How important is lean manufacturing to my company? This is a question many executives across various industries and markets are finding themselves asking these days.
With respect to OEMs that outsource their product manufacturing and or design, executives are seeing increasingly competitive companies vying to expand in or, take away, their share of the market.
Meanwhile, contract manufacturing and original design manufacturing (ODM) executives are looking for ways to differentiate their service offerings when competing to win outsourcing programs from OEM executives focused on ways to reduce waste; lower supply chain costs, and increase shareholder value while developing an edge over the competition.
One segment of findings from the VentureOutsource.com electronics outsourcing industry survey not previously released in our 24-page survey report (
available here) confirms OEMs and electronics contract manufacturers at least invest some thought in lean manufacturing.
Some companies go a step further and invest the money and the time in implementing lean principles and developing lean cultures in their organizations -- thereby also helping such organizations improve their chances of faring better with regards to managing their business.
Roughly 90 percent of OEMs that are currently outsourcing rank the importance of their electronics contract manufacturer or ODM having some degree of lean manufacturing capabilities as part of its service offering between ‘somewhat' and ‘very' important (see chart).
Meanwhile, most OEM survey respondents who indicated they are not outsourcing / yet rated the importance of lean manufacturing capabilities as part of a potential outsourcing partner's service offering as ‘important' when selecting an electronics contract manufacturing or ODM partner.
One revealing aspect of these particular survey findings on lean manufacturing is the disparity between the value of lean manufacturing as it relates to the OEM executive and the importance of lean manufacturing as it relates to the outsourcing companies trying to win OEM business.
It appears many contract manufacturing executives have not yet caught on in sensing the importance of lean manufacturing as have their OEM executive counterparts.
While there are a few contract manufacturing companies that have solid lean manufacturing programs either already in place or, underway,
developing a true lean culture within large organizations can take years.
This can be because lean manufacturing is not easy to implement when done properly. If it were, more companies would be parading the positive outcome on their bottom-line, as say, Toyota, with its now infamous Toyota Production System (TPS).
As with Toyota, companies trying to
implement lean manufacturing across global operations can expect to be faced with more complex challenges which take time, money, and dedication to overcome. After all, Toyota did not come to dominate the worldwide automobile manufacturing market overnight or, by mistake.
VentureOutsource.com
VentureOutsource.com content is copyright protected and may not be rewritten, republished, or copied without permission.
Greg
Posted at 10:56 pm on July 4, 2009
It is an interesting topic actually. We are a manufacturer and we have decided that part of our overall growth strategy is in fact to outsource some of our capacity. After all brick and mortar expansions bring with them inherent risks so we have decided to stay behind the curve in the brick and mortar/capacity. It gives us a tremendous ability to remain nimble while we continue to advance our own in house Lean Initiatives.
One of the great challenges however is to find those partners who also embrace Lean as a lifestyle commitment. We have a partner in Asia and have spent a great deal of time introducing Lean in order to improve overall product quality, and reduce our design to market change time.
I am amazed at the number of contract manufacturers I run into who have not adopted even the most rudimentary of Lean concepts. I am equally stunned at the large number of injection molding suppliers, die casting suppliers, sheet metal stamping companies, and other core suppliers to my employer who resist Lean as a lifestyle commitment. They typically have great difficulty in seeing the benefits. I have found an excellent sheet metal shop who routinely offers lead-time on initial Part PO’s in less than 2 weeks and we rapidly move into KanBan programs.
After a 2 year search of US companies, we have finally found a die caster who has a total process lead-time of less than 2 weeks as well. As a matter of fact, when we use our domestic suppliers we can make an engineering change on a part and be shipping it to our customers in less than 4 weeks without scrapping inventory.
I will admit that changeover time from China and Thailand is still about 12 weeks (4 of which is on the water) but I suspect our competitors who source in China would consider themselves luck to do it in 26 weeks. Too many companies miss this in their sourcing strategies and too many gravitate to pricing. We can continue to grow our business at 15-20% per year, even last year, and never make a commitment to parts longer than 3 weeks.
There is still far too much traditional GAAP methods in place and too many forget that the customer is king and those who can give the customer exactly what they want exactly when they want it will win the game. Oh and as many small business owners rapidly realize, profits and cash do not always go hand in hand. The more Lean you are, the closer to the cash you are as well….
So, why not find some great Lean Contract Manufacturers? It seems so natural to me…