What would Continuous Improvement look like in the Industry 4.0 world?

With the advent of Industry 4.0, the question arises whether ‘old’ methodologies are slowly becoming obsolete or offer a synergy, when applied together with new technologies.

In this article, we explore the concept of Industry 4.0 in combination with the Continuous Improvement methodology. When speaking about Continuous Improvement, this article mainly refers to the Lean Six Sigma methodology, which aims to guide the design, improvement and optimisation of processes and products.

 

What is Lean Six Sigma?

The term ‘Lean Six Sigma’ is a concatenation of the terms ‘Lean’ and ‘Six Sigma’:

  • Lean originated in the Toyota production system. Since the 1950s, it has transcended its initial scope and spread worldwide as a method for improving any standard process through identifying and eliminating waste, in industry and beyond.

  • Six Sigma was designed at Motorola in 1980s. General Electric made this method central to its business in 1990s, so we know it largely thanks to Jack Welch, the GE CEO. Today, it is the standard methodology for identifying and eliminating the root causes of defects through reducing variation in business processes and production.

Although the name of the combined method suggests the simple addition of the individual methodologies, the resulting methodology is more than that. The synergy enables companies to improve and standardise processes by addressing the root cause of the problem by eliminating waste and reducing variation. There are many Lean tools, such as standard work that can help reduce variation, and there are many Six Sigma tools that can eliminate waste. As a result, the synergies of the combined Lean & Six Sigma methods are marvelous.

As we observe, over time, the term ‘Lean Six Sigma’ is gradually being replaced by the term ‘Continuous Improvement’ as it is not only used to solve urgencies but is also employed to implement incremental improvements to optimise working processes.

Most of the projects executed as Continuous Improvement initiatives follow the Define - Measure - Analyse - Improve - Control roadmap.

Define

  • Define project charter including problem statement and goals
  • Collect customer data and translate to customer requirements
  • Map out the process components and boundaries
  • Develop project management tools to track performance
  • Define team roles and responsibilities
  • Analyse and mitigate project risks

Measure

  • Identify cause and effect relationships between process inputs and outputs
  • Identify the type of data and measurement scale
  • Understand Operational 
  • Definitions of Inputs
  • Use graphical methods to depict relationships and distributions
  • Analyse and interpret measurement system capability
    Calculate performance metrics of process
  • Determine the business case by completing a cost benefit analysis
     

Analyse

  • Identify Root Causes
  • Prioritise potential root causes
  • Validate root causes by interpreting statistical significance using hypothesis testing and other exploratory analysis
  • Identify quick wins
  • Confirm that the sample size and power are appropriate

Improve

  • Plan, organise, and evaluate any experiments if applicable
  • Select and apply tools for eliminating waste
  • Select the desired solution
  • Pilot the solution and confirm attainment of goals
  • Plan full-scale implementation
  • Check risk management
  • Update any changes to performance metrics or the process
  • Update the business case

 

Control

  • Select appropriate tools for statistical process control and interpret findings
  • Develop a control plan to ensure ongoing success and transfer of responsibilities
  • Develop or update standard operating procedures and training plans 
  • Document project findings and lessons learned
  • Identify replication opportunities
  • Finalise business case 

 

What do we mean by 'Industry 4.0'?

On the other side of our discussion, we have the reality of Industry 4.0 that we live in. This loose concept groups a number of technologies that are reaching a level of maturity enabling them to be implemented and accepted not just in industry (contrary to what is suggested by the name) but in many processes in modern society.

As technology is evolving faster than ever before, it offers new business opportunities. Think of new consumer products like smartwatches and autonomous cars. However, besides the consumer market, these technologies also allow current manufacturing and transactional processes to implement improvements, impacting how they go about their daily activities.

At PwC, we acknowledge the following emerging technologies as the key elements of Industry 4.0.

 

1. Industrial Internet of Things means equipping elements of the manufacturing environment (complementing manufacturing equipment) with remote sensing technologies that allow more data and information to be collected.

2. 3D printing offers manufacturers a quick and affordable method to produce prototypes and to showcase new products much faster than with the classical prototyping methods.

3. Drones offer a bird’s eye view as they enable oversight over large areas, and they can be implemented in dangerous or unreachable areas.

4. Blockchain can offer the solution with full traceability, where trust and reliability are missing in our current processes.

5. Augmented reality can support workforce by showing real-time measurement results, tasks etc. It can guide a worker when starting up unfamiliar processes or dealing with new situations.

 

6. Virtual reality offers new means to teach, show and share learnings and experiences.

7. New user interfaces brings a new communication method to the industry work floor. Through chatbots or voice control, employees can control and operate devices and machines etc.

8. Robotics offer us a way to perform the same task again and again, with a high degree of repetition, not by employing a human but by using a program.

9. Artificial intelligence enables the processing of big data and it offers the possibility to obtain new insights, for instance in patterns that are currently out of reach. AI also helps identify connections between what we measure and how we should respond to the results.

10. Cloud computing allows data to be processed remotely (in a cloud) and gives us access to a lot of computing power and memory without the need to set up any infrastructure.

 

A new reality of Continuous Improvement

It is true that Industry 4.0 is inspired by the latest and most useful tools that technology can offer today. However, we believe that there are great synergies between Lean Six Sigma and Industry 4.0 and, ultimately, both fall under the umbrella of Continuous Improvement.

In this section, we discuss the possible synergies arising from the amalgamation of Industry 4.0 and Lean Six Sigma.

Synergies between Lean Six Sigma and Industry 4.0

How can Continuous Improvement benefit from Industry 4.0?

In the context of the Continuous Improvement methodology, Industry 4.0 provides us with new tools and solutions to support industries in their efforts to implement this methodology, as visualised in visual above. The technologies offer new oxygen for continuous improvement as they provide more ways to collect and analyse data and implement actions. They expand the existing toolbox, which creates new ways of looking at issues/opportunities.

Thus, Industry 4.0 tools and techniques can be one of the final solutions at the end of a Continuous Improvement initiative. For example, we could identify and eliminate wasteful activities in a process and then, in order to further reduce the variation and lead time of that process, implement Robotic Process Automation (RPA). Thus, we would first have to analyse the process from a Lean Six Sigma perspective and then implement RPA. If not, we would end up automating waste in a process. That said, do not get us wrong, we do not suggest waiting for a few years and implementing only basics now if current maturity is low. 

Industry 4.0 concepts could be tested and even implemented in parallel with underlying processes aimed at improvement, or in quick succession, but that would require even more significant change management efforts than usual. The most successful approach in this case would be based on series of sprints where we combine process improvement and new technology in short bursts of improvements.

Various Industry 4.0 tools and techniques can be used in the various DMAIC phases, as is shown below.

Possibilities offered by Industry 4.0 for the Continuous Improvement method

How can Industry 4.0 benefit from Continuous Improvement?

Many believe that the new technologies somehow replace the “old style” business improvement. However, many Continuous Improvement skills will become crucial in the future to make the right decision for the process, not from the technology perspective alone.

Today, while there is a very strong focus on STEM (Science, Technology, Engineering and Math) skills, we should not forget about the "softer" Continuous Improvement skills, such as change management, project management and process assessment.

For example, one of the projects that we have done for a client, a chemical company, consisted in assessing the feasibility of applying 3d printing technology in their processes.

We organised a brainstorming session with the client, used ideas generated by the client’s team to prioritize the key areas of potential use of the technologies, and selected the proofs of concept (POCs). All this required a structured approach that could not be applied without using the problem-solving framework derived from the Continuous Improvement methodology.

Moreover, further implementation of the POCs will not be possible without applying the same rigid concept of DMAIC in order to ensure successful implementation and correctly estimate the business potential – from both a tangible and an intangible perspective.

How does it work in practice?

How Continuous Improvement can pave the way toward a mature company while embracing Industry 4.0

Standards and routine

Basic principles of operations, such as standard procedures, implementation of 5S (Sort, Set, Shine, Standardise, Sustain) and using the elements of visual management are essential for any organisation.

Without this level in place, it is nearly impossible for any company to be successful in a competitive market.

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People

No continuous improvement is possible without involving and engaging the people within the organisation. While the momentum comes from the leadership (top-down), it is every employee in the company who should eventually implement and sustain the process. This is why the change management approach is fundamental to the implementation of Continuous Improvement.

It may be argued now that ‘People’ should be at the very foundation of the pyramid, but we at PwC believe that, in fact, the implementation of basic standards should be done in parallel and so go hand in hand with people development.

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Problem solving

This layer is event-triggered. Any organisation is faced with some kind of issue at any given time. The way in which an organisation reacts to these issues is critical. Normally, it is this layer that constitutes the core of Continuous Improvement, as it is all about identifying and solving the problems in a structured way.

Typically, the problem solving is done using one of the two frameworks: DMAIC (explained above) or PDCA (Plan, Do, Check, Act). The logic of these frameworks, however, is the same and is made up of the five components shown in the ‘Problem solving’ layer.

Maturity in each of these steps is critical to understand how the organisation is capable of overcoming issues.

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Innovation

As problems repeat themselves or have a significant negative impact on a company’s performance, innovation (such as Industry 4.0) can offer a radical and thorough solution. However, just having technologies available is not enough – the employees have to be ready to use them.

Since successfully implemented technologies inevitably reshape all the lower layers of the pyramid, from the very basic standards up, it is a never-ending journey, hence the wording “Continuous Improvement”.

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Performance

The simplified structure shown above leads to the sustainable results. In our view, it is not possible to reach sustainable and ever-improving performance without implementing the previous layers first.

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Maturity model of organisational processes - Industry 4.0

Conclusion

In this article, we explored the synergies between the ‘old’ Continuous Improvement methodology and the new technologies of Industry 4.0. Then we shared PwC’s view on how these two technologies can work in practice.

Our experience shows that the two support each other. First, Industry 4.0 brings more tools, opportunities and solutions where the Continuous Improvement methodology is applied. Next, one can use the Continuous Improvement methodology when selecting and implementing these new technologies. What is more, we see Continuous Improvement as the umbrella, covering Lean Six Sigma and Industry 4.0.

How this can be put into practice depends highly on the maturity level of the company. In short, Continuous Improvement can pave the way, create the necessary buy-in, and prepare the company for the innovation brought by the Industry 4.0 solutions.

At PwC, we leverage our broad Continuous Improvement experience and knowledge combined with the newly acquired perspectives on Industry 4.0 to bring even more value to our clients.

This article was written by: Alexander Silantyev, Akanksha Tyagi, Julie Dejonckheere, Lieselotte Theuns

Contact us

Peter Vermeire

Partner, PwC Belgium

Tel: +32 049 351 8728

Jochen Vincke

Partner, PwC Belgium

Tel: +32 47 761 1222

Alexander Silantyev

Manager, PwC Belgium

Tel: +32 048 632 4612

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