IMPROVING THE “DIGITAL” Gemba: From the Front Line to the Bottom Line


Nothing in business is more devastating than the status quo. No matter how successful a company is today, complacency in business will evaporate competitive advantages faster than adjustments can be made. To break from this state companies, need knowledge and insight and as the Chinese philosopher Lau Tzu once said, “the wise man is one who, knows, what he does not know,” but he also said, “if you do not change direction, you may end up where you are heading.”

For decades manufacturers have driven continuous improvements to avoid the status quo. The most recent iteration is lean manufacturing and as intuitive as it seems, lean is reaching diminishing returns and needs digital to get to the next horizon of improvement. In addition, trade wars and a global pandemic bringing unprecedented supply disruption and demand volatility, putting further pressure on companies to require a digital approach. In short, the next generation of manufacturers need more agility, flexibility, and resilience than ever, and the best use digital to determine and implement improvements.

The time has come for a digital manufacturing performance management system that provides more actionable, timely and accurate insights to the right people in the right places to create value (“Gemba”). However, today the sheer volume of data makes it difficult to determine what is immediately actionable; the process becomes paralyzed as a result. A digital-native system has the potential to replace disparate analog elements with a self-measuring, self-monitoring closed loop problem solving system to empower frontline workers and accelerate the continuous improvement to sustain a transformational business impact.

Digital integrates top-down performance management and bottom-up problem solving into business-oriented routines without replacing their current systems. It also allows shop floor to the top floor and back again visibility creating another closed loop single source of truth about performance This real-time, single source of truth across the global production network is seen through the lens of what matters most to each person and role as they work to achieve operational excellence. Ultimately, digital will be the holy grail of the last 200 years by providing actionable insights by identifying and solving the most impactful highest priority problems in a manufacturing environment when and where they occur as they occur and eventually before they occur. 

This Digital Performance Management (DPM) system provides a robust foundation to unlock double-digit financial and operational performance improvements across the entire production network at every level.

The Analog Systems of Yesteryear

Traditional analog systems are ill-equipped to maintain production resiliency and agility in this new era of being lost in data with narrow applications and where responses to market changes affect the bottom line. There are considerable points of failure with minimal context or information, requiring intervention and interpretation to make effective decisions and tradeoffs. While they are geared toward minimizing waste, they operate from misguided assumptions. This includes the “anyone at anytime” dilemma where the system assumes everyone has a similar experience and expertise to interpret information in real time and make the best decision. Disconnected processes, unstructured and inaccessible data insights are performance inhibitors formed from analog systems.

These traditional systems lack systematic reporting structures to connect data horizontally and vertically throughout an organization. This is particularly true for vertical information flow because information is originating from various functions and business units with disparate IT and OT systems making data benchmarks unreliable and hindering effective decision making. This vertical disconnect causes an inability for top floor managers to measure and assess the actual impact of continuous improvement initiatives of front-line behavior on the bottom floor.

Most manufacturers are aware of their traditional IT systems and industrial software stack limitations. They often rely on one-off integrations which strain resources and limit the ability to source relevant data. A more intuitive and agile system that connects the right data to the right person in the right place is needed.

What’s Needed is Insight Where Value is Created 

With every manufacturing process, there is a real person at beginning, middle and end doing the work to get the product into a customer’s hands. Factory floor operators, engineers, and other personnel are provided daily goals at the start of their shift with corresponding work instructions. This approach is to work harder to achieve goals versus using digital to unlock the potential of working smarter. McKinsey estimates employees spends nearly 2 hours a day doing or ~25% of an 8-hour shift wasting valuable time searching and gathering information to complete a task. If a manufacturer can orchestrate and optimize the collective intelligence of all their employees, including frontline workers, they can drive unimaginable levels of performance.

A digital performance management system standardizes the vast array of unstructured and structured processes existing across operations. It takes decision making out of the hands of “20 managers and engineers” and into the hands of “200 or even 2000 frontline direct and indirect factory personnel” along with frontline management for problem owning and solving that improves line performance. It takes insights and knowledge out of the actual places and make them available to people no matter where they are so that problem solving can be done more collaboratively and remotely. 

Lean Leaps into the Next Generation

Toyota has been driving lean for over 80 years and like the classic paradox of stepping halfway closer to the wall, you eventually reach a limit where it no longer advances as quickly or dramatically.  The advantage experiences diminishing returns over time, so we need a new horizon; digital applied to lean concepts is this next horizon.

With Industry 4.0 technologies, manufacturers can build a digital foundation on top of what they already have (their ‘brownfield’ production networks), combining disparate IT and OT data sources, then homogenizing and normalizing the data to generate digitally charged operational insights and transform processes. Leveraging these base, digital capabilities including bottleneck identification, time loss pareto and time loss waterfall analysis, and scorecards provide granular insights into the single most important area, the bottleneck, providing root causes and enable all workers to focus on solving the most impactful problems.  In short, today 100’s of people are focusing on 100’s of problems of the moment but going forward digital will allow 100’s of people to focus on ONLY the “top 3” items that matter most creating significantly more impact at a faster speed due to laser focus and prioritization.

DPM provides the real-time reinforcement to prioritize, analyze, implement, monitor and repeat actual behavior. Acting as a closed loop management system, change management is embedded in the solution to drive improvement, visibility, and ultimately customer value and accountability.

Digital Performance Management simultaneously ties people, products, processes, and places together to provide a single source of truth from the top floor to the shop floor and across the enterprise enhancing capability and optimization. With DPM, operations will spend less time maintaining systems and more time using them and improving them; people at every level will spend less time finding problems and more time solving them and preventing them. People are empowered, processes are accelerated, products are improved, and places are optimized all around peak performance. 

About the Author

Craig Melrose is a globally recognized leader in operational excellence and has broad expertise at driving large-scale Industry 4.0 Transformational customer programs. As EVP of Digital Transformation Solutions at PTC, Melrose builds enterprise scale solutions, incorporating PTC’s CAD, PLM, IoT, and AR technologies, focusing on the most critical and most valuable customer use cases.  Prior to PTC, he served as a principal and expert partner at McKinsey & Company for 20 years, where he helped companies identify tactical and strategic solutions that delivered financial improvements and increased operational productivity in the areas of product development, manufacturing, and supply chain across all industries globally.

Melrose is a regular contributor to collaborative articles and research reports on digital transformation in industrial operational improvements and was recently published by McKinsey & Company, the Boston Consulting Group, and the Manufacturing Leadership Journal.