Can Lean and Software Coexist?

You don’t have to think very deeply to know that “all software is ‘type 2 muda’” is clearly overstatement for effect. Does anyone really think that accounting and financial reporting software is unnecessary waste? Certainly not in an age where Sarbanes and Oxley run the show for most public companies!

But what about traditional resource planning software – say order processing, order promising, or sales and operations planning (S&OP)? Is it unnecessary waste? While you might make a case that it would be desirable to run a complex supply chain without any software, it just isn’t practical. Computers and software are indispensible for receiving, processing, and promising customer orders. And having software to anticipate, in advance, the need for additional capacity – either in people or equipment – is a key element of the S&OP business process that most larger companies will likely have in place as part of their basic business management system. Basic systems for managing demand and capacity are a necessity for companies of any significant size.

But what about software to support lean manufacturing activities? Could this really be wasteful and completely unnecessary? Let’s see how true this might be.

Visual Controls

The most passionate advocates of lean manufacturing and the Toyota Production System consider visual controls and visual control board s to be the essence of the approach. Instead of extensive computerization, reports, paperwork and electronic transactions, lean manufacturers use visual controls (like kanban, andon lights, FIFO lane limits, operating limit indicators) and visual control boards (heijunka boxes, load assembly boards, kanban boards) as real-time communication devices.

Using visual control board s, lean manufacturers have put system monitoring and control firmly in the hands of the people who are responsible for production and procurement processes rather than delegating it to a separate administrative function like production control or planning. In addition the use of visual controls and visual control boards typically helps in driving simplified processes, as well as near real-time problem identification (and sometimes resolution).

This is just as it should be: simple techniques enabling people “on the firing line” to make real time decisions and execute schedules without excessive computerization or complexity.

The Planning Required for Using the Visual Controls

But often what’s happening “behind the curtain” prior to getting to the daily execution system is also important, and in most cases the calculations and preparation required to get to visual controls actually involve some degree of computerization. In talking to leading lean practitioners, I found – over and over and over again – that to implement the concepts of lean, software was being used for:

calculating takt time
determining the proper production interval (EPEI)
leveling production
determining an appropriate lot size for situations where one-piece, produce-to-demand kind of flow isn’t possible
determining the proper amount of inventory in a kanban loop
projecting supplier requirements in anticipation of the visual signal to replenish inventory
etc.

In many cases the software was built using MS Excel or some equivalent, and was poorly integrated with the basic enterprise systems and data used to manage order processing, order promising, S&OP, etc. The software itself wasn’t wasteful– but rather the human effort needed to load it with data and get updates back into the enterprise systems once it had been used was waste.

I’m not a proponent of automating functions that should be eliminated (for example, detailed manufacturing operational reporting or generating individual purchase orders or order authorization when a pull signal will do). But a lot of what I found in researching my latest book, the Lean Standard System, is that software is integral to the success of companies using a Lean approach. If properly designed and integrated with the core enterprise functionality needed to handle billing and collection, regulatory reporting and accounting standards, and fundamental resource planning functions, it can be enormously helpful in assisting in the lean transformation and in lean operations thereafter.

Toyota Uses Software

What may be most shocking to those who think all software is unnecessary: even Toyota uses software to support the core concepts of the Toyota Production System (TPS).

Read Yasuhiro Monden’s classic study Toyota Production System for details on Toyota’s systems including their technology database subsystem, material planning subsystem, kanban master planning subsystem, slip issuing subsystem, actual performance collection subsystem, order entry system, master scheduling, etc. (chapters 5 and 19).

It’s also clear from even a cursory reading that Toyota’s processes for sequencing their mixed model assembly lines (the goal chasing method as well as the new sequence scheduling logic – chapters 16 and 17) is not being done manually. Not to mention the “assembly line control system” which relies on extensive computerization (chapter 6).

No, the plain truth is that Toyota uses software where it makes sense. And where they can avoid using it – especially in the essential visual control aspects of TPS – they avoid it.

The Book That Shows You Why, And How

The Lean Standard System is the product of my seven years of research on this subject, including contacts with some of America and Japan ’s best lean thinkers. It is the most in-depth description anywhere of the core calculations and algorithms that make up the basic lean toolbox for flow and pull – takt time, pitch, EPE interval, mixed model scheduling, kanban loop sizing for both fixed quantity/variable interval and variable quantity/fixed interval methods, lean lot sizing based on fixed quantities and fixed run time approaches, signal kanban alternatives including triangle kanbans, lot making (quantity accumulator) and pattern production, and material route design.

It is also one of the few sources that describe integrating make-to-order products into a lean environment, the use of the “joker” kanban, how FIFO lanes and FIFO processes are handled in sizing and kanban tracking, and the various visual control board alternatives (heijunka box, load assembly board, kanban control board, etc.).

In the Lean Standard System, I describe how the following activities contribute to lean manufacturing. Many of these functions cannot easily be accomplished without some degree of software or automation (Specific lean functions mentioned in the book are in bold):

Strategy (strategic planning)
Sales and operations planning
Rough cut planning
Mapping the value stream
Demand management
Standard work
Supporting flow and takt time - synchronizing with the marketplace via the takt time calculation, scheduling at only one point in the value stream
Cell design and operator balancing
Heijunka - leveling future production - converting production volume and mix into small consistent increments of work at the pacemaker .
Leveling the finishing schedule via the heijunka box
Supermarket-based pull systems to control production where continuous flow does not extend upstream including capabilities for

Supermarket and loop sizing to determine inventory limits
Calculating “lean lot sizes” using the EPEI calculation
Card printing and card management
Material route design to support the flow and pull systems

Material planning and supplier scheduling
Visual control boards and tracking – communicating status to distant suppliers.

The Bottom Line

After dealing with some of America ’s finest lean practitioners my conclusion is that while software is never a prerequisite to lean, it can be enormously helpful. In a very simple environment, with few products and little component variety, already close to one-piece flow, with suppliers who are geographically close and customers who have stable demand patterns – no software may be needed at all.

However, in a more complex situation where there are lots of different products and unique components, a far flung supply chain, manufacturing processes that still include too many “monuments” to past equipment purchasing practices, customers who exhibit unstable order patterns, etc., having some simple software to assist in setting up lean execution systems may be the difference between success and failure. It really can help with

establishing takt time
periodic leveling (and re-leveling) of demand – one of the prerequisites to lean production
calculating the production interval and lot sizes for existing batch processes
projecting supplier requirements
properly sizing kanban loops and supermarket inventory levels
designing manufacturing cells and operator balancing
designing material routes inside the four walls of the plant
producing “visual control boards” viewable by distant suppliers

Don’t turn to the next page in your lean transformation without knowing whether and how software might help. My latest book will show you how:

Lean Standard System

www.grayresearch.com/leanstandard.htm

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Chris Gray is the president of Gray Research and can be reached at cgr...@grayresearch.com . Over the last twenty years, he's helped more companies sort out manufacturing and distribution software issues than any other individual in the field and has authored three books on this topic.

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