Industry 4.0 – The Next Step in Lean Manufacturing

“Industry 4.0 is more than just a flashy catchphrase. A confluence of trends and technologies promises to reshape the way things are made.” – Cornelius Baur and Dominik Wee, McKinsey & Company

The concept of the Industrial Revolution has been around for a long time but suddenly it is again a trending topic. Manufacturing industries across the globe are transforming digitally, and evolving into a new era, often characterized by the term Industry 4.0.

Industrial revolution in Manufacturing Industry

However, hype around terms like Industry 4.0 and “smart factory” often put off manufacturers looking for practical solutions they can deploy today. There is often an apparent disconnect between today’s reality and the future. How do I align all this fancy technology to what I’m already doing? Several of our customers share this concern. We often get asked, “We have adopted Lean manufacturing. How is Industry 4.0 different, and how do I transition?”

Lean manufacturing was pioneered by Toyota in the fifties. This was built on five principles: standardization of work, balancing (Heijunka), Kaizen for continuous improvement, just-in-time production and Jidoka for root-cause analysis. Lean manufacturing enabled manufacturers to reduce waste, improve operations and productivity, and reduce cost and time to delivery. The system allowed workers to make necessary and continuous adjustments throughout the value chain or a specific process – to best meet customer needs.

Lean manufacturing has evolved substantially, with more refined approaches to becoming lean, and staying that way. However, the essence has always been on optimizing the manufacturing process to reduce costs, improving efficiencies across the value chain, and making better products to meet changing customer needs. Most importantly this is a continuing process. After you get lean, you need to get leaner!

But this is exactly what Industry 4.0 promises! Overall goals and benefits are focused on reducing defects and wastage, improving productivity, reducing input costs, optimizing supply chain and inventories, and such like. This is no different from the goals of lean manufacturing – it’s just that technology can do much more today.

Industry 4.0 mainly focuses on transforming the manufacturing industry by marrying several technologies such as Internet of things (IoT), real-time data, cloud computing, predictive analytics, robotics, additive manufacturing (e.g. 3D printing), artificial intelligence, Augmented Reality, etc. With the merger of physical and digital systems to create an integrated ‘Cyber-Physical Systems’, operational excellence can reach new levels.

It’s easy to get overwhelmed by all this tech jargon! However, Industry 4.0 is really nothing but an extension of lean manufacturing – albeit, with some serious new tech-enabled capabilities. A look at the table below will help illustrate this point.

How Industry 4.0 is the next step in lean manufacturing?

  What Lean Manufacturing Does What Industry 4.0 Can Do
Flexibility – time to changeover Lean tools help manufacturers bring down changeover time – enabling one production line to efficiently produce multiple products Sensors and software can automatically identify products/parts and instantly load the necessary program and tools without manual intervention
Inventory cost reduction One of the major goals of Lean is to reduce waste,  and that includes inventory costs Today,  software can trigger automatic part replacement based on real-time inventory needs
Quality Self-inspection and other tools to reduce the likelihood of defects Self-inspections can be enhanced by data-driven analytics to identify root causes, supported by real-time monitoring
Production planning Shop floor management and other processes are adapted to production changes, so as to better plan and control production. Using data from across the integrated value chain, algorithms create each shift’s ideal production plan – and this can be tweaked in real time. Get rid of the siloes, and take a holistic view.
Productivity Focus on continuous improvement in all aspects of the production process Real-time data helps identify root causes and validate improvement measures; ensuring faster roll-out
Safety Visual aids or signals to improve safety Sensors can alert workers to dangers from moving vehicles or gases/fires
Machine downtime Preventive maintenance to reduce downtime, by maintaining equipment at pre-determined intervals Move from  preventive to predictive, so maintenance is performed as and when necessary
Data-Driven Innovation Process for collecting and analyzing customer feedback,  and then using this to drive product design and manufacture Sensors collect actual product performance allowing precise fine-tuning to each customer’s environment. Data analytics can identify unmet needs that customers themselves may be unaware of.


So it’s not about Lean manufacturing versus Industry 4.0. The latter is an extension of “lean” – enabled by some transformative technologies. You could possibly describe Industry 4.0 as Lean Manufacturing on Steroids!

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A study by BCG found that those that had already implemented lean manufacturing derived greater/quicker benefits from Industry 4.0 applications. GS Lab’s own experience working with multiple customers has been that the transition to Industry 4.0 is easier for such companies.

Regardless of where you are today, it’s essential to get leaner. Instead of spending a lot of time on trying to line up all the ducks, start with a few steps that provide high impact, build capabilities and learn as you go.

Mandar Gadre | Director of Engineering – Healthcare & Manufacturing

Mandar Gadre serves as Director of Engineering – Healthcare & Manufacturing for GS Lab. Mandar holds B.Tech from IIT Bombay, and a Ph.D. in engineering from Arizona State University, USA. He brings deep expertise and experience in crafting industrial solutions, leading technology teams, while contributing technically to sensor technology, hardware and control solutions, and data analytics. Mandar has helped numerous organizations implement IIoT and delivered results that have shaped new business models for those organizations.

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