4 Steps To Lean In Industry 4.0

Lean is about the elimination of waste. Often lean practitioners look at a process or activity to see how waste might be removed, lead-time reduced and flow created.

- Joe Panebianco

While the objective is to eliminate waste and create flow through the entire value stream from material procurement to receipt of customer payment, most of the time, waste elimination is considered only in a single process/function or occasionally in adjacent areas. Seldom do people consider how removal of waste affects the entire value chain because of a change in one specific area. Even if a more holistic approach is considered, it is often within a functional area.

For example, a company might achieve a better per unit price if they purchase a greater quantity at one time. The supply chain team would look at various pricing options and consider cash flow, amount to purchase and inventory carrying cost. They would then determine if the optimal solution (least wasteful) is to buy larger quantities at a lower per unit price but incur other costs from working capital and warehousing, or continue to buy at lower quantities yet pay higher prices. In this example, the optimal solution is within the control of the supply chain. What happens if different functional areas or areas of domain knowledge are required to determine the optimal solution?