Turning Software Into a Solution

Feb. 9, 2009
Information technology can't make your operation lean, but it can provide valuable support for the long journey ahead.

The term "IT solution" might be one of the more widely accepted misnomers to come out of the information age. Every year hundreds, perhaps thousands, of manufacturers pour millions of dollars into new software suites in hopes that somehow they will make any inefficiencies in their operation disappear. However, nobody, not even the vendors themselves, will claim that any of their products are designed with the ability to transform bad processes into good ones.

Unfortunately, that doesn't stop some manufacturers from crossing their fingers anyway. In the past those companies could survive by focusing any lean efforts internally, creating more efficient cells and improving material flow. But now as lean principles are being applied to more transactional events such as controlling supply chains, reducing inventories and manufacturing to customer demand, being truly lean takes on a whole new level of complexity.

"When those kinds of transitions start happening, they become difficult to handle without some sort of IT involvement," explains Narayan Laksham, CEO of Ultriva Inc., a provider of lean manufacturing software. "IT can be used as a mechanism to systemize the lean discipline and help companies sustain it and scale it across the organization. However, software on its own is not going to solve anyone's problems."

Companies interested in adopting IT tools to support their lean initiatives need to do so with a clear understanding of what they are trying to accomplish, Laksham adds. Otherwise, the same problems they experienced with their existing material requirements planning (MRP) system are likely to reappear. In fact, utilizing technology too early in the process can be a big mistake for most companies, according to Jean Cunningham, CFO of Stiles Associates, a consulting firm that specializes in lean and Six Sigma.

"IT should never be the frontrunner in implementing a lean business strategy," Cunningham says. "Companies who lead their lean efforts with IT never really dig down deep enough to find what drives their business, which means they miss out on some pretty important lessons. Once a process is proven to eliminate waste, then and only then should technology be used for support."

Trane's First-Things-First Approach

Any company that has begun their lean journey knows there are quite a few steps involved. Integrating IT is just one of them, and in most cases should be far from the first. In fact, companies are advised to spend anywhere from six months to a year reducing waste from as many of their existing processes as possible before even thinking about bringing new technology into the equation.

"Normally the place companies should start off a lean journey is by looking at their pain points," says Laksham. "There might be several problems within the organization, but they really need to nail down the most important constraints. That's the key to the first six months of the process. When everyone is on the same page, then you can move on to the integration of new software."

But this progression also requires a change in thinking. At the shop floor level, it means getting comfortable with smaller batch sizes. In terms of procurement, it's the idea of using a limited number of vendors with frequent deliveries. Even at the office level, orders should start flowing through the organization as opposed to moving from one function to the next.

"They need to get comfortable with the fact that their system for standard cost accounting is not the measure they need," Cunningham suggests. "Not necessarily everything needs to be fully implemented before software is introduced, but you do need to have a vision that you are going to be running things very differently. If you don't, you will end up slapping IT tools in place and without any human systems to support them."

Those systems took precedence before Trane Residential Systems made the move to lean IT. For the past 10 years, the heating and air conditioning manufacturer's Vidalia, Ga., facility relied on demand-flow technology and mix-model production, which allowed it to make batch runs a thing of the past. However, the supporting pillars weren't quite there to make it work really well, according to John Young, Trane's materials and supply chain leader.

Two years ago the facility decided to take a renewed approach to its lean transformation that would eventually involve the introduction of new IT tools provided by Ultriva. But first, management knew they had to address a few key weaknesses in the operation that could stand in the way of any meaningful changes taking place.

"In the past where we had failed with lean was in trying to define the end before we even knew where we were starting," explains Young. "So we decided to get 5S right first, then go out to the floor to really understand what was waste and what wasn't. We cleaned up our act from top to bottom. Once we were world class in those areas, only then could we legitimately start moving in other directions."

Workers at Trane use high-tech kanban card scanning stations to fill parts orders for the manufacturing line.One of the fundamental problems in Trane's system was accuracy of information, says Young. Suppliers were given orders based on inventory that was thought to be on hand, but then physical checks would often result in entirely different figures. Focusing on simple methods that didn't depend on an IT system for accuracy, the facility first implemented various kanban systems internally and with suppliers.

"We needed to have the ability to compile good data -- regardless of whether it was through a manual system or through IT," Young explains. "Otherwise, it can easily become a situation of garbage in, garbage out. And we didn't want to go through the trouble of setting up new kanbans if they were based on flawed information."

Good Role Models

Cultural differences between production and IT are inherent, so integrating a new set of tools to assist a lean movement is never easy. In many situations, this perception is perpetuated when companies allow IT to implement new technology independently, taking the shop floor completely out of the equation. However, while too much IT involvement can be counterproductive, Laksham says that leaving them out is also a mistake.

"Once you have made a decision about the kind of solution that you are looking for, then you should engage the IT department and how they are going to interface it and make it sync up," he explains. "That is where IT becomes very relevant, because they understand the ERP (enterprise resource planning) system, they have owned it and they can play an important role in how IT will be integrated."

Still, most IT professionals come from a technical level of understanding and are not familiar with lean principles. So it's important to initiate lean education activities across the entire organization. This should involve leadership level positions, in addition to many of the company's critical support functions such as human resources, accounting and IT. If these principles are more widely understood, then IT tools have a much better chance of being successful.

"In many cases, these people are not present during the lean learning process, but they are integrally important as part of your lean initiative," notes Cunningham. "This creates a divide. So whenever you have lean activities, kaizen events and other activities within the company, you should always have IT participate. Not only are they familiar with what technology already exists, but the IT person needs to learn about where the lean process is going and how they can help it improve."

Young notes that the "shininess" of any new system eventually wears off. "Then it's just a tool to get information," he says. "People will look to IT for support, so you need to have their buy in. The funny part is that not everyone looks to IT to lead these solutions, but when they are at the forefront it takes on a greater magnitude of understanding and the whole thing gets accepted a lot faster."

Breaking Down the Walls

The IT department actually played an important role for Colfax Corp., a manufacturer of pumping and fluid handling products, during its IT integration. The company, which formed in 1998 as a result of several smaller pump companies consolidating assets, replaced information systems at three of its facilities in 2002. Bringing the various entities together required its IT systems to undergo a complete restructuring, according to Jay Michael, the company's senior business analyst.

"The old system kept the lights on, but it really dragged things down," Michael explains. "People from the floor would go to IT for help, but they knew nothing about production and they would either give them half the information or ask why they needed it in the first place. It created a sort of wall that no one could ever really get past."

In addition to bridging the communication barrier, Michael says the primary objective of the integration was to move each of the facilities away from batch mode manufacturing to a more real-time model that would allow them to hold less inventory. Six years after partnering with IFS North America, an enterprise applications company, Colfax has gone from a culture of IT being excluded from business improvements to one where IT actually drives many of them.

"Companies need someone on the IT side who really understands manufacturing processes. Without it, it's tough to get very far with these types of projects," notes Michael. "The process knowledge is so critical, so integral to any kind of technology solution, that in my opinion it should almost come first. In many cases that aspect can be overlooked."

The Simplest Solution

Interestingly enough, most experts agree that IT is one of the last things manufacturers should consider in order to successfully implement their lean strategies. Too many companies today have a "wish list" of tasks that they would like a new system to perform, according to Cunningham. But they don't take the time to understand why these activities exist in the first place -- or if they need to exist at all.

"When companies really look at all the activities done for a business process, they will see that a large percentage of them are not adding value and they should be eliminated," she explains. "Companies need to make sure their process really works and eliminates waste. Then, and only then, should technology come into play."

In essence, the process comes down to principles much simpler than the complexity of any new technology. Companies throw around simple advice like "do your homework" and "make sure you're really ready," but it just speaks to how often fundamentals are forgotten. In fact, Young says that focus is critical to reach a point at which everyone in the organization is trained, has bought into the process and can claim it as their own.

"Too many companies try to jump in and lean out a cell or a certain part of a factory and don't communicate effectively," says Young. "If you truly focus on the 5S and the waste elimination and getting people at the shop-floor level to understand what's waste and what isn't, they won't be worried about jobs. Instead, they will be worried about working efficiently because that is what most people want."

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