low-cost labour advantage that originally brought western manufacturers
to China is dwindling fast. So, the race is on for ways to create a
more sustainable advantage for “Made in China” operations through
reduced operating costs and boosting quality and delivery times.

To achieve this goal, the more forward-looking China-based
manufacturers are starting to look at techniques such as lean
manufacturing, argues this article in McKinsey Quarterly.

To bring readers up to speed, lean manufacturing is a technique
pioneered by Japanese car manufacturers and increasingly used in the
west, but less common in low-cost countries. It advocates the
elimination of redundant or manual processes, eliminating errors
wherever possible, improving information flow, and removing steps that
don't add value.

Could your China-based operations benefit from the lean
manufacturing philosophy? One western company that claims that it has
achieved a significant benefit is Cleveland-based Preformed Line
Products (PLP), interviewed in the McKinsey story.

Its factories outside of China were already using lean techniques to
reduce costs. But they were stable businesses that wanted to do better:
reduce work in progress, reduce inventories, reduce lead times and
reduce costs. In China, the situation was quite different.

Not only is lean manufacturing a relatively unknown idea in China,
but PLP's Chinese factory was in a much more dynamic situation. Bill
Haag, PLP's vice president for international operations, told McKinsey:

But in China we were fighting fires on all fronts. The business was
growing, and every system in the business was under stress. The
computer system, the maintenance and quality system — everything was

Nevertheless, the company undertook a major overhaul of the Chinese
factory, which included reducing the number of production lines from
four to two, changing the way it identifies and store inventories on
shelves and changing the flow of inventory to the line.

One of the biggest barriers to change was cultural. With the lean
philosophy, the supervisor's role changes from being a monitor to being
an active problem solver. This is very difficult in China, PLP found,
as people don't like to be challenged. In the west, people speak up and
suggest ways to solve problems. In China, workers don't typically give
ideas to managers.

Nevertheless, PLP says that its Chinese workers are now doing more team problem-solving than they were a year ago.

Haag says the benefits are already visible. production is now very
predictable, lead times have improved, and even such things as the
times for inspecting and stocking incoming materials have improved
dramatically, from two weeks to 24 hours.

However, the firm recognises that it still has have a long way to go
with lean and getting the supervisors to change their ingrained
attitudes is seen as a key to achieving lasting improvements.

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