web analytics

U.S. Companies Competing with China Using Lean

by Mark Graban on December 19, 2009 · 4 comments

U.S. industry going lean to compete with China | Reuters

Yesterday, I recorded a podcast with Jim D’Addario, CEO of the namesake multi-generational family company that was featured recently on CNN. I’ll release that podcast in a few weeks. We had a great conversation that went into more detail about how his company uses Lean as a strategy for competing against cheap labor (and slow supply chains) that are part of the Chinese outsourcing model.

Lean thinkers know that cheap labor isn’t everything, especially when you have to be responsive to customer needs. The linked article from Reuters highlights other companies using Lean as a competitive strategy.

Hat tip to @AnkitTheLeanWay for pointing out the article via Twitter.

U.S. industry is discovering how to improve output and compete with cheap overseas labor by turning to a low-cost school of manufacturing known simply as lean.

Lean proponents say the system of eliminating waste and streamlining production allows companies to reduce costs and respond more quickly to customer orders without laying off employees.

In the face of economic downturn and competition from China and others, an estimated 60 percent of U.S. manufacturers have gone lean, according to the Delaware Valley Industrial Resource Center (DVIRC), a trade organization that recently held a lean seminar in this Philadelphia suburb.

That 60% number, of course, begs the question of what does “gone lean” mean? They’ve experimented or dabbled with lean methods? That 60% are working toward a fully integrated lean culture and lean management system?

The article features companies such as Probes Unlimited (in PA):

“Bags with parts were taped to the sides of their boxes so they were easier to find,” owner Ernie Delaney said. “There’s a lot you can do without spending a lot of money.”

Lots of little, simple improvements can go a long way. But, lean’s not easy (which makes me question the 60% number cited earlier).

The VP of Operations from Thomas Medical Products Inc, a unit of General Electric said:

“We had people crying in the bathrooms,” said Rapp, who said his company improved sales 25 percent and cut costs by $1.2 million since March 2006 after employees came to accept lean through regular staff meetings and incentives for achieving production goals like dedicated parking spots.

I’m not sure I like the idea of reward and incentives for hitting production numbers – there are risks of focusing on quantity over quality, which would go against lean principles, of course. I’m sure Dr. Deming wouldn’t like the idea of parking spots as prizes for hitting management goals. Who says the goals were set in a realistic way? Anyway, it’s hard to know if they’re doing lean right or if they’re creating dysfunction with the targets and goals.

But, as the article concludes, lean is certainly the way to go:

Lean production is the only way U.S. manufacturers can compete with low-cost producers in China, India and elsewhere in the developing world, said Cliff Waldman, an economist with Manufacturing Alliance/MAPI, a research organization in Virginia.

“It has become a basic paradigm,” he said. “There is really no other choice at this point.”

As Dr. Deming said:

It is not necessary to change. Survival is not mandatory.


blog photo U.S. Companies Competing with China Using Lean leanAbout LeanBlog.org: Mark Graban is a consultant, author, and speaker in the “lean healthcare” methodology. Mark is author of the Shingo Award-winning books Lean Hospitals and Healthcare Kaizen, as well as the new Executive Guide to Healthcare Kaizen. Mark is also the VP of Innovation and Improvement Services for KaiNexus.


pixel U.S. Companies Competing with China Using Lean lean
pinit fg en rect gray 28 U.S. Companies Competing with China Using Lean lean
Please consider leaving a comment or sharing this post via social media.

{ 1 trackback }

Approfondimenti su outsourcing | Il Blog di Dragan Bosnjak
January 4, 2010 at 4:38 am

{ 3 comments… read them below or add one }

1 Ankit Patel
Twitter:
December 19, 2009 at 6:26 pm

Great post Mark! The 60% number worries me a little because it seems like a lot of the companies that practice lean are just really using the tools associated with lean without the culture changes. Hopefully these changes won’t be short lived.

Ankit

Reply

2 Dean Bliss December 20, 2009 at 12:10 pm

Amen, brother. Lean, when done well, works everywhere, and it would be difficult to dispute the results we have seen in nearly every business sector. Now, if we can get the healthcare industry moving a little faster toward the recognition that Lean and other improvement methods not only work, but are necessary to affordable and accessable care for all, it will benefit each and every one of us.

Reply

3 Robert December 20, 2009 at 8:27 pm

And a counterpoint view. A company that is going to China because it thinks it’s lean. http://www.edn.com/article/CA6702291.html

Reply

Leave a Comment

You can use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

CommentLuv badge

Previous post:

Next post: