I was interviewed yesterday by Industry Week on the ever lively topic of lean thinking versus technology. … it seems this subject keeps churning so I thought I’d try to clear it up a bit.
First, let’s be perfectly clear that IT is just about always non-value adding waste (not technology embedded in the product, but the information systems used to run the business). It is waste because it fails the basic test – when I am looking at two virtually identical items in Walmart am I willing to pay more for Product A than Product B because the maker of Product A has to cover the cost of better computers and slicker programs than the maker of Product B? Of course not. I am only willing to pay more if that technology translates into superior product value – better quality, utility or reliability.
That said, IT has a role. Just because it is waste doesn’t mean you don’t need some of it to effectively run the business. It is important to recognize that just because something is necessary it does not follow that it adds value. CEO’s, accountants and even lean consultants from time to time may be necessary but they do not add value for customers. The measure of them should be whether the money ‘wasted’ on them is enabling the real value adding efforts to perform more effectively.
It is also important to keep in mind that technology is a tool – not a strategy. Like all tools, it can be used effectively … or not; or used appropriately … or not.
ERP and other management systems are often lean whipping boys. That is probably unfair – they can have an important role in a lean enterpise. The problem is that far too often they are used to create and institutionalize waste, rather than eliminate it.
Buyers, planners, schedulers and the like – the traditional MRP support infrastructure – add cost and slow things down. Systems that are designed around getting these people more information and further institutionalizing their place in the process are anti-lean. On the other hand, systems that enable cutting them out of the loop are very lean. Most ERP applications fail this basic test.
Another problem with such comprehensive systems is their inflexibility. Continuous improvement means continuous change. Once put in, how easy or hard is it to make changes to the system? Usually the answer is that it is pretty hard, and IT and/or the software provider become bottlenecks to the continuous improvement effort.
Of course, the most frequent problem with ERP systems is that they tend to formalize forecast driven push flow, rather than demand pull. These days just about every decent system can support pull, but the companies using them have rationalized their uniqueness and use the system to ‘optimize’ unnecessary and wasteful push processes. In fact, it is a very rare business that works best on forecast push, but far too many have rationalized that, because they are unlike Toyota and the basic card kanban method doesn’t work for them, they must use a push approach. There are countless ways to deploy pull processes, and it is not the fault of IT or the software if management doesn’t understand this, but IT and software are wasted as a result.
Manufacturing technologies – robots, CNC machines and the whole range of factory automation devices – are similar. They may or may not support lean. This thing looks like a nice little robot and it goes
for only $22,000. Is it a lean tool? I have no idea. Like most automation the information describing it is fixated on how it can reduce labor costs. Anticipated labor savings are rarely realized from such investments (just ask GM who spent $30 billion under Roger Smith on a strategy to automate their way to Toyota and Honda labor levels under and came up short).
Lean is about flow, so the critical questions about this robot – and all factory automation – are (1) how fast can it change from one task to another – how flexible is it?; and (2) what sort of quality tolerances can it hold relative to the specifications – the Cpk levels? If it can change on a dime and maintain very high quality levels it is likely to help the lean effort – if it can’t then it won’t.
The technologies most powerful in aiding the lean effort are those used to shorten the product design processes – additive manufacturing and rapid prototyping tools, for instance – and the Internet. Like all technology, product development technologies are effectively used after value stream mapping and optimizing the design process, else they are likely to end up speeding up things that shouldn’t be done in the first place. In the early days of Six Sigma’s development the Motorola folks repeatedly drummed the principle that ‘Automating a process without first optimizing it will only result in creating the ability to produce scrap at speeds you never before thought possible’. The correlation in management information systems is that ‘automating your business processes without first optimizing them will only result in wasting more money on non-value adding work than you ever thought possible’.
The Internet is very rapidly being seen as the vehicle for companies to communicate and often do business directly with end customers, enabling whole chunks of the supply chain that add time and cost – but not value – to be cut out. Used in this manner, the Internet may be the most powerful lean technology of all.
At the end of the day, there is nothing inherently ‘non-lean’ about technology. The lean versus technology issue strikes me quite similar to the gun control question. Guns and technology are not good or bad – they are inanimate objects. The goodness or badness attributed to them is a function of the intentions of the people using them. I think many lean proponents who come across as ardently anti-technology are a lot like the ardent gun control advocates – simply driven by the fact that stopping all of the folks who use the objects for the wrong purposes is virtually impossible so they try to solve the problem by eliminating the inanimate object those people use to do damage.