As the pressure on costs is getting more intense, many importers wish their suppliers focused on optimizing their production. In most cases, there are no optimization efforts going on.
Why is that?
1. A focus on the golden eggs, not on the goose
Most factory owners don’t intend their kids to take the relay once they retire. They see their business as a risky endeavour that might fail, or might be shut down by the local government, in the not-so-distant future.
So they focus on the cash they can out of their business. This year, not in 10 years.
In other words, they focus on getting the golden eggs. Not on improving the ability of the goose to produce more golden eggs in the future.
2. Optimizations only come from the top. If at all.
Why from the top? Not because line workers have no idea… but because in China nobody listens to them.
Unfortunately, most factory managers sit down in their office, “move paper”, and enjoy air conditioning. They are good at keeping busy. The last thing they want is to spend more time on the shop floor, looking at equipment and workers.
Sometimes a big customer can push hard and get a manufacturer to implement changes in their operations. If you are a small customer in the eyes of your suppliers, you can most probably forget about this.
3. There are a lot of initiatives to cut costs…
… But that’s not necessarily what you want.
I am thinking of the deliberate cheapening of the product. What Paul Midler calls “quality fade”:
One of the most disturbing examples I have encountered while working in China involved the manufacture and importation of aluminum systems used to construct high-rise commercial buildings. These are the systems that support tons of concrete as it is being poured, and their general stability is critical. The American company that designed and patented the system engineered all key components. It knew exactly how much each part was supposed to weigh, and yet the level of engineering sophistication did not stop the supplier from making a unilateral decision to reduce the specifications. When the “production error” was caught, one aluminum part was found to be weighing less than 90% of its intended weight.
Buying cheaper materials or using less of them is a natural tendency for many Chinese manufacturers. And they are smart enough to know what not to tell their customers.
That’s not what I call “optimization”. That’s just an attempt to get more golden eggs, even though the goose might pass out.
4. Very few ideas, if any, are tested
I was discussing with a European who used to manage a factory here in China. He often suggested to try this or that, and the production people would always say “it won’t work”… even though they never tried it before!
For example, they tried using recycled PP plastic instead of new material, with success. They tested to which point it was still acceptable for customers, and then standardized the new method.
It is similar to a “quality fade” approach, but without trying to screw the customer. Why don’t the Chinese do more of this?
Where does it come from? A lack of scientific method, for sure. But there is something else. It seems to be an ingrained belief that the current way is the best way, and that there is nothing left to discover.
Or maybe is it just an aversion to running an experiment and taking the risk to fail? I am not sure.
I would be curious to read what our readers think about this… Please comment!
Some production people in China just care about money, not quality. They just do what their boss tell them to, they don’t want to try. Because if they try, it means more work for them. If they do it in the “normal” way, they get the same money and do the job. No complain from the boss. Even some Chinese bosses jest and say employees are more important than the boss now. It’s much harder to hire workers now in China. That’s really the truth.
And copies are easy to find in China, some buyers may prefer the product with cheaper price, so some of the factories raise up a price battle, they try every effort to cut down the price like using cheaper material. So quality will fade in that way.
Yes, I agree with what you write. So the key is to reward improvement suggestions/efforts?
It seems to me that the whole compensation structure needs to be revised, and that a hefty dose of training is necessary.
what you tell is right, China most employee can not make some constructive step for company, most are follower, don’t want do more, they take care money. That’s a problem for creative
It’s an aversion to failure.
To experiment, fail and then improve requires critical thought. It is a cultural defect of the Chinese people that they cannot distinguish between negative criticism and constructive criticism; all criticism causes loss of face and therefore must be avoided.
This means that Chinese workers have no upside and only downside when making critical comments in processes and how to improve them. There is no incentive, socially, and there certainly is no economic incentive.
I believe in the power of incentives, so I am sure you could use economic incentives to induce cultural changes in attitudes about criticism. But the will to create those incentives has to be there, and it is not.
We’re talking about a country where the entrepreneur-hero Jack Ma walks around offices with a baseball bat in his hand. That is Chinese management: big stick, no carrot.
It’s depressing.
Thanks for sharing your perspective.
I didn’t know about Jack Ma and his baseball bat. A little extreme, but a good image of how many Chinese bosses see their role!
Well, just stick and no carrol, in my oppion, making it worse. There is an old saying in Chinese, feeding with one candy and one shit one after another. It means follow the rules but don’t make it so following the rules. There is a news saying that a boss bow to the employees to make thanks that the employees coming back to the factory after the CNY. As a Chinese, rewarding for the improvement is pretty important, people don’t work more while there is no reward. Because most of the Chinese working for one salary but doing two or three person’s job. You want the employee to work more with no reward?? No way!!
Yeah, with the big stick you can rule the employees, but while they leave and go to another factory, they don’t respect the security issue but just “sell” everything to another factory for money.
I can say that management in China is not just rules, sometimes the bosses have to make reward for the employees like makeing a good dinner or pay extra money.
So while you want to rule the employees in China, it becomes a little bit complicated, depends on different people.
Yes, that makes a lot of sense. Thanks Denni.
All true, Renaud,
Another reason for lack of optimization is that many waste-reducing / value-adding initiatives are scrapped at the ideation stage because they won’t completely solve the issues at hand. The search for a “complete solution” preempts work on improvements.
The perfect becomes the enemy of the good.
Great explanation. That’s true, it is so much easier to wait for the “silver bullet”!
Point 2 is the key. It only comes from the top. If the owner does not have any personal interest in optimizing its plants, it will simply not happen.
Renaud, I have a more positive experience then you seem to have here. Probably because I deal with mostly industrial products where the gains are much bigger for suppliers that optimize manufacturing processes.
I have met many suppliers that improve from one visit to another one, often consciously or unconsciously guided by their customers. But what is clear is that, with a little experience, you have a 95% chance of knowing how a company will improve or not. It all comes from the attitude and leadership of the owner. When the company becomes a little larger, it will become the matter of the management team (owner, GM/Vice-GM. Operation Mgr)
Thanks for this note of optimism! Yes, I was a bit too pessimistic when I wrote this article.
And you are absolutely right, it is easy to see if they will open their ears and make efforts.. or not.