The philosophy behind Lean Manufacturing — create value, eliminate waste — has been driving production practices for decades, starting at Toyota in the 1950s and continuing through to Dell’s influential Make-to-Order systems of the 1980s. Fast forward to 2014, and while it is clear that these groundbreaking companies got it right, the world of technology and manufacturing has changed so drastically, we find ourselves scrambling to keep up. A Fourth Industrial Revolution is upon us, characterized by “smart devices,” which are part of an “Internet of Things” or IoT that can actually direct machines on the shop floor by communicating autonomously “device-to-device” to manage manufacturing operations and distribution.
Smart devices create smart production lines, enabling a significant level of manufacturing agility that makes it possible to connect customer needs with a company’s ability to deliver a product — on demand. Today’s manufacturers must be better able to adapt quickly to specific consumer preferences. Add in new technology that creates an unprecedented feedback loop between companies and their customers in which products could actually be designed — or highly influenced — by the end-user, and you have the makings for a revolution in how products are designed and produced. The question is how do manufacturers position themselves to thrive in this new world?
In response to these technology advances, and powered by investments in manufacturing operations IT, the traditional practices of Lean Manufacturing have grown to revolve around Pull strategies, wherein supply chain, procurement, production, and distribution are based on the pull of demand (as opposed to Push, based on forecasting). Designing an operating model to best leverage Pull processes is an ever-shifting challenge.
Most manufacturers have significant investments in multiple IT systems to improve operational performance, responsiveness and planning. The current challenge is that these systems seldom work well together. What is needed is a new, smarter approach. Think of a flexible and scalable Pull platform as being the central nervous system of plant operations and ERP as providing the direction on where to go. Together, these systems provide the foundation for success and survival in an increasingly fast-paced, complex, and globalized marketplace.
While Pull processes are generally recognized as central to Lean Manufacturing, these processes can be applied to more than material flow and production activities. For example, multi-domain Pull processes can apply to quality, maintenance and even knowledge management. Adding intelligence to Lean Manufacturing processes brings us to a new generation of capabilities we call Smart-Pull.
In order to expand the scope of Pull, all functional domains of manufacturing operations management, including quality, maintenance, time and attendance, material and production, and intelligence gathering needs to be captured by the enterprise Pull platform. This platform must have built-in machine integration capabilities for connecting to a wide variety of automation equipment and smart devices. The vast amounts of real-time events data created by such connected manufacturing processes can then be used to generate insights and analytics. What results is a wealthy collection of manufacturing intelligence, which if seamlessly embedded into business processes, can then be used to realize the transformative advantages of Smart-Pull.
One manufacturer that is well on their journey is Ebara Corporation. They are implementing a Dassault Systèmes manufacturing solution to help improve inventory accuracy and visibility. Ebara’s operations improvement plan is to use this DELMIA Apriso solution to employ Pull production processes to reduce lead times and inventory while improving efficiency. Read more about this story here.
Ongoing technological advances, including the harnessing of Big Data, cloud computing, BPM (Business Process Management), the Internet of Things, and mobile access have further extended the power of Pull, enabling “smarter” decisions to be automated and executed with greater precision.
Here are seven ways to unleash the power of pull.
1) Leverage “higher order” information within a business process.
Second or higher order statistics (e.g., standard deviations, moving averages) derived from “first-order data” (collected directly from an event) are under-utilized in business processes. Given the capabilities of Smart-Pull, this higher order information can now be synthesized in real-time, and then applied to streamline performance.
2) Increase robustness of Pull processes.
In traditional Kanban processes, a fluctuation at one stage is easily amplified by responses from the next stage, leading to further fluctuations down the chain. Smart-Pull can help to improve the robustness of Pull processes while avoiding unnecessary gyrations of inventory levels by, for example, enabling real-time visibility to Kanban status and greater flexibility with the design and effectiveness of Kanban or Pull loops. Based on such access to real-time status of Kanban, advanced algorithms can be implemented to actively monitor “traffic jams” in Kanban loops and adjust control parameters accordingly.
3) Complement Push with Pull and vice-versa.
Use Pull to trigger stable demand items, and Push for irregular items.
Use Pull to improve data accuracy in Push.
Use Pull to simplify plan and order management.
Use Pull to improve detailed scheduling.
4) Improve human decisions with Pull.
In many situations, Smart-Pull could enhance human decision-making, especially when dealing with uncertain situations that are complex and rare. Moreover, Smart-Pull processes have the capability to sense and filter a large volume of real-time events, triggering active notifications to the appropriate individuals.
5) Make Lean initiatives stick.
Many organizations are challenged to make Lean initiatives “stick” beyond their initial success. IT tools can be leveraged to measure Kaizen (continuous improvement) results, benchmark across facilities and globally deploy processes.
6) Extend Pull to quality and maintenance
Smart-Pull processes can be used to improve machine uptime and equipment maintenance efficiency. Leverage smart device technology to respond faster to Quality events and containment requirements, not only at a factory, but also across a supply chain.
7) Extend Pull to supply chain partners and customers
Achieve greater return on investment by expanding Pull processes throughout the enterprise. Examples include: supplier Kanban processes, synchronization of outsourced production and supply chain quality management.
Examples of Smart-Pull processes
The approaches outlined above make it clear that Smart-Pull is more than the automation of traditional Pull-based processes (e.g., Kanban to eKanban). Let’s drill down to examine a few examples of smarter Pull processes:
Multiple- or cross-domain Pull processes can utilize information from multiple streams (quality trends, production yield, equipment failure record) to optimize a replenishment quantity or safety stock setting.
Automated, long, range and multi-event sensing. Using RFID sensors (Internet of Things) and weigh scales, the detection of material consumption activities can be automated, remotely triggering a supplier to replenish parts.
Real-time insights and higher order statistics. For example, optimize a replenishment Pull process by using a buffer calculation based on dynamically updated probability distribution parameters.
These examples, only a few of many, highlight that the upside for smarter, speedier and slimmer manufacturing operations is boundless. If you adopt a strategy of embedding Smart-Pull processes into the management and execution of operations, you can handle greater complexity while improving flexibility and response time. Speedier processes and responses contribute to an overall reduction of inventory, freeing cash flow. Slimmer processes are easier to manage, generate less waste and increase agility in the marketplace.
Great challenges go hand-in-hand with great potential. Smart-Pull execution is initiated on the frontline; processes run across multiple domains and manufacturing operations where real-time execution is necessary. This necessitates an enterprise IT architecture based on an operations platform capable of managing and integrating each of the processes surrounding manufacturing events or activities – and doing so with a high volume of activity. In order to achieve best-in-class performance from Smart-Pull strategies, a manufacturing IT platform for execution events is vital. Look for a solution that is capable of not only supporting multiple domains, but also seamlessly integrating the necessary operations intelligence.
First Steps to Smart Pull
Harnessing and integrating the power of BPM, cloud computing, mobility, Big Data, and the Internet of Things (smart devices) in service of optimizing your enterprise’s manufacturing processes is clearly no small feat. As I’ve stated, the pace and scale of technological change in manufacturing points to the emergence of a 4th Industrial Revolution.
Begin at the heart of your enterprise. What key strategic drivers are most relevant for the profitability and viability of your business? Is it flexibility and responsiveness, capacity utilization/ROA, or inventory optimization? Evaluate your operations end-to-end to gain clarity in identifying these key drivers.
Next, review and discover how Pull can improve your strategic drivers; in some cases an overhaul of your operating model might make sense, whereas in other cases incremental improvements will suffice.
Given these discoveries, identify what extensible and scalable IT platform best addresses your needs while offering the capability to embed intelligence into your Pull processes.
To begin implementation, identify a few key short-term goals with visible returns. Adopting Smart-Pull as an enterprise Lean strategy is a large-scale project; you will need a few quick wins to drive organization momentum, win over executive management and ensure future budget availability.
With these wins in place, it’s time to roll out and institutionalize successful Smart-Pull practices to other facilities. To ensure continued support, take time to publicize performance improvements, increased customer satisfaction or other valued metrics specific to your project. As these success stories are shared, look for expansion opportunities. After all, Kaizen means continuous improvement.
The challenge before us was succinctly stated in a recent McKinsey Global Institute report: “Manufacturing is entering a dynamic new phase. As a new global consuming class emerges in developing nations, and innovations spark additional demand, global manufacturers will have substantial new opportunities — but in a much more uncertain environment.” Is your enterprise ready to go beyond Lean? To the smart, speedy, and slim go the spoils of the revolution.
Fred Thomas is a DELMIA Apriso automotive industry director at Dassault Systèmes (www.3ds.com), a developer of enterprise software that provides virtual universes for sustainable innovation. Dassault Systèmes’ DELMIA brand offers products that connect the virtual and real worlds of manufacturing.