Lean OEMs Discover the CIO

David Wagner, Managing Editor | 1/23/2013 | 12 comments

David Wagner
Hey, CIOs, lean manufacturing is starting to pay attention to you. Really! And I’m not just talking about ERP. Actual process changes on the floor are being driven by technology -- even at Toyota, the inventors of lean.

If you haven’t been in the trenches as a CIO in manufacturing for a long time, it may come as a surprise that lean manufacturing and IT are at odds. But this management paper from 2009, decades after lean manufacturing got its start, hails itself as the first paper to give empirical data that technology can work in process management on the manufacturing floor and cites a long list of papers arguing for both sides of the manual-versus-technology debate in lean manufacturing.

Part of the reason manufacturers -- from OEMs to automobiles to pharmaceuticals -- are paying attention to using technology on the shop floor is that products are getting more complicated. And product lines are becoming more customizable. Where once a lean manufacturer could rely on relatively simple production lines (think Henry Ford’s “You can have any color you want as long as it's black”), OEMs like Dell have succeeded at using lean principles to manufacture on-demand, customized products for customers for over a decade. This has caused traditional manufacturers like Toyota to continually reexamine their lean processes.

If you’re not entirely familiar with lean manufacturing, a good review can be found, interestingly enough, in the pages of IT consulting firm HCL Tech. So many of the lean techniques have been absorbed into other manufacturing processes that, in many ways, it is hard to tell where lean begins and ends.

But the most important thing to remember is that lean is about establishing value for the customer by eliminating waste. To do that you relentlessly reevaluate the process you use to do each step of making a product. “Mapping the value stream” is a major part of eliminating waste and getting the processes correct, and mapping and tracking is exactly what information technology is good for.

Lean technology uses simple information devices, usually cards, called kanban by Toyota, to communicate up and down the line about shortages of parts or changes in demand or speed. Most lines practice what is called jidoka: stopping the entirely line if an anomaly is spotted, in order to prevent repeating the errors. The overarching goal is to maintain a level amount of production (one part of the line shouldn’t get ahead of another part) to keep a rhythm and avoid waste.

All of this is fairly easy without technology if you’re making a toothbrush. But if it is a computer or a car, keeping the production level or keeping track of all that kanban becomes impossible. That’s why even the king of lean, Toyota, now uses technology to do much of what it used to do by hand.

All those kanbans Toyota had are now e-kanbans, which signal parts needs without human intervention. RFID and bar codes keep track of the movement of parts around the assembly line. Parts are moved automatically to areas before they run out. Production levels are balanced because the exact speed of the assembly line is known throughout. (There's more detail in this Industry Week article.)

Of course, it isn’t only about technology. You don’t have to be lean to use bar codes to track your inventory.

It is about relentlessly pursuing the best process to eliminate waste. Toyota will continue to apply manual processes where it is cheaper or faster, and it will apply technological solutions where it can. But the fact that the automaker is finding more ways to use technology in a process that was once considered purely manual points to the increasing role of the CIO.

If you’re looking to help your OEM eliminate waste and bring lean principles to manufacturing, start with looking at the value each process brings. There are likely hundreds of ways just to attach a battery to a device. Some are very manual; some will be driven by robots or automated lines. Which way combines speed, accuracy, and the right feedback to the rest of the line? As a CIO it is your job to provide the test environment and the potential technology choices to answer that question.

Consultant Bill Waddell shares a “mantra” from Motorola in the Industry Week article:

    If you automate something without improving the quality or taking the waste out of it first, you'll find that all you're doing is managing to move useless and defective stuff around your business at speeds you never thought possible.

Whether you call yourself lean or not, CIOs who can provide testing environments for new processes or properly use M2M to replace the human error involved in reading and responding to the needs of the line will bring value to the enterprise. In many ways, all of these methods are already in place in the modern OEM, but they’re seldom integrated into a whole process. Each part of the line is perceived as a single job. The CIO can map the value chain, show how integrated it is, and provide information on how one part of the line effects another. If the CIO isn’t going to map this flow of information, who else will?

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mwilsoncss   Lean OEMs Discover the CIO   2/17/2013 3:28:51 PM
Re: Mapping the flow of information
@Dave, I totally agree with you. Many manufacturing lines are implementing technology to make their work flow more efficient. Many paper systems of material drawings are being converted to a paperless system. Many time a Kaizen needs to be done to see how technology can speed up the workflow of manufacturing lines. This is where IT plays an important role. However, many times Kaizens fail, because upper management is not committed enough. 

There are some free kaizen or 5s guides online to help management get started with one. One Source: http://www.creativesafetysupply.com/free-guides/
Susan Nunziata   Lean OEMs Discover the CIO   1/30/2013 7:55:27 PM
Re: Mapping the flow of information
Good point, Dave. Larry Bonfante gives great guidance for fellow CIOs on just that very topic in this blog: Proving Business Value.
David Wagner   Lean OEMs Discover the CIO   1/30/2013 7:27:01 PM
Re: Mapping the flow of information
I think the same thing that makes companies ignore IT (the sense that IT is a cost sink or a commodity) is the same reason why CIOs are commodity. If all you need is the dude to manage th e cost sink, you can hire and fire at will.

The CIO who shows business value is the CIO who gets the long term contract.
Susan Nunziata   Lean OEMs Discover the CIO   1/30/2013 7:25:17 PM
Re: Mapping the flow of information
@Dave: Those are sobering stats, and it seems to get worse every year. What do you think can be done to reverse the trend (if anything?).
David Wagner   Lean OEMs Discover the CIO   1/30/2013 6:10:01 PM
Re: Mapping the flow of information
Longevity is pretty crucial to CIOs right now. The average tenure of the CIO is less than five years and that average has DROPPED 6 months since 2008.

Still, the opportunity also means risk since the more you're counted on for, the more chance they think the next guy can do better.
Susan Nunziata   Lean OEMs Discover the CIO   1/30/2013 6:03:21 PM
Re: Mapping the flow of information
@Dave: I see this as good news then for the role of the CIO. That's certainly a powerful position to be in. As m2m communication continues to be added to manufacturing processes there will also be growing volumes of data that need someone who knows how to build an organization that can hanldle them. I hope OEM CIOs take heart that they are looking forward to career longevity.
David Wagner   Lean OEMs Discover the CIO   1/29/2013 2:53:44 PM
Re: Mapping the flow of information
I think it is in this case. Manufacturing lines are now a string of technology implementations. Process experts and line managers need to make the pieces work. But the person who makes them work TOGETHER is the CIO.
Susan Nunziata   Lean OEMs Discover the CIO   1/29/2013 12:13:25 AM
Re: Mapping the flow of information
@Dave: Great point. How do we train people to see the view from 30,000 feet? Is that the CIO's job?
David Wagner   Lean OEMs Discover the CIO   1/28/2013 1:55:40 AM
Re: Mapping the flow of information
@Susan- The largest obstacle is that enterprises don't think in these terms. The see processes as discreet events. They see a lot of trees and not enough forests.
David Wagner   Lean OEMs Discover the CIO   1/28/2013 1:54:22 AM
Re: Perfect Process?
@Curt- Interestingly enough, lean has often been about the opposite of cutting head count. It has been about keeping head count in an effort to avoid technology.

In America, however, labor is one of the larger costs for an organization so lean has to be looked at differently. Now that Toyota and other lean manufacturers are making products here, they've begun to look at technology as a way to really change the labor-efficiency equation.

In some cases, lean will mean cutting head count in the future, but it will be doing so in the name of simplifying the process, not just an ill-advised way to cut costs.
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