Effects of Industry 4.0 Implementation on the Shop Floor Employees in a Lean Firm

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Effects of Industry 4.0 Implementation on the

Shop Floor Employees in a Lean Firm

Master’s Thesis, MSc Supply Chain Management Faculty of Economics and Business, University of Groningen

Etta Morton

Student Number: S3704998 Email: e.m.morton@student.rug.nl Date: June 24, 2019

Word Count: 11,503

Supervisor: Dr. Ir. Thomas Bortolotti

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Abstract

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1 Introduction

Currently, Lean is one of the most popular management strategies (Buer, Strandhagen, & Chan, 2018). Lean Management aims at helping firms reduce costs, increase flexibility and responsiveness by eliminating nonvalue-adding activities (Sony, 2018; Womack, Jones, & Roos, 1991). To realize the goals of Lean, firms must create an engaged and flexible workforce as the utilization of these ‘soft’ Lean practices is needed to create sustainable advantages generated by Lean (Bortolotti, Boscari, & Danese, 2015; Shah & Ward, 2007). To create an engaged and motivated workforce, employees must feel some level of autonomy and responsibility for work and in turn, better organizational performance resulting from the higher individual performance of motivated employees (De Treville & Antonakis, 2006; Hackman & Oldham, 1976). Another paradigm quickly gaining prevalence and interest from both academia and managers is Industry 4.0 (Buer et al., 2018). Industry 4.0, or smart manufacturing, focuses heavily on utilizing technologies to make processes autonomous, with the end goal of having a factory run without workers in the process (Sanders, Elangeswaran, & Wulfsberg, 2016; Sony, 2018). The introduction of Industry 4.0 has caused changes in manufacturing and with the emphasis on technology, may affect how firms use Lean Management tools (Tortorella & Fettermann, 2017). Despite Industry 4.0’s emphasis on machines, humans are still vital to the manufacturing process as they are where the creativity comes from and the ones responsible for the final work (Zolotová, Papcun, Kajáti, Miškuf, & Mocnej, 2018). As Industry 4.0 emphasizes the use of autonomous technologies, this brings into question if and how these ‘soft’ Lean practices empowering workers continue when implementing Industry 4.0.

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the integral autonomy of the shop floor employees will be affected by the increased use of these Industry 4.0 technologies.

Although there is evidence that both Industry 4.0 and Lean together can offer some otherwise unachievable benefits, very little has been discussed about the effects of increased use of Industry 4.0 technology on the ‘soft’ Lean practices, especially concerning the autonomy and empowerment of employees on the shop floor. This paper aims to investigate these effects. The already established ‘soft’ Lean practices were considered, then how the autonomy and empowerment of employees had translated into the autonomous systems. Leading to the research question: How has the autonomy and empowerment of shop floor employees in a Lean firm been affected by the implementation of Industry 4.0? As shop floor processes have become more automated and decisions more autonomous, have shop floor employees become more integral to the process and management of these machines or has the tighter control over the machines translated into tighter controls over the workers as well?

This paper contributes to the existing literature about both Lean and Industry 4.0 by further examining their relationship and the effects of concurrent usage of the strategies on shop floor employees. Although a great deal has been studied about Lean and its benefits, the concept of Industry 4.0 is relatively new and much of it is still predictions. This study aims at furthering the understanding of the relationship and the impacts Industry 4.0 has on the shop floor employee in a Lean Management context. This study offers some practical knowledge for managers on how to reap the benefits of Industry 4.0 without disrupting the Lean culture. It specifically highlights how the implementation of Industry 4.0 affects specific job characteristics.

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2 Theoretical background

2.1 Lean

The term “Lean Production” was coined in the book, The Machine that Changed the World, in which the authors studied and compared the automobile manufacturing plants (Womack et al., 1991). However, the concept itself was originally developed from the Toyota Production System, which was a result of several decades of experiments in the Toyota Motor Company (Shah & Ward, 2007). The concept was developed due to the intense competition in the domestic market and a scarcity of resources, resulting in a system that emphasizes the reduction of waste and utilization of resources (Hines, Holweg, & Rich, 2004). The successful adoption of Lean Production, or simply Lean, was not immediate either. Lean evolved from merely copying the Toyota Production shop floor practices into Lean principles and philosophy, and continues to change and evolve (Hines et al., 2004).

Lean production is “an integrated socio-technical system whose main objective is to eliminate waste by concurrently reducing or minimizing supplier, customer, and internal variability” (Shah & Ward, 2007). As western companies made efforts to implement Lean, they copied the structure and techniques but found it difficult to share the culture and mindset (Hines et al., 2004). The “hard” technical and analytical practices of Lean, while seemingly easier to implement, are not enough to give firms a competitive advantage; the advantage is differentiated based on the implementation of and focus on “soft” Lean practices such as continuous improvement and small group problem solving (Bortolotti et al., 2015; Hines et al., 2004). Potential gains are created when multiple Lean elements are combined (de Menezes et al., 2010). For example, decentralized decision making through the use of teamwork and group problem solving allows for more ownership in the process and therefore, better improvement suggestions from employees (Forza, 1996).

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create the advantages possible through “soft” Lean techniques (Shah & Ward, 2007). To measure the work outcomes and therefore to an extent the organizational performance of the firm, the Job Characteristics Model, which was introduced by Hackman and Oldman in 1971 and will be discussed in the next paragraph, could be utilized (De Treville & Antonakis, 2006; Hackman & Oldham, 1975).

2.2 Job Characteristics Model

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Table 3.2.1: Articles and theorized effects on Job Characteristics Model Dimensions Article Skill Variety Take Identity Autonomy Feedback Shah and Ward, 2003) Cross-trained employees, Job rotation Job enlargement Self-directed teams, problem solving groups Quality management programs, formal continuous improvement programs and process capability, measurement capability, work-in-process (WIP) and inventory management (Flynn, Sakakibara, & Schroeder, 1995) Problem solving and workers moving to help bottlenecks Decentralized management of processes to find solutions Information Feedback is needed (Angelis et al., 2011) Workers should be involved in both “on the line” work and in improvement projects, multi-skilled workers, job rotation Individual feedback to lessen ambiguity Higher autonomy means higher worker commitment. Involvement in improvement programs improves commitment Supervisor training to teach them not to blame workers but help the workers. Individualized feedback on displays. Task support from both leaders and coworkers increase Lean commitment (Powell, 1995) Employee empowerment significantly correlated with corporate performance (Delbridge, Lowe, & Oliver, 2000) Handled day-to-day and quality tasks only. No upskilling. Involved in problem solving

Control stays with team leader, no more autonomy for worker. However, involved in improvement activities

Leader sets pace for work and handles any disputes or disagreements (Jackson & Mullarkey, 2000) Higher skill variety due to changes in work structure Job enlargement Higher production responsibility, more process autonomy, higher

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Meaningfulness of work is measured through skill variety, task identity, and task significance. Skill variety is the degree to which a job allows an employee to use different skills by carrying out a variety of tasks in their work. Most studies seem to agree that Lean Management positively affects skill variety as job rotation is viewed as an integral part of Lean as described in Womack et al.'s book (1991). Lean gives workers small parts of the task as a whole and attempts to keep tasks from becoming monotonous through job rotation and involving workers in nonproduction tasks creating higher levels of skill variety (De Treville & Antonakis, 2006). Task identity is the extent to which a job can be identified as a “whole” task or piece of work (Hackman & Oldham, 1975). HRM in Lean Management includes job enlargement (Shah & Ward, 2003), including more processes in one job, thereby making it easier for workers to identify the effects of the job. The third and final aspect of meaningfulness of work is task significance, which can be defined as the impact the job has on other people or their work. De Treville and Antonakis (2006) found that Lean does not significantly affect task significance, so this factor will not be considered in this study. This is further supported by the lack of literature showing any effects on task significance and is therefore in Table 3.2.1.

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floor employee teams in the automotive industry were not actually given any more autonomy or sense of responsibility, but even in this strictly control environment, these employees were still involved in problem solving and continuous improvement. In Lean, there is a constant balance between giving workers enough time and resources to get the job done while keeping things limited enough, so the employees are encouraged to improve (De Treville & Antonakis, 2006). Womack et al. (1991) in their book acknowledged that Lean Production could lead to higher stress and anxiety for employees, but that these problem-solving demands are good for employees due to their association with skill variety and skill utilization.

Under Lean Management, shop floor workers receive considerably more feedback than workers in a traditional assembly line (De Treville & Antonakis, 2006). Feedback is the information employees receive about the effectiveness of their performance and can come from the process itself, supervisors, or other employees (Hackman & Oldham, 1975). There are numerous Lean tools that can provide such feedback (Shah & Ward, 2003). Individual output display is linked to higher work commitment and therefore better outcomes (Angelis et al., 2011). When comparing Lean and non-Lean jobs, Jackson & Mullarkey (2000) found the Lean workers were more involved in creating their own process feedback by checking their own quality of work as well as receiving more feedback from other employees. Lean job design increases not only performance feedback for employees but also social interaction and support (Cullinane, Bosak, Flood, & Demerouti, 2013), therefore further increasing the amount of feedback created in Lean.

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2.3 Industry 4.0

The term “Industry 4.0,” or smart factory started at the Hannover fair in 2011 (Rüttimann & Stöckli, 2016). There are many different definitions of Industry 4.0, but there is not yet a globally accepted definition (Lu, 2017). Industry 4.0 is thought to be the fourth industrial revolution and focuses on using new technologies to reshape the manufacturing landscape (Pereira & Romero, 2017). It is currently used as an umbrella term covering future industrial developments regarding Cyber Physical systems, Internet of Things, Internet of Service, Robotics, Big Data, Cloud Manufacturing and Augmented Reality (Pereira & Romero, 2017). Industry 4.0 focuses on using these technologies to promote strategic innovation within the existing manufacturing industry and to automate with the end goal of having a factory run without the interference of workers (Kim et al., 2016; Sanders et al., 2016; Sony, 2018). As Industry 4.0 is more of an evolution than a revolution, thus there will be several iterations or stages of evolution, as it is slowly realized and now only partial implementations of Industry 4.0 exist (Rüttimann & Stöckli, 2016). However, studies show the possibilities for Industry 4.0 in the future and what the machines would be able to do (Mattsson, Fast-Berglund, Li, & Thorvald, 2018; Zolotová et al., 2018).

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of the future would focus more on creative and higher level work. Industry 4.0 technologies allow for more empowerment and involvement from employees on the shop floor (Sanders et al., 2016). By further equipping workers with Industry 4.0 technology and knowledge, Mrugalska & Wyrwicka (2017, p. 470) believe workers will be able to take on the role of “strategic decision-makers and flexible problem-solvers” in an environment of growing complexity. Industry 4.0 technologies also allow for the targeted real-time notification regardless of the distance between operator and machine (Kühl et al., 2018). Workers are able to get immediate feedback through the use of smartphones or tablets and systems can more easily evaluate workers through these systems (Sanders et al., 2016) allowing for faster and more efficient feedback for workers. The expected changes to the Job Characteristics with the introduction of Industry 4.0 technologies are shown in Table 3.3.1.

Skill Variety Task Identity Autonomy Feedback Higher as simple

tasks will become automated Job enlargement as people handle greater parts of work Greater as jobs become higher level and requirements of jobs change

Faster as the speed of communication in general improves

Table 3.3.1: Predicted Changes to Job Characteristics model under Industry 4.0 2.4 Industry 4.0 and Lean

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Methodology

3.1 Research Design

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3.2 Data Collection

The data was collected primarily through semi structured interviews with various Lean or Industry 4.0 managers supporting the shop floor operations and observations at the selected firms. An interview protocol was developed with questions to ensure reliability of the case studies and can be found in Appendix 1. The interviews gathered information about how the companies implemented Lean, types of Industry 4.0 technologies that had been implemented, and how the technologies have affected the employee’s ability to make decisions and other job characteristics related to autonomy. These questions were developed based on past research and a framework to ensure construct validity in addtion to the multiple sources of information. Observations of the facilities and interviewees were also gathered with the intention of furthering the understanding created through the interviews. An additional interview with an operations consultant was conducted to further data trainagulartion. The consultant interview combined with the observations ensures external validity. The interviews were conducted either at the facilities or via phone calls throughout April and May and were between 1 hour and 4 hours in length. The interviewees and their positions in the firms are listed in Table 4.2.1. The interviews were conducted in English for the understability of all parties involved. Each interview was recorded with interviewee permissions.

Case Interviewee Position

1 1A Quality Manager

2 2A Lean Expert

2 2B Process Engineer

2 2C Industry 4.0 Project Leader

3 3A Lean Expert

3 3B Digitalization Team Member

3 3C Digitalization Team Member

3 3D Lean Expert

4 4A Industry 4.0 Project Manager

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3.3 Data Analysis

After the interviews were conducted, they were transcribed and combined with observations then anonymized. Then were analyzed using an inductive approach. Since the inductive approach does not have first order codes already identified (Karlsson, 2016), initial codes were found by reading through interview transcripts. Codes were developed by looking for the main concepts such as the employee autonomy, skill variety, task identity, employee feedback, and any changes for employee’s environment due to Industry 4.0 as identified through the research and theoretical background. Cases were first considered individually to identify any internal patterns with emphasis on shop floor employee autonomy (ex. what decisions employees were able to make, what responsibilities they had etc.…) in the Lean Production environment and how shop floor employees have been affected by the changes from the implementation of Industry 4.0. This internal case analysis contributes to the internal validity of the study. A cross case analysis was then conducted to look for patterns in the overall data and further the external validity of the findings.

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4

Findings

The interviews with four different firms revealed several interesting findings. Cases were first analyzed individually to detect any internal patterns.

4.1 Case 1

This interview for case 1 was conducted with an experienced Lean leader who is currently a quality manager at the firm.

This company focuses on traditional Lean principles when it comes to managing employees on the shop floor. The firm emphasized the importance of job rotation and problem solving. The factory was set up in a traditional assembly line fashion with workers being stationed along the line. However, these workers were generally stationed in groups of two or more at a station. This fosters the idea of group problem solving as all at the stations had to finish so the work could move on. The employees also created the standard operating processes and were encouraged to continuously improve them. This was how the firm felt they enabled the employees. By creating a sense of responsibility through the creation of the adherence to the standards. The interviewee (1A) summed up their goals for the shop floor set up as:

“How can you create a setup where [shop floor employees] really feel, “Okay, but I’m responsible for this process and I have also the possibility in my circle of influence I can also affect the situation.” I think that’s really important… We don’t want to create an environment where people can’t affect their own situation any longer. That’s not what we are looking for.”

4.2 Case 2

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employees finding it themselves, they would not engage with the information on the same level as before. Resulting in technology deciding what is relevant instead of the employee.

The shop floor in this firm was set up as a job shop rather than a traditional assembly line. Workers were assigned to machines and were not able to rotate through other jobs as each machine required a different certification. These legally required certifications also translated into tighter controls on the shop floor for the employees. Prior to any Industry 4.0 technologies being implemented, the system was highly regulated and had many requirements for employees. The introduction of more technologies and a digitized process has allowed the firm to implement even greater controls over employees by stopping the whole process if these standards are not adhered to. The employees must have the proper certification and sign off before the next step in the process can begin. This very negatively affects employee autonomy as the employees are not able to make any process decisions themselves and are told step by step what to do by the machines. However, the employees are encouraged to solve their own issues at their workstations and if they cannot solve it, they have a team they can go directly to in order to ask for assistance. The employees have more discretion in how they choose to solve problems at their workstations. A time limit is not imposed, and they are able to choose which member of the problem-solving team to contact if they do have an issue. The employees are also engaged in continuous improvement practices. They bring improvement ideas to management and show other teams the improvements they have made so the ideas can spread, and the employees can receive recognition for their improvements. Although the processes are highly regulated employees are very strongly encouraged to take responsibility for their work cell. One interviewee (2A) elaborated on their theory by saying:

“It’s mainly empowering them to influence their own work cell. So yes, it is a very rigid system… But on the other hand, we are very flexible. That may sound silly, but you move your trash bin 20 meters and you don’t have to walk 20 meters every time and that saves a lot of energy”

4.3 Case 3

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The shop floor is set up in a traditional manner with individual employees stationed on the production line handling parts of the process. The Lean principle of job rotation is still practiced for ergonomic reasons so that employees stay engaged and interested in their work. Shop floor employees are still expected to make the same amount of decisions as they were before the introduction of Industry 4.0 technologies. However, due to the increased information availability and that the information is already coming in a more simplified form, employees are expected to make better informed and faster decisions. The employees were also expected to become more involved with the creation of Industry 4.0 innovations and implementation. The Industry 4.0 department was focused on engaging the employees on the shop floor, getting ideas from the shop floor, and creating solutions based on what the shop floor indicated as the main issues. The importance of enabling the employees to on a level that they could use Industry 4.0 technologies was also stressed. The firm is working toward educating the employees about the technologies and creating a more technology literate working force. Although the machines can supply a better overall picture, employees are expected to have an understanding of the whole process and the skills to interact with the new technologies. This is especially important to them as some very low-level decisions are already becoming completely automated within the firm.

Further following the idea of enabling employees with technologies, the controls on the shop floor were not made stricter through the use of sensors or other Industry 4.0 technologies. The firm’s logic for this was twofold. First, much of the data could have been collected before the advent of Industry 4.0 technologies but they did not have a reason to and still do not as it does not provide value to the firm and is therefore against Lean Thinking. Secondly, collecting this type of data does not interest them as they feel it does not help to improve things. The goal for the Industry 4.0 department. is to help employees do their jobs better, therefore it is better to collect other types of data about the challenges employees are facing rather than on the employees themselves. The employees not only give feedback on the changes to the process but also on their leader. They are able to score their leaders and directly give them feedback. One aspect the leaders are scored on is how well they coach employees and allow employees to solve their own issues. The employees meet weekly with their leaders and communicate any issues they are having. The leader is meant to give employees the tools to solve the issues themselves. The type of culture this creates is summed up by one interviewee (3D) as:

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do that. Otherwise, yeah, it should be possible that the people find solutions by themselves and not by upper forces or stages, the management.”

4.4 Case 4

Case 4 was an interview with an Industry 4.0 project manager. Here Industry 4.0 was viewed as the next step on a journey toward efficiency and complexity management. Industry 4.0 follows Lean as the next step. It started with Lean thinking and continuous improvement, but Industry 4.0 is needed to bring firms to the next level.

Some Lean practices were still implemented such as job rotation which was found particularly important in order to keep employees engaged as the jobs in this firm are rather repetitive. The employee controls within the firm were strict before the implementation of Industry 4.0 technologies and are therefore not affected as more technology is introduced to the shop floor. Industry 4.0 technologies have been used to make jobs less complicated. When rotating jobs employees are able to rely on the machines to tell them what the next process is making it easier for the worker to know exactly what to do. The machines tell employees what to do for steps and even have autonomous maintenance. If there is an issue with the machine, it will contact the maintenance department on its own and using data from past issues, it can suggest what might be wrong and how to fix it. In this instance, the shop floor employee does not have to be involved at all in the problem solving as the machine takes care of itself, However, the employees are encouraged to take part in development and implementation of the Industry 4.0 technologies. The employees also give feedback after the technologies have been implemented. The interview indicated that although the employees were not heavily involved in decisions on the shop floor, they were given power through introduction of and feedback on Industry 4.0 technologies. This was summed up by saying:

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5 Analysis and Discussion

The cross-case analysis is briefly summarized in Table 5.0.1. The findings based on the cross-case analysis and comparison are discussed below. The jobs characteristics varied in each firm for many reasons however, there were some areas that all interviewees agreed had been affected by Industry 4.0.

Table 5.0.1: Cross case Analysis

5.1 Skill Variety and Task Identity

All the interviews confirmed task complexity would be much lower as the increased use of Industry 4.0 technology results in information availability increases. Therefore, decisions will become easier, faster, and more reliable for shop floor employees. The interviews also indicated that process simplification due to the use of Industry 4.0 technologies greatly lowered the complexity of jobs and thereby stress for employees on the shop floor. Furthermore, it was

Case 1

Case 2

Case 3

Case 4

Industry Automotive Aerospace Manufacturing Automotive

Country Netherlands Netherlands Germany Germany

Type of Case Lean only Lean & Industry 4.0 Lean & Industry 4.0 Industry 4.0 Industry 4.0 department’s view of Industry 4.0 As a tool for Lean As an enabler for Lean

Next step after Lean

Job Rotation Yes No Yes Yes

Process autonomy Some, teams set standards

Low Low Low

Employee involvement in Industry 4.0 change process No No Yes Yes Increased Controls due to Industry 4.0 No Yes No No Problem Solving Structured as

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agreed that although the jobs would be changing and becoming more technical, they would not be more complex. This is in part due to the information simplification that can be achieved using Industry 4.0 technologies and its ability to show shop floor employees the needed and relevant information in a real time environment. Three of the four firms agreed that job rotation was a necessary aspect and would continue through the Industry 4.0 trend. As stated by Interviewee 1A “No, I think the tasks will not become more and more complex and they will still have to rotate. I think that’s a precondition. Also, from a health point of view.” Job rotation is important not only for ergonomic reasons but as pointed out by C1 there are other benefits to rotating jobs: “Good question … I mean the advantages of job rotations are for me … you have employees who know the requirements of the other process steps, so they can optimize their own process step towards it…” Case 2 held they were not able to have job rotation due to legal requirements for certifications and experience for employees. Therefore, they did not experience the same benefits of job rotation as the other cases. However, they still agreed that Industry 4.0 increased information simplification. Interviewee 2C summed this up by saying: “…in the beginning it was a lot of information. Now it’s reduced to the specific set that you need for the activities. So, it’s reduced. It’s not a matter of overload. It’s more focusing.” Literature for Industry 4.0 agrees with these findings that technologies should be used for process simplification and information availability (Kühl et al., 2018; Mrugalska & Wyrwicka, 2017; Sanders et al., 2016). As Industry 4.0 can use real time data to not only automate lower level decisions, but also to simplify the information for workers helping to unburden workers on the shop floor and letting them focus on other tasks (Sanders et al., 2016). The new technologies also allow shop floor worker to access information at any time from wherever they are, and to receive relevant data in real time (Zolotová et al., 2018). Leading to the idea that job rotation will be made easier by the increased availability and simultaneously simplified information.

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employees in learning more tasks and the more monotonous tasks are automized or eliminated and employees can focus on higher level tasks.

However, the literature and interviewee comments diverge at the expectation for jobs themselves to become less complex. Experts expect easy tasks to become automated and remaining tasks to become more complex (Becker & Stern, 2016). Sanders et al. (2016) stated the increased automation of routine tasks should allow employees to focus on more diversified work and spend time on higher tasks. This is further supported by Pereira & Romero (2017), who indicated that employees would need to be ready to handle new tasks as the routine work is automated and employees must increasing interact with machines. The literature points toward these lower level tasks being automated, but in the interviewed firms, this was not found to be the case yet. As interviewee 3B explained “Nowadays if you talk about automation, people are likely to react in a way that, “aww cool, I don’t have to do that stuff anymore.” Sometimes they don’t even feel threatened yet. At the same time, they will have to realize or you as a company are responsible to tell them, then learn new stuff. Don’t do nothing.” (3B). These findings appear to be at odds with the current literature on Industry 4.0, indicting a gap between literature and the findings. There are several possible explanations for this. For example, as pointed out by interviewee 3B, these firms may have not started changing job structures to align with the newly automated systems or other firms have not automated many tasks yet. However, both the literature and that information availability is increased with Industry 4.0 technologies and interviewees saw the lower complexity due to the technologies making jobs rotation easier for employees. Leading to:

Proposition 1: Industry 4.0 supports job rotation by making jobs less complex and information more readily available.

5.2 Autonomy

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problem-solving process and some cases furthered this by involving employees in the Industry 4.0 change process. Therefore, this research suggests redefining the definition of employee autonomy to include the types of autonomy that appear to be more central in a Lean and Industry 4.0 environment, namely employee empowerment, problem solving, and involvement in the Industry 4.0 change process. Firstly, the section on employee empowerment highlights the effects on employees’ basic decision making. Next, problem solving aspects and effects will be discussed. Finally, the employee involvement in the Industry 4.0 change process will be considered.

5.2.1 Employee Empowerment

As Powell (1995) defined it, empowerment is enabling employee decision making and increasing their involvement in the processes. The firms all agreed on the importance of allowing employees to make decisions. The interviewed consultant shared the view that Industry 4.0 technologies and the Lean principle of decentalized decision making work together saying“Decentralized decisions are more likely to be better, because the people have more information or can evaluate the situation better than a centralized person who just has portions of the information. So that’s why I would say yes, the Lean principles and the trend of Industry 4.0 are matching...” (C1). However, there was disharmony in the methods and scope employees were given to make such choices. Case 2 and Case 3 employees were expected to make same amounts of decisions but faster and better. Interviewee 3A stated: “I think they won’t do more or less decisions. They will be able to do decisions faster and this is a big point, and important in the innovation topic.”(3A) However, Case 4 stated decision making on the shop floor was limited to knowing what process to perform. While this is a much more limited scope of decisions, the interviewee still agreed with the others that Industry 4.0 enables faster decisions saying: “…there is a very strict process to follow. I don’t see that he has to [make] that many decisions. What he has to do is he has to perform the right task and also perform the task right.… You have to look … at the screen and then immediately know what to do. So that is kind of a decision, which part to pick then and which task to perform. This is definitely supported by digital information.” (4A).

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knowledge of external environment (Davies, Coole, & Smith, 2017). The idea that these technologies can provide information more quickly and accessibly leads to:

Proposition 2: Industry 4.0 technologies support faster and more informed decisions on the shop floor.

The cases showed different amounts of employee control implemented on the shop floor. Two cases stood at opposite ends of the spectrum in their stance on using employee data. Case 2 shows that 4.0 tech will be used to implement tighter controls on the employee: “It’s helping me add more hard-controls that ensuring people with the right certifications are doing the job. Currently, when I ship my products, I need to have all the papers… and I am to prove that it is according to the certificates they have and that is a lot of administration.” (2C). Industry 4.0 enables Case 2 to more easily enforce the legal requirements and to manage the information they must provide when selling their products. While Case 3 said that for their firm, they have no interest in the individual worker exemplified by a statement from interviewee 3B: “…Generally the goal is not to collect person driven data on their performance. It’s not at all interesting.…If you talk about entire sectors, entire industries, then yes we speak about performance data, performance KPIs that are being tracked, that are being analyzed, how they can be improved, what adequate measures can be so on a more high level, not on a few people in a room.” The focus of the two cases is different and part of this can be explained through the legal requirements and restrictions of the firms. Case 2 operates in a highly regulated industry requiring them to show the work was done by certified professionals in an approved manner. For Case 3, they are not allowed to use data that was collected on an individual and identifiable basis. However, the firms are still able to collect these data and the introductions of Industry 4.0 has not changed this. Interviewee 3A confirmed this saying, “No. In my eyes, no. It was transparent before. We had the KPIs before. Now we have them still but in a digital way.” Both these cases follow the findings of Lozeau et al. (2002), that the alteration of the new practices to fit the old will essentially produce the same system. Thereby supporting: Proposition 3: Industry 4.0 further enables current practices related to employee controls.

5.2.2 Problem Solving

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problems and the resources with which they were provided varied greatly by firm. In the first three cases, employees were encouraged to solve problems on their own before seeking guidance or help. Case 1 emphasized the team aspects of problem solving before calling over an immediate supervisor for help. The stations were organized by small teams or even pairs in this case. Interviewee 1A summarized the process of an employee being unable so solve an issue as: “He gets the support of the team leader, … Then the team leader should solve the problem. If he can’t solve the problem by himself or it will take too much time, they have to decide what they do.” For Case 2, employees at the station were urged to solve their own issues. The encouraged behavior was summed up as “the teams are really self-empowered to look at their troubles first and try to solve it, they’re not hesitant’ … they’re full of throttle to get that fixed, but they really want to fix it themselves first.” (2A). The initial problem solving was the same as for Case 1, however, the escalation process differed if there are any issues shop floor employees at their stations can’t solve. The employee was able to choose which individual they felt would be best able to solve it rather than to their immediate supervisor. “And the higher person is basically a team because on every work cell we have what we call a pitch team, a team supervisor, that’s basically their boss, but also a scheduler, a production engineer, and a quality control officer so all the disciplines are in that team. They have only but one function, to support the team in production to get the output.” (2A). In Case 3, the individual was also expected to solve issues by working on their own. Then if they could not solve the issues, they would go to a leader and work it out through coaching. Interviewee 3A summed it as: “The supervisor isn’t allowed to give a solution. He can lead his employee to make his own solution and to fail then to try it again and again so like his own improvement.” (3A). Case 4 appears to be the only case in which employee’s problem solving is affected by technology and strongly so. In Case 4, the machine automatically detected issues and called an expert to handle them. The worker only ran the machine, they did not do any troubleshooting with it, and machines were able to tell what maintenance needed to be done as shown by interviewee 4A “the system tells you the next time your task, so what it’s the best way how to get the machine running as fast as possible with the most probable solution.” (4A). Demonstrating the possible limited autonomy in problem solving due to data and Industry 4.0.

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high levels of human support to operate effectively (Womack, Jones, & Roos, 1990). Maintaining a smooth flow to production can only be achieved if operators assume considerable responsibility for anticipating and preventing problems that may disrupt output (Womack et al., 1990). Studies on Industry 4.0 agree employees are still needed for similar reasons. Employees are expected to be enabled problem solvers hanlding any abonormalities and improving the systems in an increasinly complex environment (Mrugalska & Wyrwicka, 2017; Rüttimann & Stöckli, 2016; Sanders et al., 2016). While Case 4 presents a different opinion, the rest of the interviews confirm the available literature about employees’ problem solving. Substantiating that while having very little decisions making autonomy, employees were still expected to take part in problem solving (Delbridge et al., 2000) even in an Industry 4.0 environment. This is further underlined by Interviewee C1 who stressed: “those people who can solve problems and overlook the complexity are required, and not those who perform the simple tasks, because this will be replaced with AI and machines. So, there will be a shift more towards IT and away from the simple workers.” Thus:

Proposition 4: Industry 4.0 does not affect shop floor employee problem solving autonomy yet.

5.2.3 Involvement in the Industry 4.0 Change Process

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need to do the best job they can do.” (3B). Both cases emphasized the need to go to the shop floor and get inspiration and direction for innovations from the shop floor employees.

Case 1 and Case 2 developed many of their technologies without the direct involvement of employees on the shop floor. Case 2 described their initial approach to developing their ideas as, “we thought we should really go to the operators and listen to them. And when you make a change like this, it doesn’t make sense to go to them. Because they just want to hear from you how they will work in the future.” (2A). In Case 2, the Industry 4.0 department chose to directly go to the employees and ask what the employees wanted to see on the shop floor. The approached was changed after the Industry 4.0 department found it did not give the desired results. Nevertheless, employees were still heavily involved in continuous improvement processes and employees were encouraged to provide ideas for improvements. Management emphasized the need for communication with the employees about Industry 4.0 changes; however, the employees were not as engaged in the development process. In Case, the department responsible for Industry 4.0 development was in a separate factory. The interviewee expressed more hesitation from the firm to readily implement new technologies on the shop floor as they wanted to be sure employees were safe first and foremost. These developments took place in a separate facility and, if applicable, were eventually shared with this factory. The interviewee said some employees were not even aware of these types of changes coming yet. Both Case 1 and Case 2 expressed that communication with the shop floor was necessary for the development of these tools; however, the employees were not directly involved in the development process.

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(4A). Industry 4.0, for Case 4, was thought to be needed to reach the next level of organizational efficiency. In Case 3, the Industry 4.0 department considered only Lean thinking limited whereas Industry 4.0 was thought to change the thought process by encouraging the rethinking of entire processes and systems. Although the Industry 4.0 departments in Case 3 and Case 4 saw themselves as more of an entity separate from Lean, they still operated under the same Lean thinking principles. Literature says employee involvement not only leads to higher commitment, but also that the shop floor can drive these changes (Angelis et al., 2011; Davies et al., 2017). These findings confirm this thinking is still present during Industry 4.0 implementation. This thinking is further underlined by interviewee 3B who describes the process as a “focus more on enabling and providing their people with the resources they need to do the best job they can. That also involves asking them what kind of tool or solution or what is it that you need to do the best job you can do.” (3B), and continued onto say that not only did they involve the employees in the new innovations, they directly went to them to create more acceptance and letting the employees drive the tool creation. As Lean requires the engagement of the shop floor employees to reap the benefits, Industry 4.0 departments that that saw themselves as the next step for Lean also sought shop floor engagement whereas those who saw themselves as a tool operated more closely with the Lean department and worked under Lean principles. Case 3 and Case 4 confirm the findings of Zolotová et al. (2018) that employees in Industry 4.0 are needed especially for creative tasks, such as implementing and developing the Industry 4.0 tools. Buer et al. (2018) found research streams representing both Industry 4.0 supporting Lean and Lean supporting Industry 4.0, and this study further verifies both are present in managerial practice. Leading to the ideas that:

Proposition 5: When Industry 4.0 is seen as the next evolution of Lean, employees are more likely to be involved in the development process

Proposition 6: If Industry 4.0 is seen as a tool for Lean, employees are less likely to be involved in the development process.

5.3 Feedback

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on their own creating for another form of autonomy. However, this was not present in Case 4. There, the strict employee controls seemed to hold for the process and employees’ feedback mainly came from the process, as demonstrated by the autonomous maintenance machines that requested repair and indicated possible issues all on its own. Cases 1, 2, and 3 emphasized the employees were encouraged to solve issues on their own and were given the tools and support to solve issues on their own if possible. However, it appears Industry 4.0 has not really changed this process yet. In Case 3, some new technologies were actually used interchangeably with the old as interviewee 3D stated, “This is communicated in the shop-floor meeting which is daily or weekly and it is also visualized on a board, on a physical board or a digital board. Otherwise, there can be instruction on the base of the tasks, and this is also communicated bottom-up and top-down.” (3D). Similarly, in Case 2, the increased use of technology had not really affected how feedback was given. In person coaching by the leadership was still emphasized the use of Interviewee 2A said “You really want to have coaching leaders. And also, something regarding behaviors and using a system and verification that you check but you also make use of facts provided by the system, where we see the link between Lean and 4.0.” Showing that while some technology has been introduced to the process and helped to speed the dissemination of the shop floor statistics, overall the processes and techniques used for person-to-person feedback have not changed yet.

This seems to be at odds with the literature, as studies predict that Industry 4.0 will allow for real time data feedback from both the process and their supervisor (Kühl et al., 2018; Sanders et al., 2016). However, all firms involved indicated a lack of internal social network or used other informal means of communication, which might be why the other forms of feedback were not said to have changed. The changes anticipated by the literature may not be fully present yet. For example, in the article by Sanders et al. (2016), the employees were all expected to have handheld smart devices to facilitate the use of the new systems and technologies. However, many of the interviewees had expressed a lack of technology on the shop floor. One interviewee 3B said: “Not everyone has a company cell phone. They don’t even have a PC user account because they don’t have to work on the computer.” Showing that the literature predictions may still be ahead of the reality of current shop floor environments. Leading to the conclusion that:

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The analysis and discussion are summarized in the following table organized by the Job Characteristics Model and definitions used in this study. Skill Variety and

task identity

Autonomy

Feedback Employee Empowerment Problem Solving Involvement in Industry 4.0

Cases Job rotation is important and enable by Industry 4.0 due to information

availability and simplification

Employees expected to make more informed decisions better and faster through due to information availability and

Most cases encouraged employees to solve issues independently and provided varying levels of resources and options if it could not be solved. One case handled all issues autonomously

In firms where Industry 4.0 saw themselves as the next step,

employees were directly included in development.

In firms where Industry 4.0 saw themselves as a tool for lean, the changes were communicated, but employees were not directly involved.

For most employees were encouraged to solve issues independently and given resources to do so, then seek support if they could not solve them.

Literature Higher as simple tasks will become automated,

Limited decisions in Lean but expected to be greater and faster as jobs become higher level and requirements of jobs change. High control pressure from Lean.

Employees must still be involved until machines become self-learning.

Employees should still be engaged in development of new ideas and especially utilizing creativity.

Faster as speed of communication in general improves Resulting proposition Proposition 1: Industry 4.0 supports job rotation by making jobs less complex and information more readily available.

Proposition 2: Industry 4.0 technologies support faster and more informed decisions on the shop floor.

Proposition 3: Industry 4.0 exaggerates current practices related to employee controls.

Proposition 4: Industry 4.0 does not affect shop floor employee problem solving autonomy yet.

Proposition 5: When Industry 4.0 is seen as the next evolution of Lean, employees are more likely to be involved in the development process Proposition 6: If Industry 4.0 is seen as a tool for Lean, employees are less likely to be involved in the development process.

Proposition 7: Speed of process feedback has increased with the use of Industry 4.0 technology, while other forms of feedback seem to be unaffected yet.

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6 Conclusion

Lean is well established while Industry 4.0 is still in early stages, both in academia and in practice. This study has attempted to answer the research question: how Industry 4.0 affects shop floor employees’ autonomy in a Lean environment through interviews with managers and observations at facilities. As of the time of this study, managers indicated the use of technology to enable decision making and more quickly communicating general information to the shop floor. However, the other dimensions of autonomy changed depending on how Industry 4.0 is viewed and possibly industry requirements. However, the answer may change as more technologies are implemented.

This study aims to add to the small but growing body of literature on the intersection between Industry 4.0 and Lean. It viewed this through the lens of the job characteristics model showing how these changes affect the jobs of shop floor employees which has, to the best of this author’s knowledge, not yet been studied. It also offers a novel way to split autonomy into different dimensions. This study also helps managers to build a basic understanding of Industry 4.0 and how it interacts with already established “soft” Lean practices specifically the autonomy of the shop floor employees. Managers can use these results to anticipate how the changes in technology and different approaches affect the objective job characteristics and therefore their employees’ motivation. Furthermore, it presents different ways employees can be given autonomy in both a Lean and a Lean/Industry 4.0 environment. It confirms that many of the advantages presented by the “soft” Lean practices can be preserved in the Industry 4.0 environment.

There are several limitations to this study. Firstly, no firms in this study have high levels of Industry 4.0 implementation. Industry 4.0 is an evolution rather than a revolution so these results may change as more technologies are developed and implemented. All cases were from Western Europe limiting the applicability of the findings. The study focused on changes in employee autonomy but was conducted from the manager’s perspective which may have led to some bias. It was an exploratory study, so all findings are hypothetical and need empirical testing. Many papers dealing with Industry 4.0 highlight the possibilities for the future rather than how the implementation phase of implementing Industry 4.0; therefore there is a large gap for future research to fill. There are also several other questions that have been uncovered during this study such as:

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• How the skillset of employees on the shop floor is changing?

• How does culture, both national and firm level, affect the adoption and implementation of Industry 4.0 technologies?

• How do employees engage with information provided by machines?

• How do firms ready their workforce and processes to implement Industry 4.0 changes? • How has the structure of shop floor work changed with the implementation of more

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Appendices

Appendix 1: Interview Protocol

This interview contributes to answering the research question: How has the autonomy and empowerment of shop floor employees in a Lean firm been affected by the implementation of Industry 4.0?

General

• Could you provide a brief summary of your job and related responsibilities? • What is your department responsible for within the company?

• What initiatives aimed at shop floor employees has your company taken to become Lean? • How have you implemented Industry 4.0? What do you think the most important

consequences of Industry 4.0 are? Employee Autonomy

• What initiatives aimed at employees has your company taken to give them more autonomy before the implementation of Industry 4.0? Do you use things such as (those below); if so how?

o Group problem solving o teamwork

o decentralized decision making o employees’ responsibility

• Before the use of Industry 4.0 technologies, how could shop floor employees make decisions in their daily work?

o Has Industry 4.0 affected their ability to make decisions? If so, how? • How did you encourage responsibility before the implementation of Industry 4.0?

o Were employees involved in things like goal setting or setting of standard processes before Industry 4.0? How?

▪ Has Industry 4.0 affected the employee involvement in these tasks? If so, how?

o Have Industry 4.0 technologies affected employees taking responsibility? If so, how? Employee Feedback

• How did employees receive feedback before the implementation of Industry 4.0 technologies? o From who (other workers, management)? How often?

o What type of feedback was given?

• Has Industry 4.0 affected how the employees receive feedback? If so:

o How has the increased use of technology changed the way and frequency feedback is given?

o How has the increased use of technology changed the type of feedback given? Skill Variety/Task Identity (Meaningfulness of work)

• Are employees cross trained? How? Do they rotate jobs?

o Has this changed due to the implementation of Industry 4.0 technologies? If so, how? • How are tasks for the shop-floor employees are aligned?

o Has this changed due to the increased use of Industry 4.0 technologies? If so, how? • Are employees able to see how their work affects the final product?

o If so, how has Industry 4.0 impacted this?

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o Has the shop floor employees’ job complexity changed with the implementation of autonomous technology?

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Appendix 2: Coding Tree

Example Quote Code Code Groups

Where you need employee involvement is while

developing the system. Not to fail develop but it kind of looking at what individual workers need and develop software along the needs. That it is what I think is the change that we have seen in the last years. Because now it is much easier to change software quickly and to learn how to use the functions. That is where you need the involvement of the employees, you need their feedback you need their ideas (4A)

Employees giving feedback

4.0 employee involvement They should, in the future, focus more on enabling and

providing their people with the resources they need to do the best job they can. That also involves asking them what kind of tool or solution or what is it that you need to do the best job you can do. (3B)

Innovation involvement

I think many of the ideas come from the shop-floor. I mean the smart watch ideas and so on, all these are ideas coming from the shop-floor… (4A)

Shop floor generated ideas I think they have to be more cross-trained. (3D) Job rotation

Job Rotation You have to do that! Because otherwise the job would be

too monotonous. You would only stay with the same job it will become frustrating. I know that there are different, I mean if you really want to perform your task perfectly, they should stay with the same process over and over again. But what you typically do out of mainly ergonomic reasons, but also in terms of enrich the work of workers, we rotate from position to position. (4A)

"It’s providing you new tools, new solutions, that will solve problems that you are facing, and it will absolutely help you, but applied in a meaningful way. Don’t make an objective of now everything has to be digitalized or now everything has to be monitored. What’s the problem that I’m facing today, what kind of tools is Industry 4.0 offering me to solve that kind of problem. And then I think it makes sense and it will help you absolutely." (1A)

4.0 as a tool to help Lean

View of 4.0 We see it kind of enabler. Bring you to the next step, to

the next level. More tools, more data available. Real time information. (2A)

4.0 as enabler for Lean Industry 4.0 is the next level of efficiency, that how I

would call it. It is the next level of complexity

management. Actually, it is kind of a journey, it started with Lean management, continuous improvement and a certain point you can’t take a step ahead (4A)

Digitalization is nothing really but the Lean management of this century. Many parts of the methodology are actually the same. Many things are not so different. (3B)

Effects of Industry 4.0 Implementation on the Shop Floor Employees in a Lean Firm