Industry 4.0 - the replacement of lean?

1. Yesterday Lean, today Industry 4.0 and what is tomorrow?

Yesterday, everyone was talking about Lean Production, now it is Industry 4.0 or digitalization.

  • What is important now?
  • Will the new technical possibilities bring me benefits or will the hype soon be over?
  • Which approach fits best to my goals?

This whitepaper is intended to provide answers to these and other questions.

2. Industry 4.0 - extensive use of digital technologies

Figure 1: Technologies

Industry 4.0 stands for the networking of people, systems, and objects in real-time, within self-organizing and optimizing value chains. The term "digitalization" is used synonymously to describe the transformation of analog processes into digital ones. Digitalization technologies are used in many different ways in production and logistics (Figure 1).

In production, workstations are increasingly being digitally connected. Sensors at the workstations ensure that the current status is always digitally "known". Data visualizations show any deviations from the target status in real time. Countermeasures are initiated promptly.

The constantly updated order status helps production planners to make the right decisions. As digitalization progresses, they are supported by Cyber Physical Systems (CPS). Workstations, workpieces and transport equipment are networked in such a way that they communicate with each other and prepare the next process step. Production planners monitor progress and only intervene in the event of deviations.

In the future, robots may also be a component of a CPS. At present, they perform routine or physically demanding tasks, but they also cooperate directly with employees within the framework of human-robot collaboration, for example when gluing car parts or picking in the warehouse.

In addition to barcodes, more and more QR codes are being used in the warehouse to identify articles without contact. RFID chips enable the identification of articles even without optical scanning. Intelligent camera systems identify articles by specific (surface) properties. Therefore, an additional labeling is not necessary.

Picking is supported by pick-by-technologies (pick by light, by voice, by vision using smart glasses). Smart watches display information and can be used as scanners. New possibilities are also offered by intelligent load carriers, which always know their stock and reorder independently if necessary.

Warehouse and production are connected by internal transport. Autonomous forklifts allow automatic unloading of goods deliveries. An "Automated Guided Vehicle" (AGV) supplies the production with raw materials and transports the finished goods to the warehouse. They navigate inductively, optically or by laser. The use of drones within factory buildings is still strongly restricted for safety reasons.

The digital twin will be a central component of the ongoing digitization process. It constantly represents the virtual copyof the logistics and production system and the products. This means that order status, machine availability, stock levels, transport capacities, current position, processing status, quality defects and other information can be called up at any time. Changes to the real system can be realistically tested on the digital twin at any time in advance.

The described technologies offer excellent opportunities to improve processes in production and logistics and thus to increase competitiveness. Does this mean that we are no longer dealing with Lean methodologies and are instead getting started digitally? Can many problems be solved directly with the new technical possibilities?

3. Digitization as a new problem solver

Figure 2: Increasing adherence to schedules with the help of simulation

For example: a company would like to increase their on-time delivery. Low planning quality was identified as the main reason. Industry 4.0 offers a solution with simulation-based planning. Planning scenarios are realistically simulated and evaluated before release (Figure 2).

In addition to the introduction of suitable software for the simulation, data must be collected in real time and processed accordingly. Then an experienced planner can achieve significantly better planning results than without simulation.

But is this the only way, is it the right one? How would the solution have turned out before the age of Industry 4.0?

First, we should analyze the deeper causes of the low planning quality. In most cases, high lead times lead to too much time passing between planning and reality, i.e. when the plan is put into reality, the assumed planning parameters are often no longer valid. High lead times result from complex processes, many transfer steps, high work in progress (WIP), high batch sizes, set-up times and much more.

The Lean toolbox offers a wide range of solutions to reduce lead times. Processes can be simplified. Avoiding overproduction reduces work in progress. Smaller batch sizes and shorter set-up times are a major lever for short lead times. Where possible, the changeover from push to pull control should also be considered. With these and other Lean measures, significant improvements in lead time and thus in planning quality can be achieved without any investment in digital technology.

Figure 3: Improvement of on-time delivery through process improvements and digitalization

So, we do not really need the technical possibilities? No, we need them, but the introduction of digital technology is always the second step (Figure 3). First, the processes have to be improved. This alone is the major key for huge potentials. If digital solutions are then used in a targeted manner, an even greater leap of improvements can be achieved. In the example described, AGVs shorten transport times and electronic Kanban increases supply reliability. The monitoring of operating and machine data enables prompt intervention in the event of target/ actual deviations. In combination with all these measures, simulation-supported planning then ensures significantly higher adherence to schedules.

The example described shows that the sole focus on digitization is too little. In other example companies, some of the "pioneers" of Industry 4.0 collect almost infinite amounts of data. But nobody knows exactly what and how it can be evaluated. Yes, the planning results are better even without process changes if current planning data is used. But the important thing is not to manage the low productivity, but to increase it.

4. Digitization and Lean – integrated more than their sum

The Lean concept aims to avoid/ eliminate waste, thus ultimately maximize productivity and minimize costs. The use of Industry 4.0 tackle these goals in the same way. Many Lean principles are even supported by digital technologies.

Processes in takt

Production in takt form the ideal principle for shortest lead times, which should be aimed in the age of Industry 4.0 too. But customized products with an increasing number of variants cannot not always be produced in a stable takt. This is where the transparency of digital data helps to find the best station to manufacture a product efficiently.

Flow

Lean aims to ensure that the material flows continuously and the flow is not delayed by buffers and waiting times. Industry 4.0 technologies help with flexible, fast transport solutions (AGVs, drones) and offer maximum transparency of stocks and current positions of the material.

Pull

According to the pull principle, the next station should "pull" its material from its predecessor. This only works with high availability and fast re-production. Here, digital monitoring of the systems and up-to-date provision of the necessary production information is helpful.

Figure 4: Reduction of waste by using technologies of Industry 4.0

Zero defects

The above-mentioned avoidance of buffers and waiting times only work if quality deviations are detected early and avoided if possible. This Lean principle is also supported by digital technologies for permanent quality monitoring and improvement.

These examples show that the Lean methodology and Industry 4.0 share the same goals. The new possibilities of Industry 4.0, used correctly, lead to a further reduction of the types of waste defined in Lean methodology (Figure 4).

Transport

Transports can be handled more efficiently and faster in the future. AGVs or even drones will receive the data on transport requirements in real time, coordinate with each other (CPS) and complete the transport using the fastest route.

Inventory

Up-to-date data and integration with customers and suppliers allow permanent optimization of inventory parameters. Safety stocks for unpredictable events can be reduced to a minimum. Short transport times ensure fast replenishment. Furthermore, the prevalence of 3D printing will significantly change the type and level of inventory.

Movement

The use of decentralized information carriers, such as tablets or smartphones, eliminates the need for movement or even the walk from value creation to an office computer. Mobile workstations ensure that materials and tools are always optimally accessible.

Waiting

By means of sensor technology and data diversity, digitization ensures a high degree of transparency in production. The introduction of a digital twin increases transparency and also allows running through realistic planning scenarios. Based on the findings from the scenarios, measures are introduced to avoid real waiting times.

Overproduction

Overproduction occurs when production output is higher than the demand in order to utilize expensive capacities. Unused capacities can be avoided if the available capacity is planned close to the actual demand. The high transparency and data availability of Industry 4.0 helps for planning more accurately on an up-to-date planning basis.

Space

Digitization reduces the need for storage space by reducing inventory (see above). In addition, product identification allows a compact storage without the need for manual searching. 3D printing offers space-saving storage of raw materials instead of semi-finished products and individual parts. Transportation space can be reduced when drones use the third dimension.

Quality

New possibilities of the sensor technology allow an early detection of quality deviations and the initiation of countermeasures. Industry 4.0 provides an excellent basis for quality improvement and continuous improvement in general due to the high data availability and its evaluation capabilities.

Unused human potential

On the one hand, digitization relieves employees of routine tasks and on the other hand offers greater process transparency. This gives employees more freedom to use their capacity and creativity to improve processes.

In summary, it can be stated that digitization does not replace Lean concepts, quite the contrary. With Industry 4.0, waste can be reduced even further than Lean has been able to do so. Thus, the principle of "processes first" still applies. Solutions from Industry 4.0, which are implemented for optimal processes, open up additional potential for improvement (Figure 5).

Figure 5: Methodical procedure to increase competitiveness

What are your experiences with Lean concepts? What is your approach bringing Lean solutions into the age of digitization? Experts of Miebach Consulting successfully implemented solutions for production companies of different branches and sizes all over the globe. We will be pleased discussing your requirements for improving your production and logistics. Let's talk about your individual targets and find together, practical solutions for you.

Our author
Dr. Reiner Friedland

Dr. Reiner Friedland

Principal

Phone +49 30 893832-0

Email friedland@miebach.com

Additional Links

The Potential of Digitalization in Logistics and Production

17 August 2018, Written by Dr. Reiner Friedland, Miebach Consulting

Supply Chain 4.0: Make it possible with AI and Digital Twin

19 November 2020, Written by Isabel Morales, Xavier Farrés, Kamel Klibi y Alexander Klaas, Miebach Consulting

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