Born at Toyota’s production line after World War II, Continuous Improvement (CI) or Kaizen has been one of the most influential principles in Lean Manufacturing. Kaizen emphasizes multiple small improvements as opposed to a few radical ones and relies on employees taking ownership of their work to bring continuous improvement. Similar process improvements programs like Operational Excellence, Six Sigma, and TQM have been introduced in the manufacturing industry over the past few decades.
LNS’ recent Analytics That Matter research report reveals CI isn’t merely “alive and well;” organizations are eager to capture operational and financial benefits and are actively investing in CI.
The percentage of companies that don’t care, doubt, or can’t quantify the value of Digital Transformation is dropping rapidly. Research indicates 40% of companies had already launched an IIoT initiative in 2017 and another 24% were in the planning stages.
Early adopters have already identified opportunities in digitalization, while laggards risk becoming irrelevant soon.
How does this boom in IIoT impact CI? Don’t manufacturers already have well-established processes that show significant improvement? Not really. Companies with CI initiatives, even the mature ones, only see improvement in the range of 1-2%. They are trying to accelerate the growth rate with better technology, but it has been expensive and there has been little, if any, ROI justification for digitalizing CI.
However, with the advent of inexpensive sensors, Cloud and Edge computing, and robust network architectures, IIoT implementation is not an aspirational task anymore but has become economically viable for manufacturers.
1. Building a Successful Business Case for Digital Transformation:
Many companies today are finding it challenging to build a business case for Digital Transformation. Probing further into this challenge, LNS Research has identified it is easier for companies to implement IIoT business cases around new problems than apply it to existing traditional use cases. For instance, a company is more likely to implement IIoT for a new project on smart connected assets than to retrofit existing assets with IIoT. There could be multiple reasons behind this imbalance, but one that’s most common is that manufacturing companies struggle with the implementation of new technology. Many industrial companies are left with unused software shortly after implementation projects are completed. By leveraging CI in the deployment of new digital technology, companies can leverage the cultural strengths and change management capabilities that are embedded with these CI processes and organizations, reducing the risk of failed or misaligned implementations.
2. Establishing New Operational Efficiencies:
Continuous Improvement initiatives are well established in many companies and deliver incremental improvement across different areas of the business. Unfortunately, as these initiatives mature there is a diminishing return to the efforts invested – as companies come closer and closer to optimal performance. The IIoT enables a holistic view of IT and operational technology (OT) data. By having visibility across these structured, semi-structured, and unstructured data, companies have the insights to achieve higher operational efficiencies, which don’t sub-optimize silos but holistically optimize the system. For instance, in the oil and gas industry, companies can maximize pump performance over time by implementing IIoT. One operator reported a 43% reduction in power consumption ($60k per month) per pump due to a decrease in pump cycles based on new IIoT approaches.
3. Enabling and Empowering Workforce:
Operational Excellence initiatives have always been about the interaction of people, process, and technology, and for the first time since records have been kept, there are now more open positions than workers to fill those jobs within the US. This means industrial companies are in a war for talent, especially when trying to attract younger workers. With integrated systems and processes, and real-time visibility, companies can provide a modern and attractive workplace while simultaneously empowering the workforce to make powerful data-driven decisions and drive business improvements.
Digitalizing CI will have a significant impact in the way manufacturing is done. It can bring substantial improvements to a company’s manufacturing operations and financial metrics. However, it’s not only about implementing the right technology. Most CI processes are about people. It is important to remember that IIoT empowers the people implementing Continuous Improvement; it does not replace them.
About the Author:
Vivek Murugesan, Research Associate LNS Research
Vivek Murugesan is a Research Associate with LNS Research; where he conducts market data analysis and creates data models that span the breadth of LNS coverage areas including Digital Transformation and the Industrial Internet of Things (IIoT), along with Manufacturing Operations Management, Asset Performance Management, Quality Management, and Environment Health and Safety. Vivek holds a Masters of Science degree in industrial engineering from Northeastern University, and earned a Bachelor of Engineering (BE) in mechanical engineering from Anna University in Chennai, India. Prior to LNS, Vivek worked with ARRIS where he focused on supply chain analysis, and co-founded Namma Café, a social and collaborative learning environment for young professionals to develop their skills in the areas of creating and building data models, interactive dashboards, and business intelligence reports.