The debate among Lean manufacturing vs Agile manufacturing zealots made headlines regularly during the supply chain disruptions of the past several years. Advocates for each defended their approach as the best means to address the near daily calamities. Where do we stand now that the turbulence has subsided? Have we come full cycle, with data back at the forefront? And what does this mean to the information systems that need to support it? How do we drive the business in the right direction, investing properly for now and the future?
A Quick History of Lean Manufacturing vs Agile Manufacturing
In the beginning, there was Total Quality Management (TQM). Rather than a methodology per se, TQM is a management philosophy that focuses on continuous improvement and customer satisfaction. It centers around creating a culture of quality throughout the organization, engaging employees in problem solving and decision making, and using quality tools and techniques to improve processes and products.
Out of this genesis were born three manufacturing methodologies:
The data-driven heavyweight among the three manufacturing methodologies, aims to reduce defects and is the enemy of variation in manufacturing processes. It focuses on identifying and eliminating the root causes of errors, improving process capability, and enhancing product quality. Six Sigma methodology offers dozens of tools for brainstorming and collaboration as well as statistical tools and methods to measure, analyze, and improve process performance.
Lean manufacturing is (proudly) the lightweight contender in the arena. It focuses on eliminating waste and maximizing customer value by streamlining processes, reducing inventory, minimizing waiting times, and optimizing resource utilization.
Agile is the new kid on the manufacturing methodology block. Coming from the Information Technology world of software development, Agile Manufacturing emphasizes flexibility, responsiveness, and adaptability of manufacturing processes. It aims to quickly respond to changing customer demands, market trends, and emerging opportunities. Agile Manufacturing enables organizations to adjust their production processes, supply chains, and resources to optimize efficiency and deliver value to customers.
These manufacturing methodologies provide organizations with frameworks and tools to improve their operations, increase efficiency, enhance quality, reduce waste, and meet customer expectations. It is important to note that rather than warring factions, these methodologies are not mutually exclusive and can peacefully coexist. Indeed, many organizations tailor and combine the approaches based on their specific needs, industry requirements, and organizational culture.
Nonetheless, the philosophical battles over the methodologies have been waged repeatedly in articles, blogs, and webinars over many years.
Understanding whether agile vs lean manufacturing can support your goals
Overcoming My Six-Stigma
As a not-so-innocent bystander, I would contend that among the three sibling contenders, Six Sigma has been on the ropes for well over a decade, not just because of its regimentation, but because it is HARD. When I was at Honeywell Aerospace, it was a requirement of all directors and above to earn their Six Sigma Blackbelt–a rigorous and methodical program that took three years and countless hours of statistical work using Minitab, embodied by physical binders containing reams of deep statistical work. Much as occurs during the oral defense of a doctoral dissertation, the Blackbelt candidate had to survive the grueling gauntlet of Master Blackbelts who dissected the materials during one of the longest afternoons of my life. Although I confess to still adhering to many of the Six Sigma ancient arts, obviously, I have some PTSD issues to overcome. Consequently, rather than dwell on it, let’s dig more deeply into the two more popular methodologies.
Lean manufacturing, also known as Lean production or simply Lean, is a systematic approach that focuses on eliminating waste, optimizing processes, and maximizing value creation within a manufacturing or production environment. It originated from the Toyota Production System (TPS) and has since been widely adopted across numerous industries. Lean rose to its heights due as much to the economic climate as to its simplicity. While it certainly helps to have good data, instead of statistical analysis, Lean relies upon A3 problem-solving and iterative learning.
How are the objectives of lean manufacturing achieved?
The key precepts of lean manufacturing include:
- Value: Identify the activities or processes for which a customer is willing to pay.
- Value Stream: Map the series of steps and processes required to deliver the product or service to the customer. Determine the value-adding and non-value-adding activities within the stream.
- Flow: Create a smooth and continuous flow of work that eliminates interruptions, bottlenecks, and delays. Minimize waiting time, handoffs, and excessive inventory.
- Pull: Implement a pull-based system where work is initiated based on customer demand. Products or services are produced in response to actual orders rather than being pushed through the system in anticipation of demand.
- Continuous Improvement: Encourage employees at all levels to identify problems, suggest improvements, and participate in problem-solving activities. Utilize Lean tools and methodologies, such as Kaizen events, 5S, value stream mapping, and root cause analysis, to drive incremental improvements continuously.
- Standardization: Establish standardized work processes and procedures to ensure consistency, quality, and repeatability. Develop and document best practices to serve as a baseline for improvement.
- Waste Reduction: Identify and eliminate waste across all aspects of the production process. Common types of waste include overproduction, waiting time, unnecessary transportation, excess inventory, defects, unnecessary motion, and underutilized talent.
Hear from Mitch Cahn, President of Unionwear, on his decision to implement lean manufacturing principles for standardization and continuous improvement.
By following these Lean manufacturing principles, organizations can improve productivity, quality, lead times, customer satisfaction, and overall competitiveness by streamlining processes and eliminating waste.
Swiftly On to Agile
That leads us to Agile, which emphasizes flexibility, responsiveness, and adaptability to meet changing customer demands and market conditions. It originated as an extension of Agile software development principles and has since been applied to manufacturing. Agile manufacturing enables organizations to quickly adjust their production processes, supply chains, and resources to optimize efficiency and deliver value to customers.
Advantages of agile manufacturing in operations & supply chain management
The principles of Agile manufacturing include:
- Customer-Centricity: Much like a well-known Customer Relationship Management system (CRM), Agile puts the customer at the center of its operations. The focus is on understanding customer needs, preferences, and market trends to deliver products and services that meet their expectations and provide value.
- Rapid Responsiveness: More than anything, Agile manufacturing emphasizes the need for speed: quickly responding to changes in customer demands, market conditions, and technological advancements. It involves shortening lead times, reducing time-to-market, and enabling swift adaptation to emerging opportunities. This is why it was the darling of debates during the recent supply chain tumult.
- Flexibility and Adaptability: As the name suggests, Agile manufacturing promotes the ability to quickly adapt and reconfigure production processes, supply chains, and resources. It involves modular production systems, flexible manufacturing cells, and agile production planning to accommodate variations and customization. Capital-intensive businesses with monoliths (production functions that cannot be easily moved) need not apply.
- Cross-Functional Collaboration: Agile manufacturing encourages close collaboration and communication among functions within the organization, such as marketing, design, procurement and supply chain.
- Iterative and Incremental Development: Agile manufacturing follows an iterative and incremental approach to product development. It involves breaking down projects into smaller increments or iterations, focusing on rapid prototyping, obtaining early and frequent customer feedback, and continuously improving the product throughout the development process.
- Collaborative Supply Chain: Agile manufacturing extends collaboration beyond the organization and includes suppliers, distributors, and partners in the supply chain. Collaboration is essential for sharing information, synchronizing activities, and responding collectively to changes in demand or supply.
Agile manufacturing requires a shift away from the “that’s the way we’ve always done it” mindset. However, the benefits of enhanced flexibility, improved customer satisfaction, faster time-to-market, increased innovation, and efficient resource utilization make it a valuable approach for organizations seeking to thrive in a rapidly changing competitive landscape.
Lean vs Agile Manufacturing: Decisions! Decisions?
Both Agile Manufacturing and Lean Manufacturing have their strengths and can be effective in different contexts. The choice depends on factors such as the nature of the industry, customer requirements, market dynamics, and organizational goals. As previously mentioned, some companies integrate aspects of both approaches to create a hybrid manufacturing strategy that suits their specific needs. For example, it’s difficult to be nimble if you are encumbered by waste in the value stream. That’s why Agile embraces those Lean principles that optimize processes, reduce unnecessary inventory, minimize waiting times, and improve overall efficiency. So, it’s ok to have your cake and eat it too.
Why the Rise of Agile Manufacturing?
Lean Manufacturing is often considered more suitable than Agile Manufacturing in mass production where the products are standardized and demand is stable. Lean manufacturing requires a well-established and reliable supply chain that can be relied upon to deliver materials just-in-time (JIT), precisely when needed. If an organization has a strong network of suppliers and a stable supply chain, Lean practices can be seamlessly implemented.
On the other hand, if either demand or processes are highly variable or subject to frequent changes as they have been since COVID, it can be challenging to maintain the required stability for Lean practices to succeed on their own, which is why Agile manufacturing has come into vogue.
Agile works well in highly variable environments or where customization and personalization are required. Agile principles emphasize the ability to quickly configure production processes and accommodate individual customer requirements, enabling organizations to deliver unique and tailored solutions, accommodating shifts in customer preferences, emerging trends, and competitive pressures.
Agile manufacturing thrives in industries characterized by innovation and new product development and where product life cycles are short. It allows companies to rapidly introduce new products and adapt to changing market conditions. Agile principles promote cross-functional collaboration, quick decision-making, and efficient communication, facilitating faster time-to-market and staying ahead of competitors.
Agile manufacturing is beneficial when demand patterns are uncertain or subject to seasonality. It enables organizations to adjust production levels, scale resources, and respond to fluctuating customer demands effectively. By avoiding overproduction and not carrying excess inventory, companies can mitigate risks and maintain cost efficiency.
To Adapt to Change, Your Systems Must be Equally Agile
In May, IDC released an InfoBrief, sponsored by Rootstock Software, based upon surveys of more than 500 manufacturing leaders, reporting that even with current economic concerns, more than three-quarters of manufacturers (75.2%) plan to boost software spending over the next 12 months, with more than one-third (37.8%) planning on double-digit increases. Moreover, two-thirds of respondents are considering changing their Enterprise Resource Planning (ERP) providers. The ability to respond and recover quickly from disruption/change is cited as among the biggest drivers (27%) behind these software investments.
If you are among those considering these investments, then make sure you are seeking out solutions that enable the versatility that market conditions dictate and your customers and employees need now and in the future. Just like the production line on the factory floor, an organization’s information technology infrastructure should reflect the manufacturing methodologies it employs. You can’t expect agile manufacturing or lean manufacturing to thrive in an environment where data is trapped in inefficient standalone systems that don’t talk to one another. Nor can you adapt to demand volatility by wedding yourself to the antique monolithic ERP systems of the past.
How Technology Supports Agile Manufacturing Strategy
A cloud ERP with composable architecture built on an adaptable platform provides features and benefits that support Agile Manufacturing principles. Here’s how:
Flexibility and Scalability:
Composable architecture allows for modular and flexible deployment of ERP components. It enables organizations to adapt to changing business needs and manufacturing requirements. In Agile Manufacturing, where rapid adaptation and scalability are crucial, a cloud ERP with composable architecture provides the necessary flexibility to quickly incorporate new processes, technologies, or production lines without disrupting the entire system.
Agile Manufacturing involves collaborating with various stakeholders across the value chain, including customers, channel partners and suppliers. A cloud ERP with composable architecture facilitates rapid integration with external systems and applications through (Application Programming Interfaces (APIs) and pre-built connectors. Or better still, all enterprise applications—CRM, PLM, ERP, MES, QMS—can reside on a single platform that provides seamless data exchange (without fragile, bespoke integrations), real-time collaboration, and efficient coordination among different parties, supporting Agile Manufacturing’s focus on cross-functional teamwork and quick decision-making.
Real-time Visibility and Analytics:
Agile Manufacturing requires real-time visibility into production processes, inventory levels, quality control, and other operational metrics. A cloud ERP with composable architecture offers advanced analytics capabilities, including real-time dashboards, predictive analytics, and data visualization tools. This empowers manufacturers to monitor key performance indicators (KPIs), identify bottlenecks, track progress, and make data-driven decisions on the fly.
Agile Supply Chain Management:
Composable architecture facilitates both Lean and Agile supply chain management practices, such as dynamic demand forecasting and just-in-time (JIT) inventory management in rapid response to changing customer needs. By leveraging the cloud ERP’s composable architecture, manufacturers can reduce lead times, improve delivery performance, and enhance overall customer satisfaction.
Continuous Improvement and Iteration:
Agile Manufacturing emphasizes continuous improvement and iteration based on customer feedback and market dynamics. A cloud ERP with composable architecture supports this iterative approach by enabling easy configuration, and extensibility without software developers having to write code. Instead, business analysts and administrators can modify workflows, add new functionalities, and integrate emerging technologies, such as Internet of Things (IoT) devices or machine learning algorithms, to optimize operations and adapt to evolving requirements.
Collaboration and Communication:
Agile Manufacturing relies on effective collaboration and communication across teams, departments, and even geographical locations. A cloud ERP with composable architecture facilitates collaborative workflows and communication channels within the system. It enables real-time collaboration on documents, tasks, and projects, while providing centralized communication tools, such as chat or discussion boards. This enhances cross-functional teamwork, knowledge sharing, and information flow, enabling members throughout the value chain to collaborate efficiently and make decisions faster.
Composable ERP: Empowering Lean and Agile Demands of the Future
Regardless of whether you are an advocate of Six Sigma, Lean, Agile, or all three, a cloud ERP with composable architecture allows organizations to align their IT infrastructure with their manufacturing methodologies, enabling flexibility, rapid integration, real-time visibility, analytics capabilities, agile supply chain management, continuous improvement, and collaboration. This supports their efforts to respond quickly to macro- and microenvironmental changes, optimize operations, foster innovation, and achieve agility in their manufacturing processes.