helping an industrial high-performance fabric manufacturer address a material variance problem that’s adding up to several hundred thousand dollars of loss each month. Through a design of experiments approach, we will collect and analyze data from critical machines one at a time. This systematic approach is the key to pinpointing the specific influencing factors contributing to the performance problems without getting overwhelmed by too much data that can hide the key insights. The plan is to continue until all critical areas of the process are explored and perfected, ultimately creating confidence that the process is as efficient and effective as possible with all waste eliminated at the source.

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CHAPTER 4

Connected Workforce: How to Create a Connected, Revenue-Generating Workforce Strategically supplementing employee skills with automation reduces waste and drives greater productivity while leading to more engaged, more satisfied employees.

+ Key Takeaways • In most manufacturing organizations, about 20% of the workforce is currently engaged in non-value-added work, such as moving things instead of making things or reading and re-reading paperwork instructions.

• In a Lean 4.0 environment, automation doesn’t replace people; it frees up resources to do revenue-generating work and makes human resources more productive, more quickly.

• Five key technology upgrades can help you quickly establish a connected, revenue-generating workforce capable of helping your business win.

If it’s not value added, then your people shouldn’t be doing it.

A Lean 4.0 approach optimizes human resources in two ways.

Right now, everyone’s feeling the pain of not enough people to get the work done. While there are macro-economic factors at play that are largely out of your direct control, you can certainly optimize the people you do have available.

And adopting a Lean 4.0 mentality is the first step.

At TBM, we believe Lean 4.0 should be leveraged as a tool to solve meaningful business problems through the strategic use of data, advanced technology, and automation. When it comes to the labor shortage problem, there are two key areas where a Lean 4.0 approach can make a big impact.

Wait, wait, wait, you say. You’ve heard the buzz about Lean 4.0. But what does it have to do with people? Isn’t it all about IIoT? Yes. And no.

Connected machines are certainly a central component of Lean 4.0. But in the TBM view, Lean 4.0 is bigger than that. It’s about minimizing all waste and optimizing all resources. And your people, especially right now, are an excellent place to start, given that about 20% of the work they are currently doing is not generating any value or return for your business. In other words, it’s waste you can’t afford.

• First, it frees up people up for higher-value work through the automation of any non-value-added tasks they are currently performing. The less time people spend moving things around the factory, the more time they can spend making product you can sell, which drives up incremental margin and makes a much bigger impact on the business than cost savings alone ever could.

• Second, it makes people more productive more quickly by automating anything on paper that can be done digitally. About 80% percent of the paperbased work your people are currently doing, as well as any work you’re doing on paper to manage your human resources, can and should be digitized.

Creating a “connected workforce” through this type of automation immediately and significantly improves the productivity of every member of your team, simply because it takes far less time to find and glean insights from information when it’s in a digital format.

5 steps toward a connected and revenuegenerating workforce.

1. Identify the Non-Value-Added Tasks That Are Candidates for Automation. Stacking containers and moving WIP (work in process) around the factory floor are obvious choices for automation because a machine can do them just as well if not better than a person.

But be sure to look for other parts of your process you can automate as well. If you can speed up even one step in a process, and enable the same 10 people to produce 200 units per shift as opposed to 100, you significantly change the value of your workforce, lower direct labor cost per unit, and double the contribution margin. In many cases, automation also helps reduce scrap, increases equipment uptime, and reduces changeover times. The benefits compound, further justifying the investment.

2. Digitize Standard Work. With your people allocated to the highest value tasks in the factory, now it’s time to get them proficient at the work as quickly as possible. If you were learning how to do something new at home, you’d probably look to YouTube. And that’s essentially what digital standard work is. It takes work instructions and drawings off the paper and brings them to life in digital formats that employees can view and learn from more quickly and effectively.

This isn’t just more efficient; it’s more enjoyable and rewarding for your team, too. Think about where your staff’s biggest sources of frustration lie or where you’re experiencing the most turnover, and consider automating digital standard work for these jobs first.

You’ll also reduce the need to use your most talented employees for training purposes, which can further increase productivity.

Drishti Technologies, digital standard work software

3. Digitize Audits and Quality Checks. You can take the digital learning and training process a step further by automating quality control processes.

First, companies conduct daily audits of safety, working conditions, equipment setup, etc. Tools exist today to digitize these audits creating the opportunity to conduct analysis and measure outcomes. The other element is the use of automated inspection capabilities that have advanced significantly over the years. Automated measurement that use to require a dedicated piece of equipment in the Quality lab can be replaced with move visual and smaller pieces of equipment.

4. Automate Human Resource Management. As manufacturers continue to struggle with labor shortages, they find themselves short staffed on a regular basis. A digital talent management system can help supervisors make fast and effective daily decisions on where to best allocate the resources they do have available. Seeing at a glance who has which skills makes it much quicker and easier to make necessary changes and put people in the best positions to accomplish the most critical work each shift.

5. Track Performance in Real Time. Automating KPI management takes the concept of a connected workforce to another dimension. As you introduce automation into your processes, either to free people up for more value-added work or to support training and workflow, employees and managers can see the impact on the business’ most critical metrics in real time. For example, digital manufacturing software and KPI management tools, such as Dploy Solutions KPI dashboard software, make it possible to see

performance by day, shift, or even by the hour and to view performance trends over time to see how, and how much, productivity is improving. Of course, the team can also see misses and impending misses and can take action to correct problems quickly, further improving performance and productivity.

Take the waste out and optimize every man hour.

When it’s hard to hire more people, then you must get more out of the people you have. Leveraging Lean 4.0 tactics to create a connected workforce can help.

When people are efficiently performing your highest value work with strategic support from automation and other advanced technologies, it’s possible to hit your production targets even with a smaller crew. And you’ll even improve the employee experience and satisfaction of your team in the process.

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CHAPTER 5

Connected Supply Chain: 5 Ways to Combat Supply Chain Disruption Now Ongoing supply chain disruptions call for manufacturers looking for supply chain optimizing solutions. They need answers right now and are increasingly looking to Lean 4.0 strategies to gain visibility and control.

+ Key Takeaways • A connected supply chain gives manufacturers the visibility they need right now to make the best possible decisions in challenging situations.

• With a Lean 4.0 approach, companies can more quickly see and act on every possibility for reducing lead times and lowering costs.

• Robust data visualization and advanced analytics capabilities speed up effective supply chain decision making, which is key to gaining an edge today and in the future.

When supply chain challenges seem insurmountable, Lean 4.0 can open the door to new solutions.

A Lean 4.0 supply chain is a connected supply chain.

Lean 4.0 is one of the newest buzzwords in the industry, and when people hear it, they automatically think about connected machines. In TBM’s view, Lean 4.0 means connected everything, your supply chain included.

“The supply chain is a disaster.” These words, expressed by a manufacturing executive during a prep call for a recent Operations Executive Roundtable, sum up the current sentiments of many business leaders. Some are at the point of throwing up their hands. But, even though the hits seem to keep on coming, there are things you can do to ease the pain and gain greater visibility and insight into what’s happening on both the inbound and outbound sides of your supply chain.

Just like you’d put sensors on machines to draw out performance data, you can put sensors on shipping cartons to gather information about where they are in the world. However, that’s just one part of a much larger equation. Lean 4.0 is about getting the holistic view of everything impacting the availability, cost, and flow of materials and finished goods, and using actionable data and advanced technologies to make the best possible decisions, reduce lead times, cut costs, and ultimately improve business performance.

As one leader put it, even if the news is bad, seeing it sooner and more clearly makes a big difference. Enabling this line of sight requires the right data and technology. It takes the right mindset, too.

A Lean 4.0 approach, when applied to current supply chain challenges, can help you move past the gridlock and take steps that will improve your ability to operate efficiently today and down the road.

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5 ways to drive rapid results from your supply chain operations.

On the other hand, if you are working with just one supplier for a specific part, and that part is a bottleneck, then you may need to look for additional suppliers to help meet this need.

1. Proactively Engage Your Suppliers. This isn’t just about daily phone calls to find out the status of an order, only to hear the same news that suppliers’ hands are tied, and they’ll get it to you as soon as they can. It’s about taking the conversation deeper and working with suppliers to explore new options or solutions around materials and pricing. When you initiate this collaboration and show willingness to talk about what can be done as opposed to what can’t, you may be surprised at the results.

In any case, investing in a spend analysis will help you understand you true costs right now and may open the door to possibilities you haven’t considered in the past.

We recently worked with a client to analyze its indirect spend (i.e., expenses not related to critical parts.)

We identified several opportunities, including more aggressively considering alternate suppliers, offering more significant supplier incentives, consolidating suppliers where possible, and fully leveraging category management techniques. With these strategies and tactics, the customer is positioned to take full advantage of cost reduction opportunities in the supply markets.

One participant in a recent TBM Operations Executive Roundtable discussion, tired of operating in survival mode, has made the effort to proactively engage with every supplier, whether they are currently experiencing issues or not. “Even if something’s not broken, we’re still reaching out to key suppliers to ensure they remain non-problematic. We thought due to everything being so tight, we’d be talking to a lot of hands. But we’re actually getting good engagement from current and potential new suppliers that we didn’t expect.”

3. Take Advantage of Good Data and The Tools That Can Help You Interpret It. Spend data is just the tip of the iceberg when it comes to available information related to your supply chain. There is no shortage of data out there that can tell you where your materials are in the supply chain, down to the SKU level. And you can tap into information about delays happening at every major port. While executives agree that effective supply chain decision-making is only as good as the data influencing it, the challenges typically revolve around accessing that data, analyzing it properly, and getting it into a format you can use.

If there’s ever been a time to think outside the box and try new things, this is it. If nothing else, opening up the channels of communication can lead to additional information and insight beyond just knowing that your order is still delayed.

2. Better Understand Your Spend. Efficiency and cost cutting are fundamental tenants of any lean approach, and Lean 4.0 is no exception. To identify savings opportunities, you first need to know where you are spending, both by supplier and geographic region.

Conducting this kind of analysis can turn up issues you may be able to solve for right away.

This is where a good supply chain control tower is invaluable. Such a solution gives a singular view into all your real-time shipment-related data. It lets you see in advance when and where issues may arise and enables you to respond in a timely manner and make decisions that can help prevent delays. While most mid-sized manufacturers lack a fully built-out supply chain control tower, many have elements of such a solution already in place, such as a way to get alerts from suppliers and shipping companies. Taking that data and marrying it with analytics and visualization capabilities can be a relatively easy next step when you leverage existing digital manufacturing software solutions. For example, with Dploy Solutions, you can quickly create dashboards that let you visualize and manage critical supply chain KPIs, all in one place, enabling you to identify, investigate, and quickly respond to delays and issues.

For example, you may have similar items with different part numbers, such as screws, bolts, or other common components. Or maybe you are using multiple suppliers for the same item. If this is the case, you could be missing opportunities to leverage volume and spend to get preferential treatment and pricing and potentially receive your materials sooner at a lower cost. Given that some organizations are facing up to 500% increases in shipping costs, it’s worth looking for consolidation opportunities that can help you save wherever you can.

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4. Leverage Advanced Technologies Such as AI/ Machine Learning. Even with the most basic supply chain control tower in place, it is possible to set up your systems to trigger automatic response to the data that will help ensure the best possible outcomes in any scenario. This is especially useful for organizations that have very complex supply chains.

“Before we had too much inventory, too much cost, and then everything was affected by COVID. Now we have a better handle on the supply chain across the board.”

5. Manage your connected supply chain long-term.

S&OP process and discipline remain especially critical as manufacturers continue to deal with fluctuating demand complicated by supply chain constraints and, in many cases, labor shortages as well. Again, this process relies on quality real-time data and analysis to help you efficiently manage and allocate critical resources to meet customer demand in the most profitable way for your business over the long-term. In the words of one Roundtable participant, “Especially with the long lead times when you’re looking 12 months out, it gives you the ability to react. It’s the windshield that gives us better visibility.”

When you see the whole picture, you can spot the solutions and not just the roadblocks.

Ceres Technology Discover dashboard

Lean 4.0 cannot solve for all the supply chain issues that manufacturers are contending with right now. But it can make it easier to see all your options and make the best decisions that impact availability, cost, and flow of materials and finished goods. At a time when organizations need every advantage they can get, leveraging data and technology will help you respond to today’s challenges better while guiding longer-term decisions for restructuring the supply chain for optimal efficiency.

For example, another Roundtable participant shared how his company is keeping transportation and warehousing costs low by tapping into a digital fulfillment provider’s warehouse management and transportation management control modules. The company receives real-time information on the location of inventory in the supply chain including alerts at critical milestones, such as loaded onto ship.

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CHAPTER 6

Stop Digitization Derailers: 3 Ways to Remove Technology Project Roadblocks Digital adoption is no longer optional for most manufacturers. Yet digitization projects notoriously fall short of their goals. Understanding, and navigating around, project derailers can help fast track digital success.

+ Key Takeaways • Digitization projects that fall short of expectations have one or more common denominators: they rely on poor data, insufficient IT infrastructure, and/or leaders who are not fully on board.

• Manufacturers can avoid digitization derailers and accelerate results by doing the legwork in advance to put the project on the right foundation.

• Pre-assessing the full impact of a digitization project on people, process, and technology is key to realizing the advantages you want and avoiding the “side effects” you don’t.

3 ways to remove project roadblocks and realize benefits faster.

Gaps in data, technology, and buy-in can keep your digitization project from getting off the ground.

Here are three ways to get ahead of the issues, accelerate your project, and get to the benefits faster.

As labor and supply chain challenges persist and inflationary pressures pile on top, manufacturers need the efficiencies and insights that connected operations can deliver. Digitization and Lean 4.0 strategies promise solutions. But technology adoption doesn’t always work, or it doesn’t work fast enough.

1. Get Your Master Data in Shape. While there’s no such thing as perfect master data, most manufacturers are a long way from good enough. Ideally, to ensure the success of Lean 4.0 and other digital projects, you need data you can trust in six key areas:

Our recent experience shows that there are three key reasons why digital projects fall short of goals:

• Customer data • Item or product data

1. Poor master data

• Supplier data

2. Inefficient technical infrastructure

• Standards (labor, machine times)

3. Lack of buy-in from key stakeholders

• Bill of Materials (BOMs) • Work centers and routing definitions

When any one of these three elements is missing or lacking, it can topple the entire project or, at least, make it extremely difficult to gain any ground.

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Dig in and go see for yourself what the issues really are. Sometimes it is the system’s fault. However, we often find that companies must revisit procedures and instill process discipline to prevent ad hoc workarounds. For example, rules for creating BOMs, updating routings, and properly recording changes to standards can help protect the integrity of your data and set up your digital projects for success.

Standardizing this information across the organization is key to efficient performance and performance tracking. The first step is to get away from spreadsheets—something that, according to a recent McKinsey article—is still being used by 73% of companies for supply chain planning. Start using solutions that make real-time data available across the organization instead. And be consistent in how you refer to your data. Many times, simple inconsistencies in naming conventions can derail entire systems and prevent end-to-end connectivity across the business.

For example, when part numbers don’t match up with product orders or drawings, it leads to manual interventions that cost time and money.

2. Put the Right Technical Infrastructure in Place. The more digital your operations become, the more they will rely on your IT backbone. In other words, you can’t introduce automation and advanced technologies like IIoT, digital standard work, workstation robotics, advanced analytics, and AI if you don’t have good connectivity on the shop floor. And your team can’t take advantage of the benefits these solutions deliver if they don’t have a way to easily access the information and insights.

In a lot of cases, manufacturers don’t realize they have a data quality problem—or how significant it is—until they do a formal assessment. We work with one company where we heard rumors about “phantom” part numbers. The team knew they existed, but no one really understood the full implications for the business. Team members were manually creating parts numbers to designate kits of materials and facilitate picking the right parts. The “phantom” numbers were also being used for a made-to-order product required in a final assembly. The numbers existed in the bill of materials but were not being transacted. Therefore, all visibility into labor and machine time was lost for these make-to-order items, severing what we call the digital thread, and making it virtually impossible to connect the dots across the organization. Delivery and productivity suffered as a result. Ultimately, we facilitated a great deal of data cleanup work to remove the phantom numbers before we could move new digital efforts forward with confidence.

We ran into just such an issue with a manufacturer looking to roll out a new order management system.

The company has an opportunity to remove 20% of the lead time in its order-to-cash cycle. But the manufacturer launched the new tool without first thinking through the entire process and the various connections needed to make it successful. Multiple issues that could and should have been solved prior to launch have delayed the implementation and discouraged the team.

To avoid such a situation, make sure you have a basic tech stack in place. At a minimum, your capabilities should include: • Connectivity. From the top floor to the shop floor.

Wireless or wired. Sensors. Shared databases and folders. All equipment is well placed and protected.

If you regularly operate off variances, this is an indicator that your data needs some attention.

Another way to know you might have a data problem is to consider how often your customer service and order management team members are working around the system—and why. Your operations team will tell you it’s because the system doesn’t work. But your IT team will say it’s because people don’t know how or are not willing to use the system properly. Either way, it’s a problem. And you need to find out the root cause. While the work may ultimately be getting done, frequent manual interventions are inefficient and will leave you with data that does not reflect what’s actually happening in your business.

• Devices. Workstations, tablets, laptops, and/or digital performance boards. Strategically located and easy to access.

• Data visualization software. At-a-glance insights.

Dashboards. Alerts. Intuitive user interfaces.

• Time tracking capabilities. For labor and equipment times.

• People and product tracking capabilities. For accurate inventory and workflow.

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3. Get Buy in From the Get-Go. It takes more than the right technology to enable digital adoption. It takes the right mindset, too. Manufacturers often make the mistake of overlooking the people side of the equation.

However, digital adoption comes with a whole spectrum of changes for people at all levels. You can’t expect everyone to embrace them out of hand. Indeed, we’ve seen more than one implementation stalled by a lack of change readiness. Whether it comes from the c-suite, operations leaders, IT, the engineering team, or the shop floor, leaders and operators who are not onboard can throw up roadblocks faster than the highway patrol.

When building the tech stack, keep in mind how, where, when, and by whom different tools will be used. If shop floor technicians will be interacting with the systems, then desktop computers located away from work cells are likely not the best option.

Tablets that can easily fit into the work environment may be the better bet. And while ERPs certainly have the capability to track inventory, a handheld barcode scanner is going to be a much better solution for accomplishing that on the shop floor.

VKS

work instruction s oftware

You need a project champion with the desire and authority to drive implementation forward and address issues as they pop up. While this person can potentially force through the changes, he or she will have a smoother and more successful journey if you create alignment from the beginning. Think through all the departments and processes that will be affected.

Explain the changes and the business case or making them. When all leaders understand why the project is a priority and the immediate and long-term benefits, they will be more likely to become allies in your effort.

VKS work instruction software

Set up your digitization project for success.

When building the tech stack, keep in mind how, where, when, and by whom different tools will be used. If shop floor technicians will be interacting with the systems, then desktop computers located away from work cells are likely not the best option.

Tablets that can easily fit into the work environment may be the better bet. And while ERPs certainly have the capability to track inventory, a handheld barcode scanner is going to be a much better solution for accomplishing that on the shop floor.

Digital and Lean 4.0 projects are the gateway to the connectivity and the visibility manufacturers need to solve their most pressing challenges now. But they easily can become more of a problem than a solution if they aren’t properly planned. Proactively address the roadblocks to digital manufacturing—poor data, insufficient infrastructure, and lack of buy in—before you get started. And lay the groundwork that will help your business reach its objectives faster.

It’s also important to be familiar with the full range of capabilities of each tool. A full-blown MES can track job times. However, a Visual Knowledge System (VKS) used for digital standard work can also perform this task. Similarly, an AI-based tool with visual recognition capabilities, like sys.AI, is gaining traction as a way to track people and products throughout the factory. The more knowledgeable you are about different systems, the more you will be able to optimize your investment in advanced technology.

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CHAPTER 7

Getting Started with Lean 4.0: A Practical Approach Implementing Lean 4.0 in a way that pragmatically addresses specific business issues will ensure your investment pays off and delivers sustainable value.

+ Key Takeaways • Many veteran lean manufacturers have seen performance improvements plateau and are currently gleaning only incremental (1-2%) gains from lean initiatives.

• Critical elements for Lean 4.0 success: 1. Implement holistically across the organization, 2. Marry lean with Industry 4.0, and 3. Introduce advanced technologies and IIoT data.

• A pragmatic, prove-and-move approach to your Lean 4.0 journey is the best way to unlock your full performance improvement opportunity and generate sustainable value for your business.

Getting Started with Lean 4.0: A Practical Approach.

A comprehensive approach to Lean 4.0 is the key to identifying and understanding hidden areas of waste and opportunity in your business processes that will help you capture your next major improvement gains. But as with any other innovative idea, it shouldn’t be adopted just because the capabilities exist. Implementing Lean 4.0 in a way that pragmatically addresses specific business issues will ensure your investment pays off and delivers sustainable value.

Identify Your Business Challenges

Digitize Your Daily Management System

Capture New Data Incrementally

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Prove and Move

TBM’s Lean 4.0 Approach Identify Your Business Challenges APPROACH

CLIENT EXAMPLE

» First identify the business issue.

» CI and Lean Six Sigma contributes to years of productivity, quality and maintenance improvements.

» Focus on the problems you need to solve —variances, quality, costs, productivity, turnover?

» Company still suffered from material variance and OEE issues costing several hundred thousand dollars per month

» Identify the next source of performance gains.

» Needed a deeper level of data and analytics to understand the problem.

Digitize Your Daily Management System APPROACH

CLIENT EXAMPLE

» Leverage digital tools to capture data and analyze areas of waste, downtime and opportunities to improve.

» Analyzed existing equipment parameter data from lines with stoppages and lower OEE

» Conduct root cause analysis. How is equipment and process impacting operational performance metrics (throughput, quality, productivity)?

» Data revealed 5-10% performance improvement opportunity saving over $1M+ annually. » Opportunity to free up capacity to support growth and defers significant CapEx investments.

» Determine the optimal settings for the most efficient and effective process outcomes.

Capture New Data Incrementally APPROACH

CLIENT EXAMPLE

» Design of experiment approach —gather and analyze data on a critical few machines first.

» Launched a design of experiment approach to begin collecting and analyzing data from few critical machines.

» Pinpoint the specific influencing factors that drive process performance.

» IIoT sensors were installed, and data analyzed. Identified correlations and variables/influencing factors that contribute to performance problems.

» Continue experiment until all critical areas of the process are explored.

» Experiment continued until all areas were analyzed.

» Methodically identify what moves the needle on specific issues

Prove and Move APPROACH

CLIENT EXAMPLE

» Run pilot programs and tests to prove the value of a solution and what drives significant improvement in your business.

» Introduced predictive analytics to stay on top of machine health and predict impending failures. » Optimized equipment and line performance by resolving immediate issues.

» Implement the program to the next area that brings the most value to the business.

» Developed a solution to keep lines running.

» Prove and move is critical to ensure your investments in Lean 4.0 deliver the value you seek

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CHAPTER 8

Case Study: Lean 4.0 Journey Manufacturers that produce highly customized goods often struggle with margin erosion that happens between quoting and final production. How to ensure that does not happen.

+ Key Takeaways • How one manufacturer of highly customizable products identified $7 million in Lean 4.0 efficiencies and improvements that will help reverse the slide and ensure a 15% gain in operating margin.

• To solve for the problem, manufacturers require greater insight into processes, increased connectivity across the business, and lean processes to remove inefficiencies and waste.

• A step-by-step approach to Lean 4.0, with a focus on data and advanced technologies, can equip businesses to improve estimating accuracy, better manage time and money at every step in the process, to improve estimating accuracy, better manage time and money at every step in the process.

Turn margin erosion into margin gains.

To get there, we helped the company embark on a six-step Lean 4.0 journey. The goals included:

When a significant amount of configuration exists in your business, it can be extremely challenging to talk about time and money with any degree of accuracy, especially early in the process. We worked with one engineer-to-order manufacturer that was dealing with just such a problem. Due to the high degree of complexity and customization inherent in its processes, the organization’s leaders were struggling to understand and manage the profitability of the company’s highly customized products. Ultimately, what this manufacturer needed was correct, consistent, and usable data related to all the steps and resources at play it its processes, along with the systems that could ensure access to those insights all across the organization.

• Establishing the master data • Creating simplified and connected systems to ensure usability of the data • Aligning lean business processes around the systems and workflow to help eliminate any efficiencies that could creep in and eat away at margins during the process While the organization is in the early phases of the journey, company leaders can clearly see the finish-line: an end to margin erosion and a 15% gain in operating margin. These benefits are driven by better insights for quoting accuracy, better processes for greater efficiency, and $7 million in improvements that can be realized over a 3.5-year period.

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3 ways to prevent margin erosion in your business.

3. Define The Right Industry/Lean 4.0 Solutions. We defined a future state to take the company from 35 disassociated systems to nine associated systems that will streamline, expedite, and improve all aspects of the process. (See Figure 1)

1. Assess Operations. We took an end-to-end look at everything involved in the company’s processes.

The goal was to define requirements and baseline performance for each step and to begin gathering the master data and putting accurate standards in place for labor, machine times, and materials that can be used to improve quoting.

4. Create The Roadmap and Business Case and Define The Quick Wins. We helped the company’s leaders evaluate specific technologies for each component of the recommended system by presenting good, better, best options along with the costs and benefits of each. We highlighted pieces of the system that can be stood up quickly so the company can begin generating results right away. Overall, we helped the company identify up to $7 million in benefits that can be realized over a 3.5-year period, including:

2. Assess IT Infrastructure. In addition to manual and physical steps in the process, we looked at the systems involved. The company was using at least 35 different offline systems to run the business, including Microsoft® Excel spreadsheets and email, leading to a lot of inaccessible and out-of-date information. Despite all these systems, a great deal of manual intervention was happening behind the scenes and associates were spending more than 30% of their time dealing with these workarounds and chasing information. These inefficiencies, mostly untracked, were driving up costs and heavily contributing to margin erosion.

• Eliminating manual processes and non-associated offline tools • Reducing time spent searching for information and components • Reducing touches per inquiry through process automation

FIGURE 1

Define the Right Industry/Lean 4.0 Solutions Configure/Price/Quote Fully integrated calculators eliminate dependence on spreadsheets and reduce manual intervention while integrated material and supplier information keeps pricing up to date.

Analytics

Product Lifecycle Management (PLM)

Identifies and resolves performance issues and supports continuous improvement

Digital Management System Monitors daily execution and eliminates emails to manage workflow

Accelerates the product development process

ERP/ MRP

2D/3D CAD Advanced modeling capabilities support the needs of highly customized products

Advanced Planning & Scheduling

Digital Standard Work

Improves visibility of capacity and work order status

Streamlines and improves daily execution discipline

Manufacturing Execution System (MES) Captures actual job times and delivers data and insight to the CPQ system for improving quoting accuracy

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Start making the money you plan to make on highly customized products.

• Improving scheduling and execution of schedules • Improving drawing standards and reducing time to figure out complex drawings

If, like many configure-to-quote, engineered-to-order, and assemble-to-order businesses, you struggle with margin erosion that happens between quoting and final production, the keys to turning loses into gains lie in Lean 4.0. With better data, end-to-end connectivity, and lean processes that eliminate waste, it’s possible to protect and even significantly improve your margins.

What you quote and promise to customers becomes what you ultimately deliver. And you can confidently plan on achieving the profitability that will help your business grow.

• Increasing understanding and resolution of performance issues including labor and material variances 5. Identify and Implement Change Management and Business Process Requirements. To support the transition to Lean 4.0, the company will need to think through the necessary updates to its business processes. And it will have to roll out the changes in a way that ensures they can be adopted successfully by all members of the organization.

To learn more about how Lean 4.0 protects against margin erosion in the quote to cash process, read our full article, 3 Ways to Stop Margin Erosion in Your Engineered-to-Order Business.

6. Create Stakeholder Buy-In. Of course, no major transition in the way business is conducted can succeed without the support of critical stakeholders.

Companies that embark on such a journey need a plan for educating decision makers and key players, so they fully understand the business case and are on board with the goals and objectives of the project.

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We are here to help with your Lean 4.0 Implementation TBM Consulting Group specializes in operations and supply chain consulting for manufacturers and distributors. As lean manufacturing operations and supply chain experts, we help clients leverage operational excellence, enabling technologies, and lean process rigor to dramatically enhance operational speed. We help manufacturers navigate Industry 4.0 by customizing a realistic approach to digital transformation that’s practical, affordable, and designed to quickly deliver quantifiable bottom-line profitability improvements.

We marry Industry 4.0 with a lean mindset for what we refer to as our Lean 4.0 approach. By offering pragmatic manufacturing technology solutions for your journey, we keep you focused on operational objectives so you can achieve the double-digit productivity gains and create the tangible business value you need not only to survive, but to thrive in the digital era.

With TBM’s pragmatic approach to digital manufacturing, you can make Industry 4.0 and Lean 4.0 work for your business. Through strategic investments, well-paced projects, continual measurement, and a focus on rapid results, TBM helps you create the business value you need to win in the digital era.

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TBM specializes in operations and supply chain consulting for manufacturers and distributors. We push the pedal down in your operations to make you more agile and help you accelerate business performance 3–5x faster than your peers.

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