Do you want to be lean or agile

Back in the 1980s 'lean and agile' was the business credo of Jack Welch the CEO's CEO, then the boss of global giant GE. It was advanced thinking for the time, on the one hand because he was talking and implementing 'lean' long before it became popular, and on the other, I suspect, because 'agile' was being used as a politically correct rationalisation for 'downsizing' which was just taking hold. 25 years later and we are still no clearer – 'lean' and 'agile' mean different things to different people. A nice nutshell is fashioned by Simon Bragg, European research director at analyst ARC: "Today, challenged by increased product variability, greater demand fluctuations, and shorter lead times, lean manufacturers are adopting agile manufacturing, which synthesises lean thinking, build-to-order manufacturing and event management to realise increased profits." That's what Preactor, the advanced planning and scheduling software vendor, thinks too. "Agile is just a push to get to an EBQ (economic batch quantity) of one," says Graham Hackwell, technical director. "Which means you need to be able to change from one product to another very rapidly. But when you do get to the happy situation of an EBQ of one you have a scheduling problem. "To my mind make-to-order is the ultimate lean and the whole issue of lean vs agile is just a semantic dance. When you reach a point where you make exactly what the customer wants, you have no excess inventory, no waste – it's exactly the position you need to be in. Unfortunately we're never going to achieve this – but I suspect we can get a lot closer to it than we are now." According to Hackwell, finite scheduling can have an even bigger impact in agile than it does in lean – particularly where the old guard still insist on not using computers at all, and relying on visual production control techniques. "We've always supported waste reduction, which is what lean is primarily about," he says. "But the concept of saying that IT has no place in manufacturing is very simplistic. We tend to go back to the days of Dr John Parnaby at Lucas Engineering Systems who introduced the concepts of runners, repeaters and strangers analysis." Kanbans work well if you have stable demand on your runners. But it's never been satisfactory if you have variability in demand as per your repeaters and strangers. And when even the runners exhibit variability, computerised scheduling plays a very significant role. "It's impossible to optimise a complex production environment without using computers," insists Hackwell. Cosworth, the legendary motorsport engine maker and Preactor user, concurs: "We were having a core team meeting in our ARP [ancillaries, refurb and prototype] section, which has to handle the most immediate changes," says Darren Dowding, Cosworth's production scheduling manager. "Before Preactor, the meetings would be full of 'what if" questions that were answered by gut feel and/or intuition. This time, the scheduler simply took the 'what if' scenario to Preactor and returned a few minutes later with a hard copy of the consequences. "In that meeting we saw not only the transition from 'guestimates' to 'definites'; we also saw the beginning of a very short process by which all the teams came to trust completely the information from Preactor. By generating quick, reliable information that is easily interpreted, the workforce has been given back a degree of self-determinism." And Preactor has several customers like Cosworth that have gone through a full lean programme and then installed Preactor and achieved significantly more savings. According to Hackwell, most of the influences on modern manufacturing are now tending to push manufacturers more towards 'agile'. "What's happened with lean is that we've changed from having EBQs which were actually quite large, down to making one kanban for an EBQ," he explains. "And we've made the process, by definition, more 'agile' in order to achieve this. With an EBQ close to one you've got lots of small orders with potentially significant variance. Good work sequencing through the process becomes important, and scheduling comes to the fore." In fact, a lot of the initiatives around lean and agile are just good manufacturing common sense. The problem of one versus the other is a confection of the marketing classes who seek to promote their own systems and initiatives. Also, a lot of the difficulty in understanding arises when companies adopt an initiative and only evaluate it in very narrow terms rather than looking at the broader picture and identifying what's appropriate to deliver maximum business value. Software is like a piano According to Dowding, just buying software is not going to solve businesses' problems. "Anyone can buy a grand piano but it doesn't make them a concert pianist – you actually need to understand all of the issues before you can apply any kind of software solution. As soon as you share information and identify the inter-dependencies, the IT part becomes the transport for the information. When the information is available people get hungry and start to ask 'if only you can give it to me in this fashion', which brings more people on board, which in turn makes collaboration easier." Then the IT group has to be agile as it can rapidly become the bottleneck! "One of the less desirable aspects of our lean experience was our attempt to have 'continuous improvement' meetings," says Dowding. "This sounds OK in principle but these meetings were scheduled on a regular basis whether we needed them or not. And there are three reasons why this is not such a good idea. "First, if somebody has a good idea, it needs to be implemented immediately not held over for the next meeting. Second, good ideas do not necessarily coincide with half-hour continuous improvement meetings. And third, if you take 10 manufacturing people to an offsite meeting for half an hour you better come up with a good improvement every time that saves you the five hours you've just lost!" But there is another trend – the attempt to make whole supply chains more agile. "This is certainly very difficult to do, but it is definitely the way we see things heading," says Hackwell. "Pfizer is probably the closest we've achieved today. Although the supply chain scheduling at Pfizer is within its own internal supply chain – which some might argue is easier to optimise." Preactor sees the world moving towards these much more integrated processes so that when you're creating your own schedule you can take account of the schedules of other partners in a supply chain. "This is what you have to do if you want to be truly agile and lean," says Hackwell. "It is possible to have a relationship with a supply chain which just involves 'pull' signals: it works in the automotive industry, for example, where you have a large dominant OEM that is able to dictate to its supply chain. But there are lots more ad-hoc supply chains out there where there needs to be a much more co-operative relationship." Getting those supply chains lean and agile will be the next wave. There is a long way to go before general acceptance of supply chain scheduling, but it will bring agility by keeping all parties aware of what they are doing. If you have every one on the same supply chain page, if one contributor slips the schedule, everybody else is notified immediately and the schedule can be modified – to make that particular EBQ of one much more achievable.