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Industry 4.0 and Lean Possibilities, Challenges and Risk for Continuous Improvement

An explorative study of success factors for Industry 4.0 implementation

Written by J. Larsson, J. Wollin

Paper category

Master Thesis


Business Administration>General




Master Thesis: Introduction to Continuous Improvement and Industry 4.0 "Pursue continuous improvement, not perfection"-Jin Collins, based on the famous saying of former track and field sprinter Jin Collins of St. Kitts and Nevis, can safely assume that this concept CI has already been used in the corporate field. Found his own way out. Needless to say, similar to athletes, every organization that aims to remain competitive has a basic need for CI (Bicheno & Holweg, 2008). In addition, since the long-term viability of an organization is directly related to its competitiveness relative to other participants, CI itself is a necessary condition for all competing existing organizations. One of the most famous and widely used methods of achieving CI is to use Lean, which has been shown to significantly improve the company's operational performance (Shah & Ward, 2003). In short, Lean is an attempt by the West to imitate the Toyota Production System (TPS), which has been successfully used by Toyota since the end of World War II (Fujimoto, 1999). CI is a well-known core value in the "Toyota Way" and a prerequisite for TPS (Toyota Research Institute, 2001). Generally speaking, CI enhances the organization's products, services, and processes through incremental improvements in value creation activities (Bhuiyan and Baghel, 2005; Lillrank and Noriaki, 1989); this is done by continuously discovering and solving problems. This essentially means continuous improvement in all aspects. In an industrial manufacturing environment, this will be more specifically safety, quality, delivery, and cost (SQDC), etc. However, in the context of this work, the focus is on CI related to cost reduction through productivity. Driven by the current digital trend 1, the manufacturing industry is on the verge of a new industrial revolution, namely Industry 4.0 (I4.0) (Rojko, 2017). The term was coined at the Hannover Messe Technology Exhibition in 2011, and is an initiative of the German government to implement a high-tech industrial technology strategy (Benitez et al., 2019). In short, I4.0 refers to the changes driven by different technologies in the organizational manufacturing system, and these changes have multiple organizational meanings (Lasi et al., 2014). These changes are largely due to the introduction of new information and communication technologies into the manufacturing value chain, which has brought many benefits to the organization (Mohamad, 2018). However, the real impact, especially those of the integration of I4.0 technology into the value chain, is still eclipsed by the unilateral discussion of the conceptual advantages portrayed by the I4.0 technology. According to data from the World Economic Forum and McKinsey & Company, the three major technological trends are the outstanding value drivers of production transformation during I4.0; namely, "connectivity", "intelligence" and "flexible automation". Adapting technologies that belong to each megatrend can have a profound impact on organizations that are free from the inertia of “pilot purgatory 2”, such as increasing productivity (World Economic Forum, 2019). Generally speaking, I4.0 will bring major changes to manufacturing and business (Nosalska, et al., 2019), but most companies are not aware of the potential challenges and risks they may face when implementing I4.0 (Mohamad , 2018). 1.2. Discussion of issues As the industrial manufacturing landscape changes with the introduction of I4.0 technology, CI conditions may be affected. However, despite the relevance and potential interdependence of these two themes, researchers have not yet investigated the impact of the implementation of I4.0 on the organization's CI work. In addition, as stated by several authors, there is a lack of a comprehensive framework that combines I4.0 solutions with lean (Kolberg & Zühlke, 2015; Leyh et al., 2017; Wagner et al., 2017). Judging from the conclusions of the articles reviewed in Chapter 2, there seems to be a general consensus that I4.0 and Lean are complementary rather than contradictory (Section 2.6). Even so, it is clear that the literature lacks a more realistic and critical approach to the interrelationship between the two fields. In addition, although there are some studies on the inter-domain between I4.0 and Lean, as far as the author knows, none of the studies discuss the possible impact on CI. Considering that CI is the core value of lean, and the necessity of CI is everywhere in organizations affected by competition, this is considered to be a research gap worth filling. I found some research investigating the obstacles of CI, focusing on the behavioral aspects of managers and employees and organizational culture as the key factors for successful CI (Section 2.2). However, no literature has been found to prove the potential impact of I4.0 on these factors after the implementation of I4.0, which further emphasizes the need for discussion around the interaction between CI and I4.0. As mentioned above, achieving process improvement to increase productivity requires continuous improvement and the ability to adapt to environmental dynamics; this fact emphasizes the importance of manageable organizational inertia3 (Kinnear & Roodt, 1998; Louw & Martins, 2004). Read Less