What's 'augmented lean' and how could it decarbonize supply chains?

In the next decade, I foresee industry as a whole moving toward mass-customized, digitized, diverse, modular, lean, sustainable and human-centric principles – aspects that are only found in pockets of industrial activity today.

The scale change required to generalize such approaches is not something that typical sustainability efforts, environmental, social and governance (ESG) measurement, or even increasing tech automation can accomplish alone.

As the author of the book Decarbonizing Logistics, professor Alan McKinnon points out in a recent interview with the Augmented podcast (2022), decarbonizing logistics without slowing economic growth is a formidable challenge which requires paradigm shifts across many industries. In this piece, I look at ways that this ambitious agenda can be accomplished through augmented lean approaches.

'Augmented lean' is the idea that human labour can be empowered in significant ways by cleverly introducing specific tools adapted to enhancing human activity, by combining top-down and bottom-up approaches, resulting in both efficiency and innovation.

Through humanizing organization operational principles (HOOPS), which we write about in Augmented Lean, deciding to conscientiously learn, emerge, augment, decentralize, empower, respect, hack and govern, are organizational efforts that go far beyond metrics because they are grounded in workforce motivation.

When coupled by a desire to integrate changes across locations, aided by technology, these actions can be transformational.

Decarbonization is the reduction of carbon dioxide emissions through the use of low carbon power sources. Consultants such as McKinsey are often brought in to help companies do this (see Decarbonization Transformation), and that tends to help.

But getting advice is only second best to figuring it out on your own, because you learn more in the process. Augmented lean is an approach that is focused on learning by experience rather than by proxy.

Companies around the world are now adopting augmented lean as a way to achieve sustainable results in a double sense: sustainability approaches that can be sustained over time.

There are three reasons why decarbonization is hard, says McKinnon. Freight movement is forecast to increase rather than decrease, most of the energy used is from fossil fuels, and the asset life of ships is 30 years and for trucks it is still 15 years.

That’s why out of the box thinking is warranted: circular economy, recycling, 3D printing, even the sharing economy could contribute, he says. However, the most powerful approach of all, I think, is empowering the edge. In the end, the resources at the edge are the true assets for sustainability.

The most powerful openness principle that supply chain professionals can learn from the internet’s adoption is that by spreading responsibility to the edge, you localize responsibility and control, and if you standardize the interfaces, that does not mean you lose governance, rather the opposite, you increase it. Also, with limited effort, you can monitor it.

DMG MORI, the German high-end industrial tool maker, is developing software tools that make machine tools more productive. In the process, they are also believed to be simultaneously making manufacturing more sustainable.

Their approach is augmented lean, in that they are digitizing their own value creation chain, always measuring the year one return on investment, and empowering their own employees to identify improvements.

When operators themselves build digital apps that address their team challenges, there is zero waste and lag between problem and solution. When DMG MORI puts in corporate effort to scaling changes that deserve a wider footprint, efficiencies increase, but no solution is forced upon any factory floor, which preserves operational flexibility.

Among other nearly impossible things to imagine, decarbonizing logistics, says McKinnon, means “adopting openness principles from the virtual internet onto the physical nature of the supply chain”, as well as “facilitating new business models, sharing, and standardization, and eventually dematerialization”.

What fundamentally altering supply chain openness means, is that all the data embedded in each step of the chain needs to travel between the nodes. What it should not mean is that every node constantly assesses all the available information.

The biggest challenge in achieving sustainability is not surfacing information, but limiting the disruption from receiving it so you can respond appropriately to the most important parts.

This is why a lightweight approach with carefully composed frontline operations apps is better than fully configured dashboards only available to executives or supply chain managers. No supply chain problem was ever only a management problem.

Smoothing out supply chains and reducing the need for goods to ship in the first place requires first principles thinking, questioning basic assumptions. What better way to do that than to start by reimagining each step of the supply chain, and each complexity that occurs? And, who better knows whether each step is necessary, than those who are currently executing it?

Supply chain stress can be remedied by reconfiguring global supply chains with augmented lean approaches, including frontline operations platforms using no-code software that do not require developers to build or extensive training to operate.

This is important to supply chain professionals because managing the risk and capturing the value along (foreign) supply chains has only become more important over the past few years. These are also turbulent times in terms of the cost fluctuations of raw materials and components in manufacturing.

Supply chain professionals in manufacturing often look to software to manage these risks and the potential value. However, to do so, the systems must be connected to real-time data all along the way. Part of that value resides in machine and system monitoring, but another part might reside in workers and partners along the supply chain.

With digital transformation of supply chains, a lot can go wrong if supply chain professionals fail to consider the need for tech integration, skills and training costs, or ramp up periods. A set of newer approaches, notably frontline operations platforms, potentially solve some of those challenges.

However, to accomplish seamless supply chains, an augmented lean management framework adjusted to company specifics greatly facilitates the process. Importantly, what happens is not just a matter of increased efficiency (e.g. doing things better). Rather, with augmented lean, the workforce (and all partners along the supply chain), suddenly can do new things, but rarely to do less.

Through purposefully developing light applications that govern specific end user interfaces for the data and actions carried out by machines, devices and the systems used in a production or logistics process, any contributor along a supply chain can innovate. That means creating more value, which is even better than achieving small reductions.

Apps built by clients of frontline operations software provider Tulip – for example, by DMG MORI, J&J, Dentsply, Stanley Black & Decker and many more – give “new life” to previously hidden or underutilized supply chain data on materials, shipping status or sales.

For supply chain professionals, new insight can be derived from the deeper understanding of the production process that frontline operations platforms can yield, however, only if implemented with full awareness of both system and workforce-related bottlenecks, and in sync with organizational specifics. ESG metrics, properly weaved into the production process, can then come to life, despite being an imperfect tool.

Decarbonizing without decentralizing responsibility to the edge of the supply chain will not reduce volumes. We would constantly be shipping more products to more places. That needs to stop.

Sustainable supply chains need augmented lean management because without it, they might be slightly more efficient, and might measure ESG all they want, but won’t embody the human spirit of improvement upon which true sustainability depends.

Parts of this article is excerpted or abridged, with permission, from the new book by Natan Linder and Trond Arne Undheim, Augmented Lean: A Human-Centric Framework for Managing Frontline Operations, Wiley, 2022.