Lean automation: A reshoring strategy

Oct. 21, 2014 – It’s happening. In many sectors of business, the great globalizing manufacturing transient is coming to an end. With long supply chains needing much inventory and babysitting, the so-called low-cost labour jurisdictions are out, and much shorter and more sustainable supply chains that put manufacturing and other value-adding processes closer to the customer (helping the planet with more sustainable business practices) are in.

Many corporations are redefining their supply chain, considering more regionalized forms of manufacturing, and in some cases reshoring from more remote supply locations to be close to the customer. But this doesn’t mean that productivity and waste in any form can be tolerated.

Now that direct labour and support costs will play a bigger part in the total cost equation, while transportation and supply chain management costs diminish, there is a stronger need for a new approach called “lean automation.” This will be the differentiator for future business success in this new journey.

There are three process engineering strategies required to achieve lean automation.

1. Use lean thinking to eliminate the waste in the non-value-adding parts of the overall business process, and reach a simplified and much leaner version of the new business process. This must apply to all parts of the business operation, including the supply, manufacturing and distribution loops. This will require a rethink of the business processes and the facilities, systems and people factors that can be improved and better integrated. Therefore, this overall process of lean thinking must be at the top of the business planning agenda to strip out non-value-added process steps and associated waste.
 
2. Undertake a formal review of what new and emerging technology and science can be applied to this business model using innovation strategies. This will also include a review of current and future product designs and how it may better leverage these technology application opportunities. An organization with close-coupled product and process design teams and a slick new-product-introduction process should perform these tasks much better than those that do not have such cross-functional business teams operating naturally within the organization.

3. Apply automation in all forms to the output of the two strategies above. Automate the latest technology into the remaining value-adding business processes to support the most advanced and integrated product set. This approach will possibly make the business the benchmark in the industry.

The individuals that can grapple with these three complementary strategies, stay current on the latest technology and scientific trends, relate the output to the latest automation technologies and communicate and implement such strategies and continuous improvement plans inside an organization, will be the super heros of the business world.

Welcome to the new quest of lean automation thinking.

Nigel Southway is secretary and past chair of the SME Toronto Chapter.