Lean in automotive industry
Last update: March 26th, 2008
How and how fast are Lean Manufacturing principles deployed in Low Cost Countries?
Major players like OEMs and their top ranking equipment makers (tiers one) going East have been triggered by strategic considerations - conquest of market shares in emerging markets - and economic considerations, mainly manpower cost reduction.
For infrastructures, most of Eastern European plants have been built from scrap in green fields, without the need of transformation for existing facilities. These basic conditions are particularly favorable to think infrastructures in Lean spirit, especially for physical flows, like energies and fluids, circulation, parts and material supplies, finished goods shipping or waste disposal, etc. Otherwise than in "Old Europe" where facilities are rather old ones, changes in layout often face constraints and space limits, transformation costs or other technical constraints.
Starting in a green field is also of advantage to install a culture and methode with personnel discovering and accepting them as given rules of the (new) company they join.
Hence, contrary to Old Europe, there is no need to fight lengthy resistance to change, let people leave their (bad) old habits, neither to fight unions. Lean deployment goes the rhythm of the plain learning curve, speeding up the gear shifting from effectiveness to efficiency!
Engineers, technicians and line leaders are well educated and already aware of Lean principles.
Regarding technical skills, they may be acquired from former jobs or trained with Western European trainers sent to tutor their Eastern colleagues.
Myths and realities
Believing Lean deployment in low cost countries will take as long as in Western Europe or United States is a dangerous illusion. Best practices and Lean principles are largely known. For new comers "new entrants", no need to go the lengthy discovery and initiation as the Lean Pioneers went. An advantage the new challengers are aware of and eager to exploit.
The same kind of belief forecasted Korea and Taiwan and more recently China, a long learning time until mastering quality, granting Western manufacturers time ahead of competition and time to leap further ahead through innovation.
What about costs ? If labor costs in Eastern Europe remain globally lower then in the West, it is less and less true for the top positions. For those, excellent level of education and shortage of personnel tend to catch up with West European standards. Furthermore, considering total costs (including logistics, transportation, etc.) lowers somewhat the interest for LCCs.
While exploiting cost differences is timely limited, the competition with these emerging new entrants will be long lasting.
(*) Agamus Consult has its own subsidiary in Slovakia (Bratislava) in order to help its major French and German clients to "go East" with native speakers of local languages and guarantee of cultural alignment.Read more lessons learnt about Lean in European automotive industry
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