Lean OEMs Discover the CIO

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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?