The current economic crisis probably won’t be a good thing for anyone I know (I don’t hang out with a lot of Fortune 500 CEO’s) , and I can’t pretend that just being going LEAN or employing JIT will make it better for all the China manufacturers faced with uncertainty. Lot’s of great, well-managed companies may suffer, and lots of great managers and leaders in those companies may find their lives adversely affected.
I do believe, however, that those manufacturers who practice LEAN and it’s related strategies may be better able to whether the storm, and may even come out better. Here’s why LEAN and JIT may help manufacturers get through the crisis:
When labor costs rise those more efficient in labor utilization will gain more value as a competitive advantage. This is one of LEAN’s primary advantages.
When credit is scarce there may be opportunities for growth for those organizations who can utilize cash most efficiently. Once again, LEAN and JIT make better use of cash as inventories are reduced. Those that waste cash on creating WIP, creating rework, and creating stock will be at a fiscal disadvantage.
When order sizes decrease, as is likely in a recession, those manufacturers which are flexible and can efficiently produce smaller lots and ship them JIT may have opportunities for growth, taking business away from the larger, less flexible manufacturers who are unable to adapt to smaller order sizes with a greater product mix.
