Is Lean Manufacturing Still Relevant Today?

Lean manufacturing, which originated as the Toyota Production System (LPS), is one of the most well-known process strategies in modern manufacturing. It migrated to the US in the 1950s and began to draw serious attention in the 1980s.

Since then, it has become the industry’s default best-practice approach and has been widely adopted in manufacturing facilities worldwide. The impact on the manufacturing industry is staggering, similar to Henry’s Ford’s vision for assembly line production and Eli Whitney’s notion of interchangeable parts.

But where does lean stand today? Have new technologies made lean irrelevant? Have the retiring Baby Boomers, yesterday’s lean pioneers, taken the secrets of lean success with them into retirement?

Lean manufacturing in today’s business

Today, lean processes are still at the heart of most manufacturing operations worldwide and are increasingly important in other industry sectors, including distribution and financial services. As the manufacturing industry recovers from the recession and moves into a growth phase, analysts are starting to once again pick up the lean dialogue, as though it simply had been paused.

In response, managers are starting to review their original lean strategies in light of today’s changing market demands. Some are asking, “Is lean still relevant?” Others wonder, “How does a lean enterprise also embrace investment in new technologies like 3D printing and the Internet of Things?”

The manufacturing industry has changed dramatically since lean principles were first adopted, especially in the areas of manufacturing technology and information management. When many companies first rolled out their lean initiatives, the Internet was in its infancy and few could imagine a workplace that included the use of mobile devices, online portals for customers and suppliers, and real-time collaboration with suppliers in other continents. It’s a quickly evolving global marketplace today with highly demanding customers. How do lean principles hold up to this new paradigm?

On the surface, it may seem that advanced technologies are contrary to the lean principles of simplicity. Although Taiichi Ohno did not map out an IT infrastructure that incorporated predictive analytics and closed-loop feedback channels with customers, that doesn’t mean he wouldn’t embrace them now, if he were updating his concepts for today’s manufacturer.

Since the early days of lean adoption, IT managers and production managers have often clashed, as they struggled to find the balance between big powerful ERP systems and streamlined minimalist processes with as few steps as possible.

The monolithic ERP systems that tried to impose a one-size fits all structure were not always lean compatible. “Early pioneers of Lean systems pursued strategies of removing IT from production processes, viewing this technology as an additional step which could be ‘leaned’ out of processes to remove waste.

This philosophy was probably reasonable in the 1970s when technology was in its early, nascent stages; today, however, is a completely different situation with a level of complexity that necessitates reliance on IT systems to remove the waste of manual processes,” says blogger Fred Thomas in his post, “The Lean Manufacturing Makeover.”

In a recent Computer Weekly article, “Business applications, data analytics can make business lean,” author Stephen Pritchard says, “One of the objections raised by lean practitioners is that centralized back office and business applications—such as ERP and customer relationship management (CRM)—often impose rigid business processes on the organisation.” Such impositions can deviate from the lean process flow, creating friction between the two camps.

"You have lean purists who think that enterprise resource planning (ERP) gets in the way of business improvement," says Mark Edwards, a manufacturing expert at the business consultancy, KPMG. He adds that lean programs and ERP solutions may follow different routes, but the goal is the same: continuous improvement. “People have started to realise that there can be a virtuous circle. ERP brings in common nomenclatures and data standards, so you have a fact base to apply lean thinking to."

A Manufacturing Business Technology article, “Beyond Lean: Adding intelligence to unlock the power of smart pull,” addresses the new demands placed on manufacturers today and suggests that lean processes—along with modern data management capabilities—can provide organisations with the insights they need to thrive.

“The world of technology and manufacturing has changed so drastically, we find ourselves scrambling to keep up,” says the author, adding, “A fourth Industrial Revolution is upon us, characterized by ‘smart devices’…that can actually communicate ‘device to device’ and autonomously manage manufacturing operations and distribution.”

Smart devices create smart production lines, changing the role of lean mandates. Today the manufacturer must, above all, be able to connect customer needs with a company’s ability to deliver a product—on demand. Multiple tactics and tools are required to make on-demand manufacturing feasible—and profitable—from product configuration solutions to component subassemblies, co-manufacturing partnerships, and late-stage assembly strategies.

Modern ERP solutions bring these tactics and tools together into one streamlined process flow. Today, the highly flexible ERP system acts as the central nervous system, connecting process flows and making a lean philosophy attainable.

Read our next blog to find out how the lean concepts are updated match current business drivers.