As you refine your business strategy for 2021, you may be asking your teams: How can we improve our business model? Make it more effective? More cost-efficient?
The answer lies in adopting and refining a “lean plus digital” approach—leveraging the fundamentals of lean management supplemented by the regular application of critical business data to reduce waste and create business value.
Lean lies in the collection and use of data to determine progress toward a stated business objective. This data focus is perfect for the use of digital technologies. Because data is now abundantly available, it can be used for analytics and AI techniques to gain deep insights to support process changes needed to reduce waste and create better business value. Even more important, digital augments the key lean principle of continuous improvement as analytics and AI systems learn from the data gathered in the new digitized lean process.
What is lean, and why is it important?
The five key principles of lean date back to the 1990s, when manufacturing and engineering functions sought to maximize impact and time to value while minimizing waste — sentiments that still retain immeasurable business value today.
According to lean experts James Womack and Daniel Jones, the core tenets of lean include:
1. Value. The first and most important step, value is defined by specific needs such as timeline, cost or waste. Defining and quantifying value is the most critical step in the “lean plus digital” journey using verifiable business data.
2. Value stream. The next action is to map out the steps and processes involved in delivering the final value product, pinpointing and identifying steps that don’t provide value. This “value stream” is most often a map or flowchart. A process is not truly lean unless it has been value-streamed at least half a dozen times.
3. Flow. To ensure the remaining steps of the process flow as smoothly as possible, the next step requires not only an open mind and broad imagination but also a significant amount of cross-team collaboration to ensure all potential bottlenecks are prevented and the new verified business value is shown.
4. Pull. Now that an optimal flow is in place, time to value can be dramatically increased. Companies can “pull” products as needed, and the organization doesn’t need to worry about stockpiling materials in advance and accruing management and inventory costs.
5. Perfection. The last and final step is to perfect the “lean plus digital” approach. The more you refine your lean approach and continuously improve the value stream, the more streamlined it will become. Lean is not a static system. It requires constant effort and vigilance to perfect.
Why is digital important?
Data is becoming plentiful and is being captured and associated with all key processes. Therefore, putting this powerful data to use can give you significant leverage. AI and analytics tools can extract more insights and patterns from data faster and more accurately than humans to deliver insights that were not realized before.
“Lean plus digital” gives us an organized approach to solve the problem and get continuous improvement. What steps can an organization take to proactively implement a successful strategy?
1. Understand where in your operation you have the greatest waste or the greatest opportunity for business and financial improvement. This is usually done by selecting one of your key business processes and conducting a waste discovery process. It can take the form of a value stream map that will identify areas of waste in a complex business process and the steps for remediation to pursue. You can then prioritize the one or two areas you want to address first either by the amount of impact or time needed to implement and achieve success.
2. Access high-quality data. In many cases, you will quickly find that there are many challenges with your data availability, quality and timeliness that you need to address. Do you have a single source of any key component of your data or is it scattered among multiple sources? Is it inconsistent or of questionable quality? Is all of the data there at the time that you need it or is some of the current data captured on individual spreadsheets, and are you looking at old data in your ERP or MES systems? The answers to these questions will factor into your next steps plan.
3. Be prepared to modify or change your business process in order to remove waste. You might need to change the current business process so that it is actually based on high-quality digital insights. If you don’t embed these insights into your business process, you will not see the large business improvements, as the process will continue to be made using ad hoc and possibly highly incorrect gut-feel decisions.
Today’s digital technologies allow companies to drive value with lean. For most organizations, the benefits of “lean plus digital” are in process, but the possibilities are endless.