Ask Art: Is there a conflict between automation - IT and lean?

In today's world, it certainly seems that automation and the use of digital technology can solve almost any problem. Both approaches can create great value and should be used where they make sense. And when it comes to lean and automation or IT, I don't see any conflict with computer programs that can speed up and simplify work that traditionally could only be done manually. New inventions and solutions have been at the heart of productivity gains since the industrial revolution, and I hope this trend not only continues but also accelerates over time. In fact, I hope it will be one of the main drivers in lifting millions of people out of poverty.

However, I ask people to be careful about how they mix lean practice with these tools. Over the years, in many industries, I have seen people misuse an IT or automation solution to, using the lean term, "automate waste" (or, as others have labeled it, pave the cow path). You can see this most often in industries with many small transactions, where tracking requires the use of computers, such as banks, insurance companies, mortgage brokers, governments, universities and other similar businesses. Hospitals, with their data management needs both for patient safety and to meet various regulations, are another good example.

In many of these businesses, when a problem arises, the knee-jerk reaction is to create another computer program to solve it. They bring the IT people to the place where the problem is and say: "here is what we need you to do. How fast can you do it?". Sound familiar? In places like hospitals, besides being expensive, this can create new problems. I have seen cases, for example, in hospitals organized and run in silos, where the various silos implemented new computer programs to solve their own problems, only to discover that none of these programs could talk to the others and even more money had to be spent to get them to communicate.

Often, a new and completely unnecessary computer program is developed to solve a problem that would not exist if the other parts of the system did their job correctly. I saw this at a life insurance company I was helping with kaizen work. At the time, the company took 48 days to underwrite a new life policy (that is, to respond to a request for a quote). And they relied on an elaborate and costly (in money and manpower) computer program that tracked the status of all underwriting requests in the system. They said they needed this program to answer the many inquiries received from insurance agents about the status of their policies. Of course, this was only necessary because it took 48 days to get back to the agents with a quote. By using lean to shorten this lead time, we were able to get most quotes answered in less than 20 days, with a good trend toward doing it in 10 days. As a result, that program was no longer needed.

The same can happen in manufacturing companies where engineers like to develop high-speed (and very expensive) solutions as the first choice for almost any problem. Sometimes this can delay the introduction of new products or cause huge excess capacity when the marketing forecast is way off. On the other hand, if something changes in the product specification later, the high-speed automated line can become obsolete or require massive capital expenditures to produce the new specifications. If you ask most manufacturing engineers to reduce the setup time of their equipment by 50%, they will usually come back with a very expensive automated solution with a very long lead time. My experience with lean is that setup can be reduced by 90% during a kaizen week without spending much money. After all, how much can you even spend in just one week?

The point here is that if you first use lean to find and remove the waste from your processes, then when you decide to automate, it will be done step by step. You will spend much less money and automate only what makes sense to automate. Lean will give you a clear picture of where you are and what needs to be done. The same goes for computer programs. A little value stream mapping and kaizen to get rid of waste will reduce your costs and speed up your response.

So yes, automation or IT solutions are compatible, but only if you use lean first to eliminate waste before launching into expensive solutions.