Lean starts and ends with customers. It starts with customer value definition and culminates into successful delivery of the same. As technologies advance, so does the customer experience and hence, their aspiration. Expecting more and more is a healthy addiction and that keeps setting the benchmark higher and higher for all. Therefore, we have seen customers get more and more demanding, needing more variety, tighter specification, superior quality (performance & looks), enhanced life and have increasingly competitive values.
A lean and mean supply chain organisation is the one that can breathe with fluctuating demands. Time from order taking to order delivery is key; shorter the time, leaner the organisation, making it more reactive, more flexible and generally more sustainable & profitable. Industries have evolved through Industry 3.0 to Industry 4.0 and now, have set their sights on Industry 5.0 (wherein, enterprise-wide smart and intelligent machines would be connected via IIoT, involving liberal amounts of AI, deep learning and predictive decision-making). Sounds utopic? Imagine how IoT as a concept may have sounded as a possibility in the early 90s. Speed to market has become key (without compromising on other parameters), be it raw material supply or within the shop floor or from the factory to the points of sale. Higher the ‘velocity’ in any of these three constituents of the supply chain, more is the accrual of benefits. This reduction in lead times, without adversely impacting customer experience, forms the bedrock of benefits for lean.
Benefits of higher velocity
There is a need to carry lower inventory, as provisions for inventory have to be normally made for much fewer days. If manufacturing can guarantee products to its customers in a reduced manufacturing lead time (say), not only can buffer inventory be reduced (which also simplifies the supply chain inventory planning complexity) but also marketing can enhance its forecast accuracy by having to forecast for shorter durations. In turn, this would reduce disruptions on the shop floor by condensed unplanned changeovers or reduce the inventories/buffer stock carried in the FG store/supermarket. This will further cut down on the RM stock that needs to be carried and also have a positive impact on the credibility of schedules given to suppliers. The waste by the way of ‘insurance buffer and insurance time’, on account of unplanned and disruptive variability, takes a dip. The water in the proverbial river goes down, exposing the rocks that need to be dealt with, post which the ‘value chain’ river can be safely and comfortably navigated even at lower water levels (inventory).
Differentiation possibilities start from here and many companies have started to do so. Let us examine elements of lean implementation and see what impact modern customers and technologies have brought.
Customers have started to expect to be pampered - A win-win for both the customer and company. The entire supply chain then adapts, upgrades and caters to this pampering.
A leading IT hardware manufacturer down south has been allowing customers to configure, choose and order their computers online. Consequently, their production planning and scheduling systems are extremely agile to ensure that such orders are shipped within a day, post production/assembly. They follow a strict make/assemble to order philosophy and have been extremely effective while doing this.
During a temporary phase of low growth, a two-wheeler manufacturer in South India, enjoying a legendary brand status, innovated brilliantly by launching a slew of variants of their bikes and thus, stimulated the imagination of not only their die hard fans but also that of many other bikers, who shifted loyalties. Of late, the company has started to offer custom-made bikes, where customers can choose some basic configuration options. The innovativeness keeps extending.
A popular car manufacturer innovated an electric car that promises a quantum mileage between recharge (needless to say, all component manufacturers have rapidly adopted to affect this innovation)
The leanness and flexibility that is built into modern e-commerce supply chains, wherein not only is AI and Machine Learning (ML) used to wow clients when they log on, but the back-end supply chain is super efficiently managed to deliver items in as quick as two hours from order placement
Steel companies innovating their retail distribution is yet another example
Production planning - Closely interlinked with the above is the next in line-associated function, that of production planning.
Complicated S&OP optimisation models are used to ensure maximum On Time in Full (OTIF) and customer satisfaction
Cost optimisation models further fine-tune the effectiveness of the planning process
It must be admitted that there appeared to be a scope for improvement in Indian supply chains to reduce the need for manual planning by digital solutions and/or supermarkets (or a mix thereof). SAP has held mainstay here.
Physical effort has given way to digital convenience in this function. Speed, ease of navigating complexity and more satisfied customers are the net result.
Lean in the shop floor - Lean in shop floor remains largely the same, albeit with the incorporation of technological changes, intending to enhance productivity, reliability, reduce stress levels and improve customer serviceability.
The degree of use of technologically superior robots in favourable industries, such as automobiles, has increased and also been deployed into additional application areas
Cobots are being tested for use and being used in a few cases, mainly for functions such as application of sealants, go-no-go tests requiring pick & place & for material handling activities
Cobots were also being tested on a component assembly line of the machine shop of a leading automotive manufacturer, replacing the role of men in picking and placing. The experiment is in the stage of resolving teething problems; but if successful, it would be one more case of robots (cobots) replacing men.
Operator/line level entry of production, time and loss data is being rapidly adopted to replace the earlier systems (in progressive organisations), wherein data is collected at the shop floor and entered once in a day by someone offline
Line sampling quality inspection data is increasingly getting fed/entered from the proximity of the line itself, using quality inspection stations and trained authorised logins
Real-time data captured by machines is now being enhanced to incorporate automatic codification, such as to measure losses due to line/machine stoppages and thus, to auto-generate OEE reports
Digital dashboards are being increasingly engaged to give an operating level bird’s eye view of the plant operation. Elsewhere, these are also called war rooms and are manned by instrumentation experts (something like the one one sees in refineries, etc). In most cases, this results in some sort of a feedback on sight of unwelcomed deviation (either over the phone, or open loop or closed loop).
Telephone/SMS alerts on machine condition and machine stoppages have become a routine. Automation of the alerting process exists in a few cases, with no need for manual intervention.
Ergonomic studies are being increasingly indulged in to measure worker stress and thus, evolve superior and more healthy work methods
Enhanced focus on the safety and health of workers is finding more and more prominence amongst managements. Metrics to measure this forms a part of the regular monitoring process. To reiterate, it is not that this was not considered important in the past; rather, it is to say that, the same is now being considered very seriously and also includes the wellbeing of contract labours in most cases.
Efficient process & streamlined operations - Suppliers have generally benefitted directly/indirectly on account of lean adoption in customer value chains, resulting in more efficient processes and streamlined operations. This is particularly true for the established OEMs and good tier 1 suppliers. The same cannot be said for tier 2 suppliers and MSME organisations, where though improvement and upgradation would have happened, what is not clear is if it is keeping pace with the progress at the OEMs (with respect to good manufacturing practices, automation, safety, etc).
Lean impact & Industry 5.0
Thus, if one were to highlight the one aspect that is positively impacting lean adoption, it is digitisation, followed by what can be called micro automation (or solution-based automation). The other stages of lean, viz. eliminating/reducing waste, implementing flow, stabilising the processes, implementing pull, etc will continue to be increasingly adopted at a normal pace (and most of the established companies have done an appreciable job at this). The question remains how successfully will Indian companies be revved up for the concepts of IIoT and then Industry 5.0? How intensely will the Indian industries be able to feasibly invest in IIoT and smart machines (connected to the cloud, uploading of data in real-time on the cloud, predictive analytics, etc)? And finally, the move on to Industry 5.0 remains to be seen. Industry 5.0 would entail investment in smart IIoT-based connected machines across enterprises.
What remains to be seen is the nature of trade-offs that will get considered and how managements will resolve the cost-benefit issues within the decision-making process (given the fact that we continue to be and portray ourselves as a low-cost manufacturing destination). Hence, the ROIs of a grand investment in automation in India may not prove as feasible as it otherwise would in developed economies.
After-effects of COVID-19: Short-term & long-term
Before concluding, it would be incomplete if one does not consider the likely impact of the present COVID-19 scenario and mull over the short-term and long-term repercussions. In the short-term, though demand has been suppressed and factories have started to open up, it will take some time to get over the restrictions imposed on factories. However, one can see aspects of COVID-19 compliances having the potential to redefine some aspects of how we see ‘necessary’ and ‘unnecessary’.
Social distancing norms, sanitisation requirements and generally the paraphernalia associated with having to manage the infection threat, will force organisations to operate with less. This would push for automation of simple jobs that would otherwise have been done manually. Hence, one could see material handling jobs (end-of-line or otherwise) being automated. Dependency on contract labours will be reviewed for reduction.
Crowded assembly lines and workers operating in close quarters will be a thing of the past. Work reallocation may happen to ensure this compliance.
Productivity will get compromised on account of compliances to COVID-19 requirements. To offset this, factories operating in single or two shifts will consider operating in two or three shifts. Capacity redefinition may happen in many factories (on account of the above) until such a time that automation happens (or any alternative compliant solution is implemented).
Hygiene will go to a whole new level, which is a positive long-term impact. Once enforced in factories, it can be hoped that its effect will continue to be felt even at the employees’ homes.
One may see factories increasing the allocation/production of factories in areas that are less affected by COVID-19, as compared to the ones that are more severely impacted (say, the ones that lie in urban areas)
There may be additional turnaround time for trucks, owing to clearance of drivers/cleaners and sanitisation of trucks, etc
Travel time of goods may also increase, in case of delays due to COVID -19 checks — to the extent that buffer stock may have to be increased
In conclusion, as we prepare to restart from where we left off, the silver lining in the dark cloud that has passed (hopefully) holds out the potential to redefine the assumptions of lean that we have been used to. The assumptions of value-added, non-value added and essential non-value added will undergo a change in classification. A bit of what was acceptable in the past, may not be so going forward and vice versa.