IT Strategy

Lean Manufacturing and IT Strategy

September 20, 2009 by Raj Sheelvant

Olivier Drean is EMEA alliance partner for APRISO, which is an editor of MOM (Manufacturing Operation Management) system. He has 15 years of manufacturing experience that is split between production management, Lean Manufacturing consultancy before joining APRISO. Olivier has a Mechanical Engineering degree and a MBA.  He has a unique perspective of IT in manufacturing organization.  I had an interesting conversation with Olivier and here is an excerpt of my conversations with him…

Raj:  What do you think is the biggest problem manufacturing organizations are facing that IT has not solved yet?
Olivier: In the manufacturing world one of the biggest challenges we are facing is a strong aversion to IT by the business people.  IT is often perceived as intrusive and with minimal value added vs. automation which can provide a lot of help. This gap has even been increasing by the massive implementation of ERP which is not a dedicated manufacturing tool. The result is a large set of local custom development or initiative has led to a huge heterogeneity in IT systems that prevent people from working together. This has ultimately led to a chasm between business and IT.   I think IT can play a strong role in enabling large business transformation project such as Lean Manufacturing or 6 sigma initiatives which has not been exploited by the manufacturing organizations.

Raj: Tell me more about the solution APRISO has and how do you solve IT Strategy Issues?
Olivier: APRISO has developed and implemented a business consulting offering named OVA – Operational Value Assessment. This is a way to align business strategy from top to bottom and bottom to top.   We define IT needs right down to the shop floor. The goal of this analysis is to be quick. It take us more or less 2 days per plant and a few days of interview with C executive and consolidation to be able to deliver a phased project/program in line with business needs with a target saving which build the ROI of the project. Last year we performed a few of those and for a 3 sites OVA the overall duration is from 4 to 6 weeks maximum, then a project can be started. As a key MOM player the savings we delivered to our customers are really amazing and with more 600 plants running in discrete manufacturing we start to have large numbers of testimonies.

Raj: Interesting approach… Do you see resistance from your customers to adapt to this approach?
Olivier: As Software editor, this approach is quite surprising and customers still view our approach with suspicion. That’s why we are looking at IT consulting firms that provide high level IT infrastructure or just at IT standardization to justify ROI, while at the same time they can be part of business transformation initiatives that lead to even bigger and more sustainable savings. IT can play an important role but with most of Lean people who are still claim that Lean journey can be taken is without IT, while Toyota is investing 10b$ in IT since 2003, is very much frustrating.

Raj:  Maybe that is the myth created by ‘Lean experts’.  All the books I have read about Lean Manufacturing, claim that Toyota manages Lean process with minimal IT Support.  But you say Toyota is investing $10B. Do you know where they are investing?
Olivier: Yes and it is public knowledge. In 2003 an article was published (in Japanese) about how Toyota invested 2 billion USD in IT to do what they called “Global Kaizen”. This is also called the 1st step of the planned “10 billion dollar Kaikaku”.

Toyota tends to be very secretive about their investment plan. This article is written by a highly regarded Japanese magazine called “Nikkei Information Strategy” which hired several Auto industrial consultants to investigate Toyota’s IT investment.
They have identified 4 areas that Toyota invested heavily on IT.

1. Electronic Kanban for global purchasing – In 2003, Toyota’s profit margin was Japan 9.2%, NA 4.6%, Europe 0.2% => best practice failed to roll out from Japan to overseas
2. New product planning and design – switching from old “V-Comm” system to CATIA and automate cost estimation
3. Support for BTO – to adopt Dell model… capability to search what WIP are on the factory line and then allocate to customer requested options / specifications
4. After sales service – consider as major revenue stream – traceability system extended to post sales and running record on vehicles
5. Multi-tera byte M-BOM – Dassault PDM

There is an interesting comment at the end of this article: Toyota does not use the word “Standard” in any documents but rather calls them “Format”. This is because the Toyota is not concerned whether oversea facilities have inferior performance or Kanban not running correctly. Toyota’s biggest worry is Kaizen being stopped and employees blindly following according to “Standard”. Hence all standards are considered as temporary formats subject to Kaizen changes. This is their greatest concern in rolling out global “standardized” IT systems.

Therefore an important takeaway, when talking to Toyota, do not talk about standardization of process. Only talk about standardized platform to sustain Kaizen.

Raj: Wow that is an important distinction! No wonder Toyota is a leader in continuous improvement of their business process.  Is there anything else IT can learn from the Lean Manufacturing?
Olivier: Lean relies on capability to improve continuously, IT is perceived as rigid and constraint full. IT development and project management has been evolving and today can fully embrace and support Lean philosophy. A key element of the lean journey is embracing changes, the IT world should learn from that principle: to go back to simplicity and rely on the strength of everyone and not only pushing dogmatic vision that are not serving their key resources, pragmatically it means that stronger collaboration with business people.

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