Is Lean Manufacturing and Industry 4.0 the Next Level of Operational Excellence?

Sep 17, 2021 by Mark Dingley

Want to start your journey to becoming a more efficient, continually improving business that brings values to your customers faster?


There was a time when Lean principles were the only way that manufacturers did business. A decade later, however, and Industry 4.0 seems to be the new buzzword. Does this mean that Lean management is on the outs or can it be used in conjunction with Industry 4.0 to create a whole new operational excellence level?

The Lean approach is designed to eliminate waste and non-value adding activities, which helps to reduce complexity and cost. Thanks to standardising processes, empowering workers on the factory floor and instilling a culture of continuous improvement, it provides a foundation for operational excellence.

Thanks to Lean techniques, all employees can be involved in continuously reviewing and improving efficiency via a value chain or process. These tools may include preventative maintenance (proactive equipment maintenance reduces the number of equipment failures) or visual controls (to help operators identify the right times to adjust equipment).

Times, however, are changing. With operations becoming increasingly complex, manufacturers are finding that Lean methods are not enough to achieve true operational excellence on their own. Some think that classical Lean tools have become a victim of their own success, making further improvements tougher to achieve.

Lean Industry 4

Industry 4.0

Referring to the fourth wave of technological advancement in manufacturing, Industry 4.0 is powered by the internet and automation. There are actually 9 key technologies involved – additive manufacturing, advanced robotics, augmented reality (and virtual reality), big data and analytics, cloud computing, cyber security, horizontal and vertical system integration, the industrial internet, and simulation.

The ability to exchange huge volumes of information in real-time is at the core of Industry 4.0. It can be from machine to human (line operators, for example, can analyse data in real time in order to improve processes and identify potential issues) and from machine to machine (they are able to communicate among themselves in real time – and independently of humans, thus enabling them to auto-optimise, auto-diagnose and auto-configure).

Lean versus Industry 4.0

We actually prefer to think of it as traditional Lean and Industry 4.0 - the interplay between the two could be the most effective way to reach the next level of operational excellence.

In fact, it even has a name: Lean Industry 4.0.

Manufacturers were previously focused on improving processes to boost productivity and eliminate waste. Now, they’re able to utilise sensors, data and advanced analytics in order to predict and solve problems, as well as identify improvement measures in ways that were never possible before.

Don’t just take our word for it – there has even been research to quantify the benefits of Lean Industry 4.0. Boston Consulting Group (BCG) report that manufacturers who have successfully deployed this process can reduce conversion costs by as much as 40% in only 5 to 10 years. These savings are greater than those of either Lean Manufacturing or Industry 4.0 on their own. It’s worth noting, however, that fewer than 5% of the companies that BCG observed actually reached a high level of maturity during that time – the concept is still so new.

So, how can manufacturers combine Lean Manufacturing and Industry 4.0 for maximum benefit?

Some experts believe that companies need to think of the implementation of Lean Industry 4.0 in terms of addressing specific ‘pain points’ they are experiencing. Here are just a few examples:

‘Pain Point’ #1 - Time-consuming changeovers

There’s no denying that product changeovers can be time-consuming, however, they’re necessary for manufacturers when using one production line to make multiple products. The utilisation of Lean management principles, alongside digital automation tools (like sensors and software), will allow manufacturers to facilitate more efficient changeovers without operator intervention.

‘Pain Point’ #2 – Equipment breakdowns and failures

The utilisation of Lean methods, like preventative maintenance, can help manufacturers to improve overall equipment effectiveness (OEE), as well as reduce the downtime required for correcting minor issues.

The addition of Industry 4.0 will take this to a whole new level. It can help to identify the potential for breakdowns before they occur thanks to advanced analytics algorithms and machine-learning techniques, which will be able to analyse the vast amounts of data the sensors collect. Operators, for example, will be able to see when parts are wearing out and perform preventative maintenance at the optimal time. This minimises unnecessary downtime, replacement costs and disruptions.

Real-time data also helps to accelerate continuous improvement. The data can be used by line managers to identify the cause of performance issues, ensuring that the problem doesn’t become an ongoing concern.

‘Pain Point’ #3 – Inconsistent product quality

For all manufacturers, maintaining high product quality is an ongoing priority. If products fail to meet the specifications of customers, a manufacturer could incur penalties and lose customer trust – not to mention the risk of withdrawals and recalls. Lean management tools have been specifically developed to improve error detection and reduce the likelihood of errors.

Industry 4.0 takes this even further by assisting manufacturers in the identification of the root cause of errors, and to fix them. Again, it all comes down to data analytics. Industry 4.0 technologies (like sensors and camera-based vision inspection) are designed to collect data and feed it into software, which then creates detailed analytics. This allows operators to analyse the inspection system data in real time, ensuring that production output ticks all of the high quality standard boxes.


The search for new ways to achieve continuous improvement in terms of productivity, quality and service levels never stops. This is thanks, in part, to the unrelenting pressure for manufacturers to stay profitable and competitive. They have been able to realise the benefits of automation and system integration with the rise of Industry 4.0. The next step, then, in lifting operational excellence to new heights is to combine the benefits of Lean Management and Industry 4.0.