IT and Lean – can’t we all just get along?

Over the last 30 years I‘ve seen corporate IT evolve from a business process function to an autonomous powerhouse. In the 70s and early 80s, for instance, IT was primarily implementing technologies that supplemented business functions: hardware, networks, productivity software, and tools that automated manual functions.

During the late 80s and early 90s, however, manufacturing systems became a necessity for running a shop floor. As a result, many shop-floor personnel, especially from materials, scheduling and planning, collaborated closely with IT to successfully implement MRP systems.

By the late 90s, MRP had transitioned to ERP, with the focus shifting to sales, order processing, financials and other corporate functions taking precedence over manufacturing. Corporate executives became the decision makers for purchasing ERP systems with IT owning the deployment. Interestingly, the deployments involved more technology people than business people and if business people were involved, they were outside consultants.

Around the turn of this century, fueled by Y2K problems and the growth of Internet, the transition or evolution, was complete. IT was the owner and final arbiter of all technologies, irrespective of who the end-user was. IT no longer consisted of a good mix of process and technology people; it was overwhelmingly technology people driving businesses. One of the major business magazines even went so far as to question whether the CIO was on par with, or more important than, the CEO.

Since then, IT has provided the latest and greatest technology to the organization, but in the process has quite unconsciously isolated and neglected core business functions. It’s not surprising then, that the IT department can frustrate the very users it is chartered to help. In the manufacturing function, users are busy processing orders, building products, procuring raw materials, shipping goods and collecting money, often hamstrung by an IT department that does not understand the types of systems they need.

The first challenge to this IT dominance came when SalesForce.com devised a quick and simple software tool for sales people to manage their contacts and prospects. This challenged the multifunction, corporate-wide software from Siebel Systems, then the darling of IT. Siebel took months to deploy and users had no control over the deployment or management of it. As soon as an easier tool came directly to end-users to help manage the sales function, IT was cut off from the process. Virtually overnight Siebel, a billion dollar-plus company, saw its market capital significantly eroded.

Nowadays, as I tour manufacturing companies around the U.S., I notice the larger the company, the more anguish end-users are experiencing with their IT department. This problem directly affects the core business when the plant embraces lean manufacturing. Lean is the antithesis of batch processing as well as building to forecast — and these two tenets form the DNA of manufacturing systems within the current ERP systems. Meanwhile, lean practitioners are embracing ‘pull’ methodologies like Kanban and demand-driven scheduling to reduce inventories, eliminate stock-outs and increase shop-floor efficiencies to improve customer satisfaction. To make matters worse, most of the lean gurus have been preaching that technology is not required to implement lean on the shop floor. This has left a huge gap between lean’s potential benefits and the reality of what it actually did accomplish, which has slowed the pace of lean implementation across the corporation.

I believe IT has a chance to add tremendous value. Lean programs normally demand real-time responses as compared to batch processing. They normally demand collaboration with business partners (suppliers and customers). They need integration of scanners, RFID and other evolving technologies to automate traditional processes of ordering, scheduling, receiving and shipping. IT has already made several successful transitions to adapt to a market situation. It is time to change again.

IT needs to embrace the concept of enabling business through technology. Whether becoming a SaaS provider or a conduit for application access, it needs to become an integral part of the business unit. IT can play a significant role by combining best-of-breed programs with existing infrastructure. Similarly, IT leaders can become business decision makers instead of the gatekeepers they are today. A good alliance between the business function and IT will ultimately lead to better decision making overall.

Ephraim Schwartz, over at InfoWorld, recently wrote a very good article about this. It is appropriately titled: IT needs to get lean on manufacturing.