Lean manufacturing is one of the most popular improvement agents in the pursuit of perfection. However, in today’s complex and dynamic manufacturing environments, lean tools are facing an inevitable death. Industry 4.0 can be integrated with lean tools to avoid their end. Therefore, the primary purpose of this paper is to introduce an Industry 4.0-based lean framework called dynamic value stream mapping (DVSM) to digitalize lean manufacturing through the integration of lean tools and Industry 4.0 technologies. DVSM with its powerful features is proposed to be the smart IT platform that can sustain lean tools and keep them alive and effective. This paper specifically tackles the scheduling and dispatching in today’s lean manufacturing environments, where the aim of this research is developing a smart lean-based production scheduling and dispatching model to achieve the lean target through optimizing the flow along the VSM and minimizing the manufacturing lead time. The developed model, called the real-time scheduling and dispatching module (RT-SDM), runs on DVSM. The RT-SDM is represented through a mathematical model using mixed integer programming. Part of the testing and verification process, a simplified IT-based software, has been developed and applied on a smart factory lab.