Lean On!: Evolution of Operations Excellence with Digital Transformation in Manufacturing and Beyond

LEAN ON!

LEAN ON!

EVOLUTION OF OPERATIONS

EXCELLENCE WITH DIGITAL

TRANSFORMATION IN

MANUFACTURING AND BEYOND

MOHIT GUPTA

NEW DEGREE PRESS

COPYRIGHT © 2021 MOHIT GUPTA

All rights reserved.

LEAN ON!

EVOLUTION OF OPERATIONS EXCELLENCE WITH DIGITAL

TRANSFORMATION IN MANUFACTURING AND BEYOND

ISBN     978-1-63676-847-2     Paperback

              978-1-63730-195-1     Kindle Ebook

              978-1-63730-291-0     Ebook

To Mom, Dad, and Smriti

Friends, Mentors, and my Sensei

who have been my constant source of inspiration

And to the almighty for His blessings.

CONTENTS

CHAPTER (I)    HOW TO USE THIS BOOK

CHAPTER (II)   INTRODUCTION

CHAPTER (III)  MY INSPIRATION STORY

PART 1

CHAPTER 1.   LEAN | HIGHLIGHTS FROM THE PAST

CHAPTER 2.   HORS D’OEUVRE | STORIES ON LEAN JARGON

CHAPTER 3.   SOFTWARE IS EATING THE WORLD

CHAPTER 4.   CASE 1 | AUTO INDUSTRY EXPLORATION—WHERE IT ALL STARTED

PART 2

CHAPTER 5.   DIGITAL VS PHYSICAL | FROM DUEL TO DUALITY

CHAPTER 6.   THE BEYOND | LEAN FOR SERVICE INDUSTRY

CHAPTER 7.   LEAN PROJECTS | CHALLENGES AND MYTHS

CHAPTER 8.   CASE 2 | GROUND REALITIES—BOEING’S LEAN IMPLEMENTATION

PART 3

CHAPTER 9.   THE NEW OIL | IN DATA WE TRUST?

CHAPTER 10. THE POTENTIAL OF AI AND ML

CHAPTER 11. CONFLUENCE OF THE FUTURE OF MANUFACTURING | LEAN AND AGILE

PART 4

CHAPTER 12. LEAN OF THE FUTURE | HYBRID LEAN

CHAPTER 13. SEVEN WAYS LEAN CAN EVOLVE

CHAPTER 14. CONCLUSION

ACKNOWLEDGEMENTS

APPENDIX

NOTES

CHAPTER (I)

HOW TO USE THIS BOOK

This book is an exploration of process design in different industries. I start with the history and go over a few very important tools explained through stories and ending at the various possibilities of evolution of the Lean process. I expect my readers to be students who want to enter the fascinating world of operations and manufacturing, professionals who are already there and need to explore deeper, or just enthusiasts of lean.

Students should use it for learning the brief history of Lean and enjoy a few actual stories that people dealt with while implementing lean. I imagined myself being in that position as a second-year engineering student, but I hardly had a book introducing me to the concept of lean from scratch. I have made sure that I introduce every Japanese word that you hear for the first time in this book in the form of a story that you can relate with.

The stories will also be something that you would come across in your professional life at least once. I would urge you to refer the list of resources mentioned at the end of the book to relate to the topics better and get a better understanding of the subject. There are some interesting podcasts out there that I would want you to leverage while you enjoy this book. Students who are engineers should start from the first chapter to get the basics and the right context to understand the stories in the subsequent chapters.

For professionals, unless you are comfortable with the basic tools of Lean (multiple websites claim to have twenty-five top Lean tools that organizations deploy), skip the first two chapters—they describe the basic terms in the form of small anecdotes I collected from different interviews as well as my own experiences. Use them to calibrate your experience with mine… I would love to listen to your stories if you want to connect with me personally!

Enthusiasts—you are the special ones. You have a lot of curiosities and I have made an attempt to cater to those in this book. I compare things, answer many myths, and talk about real incidents to explain the evolution of Lean over time for many of the operations leaders that I spoke with. I hope you use this book as yet another way to enter the future and create your own opinions as an operations enthusiast like me.

Now, let’s begin.

CHAPTER (II)

INTRODUCTION

It was a cold day in October 2019. I was sitting in a conference room when I was taken aback with how the host ordered the group a cup of coffee. He never moved an inch and instead uttered the magic words: Alexa, make me a cup of coffee. Hearing the coffee machine whirring on his commands was the next thing that blew me away. I was in tech shock. We have all seen the evolution of the humble doorbell. It has evolved from alerting the homeowner of a visitor at the door to a futuristic mobile-controlled, video-enabled Ring, which provides an array of convenience and security features.[1] These are examples of new technology that has disrupted the way people conduct their daily lives. In fact, the technologies represent quantum shifts in how people interact with the world today.

As a mechanical engineer, I see and think about all the components and the way the products function as well as the mechanics behind all these marvels. I wonder about the processes that might be used to enable the disruptions in examples above. How did we decide one day that we needed a video assistance on our entrance? How did the creators connect that design vision to the actual product? There must be some changes in the way these products were built—changes which could make the time-to-market of those products faster or control the quality variation of each unit of the product. A drastic reduction in the timeline of a product launch means that they have acquired a lot of agility in how they were built. These developments have a pattern that seems to occur every twenty years.

To understand how the present products are made, I dove deeper and contacted my friend, who proudly carries the electric vehicle baton in a start-up based in the west coast of the United States. He has led operations in companies like Tesla and General Electric and currently wears the operations hat at an underwater AV company. Due to COVID-19, the production at his company slowed down. He saw this as an opportunity and managed to convince the founder of the company that they should rebuild their manufacturing processes from top to bottom. He stressed the importance of this overhaul because a company cannot expect to keep releasing upgrades in the product without ceasing to upgrade the inherent process used to make the product. That’s why he is happy. He knows customers have crazy expectations and to keep pace with them, the company needs to be a step ahead. So, he has taken a step back to create standard defect-free processes to build the basics right, which will help his company continuously improve.

On the flip side, the founder of the company, like every entrepreneur, worries about growth and returns. He believes that the team needs to prove the product’s value before thinking about stopping and improving. To him, stopping production means losing potential sales.

I have seen this clash of thoughts before. I have explored and tried to question these clashes in my interviews with many operations leaders. To my surprise, I was able to resolve a lot of doubts that I had in comparing the businesses in the US and worldwide. Not to give away much, but one of the things that I discovered is that continuous improvement and optimized production are, inherently, forms of art and need to be paid special attention.

World View

Elon Musk says, Humans are underrated.[2] There is nothing that humans cannot conquer. We like to think logically and structure our thoughts based on our past experiences. Think of the impact of a process defect today. For a typical automotive manufacturer, the cost of an unplanned downtime is over $1.3 million per hour, or $361 per second. So, if an employee spends three minutes calling a supervisor about a breakdown, they have spent $65,000 just to let someone know that that they have a problem. Over the years, Lean has triumphed in establishing mechanisms to avoid such failures and ensuring a foolproof process to avoid another failure to occur.[3]

The initial mechanical tools used from the Industrial Revolution of 1700s, for the next one hundred and fifty years are termed Industry 1.0, which was nothing but the manual creation of value.[4] The 1920s saw the start of mass production in the manufacturing industry in the US. This was Industry 2.0. Mass production had begun with increased demand from domestic business as well as the World Wars. A company producing thousands of products daily inspired shock and awe. But this trend evolved differently in the East and the West. While the United States focused on increasing production, Japan focused on increasing efficiency. Following Japan’s success, the United States quickly shifted from mass production to improving quality and efficiency.

Robotics was at the heart of efficiency for the most part of the 1950s until the 1980s. This was Industry 3.0. It was all mechanical but still helped in doing jobs in conditions that humans could not—high temperatures and deep seas. Now with the onset of thetwenty-first century, we are in Industry 4.0.[5] Almost everyone has created the capability to manufacture with accuracy and precision. A lot of credit for this goes to robots and to the new ways of using data. Today, success in manufacturing relies on the data generated in production and how we integrate the different steps in the value chain to create efficiency.

The Problem

Lean came into existence when organizations required efficiency in business. You become lean when you shed fat. For businesses, wasteful resource utilization is the fat that needs to be shed. Six Sigma came into being to support organized problem resolution. Six Sigma is a way to measure the variation in our processes and is one of the famous quality tools used in every industry. Lean and Six Sigma are now common names in manufacturing and are used interchangeably. Managers do a simple improvement and claim to have made their processes lean. In reality, these projects are more complex with many new and unique break points. Creating complex process system improvements requires time and patience to be successful. This path is excruciatingly slow and requires investment that not many companies are prepared to make.

In this book, I set out to see how Lean can be used in a new era of digital transformation for different industries that flips norms on their heads. The global manufacturing value affected by digital transformation is over $10 trillion, aided by many supporting factors. The cost of sensors and virtualization of manufacturing has been reduced one hundred times in the last decade. Digital transformation impacts the traditional design process. My friend who shifted three electric vehicle companies saw the same trend in all of them. There is now more focus on automation, product testing, and simulations. These attributes are still not discussed widely in Lean manufacturing. Rather, many operations leaders suffer because the adopters of Lean overlook this crucial philosophy when they are rapidly expanding.

So, the company CEOs and, subsequently, the operations leaders need help. Process design is too fragmented and falls prey to the pretty technology. Software programs have been developed over their own platform of Agile. Agile is a distant relative of Lean that got developed in the software world.[6] The world without Agile was linear. Software used to be developed in a sequential chain, handing over the developed product from one step to the next. Agile helped to create multiple iterations of the same product to reduce the lead time in developing the product.

But what happens when Agile meets Lean? What happens when more software engineers are developing a physical product than traditional design engineers? What changes will Six Sigma undergo with the future of work? The smarter companies are faster adopters and practice smarter implementation.

According to Forbes, 70 percent of the companies either have a digital strategy or are working on one to transform their operations.[7] Companies see how going digital can bring them a brighter future. Developing apps and creating digital documentation are also on the rise because most technology companies are undergoing some form of tech-transition. A robust plan starts with defining a process, which provides a foundation for a complete digital transformation.

Why Read This Book?

This book, predominantly, discusses the problem of evolution of Lean processes with digital transformation. I have been supported by active operations leaders who share their perspective with me. Many times, it is those leaders who give me different avenues to discuss the idea of digital solutions in manufacturing and grassroot operations.

This book also describes a possible confluence between the two worlds—physical and digital—where the proven process of Lean meets the software process of Agile. I have relentlessly tried to uncover these differences and make what Lean should be today— seamless with the digital world.

I’m an explorer here. An explorer who loves putting his inquisitiveness to good use by learning stories about things beyond my normal reach. Those who know me from school times know my reputation of sharing notes with fellow students to help them in their examination blues. This is what I am trying to do in this book. I have traded places from being a student who crams and regurgitates to being a researcher who asks and ponders. I ask many questions that I break down further along with a lot of people in this book to give you the Lean of the future. In my journey to explore the merger of physical and digital Lean, I talked to a lot of people who are unsung heroes of their companies. They have optimized and polished operational processes countless times. Lean is slow, hence most of their heroics go unnoticed.

My intention with this book is to explore. I see it as a perfect fit for an engineer who is curious about the manufacturing space and its realities. This book is for the professional entering into manufacturing and wants to have a crash course on how they can set up their work for success. It is also for an entrepreneur looking for ways to optimize business operations, or a curious business leader trying to break free from the traditional ways of operational excellence. I seek curious readers looking to educate themselves about technology and