Improving Kaizen with Industry 4.0 – Identify the Problems

First off, what is a “problem”? In manufacturing, one way to look at that definition is to use the seven wastes (or eight wastes). These are: transportation, inventory, motion, waiting, overproduction, over-processing and defects. Many companies will add an eighth waste of the underutilization of human potential. All of these are things that you can identify with data in your organization. If you do not have visibility to any of these wastes, that is where you might want to start augmenting the data collection that you have with Industry 4.0 capabilities.

Some of these wastes can be identified within an ERP system. Anything that is transaction-based or that has a direct dollar impact is going to be in your system of record. Inventory is a great example of a waste that will show up in a transaction system.

However, some of the wastes such as transportation or motion may not be in typical business systems. It is possible to capture those wastes with an Industry 4.0 system, though. For example, if you put an RFID chip on your material lots, you can trace that movement and you can get a sense on how much transportation that you have within your organization.

For a waste such as over-production, it can be a bit fuzzier. If you are tracking production at a given station and it is a credit point in your ERP system, then you may have that information today. But for individual workstations you may not be able to track that data today. However, it is very easy to collect that information. If the machine has a PLC or a controller it is an automatic process. If it is a manual process, it is still easy to have something that triggers that a piece has been produced and moved on to the next step.

Industry 4.0 provides capabilities to capture information about each of these wastes. The next step is to not only collect information about what is happening, but also why it is happening.

It is not enough to know that my first pass yield went from 97% to 93%. Just knowing that my FPY dropped is not enough to take action to fix it. The information is not actionable. It is a good start and I will know that I need to pay attention to it. That is good to know! But until I know why it went from 97 to 93, there is nothing I can really do about it. To address that in the old days, we went out there with a clipboard and stopwatch and we started watching the line for what was causing the defects. We used tick sheets collect information about why things were happening and how frequently they were happening. But there are better ways to do that now.

Another very common way of looking at this is with KPIs, or key performance indicators. These are often organized into categories SQDCIME – safety, quality, delivery, costs, inventory, manpower, and environmental. As I mentioned earlier, for a lot of companies these are tracked in a very manual fashion and displayed on boards with people either coloring in the sheets themselves or printing these off from Excel on a daily or weekly basis and posting them up.

They are great because they are color-coded you can immediately see if the status is green or red for any metric. And that’s great! It is very visual. It is very easy to see where the problems are. But again, this can be done in a much more automated fashion with a lot less waste in the process. In the inset photo, I would argue that we are seeing a living example there of the eighth waste of the underutilization of human potential. I’m sure he could be doing something more valuable with his time than putting printed sheets into a magnetic holder every single day.

So how have we addressed this with our customers? This is an example of where we built a KPI dashboard, that the COO used on his weekly cadence calls with his direct reports.

But then we used that same type of interface all the way down to the shop floor. We had large screen display boards that showed real-time updates of the data that were used in their shift handoff meetings.

The key here is that we were collecting the information for all of these metrics from the shop floor itself. For all the listed metrics, we bottled the information at the source and then rolled that up and aggregated it across those different systems. Then presented it in a way where on a 20 minute or a 30 minute cadence call each week, the COO could just focus on those red boxes and he could talk to each plant manager and ask why did you miss your OSHA rate in this time period and what were the drivers behind that? What was the explanation? And then what are you doing to address that? And then he would move on to the next one and the next one and so forth on down.

And the plant manager, when they were talking with their team, they could run the same exact process with their staff. Instead of seeing the different plants, they would be able to see their different cells or the different lines and be able to have that same conversation. The line managers could look at the different resources and so on. This created a standard way of looking at data from the top of the corporation to the shop floor. It ensured that everyone was aligned in what was important.

I mentioned that we bottled things at the source. Data is generated at every step of the process, whether you are capturing it or not. Whether you are persisting the information or not, data is being generated at every single step. It’s just a matter of being able to capture and persist the information and then being able to access that in an easy way. Then you can see where the problems are and identify where you have opportunities for improvement.

Once you have visibility to all of these issues, the next step is choosing which one to work on first? A big key to that choice is to be able to put a dollar figure to those different problems. This is the only way to understand the business context of the true magnitude of a problem. In the end, you want a better way to select projects than the squeaky wheels getting the grease. You want to make decisions based on the potential dollar value of improvement. Is it a fast change to implement? How much of an investment in time, capital, and resources have to be made in order to make this improvement? Are there projects that are interdependent? Do they have links between them so that if I improve one thing, I can get results in a number of different areas? Also, how confident am I that my people are ready for this change? Do these projects line up with the overall priorities for the business? Being able to put elements on these different axes and ranking those is also very important for picking which issues to attack first.