Over the past 20 years, the tenets of Lean Manufacturing have gone from nice to have, to must-have, to an SOP. Nations across the western world have implemented Lean Manufacturing with great success, so much so that without it, being competitive has become virtually impossible. If you were around in the early days, before Lean became a household word, you'd remember how difficult it was to implement. Toyota had to practically crush the US auto industry before anyone took it seriously.
Here we are in 2015, the word Lean is now rarely used
because of its just business as usual. So what happens when you take a
Lean enterprise, place it in a developing, unregulated economy with the same
material resources as the western world, and labor costs that would make
Montgomery Burns smile? Serious competition.How companies in the EU have dealt with this rising tide of competition is simply to enhance systems and processes that are already in place. Many success stories have been highlighted through the Industrial Excellence Award (IEA). Since 1995 European manufactures and suppliers have competed for the IEA, which awards companies that have proven their competitiveness through new and innovative means. The award is the vehicle for benchmarks that benefit the entire industry; additionally, the IEA is also highly prestigious and tells partners, customers, and colleagues that they are serious about being competitive.
After looking at some of the recipients, I found three main areas of innovation that distinguish winners of the IEA; they are:
1. Maximize data flow across the entire supply chain
2. Create value elsewhere in the supply chain
3. Enhance manufacturing efficiency through communication and process flexibility
Maximize data flow across the entire supply chain
We have all heard it, partner with your customer, partner with your suppliers. For IEA winners, it means sharing data with customers and suppliers in real-time, as if they were an in-house entity. This allows for a seamless and fast reaction to any changes that may affect production or the product. The level of cooperation and data sharing required here is something that is difficult to impossible to achieve with off-shoring. Not many companies in the US or the EU would be comfortable sharing that level of data with a supplier in China, Brazil, or India. However, it is much easier to accept when you’re dealing with suppliers who have the same values and standards of quality and abide by the same laws of intellectual property. In the EU, this is now standard practice for engaged companies. The reward is a sense of ownership between stakeholders and the creation of something we don’t hear much anymore, trust, and loyalty.
Create value elsewhere in the supply chain
One can relate this aspect to any value stream except it goes beyond the shop walls. To succeed an organization must have the ability to look up and down the supply chain. The hard part is understanding the challenges that each member faces and the knowledge that your part of the chain is only a fraction of the total cost of the product. Again, this is the insight that most offshore providers simply will not have. However, if the entire chain has this understanding than the group can move as one.
Of the three areas, success in this requires an elevated level of innovation. The benefits are certainly tangible, the cost savings and decrease in the waste can make a big impact however; there are a number of intangibles that are harder to put into numbers. The most obvious is the benefits to partner relationships, especially with new customers. Getting insightful suggestions drives home a company’s commitment to the long term. It also places them in a position of being more than just a provider of products and services. For employees working on this type of initiative, it allows them to work in areas outside of their usual sphere of influence, giving them a broader understanding of related industries and processes. That is a win-win now and down the road.
Enhance manufacturing efficiency through communication and process flexibility
In today’s far-flung supply chains, changes to product specifications usually equate to schedule delays, missed deadlines, or excessive waste. The ability to be responsive starts with the ability to be flexible.
Eliminating these issues begins with open lines of communication between suppliers up and down the supply chain. Each stakeholder needs to be able to contact the person that makes the decision that will facilitate a change quickly. For example, recipients of raw materials should be able to easily change the requirements for a particular JIT delivery while manufacturing and assembly processes should be set up to easily accept requests for change.
Achieving this type of hyper-responsive environment requires a roadmap with clearly defined responsibilities and processes that are designed to allow for change while minimizing their impact. The commitment, that this entails, needs to reach into every part of the organization, from the front office to the loading dock. Every employee has to be a stakeholder. If all of the staff understands what their part is and why, you’ll build trust and dedication within your own walls, which will as a matter of course permeate to your suppliers.
The type of competitive success that the IEA focuses on can
only be won by a broad commitment that is shared by entire industries. This means that the entire supply chain must be doing
business in the same manner. Similar to selecting a supplier with an ISO cert, you would also have to choose partners with the ability, and the desire to hold up their end of the bargain.
In the US, as in Europe, this must begin with larger manufacturing
entities that have the resources and utilize larger supply chains. Just as in the early days of Lean, over time the benefits will slowly reach even the smallest shops. One could certainly draw similarities between today and 25 years ago. I remember holding Kaizen events
with people who didn't understand why we needed to turn everything upside down.
In fact, we were turning them right side up, right now we need to polish the
profile.
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