How to adapt lean practices in SMEs to support Industry 4.0 in manufacturing

Abstract

Industry 4.0 promises to increase productivity and flexibility for the manufacturing industry, which translates into greater customer value and lower costs. Lean manufacturing has long championed principles and tools with a focus on value adding activities, elimination of waste and continuous improvement. Even the most successful lean manufacturing firms, in terms of efficiency and quality achieved through waste reduction, will acknowledge there is a lot of opportunity for improvement. This review evaluates how lean principles can support Industry 4.0 in pursuit of greater customer value and manufacturing excellence. Leveraging the opportunities that exist within Industry 4.0 umbrella of technologies can help to further reduce the nine wastes of lean. While large corporations have access to extensive capital markets and can capture economies of scale offered by leading edge technologies of Industry 4.0, small and medium sized enterprises (SMEs) with greater capital restraints face the challenge of justifying Industry 4.0 technologies and cannot risk being at the bleeding edge of technology. Using a case study of a small electronics manufacturing firm, the opportunities, challenges, and the implementation strategy for technology are examined. This paper finds that SMEs pursuit of process efficiencies and waste reduction can be best achieved through a focus on foundational digitalization & data management then taking a stepwise approach towards the cyber-physical systems of Industry 4.0.