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Lean manufacturing principles take off in the cloud

The cloud's emphasis on easy collaboration and access to shared data can advance lean manufacturing principles, helping companies eliminate waste and focus on value-added activities.

With its promise of simplified infrastructure, enhanced collaboration and ubiquitous data access, the cloud may...

advance companies' lean manufacturing strategies, playing a role in eliminating waste and advancing quality while aiding in continuous improvement.

At the most basic level, software as a service (SaaS) applications reduce companies' investment in costly server and storage infrastructure while freeing up IT from the day-to-day burden of running and maintaining a data center. With less time spent overseeing servers and administering network connections, IT can shift focus to higher-value activities that generate lift for the business.

"A key lean principle is removing waste and the non-value-add from your processes and the way you operate," noted Cindy Jutras, president of Mint Jutras, a technology research and advisory firm specializing in enterprise applications. "Is there any value in a company investing in hardware, servers, and the care and feeding of that infrastructure? Why not leave that to the experts who can do it at a scale that's not possible for the typical manufacturer?"

Central to a lean manufacturing strategy is the ability to collect and analyze data -- a chore that's much easier to manage with cloud-based software. Not only is the data accessible anywhere someone has access to a Web browser -- which could be on a tablet or smartphone, for example -- but it also can be made available in real time, which aids in better decision making and helps companies make adjustments on the fly.

"When you're talking about eliminating nonproductive work, you want a couple of really good KPIs [key performance indicators] to know that you are making progress and to monitor that progress over long periods of time," said T. Lee Wylie, former CIO at Gartner, who is widely credited for coining the term ERP, and is now a consultant to manufacturers. "Maintaining dashboards and KPIs is a lot easier in the cloud than with legacy software."

A self-service path to lean

The relative ease of deployment and the low-cost of cloud-based software have also given small- and medium-sized businesses their first real crack at deploying core enterprise applications like ERP or supply chain management. These platforms, while not essential to support lean manufacturing principles, are certainly beneficial to key practices, Wylie said.

The cloud also paves the way for mainstream users to become more involved in the lean initiative, Wylie said. That wasn't the case in the early days of lean, when companies brought in armies of specialists and industrial engineers to spearhead their efforts. Since there often isn't enough budget to fund protracted lean consulting engagements today, cloud-based software empowers everyday users with a set of tools and easy access to data, enabling them to pick up the slack and get involved in the lean manufacturing program, he explained.

"The cloud software helps reinforce a lot of things companies are trying to do to become lean," he said. "Instead of bringing in the consultants, you can get people excited about using SaaS software as a way to document changes being made and as means to implementing KPIs and tracking."

For FlowVision LLC, a provider of lean manufacturing software and consulting services, the cloud has changed the way it engages with clients, allowing the company to stay continuously involved in the process without the client having to spend significant dollars on bringing its consulting partner in for on-site visits. "With the cloud, we don't go away," said John Denzel, president of FlowVision. "We can look at our customers' data all day long, every day, and proactively tell them what's wrong. It allows for sustainability of the lean implementation and ensures the work is continuously being done."

Just six months ago, Denzel was watching his son's basketball game at school and was able to do some real-time problem-solving on critical data from a secure website using his iPad. "Talk about lean -- customers don't want to spend thousands of dollars on consultants," he said. "They want the answer and to be done with it. This lets us all work on the same data set with no latency in the data."

Alliance Laundry Systems, a manufacturer of commercial laundry equipment and a FlowVision customer, has benefitted from that type of experience. The company, which engaged FlowVision to help inject lean manufacturing principles into its spare parts inventory practices, among other areas, used to share its ample collection of inventory data with FlowVision via FTP transfers, a process that was labor-intensive, involving lots of email and follow-up calls.

Today with FlowVision's cloud-based inventory optimization software, the partners can interact directly and simultaneously view data in real time, according to Brian Stark, general manager of service parts for Alliance Laundry. "With the cloud, we're not wasting time emailing or making phone calls," he explained. "It helps us streamline the processes and get rid of waste."

Next Steps

Should you take a hybrid approach to cloud ERP?

How IoT data could support lean manufacturing

Weighing SaaS vs. on-premises ERP

Cloud vendors develop industry-specific features

This was last published in October 2014

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If you follow most of the thought-leaders and implementations of DevOps, you'll see that many of them talk frequently about following the principles of W. Edward Deming. Gene Kim's book ("Phoenix Project") does an excellent job of putting these concepts into a real-life IT example. Definitely worth adding to your reading list. 
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