The 4th Industrial Revolution Industry 4.0 and Lean 4.0 – What might they mean for you?

“How’re you doing with the revolution, Comrade?” someone asked me the other day. What?!! “The 4th Industrial revolution!” Like the rest of us I’d heard about the first one, started in Manchester, Cottonopolis.

As most of us know, there have been other Industrial Revolutions since then and we’re actually in another right now. Each one before brought enormous challenges and disruption to everyday life. People had to transition from manual labour and horse power to machines and electrical power, from counting to computing and now to the internet and connectivity. But each one delivered huge opportunities – especially to those who were ready to embrace the concepts and the means to realise them.

Owners of manufacturing businesses today are uniquely placed to build on our industrial heritage, to create hope and prosperity for themselves and their successors.

So, how to get ahead, become Industry 4.0 compliant, and what would that do for my business? Now, we’ve all done some kind of Lean and have a wardrobe of T-Shirts to its “success”…..? Is there life beyond Lean? Yes, but not as we know it. Might it be possible to flow beyond Lean to Lean 4.0 as a route to Industry 4.0 compliance? Before answering that question, let’s back up a bit.

The 1st to the 4th Industrial Revolutions – Industry 1.0 to Industry 4.0

The 1st Industrial Revolution, otherwise known as Industry 1.0, started in Manchester, here at Royal Mills on Cotton St. Water and then steam-powered cotton production began here on an industrial scale. With so much rain and humidity they could spin much finer yarn without it breaking. Yes, really.

Electrically powered mass production of cotton and many other products drove the 2nd Industrial Revolution or Industry 2.0. Computerised automation and IT, the 3rd Industrial revolution (Industry 3.0) is already being revolutionised. Industry 4.0 is Internet and Data driven, but it’s not just about Robots and the Internet of Things (IoT) but also Connectivity, Mobile Technology – remote monitoring of factory processes, Machine Learning, Servitisation whereby Products become more like Services and much more.

This 4th Industrial or Digital Revolution has become known as the latest “release” or Industry 4.0, as mapped out below.

                                                

Lean Manufacturing 1.0 to 4.0

Lean 1.0 was also revolutionary in its day but has progressed to Lean 4.0 or flow – for greater Productivity, more Profitable Growth and better Cash Flow. All of these drive efficient Working Capital Management.

                                              

Lean, as “the elimination of waste,” dates back to Benjamin Franklin, Taylor and Ford, but it was Taiichi Ohno at Toyota who identified the 7-Wastes, or Muda as Lean 1.0 between 1948 and 1975. This became known as the Toyota Production System (TPS.) TPS combined a mix of techniques e.g. Kanban, a signal to work, Kaizen or improvement and Takt, a rate of production to be calculated each day as the mix and volume of customer demand changed.

Lean TPS evolved to Lean 2.0 by embracing Process Improvement, pioneered at Motorola in 1986, patented in 1995 as Six-Sigma. The goal was to have 99.99966% of products defect free, or parts-per-million (PPM) quality.

Eliminating an 8th waste, that of human potential, skills, creativity and talent became associated with the names of Shingijutso and Bodek who brought Lean up to the next level of innovation as Lean 3.0.

Since a lot of Industry 4.0 is about Digitisation and Connectivity Lean 4.0 is the logical companion to Industry 4.0 having evolved from these strands of Lean. Characterised very simply Lean 4.0 replaces go-stop-go production with continuous flow. A “digital twin” of the factory is created based on John Costanza’s concept of Demand Flow Technology (DFT.) See Wikipedia 

Then, following this Lean 4.0 holistic data analysis, complex Product and Process relationships are linked and synchronised together in a continuous flow for much faster speed of response to customer orders and much better cash-flow. 

Lead times, and the associated cash embedded in “redundant” inventory (inventory that doesn’t really need to be there in a flow) can be reduced from weeks to days or even hours. This cash released in the process is invested elsewhere in the business. The output of one Process is linked and synchronised with the next in a flow for Industry 4.0 Connectvity.

Lean 4.0 has huge implications for the three key business metrics of Productivity, Profitability and Cash Flow. They all tie into Working Capital Management, for which John Costanza was nominated as a Nobel Laureate in Economics. The data-driven emphasis of Lean 4.0 facilitates key Industry 4.0 features of Connectivity, Servitisation and Big Data so innovative businesses can become more Industry 4.0 compliant.

For a 2-minute audio-visual to see how this is done Click here.

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