December 17, 2006

Maximizing Manufacturing Efficiency in China: A Discussion on Lean Principles with Jim Womack*

25 minutes

Show notes: https://www.leanblog.org/13

Remastered June 2021

LeanBlog Podcast #13 brings us part 2 of our discussion with James P. Womack of the Lean Enterprise Institute, the author of many books including the classic (published 10 years ago) Lean Thinking and the more recent Lean Solutions. Part 1 can be found here.

In the second podcast, Jim discusses the state of manufacturing in China, including some factors to consider when competing with China, or setting up shop in China. Jim talks about the tradeoffs between manufacturing for export versus manufacturing in China for the local market.

Show Notes and Approximate Time, Episode #13

1:00 Are Chinese companies focusing on the short term, as they transition to market practices, or can they focus on the long term?

2:10 How Chinese companies are often getting rid of headcount as fast as they can, as opposed to being rewarded for finding something for people to do

3:20 “Had two years to become a modern mass producer”

4:00 Smart ones are building for the long term and for the Chinese domestic market

4:37 “If you're just coming in as an exporter, a lot of things could happen,” referring to instability or political risk over time with China

5:00 “Iron rice bowl” — the idea that your job came with housing, education etc., a social control mechanism, everything came with your job… “the last thing you want to do is get anybody upset at Widget Factory #9.”

6:00 The amount of dislocation in people's lives in China

7:00 What about “sweatshop” conditions alleged at the iPod factory?

7:30 Womack says the plants run by multinationals are, generally, run right (for safety, cleanliness, etc.)… “they don't know how to run a sweatshop”

8:30 “Corner cutting doesn't really save you any money… stupid meanness.” Those factories not directly run by multinationals might be tempted to cut corners because they just don't know any better

9:50 “… what kind of doorknobs are you?”

10:10 What if we had a campaign to enforce safe work practices? Cost might actually go down.

10:40 Lots of people just moving material or sorting product in the Chinese pencil factory, lots of waste, “what a sad thing”… some minimal quality processes could save a lot of cost

11:30 “Quality is free, safety ought to be free, if you know what you're doing…”

12:00 Many Chinese factory managers “just don't any better, it's better here than the old factory”

12:30 What about the environment (air, water) in China?

14:45 China is facing the same demographic problems as Japan, Europe, the U.S. with a large older retired population (with the one-child policy)

16:00 Has the “lean math” that Jim talks about changed? If you're going to set up in China just for exporting back to the West, you have to really stop and evaluate the risk factors (political, etc.)

18:30 “What's wrong with Mexico? It's a truck location, not a boat location.”

19:00 What about reports of cars being imported from China?

20:30 Chinese car companies are a long way off from being able to compete here, quality wise.

23:20 There are 12 Lean Institutes around the world, “we are equal opportunity educators.”

...more

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By Mark Graban

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