U.S. Companies Competing with China Using Lean
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.