In 5 building blocks for developing good Chinese suppliers I mentioned that the last step (re-organizing production) was all about lean. But I noticed that a few readers are not familiar with the lean approach to manufacturing.

What is the lean approach?

It was derived from the Toyota Production System. For historical perspective, see this timeline on the Lean Institute’s website.

Why it is a great approach to improve a company’s competitiveness, cost- and quality-wise?

1. It focuses on eliminating waste in the whole supply chain (rather than optimizing one point, then another one in isolation, and so on).

2. Its goal is increasing effectiveness (making sure the right things are getting done) first, before working on efficiency. Processes that don’t add value from the customer’s perspective need to be eliminated whenever possible.

It can actually bring better results than full automation. As Bill Waddell writes:

Lean techniques are very much akin to automation. They are both methods to make a process faster, cheaper and less error prone. The big difference is that lean does it without all of the investment and supporting case technology requires. Back in the heady, early days of Six Sigma at Motorola the management was fond of pointing out that automating a process before it has been optimized will merely enable you to create defects faster and in greater quantities than you previously thought to be possible.

I wrote before about the incredible benefits of a lean transformation.

I tried to boil down lean to a few principles:

• Optimize the stream, from raw materials to final customer. Work hand in hand with suppliers and customers. Eliminate unnecessary steps.
• Align process steps so that products flow as fast as possible to the customer. People intuitively think that making 1 piece at a time is not as efficient as making 1,000 pieces at a time, but this is wrong.
• Eliminate most of the inventory by setting up a pull system. Avoid forecasts and complex IT systems.
• Always work on continuous improvement. It is always possible to improve costs, quality, speed, and safety.

Experts estimate that less than 1% of manufacturers are “lean”. Those who make the effort are usually well compensated.

Is it applicable to China?

Absolutely. The proof is that tens of Chinese factories in the automotive industry are already pretty lean.

A few months ago I had the chance to visit Valeo’s Shenzhen factory. It is part of a French group that sells components to car manufacturers. They told me their defect rate was below 10 parts per million in certain production lines. At least 90% of the “Valeo Production System” was strongly inspired by Toyota.

And is it possible outside of the auto industry? Absolutely. I have visited several factories that were already far along the way to a truly lean operation.

Many people think it is incompatible with Chinese culture, but in truth it is only incompatible with certain bad habits that one often sees in Chinese factories. I wrote at length about this in Yes, lean production is possible in China.

If your suppliers are not interested in re-inventing the way they organize their production, or if they don’t want to make any efforts, any lean implementation project is dead in the water.

However, some manufacturers are truly looking for a way to get an edge over their competition. And, more often than not, they have never heard of lean. Spread the work! Hundreds of books were written on this topic and there is no excuse to stick to the old ways.

Actually, lean can also be used by manufacturers in the US and in Europe, who want to be competitive against Chinese imports. Michael Woody calls it “Fewer, Faster, Finer”, not lean (which rhymes with “mean”). That’s good marketing.

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RELATED: we offer a free template to see and record signs of the 8 wastes on this page.