The Next Evolution in High Velocity Lean Manufacturing

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Lean Manufacturing vs. JIT
For many years now, manufacturers around the world have pursued and embraced the philosophies and methods of Lean Manufacturing (Lean) to improve their business. To summarize, some of the common lean manufacturing benefits include:

  • Improved inventory turnover ratios
  • Improved product quality and reduced scrap rates
  • Higher labor productivity ratios
  • Improved revenue to cost of labor ratios
  • Improved employee morale
  • Better overall customer service from a given level of investment in assets such as facilities and materials
  • Improved competitive position against non-Lean rivals

The same can be said for Just-In-Time (JIT) style production systems. Some of the common benefits attributed to JIT manufacturing are:

  • Improved inventory turnover ratios
  • Reduced inventory holding costs
  • Reduced costs from obsolete and slow moving inventories
  • Improved product quality and reduced scrap rates
  • Reduced levels of working capital required to support a given level of production output
  • Improved flexibility and agility in manufacturing operations
  • Improved new product introduction to manufacturing cycle times
  • Improved employee morale
  • Improved competitive position against non-JIT rivals

As can be seen above from the simplified set of benefits attributed to JIT and Lean, there are a number of similarities in expected outcomes. This should not be surprising as key roots for Lean Manufacturing can be found in JIT. In fact, the two are similar enough that some consider them to be two names for the same thing. This, however, is not the case. In its heyday, JIT was primarily focused on the efficiency of production and the inventories and supply chains that supported it. Lean absorbed that core focus and then expanded on it to address the broader customer value cycle of an entire manufacturing business.

Looking a little deeper into a comparison of Lean and JIT, another key commonality can be found between the two – the concept of velocity. In fact, many of the benefits attributed to both Lean and JIT are in fact related to improvements that these systems provide in terms of velocity. However, velocity is not a goal of these systems that can be achieved in a vacuum. The laws of physics such as cause and effect are also operative in the world of manufacturing methodologies.

In the past, achievement of optimal velocity in these systems has required as predicates two other conditions to be met first: 1) demand and supply stability, a feature of a level-loaded production environment, and 2) demand and supply synchronization, outputs of the system being pulled upon by demand must be in balance with inputs to that system such as inbound material flows and labor/machine capacities.

While achieving these predicates has been reproduced successfully within a number of different manufacturing operations over the years, that success rate has dropped significantly when pushed out beyond the four walls of a manufacturing operation into the supply chain that supports it. As with many other systems, Lean and JIT can only be as strong as the weakest link in the chain. Even the application of advanced information technologies available in modern ERP, SCM, and PLM systems has failed to overcome the limitations of fully stabilizing and synchronizing the external supply chains of successful Lean and JIT practitioners.

However, this shortcoming in extended Lean and JIT manufacturing systems may finally be nearing a point where external supply chains can achieve the performance levels necessary for nearing a state of optimal performance within these methodologies. This enabler for the next evolutionary stage in Lean and JIT systems is the Industrial Internet.

To help in envisioning how the Industrial Internet could be applied to improving on Lean and JIT based systems, consider the example below as a simplified flow of information in a company using these manufacturing approaches today:

Even in a pull based production flow such as depicted above, success is dependent on several expectations tied to stability and synchronization. Examples of this would include:

  • There is a known and highly repeatable cycle time inherent in this flow.
  • Finished goods supermarket sizing (predicated on expected rates of demand and cycle time to replenish) is appropriate to actual sales fulfillment needs.
  • There is very little disruption in the flow from things such as equipment breakdowns, quality issues, or external factors such as severe weather events.

Unfortunately, in the real world these expectations are not actually incontrovertible facts. In today’s environment, when the real world fails to live up to the expectations that a synchronized one piece flow in Lean / JIT manufacturing process depends upon, Lean/JIT systems encounter disruptions that can impact on both customers and the bottom line of the company.

In a future in which the Industrial Internet is fully deployed and operational, disruptions will still occur, but the ability of the overall system to sense (or even predict) and adapt to these anomalous occurrences will be dramatically improved. A few examples of how this hypothesis could play out include:

  • Predictive analytics tied to real-time consumer demand patterns could be used to adjust supermarket and downstream kanban sizing before actual demand consumes goods from the supermarket.
  • Real time production equipment monitoring and failure condition analysis will greatly reduce the potential for unplanned breakdowns.
  • Machine-to-Machine (M2M) communications could signal replenishment requirements in real time, long before a manual kanban card system would.
  • These same concepts could be applied to interactions with vendors, achieving the long sought for benefits of a truly interconnected supply chain.

All of these changes will exert significant positive benefits on the magnitude and velocity of information being generated and shared across shop floors as well as throughout global supply chains. In turn, this age of high velocity interconnected data streams will bring even greater velocity to the material and product flows supporting manufacturing operations of the future.

In such an envisioned future state for Lean/JIT based manufacturing operations, the main risk to the integrity and operability of the system may become the internet itself, as well as the information technologies that would interconnect and harmonize all the moving parts of such a system via the internet.

While we are just beginning to explore the possibilities of the Industrial Internet, part of that exploration needs to include rethinking how our manufacturing operations, and other supporting applications such as ERP, MES, SCM, and networking systems, need to change to be ready for this brave new world.


This publication contains general information only and Sikich is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or any other professional advice or services. This publication is not a substitute for such professional advice or services, nor should you use it as a basis for any decision, action or omission that may affect you or your business. Before making any decision, taking any action or omitting an action that may affect you or your business, you should consult a qualified professional advisor. In addition, this publication may contain certain content generated by an artificial intelligence (AI) language model. You acknowledge that Sikich shall not be responsible for any loss sustained by you or any person who relies on this publication.


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