Application of Lean Thinking in Supply Chain Management by the Small and Medium Sized Manufacturers in China: A Status Survey

Application of Lean Thinking in Supply Chain Management by the Small and Medium Sized Manufacturers in China: A Status Survey

Kwok Hung Lau (School of Business Information Technology and Logistics, College of Business, Royal Melbourne Institute of Technology University, Melbourne, VIC, Australia) and Jue Wang (School of Management, College of Business, Royal Melbourne Institute of Technology University, Melbourne, VIC, Australia)
DOI: 10.4018/ijisscm.2013100101
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With increasing pressure for higher wages and growing competition from other developing countries such as Vietnam and Mexico, China can no longer rely heavily on cheap labor supply as a competitive advantage to secure her position as the world’s largest manufacturing base. Other competitive edges, such as lean manufacturing and lean supply chain management that help cut cost and reduce waste, have to be explored. Using a self-administered questionnaire survey, this study investigates the current status of lean thinking application in supply chain management by the small- and medium-sized manufacturers (SMMs) in China. It also explores if there are benefits in the application and the challenges faced by the SMMs in implementation. The findings suggest that application of lean thinking in China is not widespread. For those firms that have applied lean thinking, the major benefits obtained include reductions in cost, waste, inventory, labor, and cycle time. The major difficulties encountered lie in the accurate communication of the requirements between workers and managers and the collaboration with supply chain members. Proper application of lean thinking in supply chain management can bring substantial benefits to the manufacturing industry. Managers can use this research to benchmark their lean thinking application and revise their supply chain strategy accordingly.
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Efficiency and responsiveness can be regarded as the primary goals in supply chain management (SCM) (Chopra & Meindl, 2010). To achieve these two objectives, waste elimination and flexibility enhancement are the keys. They help reduce operating cost and enforce continuous improvement thereby increase overall efficiency and responsiveness. With growing recognition of the significance of SCM (Houlinhan, 1987), the notion of “lean supply chain” – a derivative of “lean thinking” (Womack & Jones 2003) – has been proposed. As a philosophy developed from “lean production”, lean thinking was put forward by Womack, Jones, and Roos (1990). Lean production, or lean manufacturing, itself is originated from “just-in-time manufacturing” or “Toyota Production System” introduced by the Japanese automobile manufacturing company Toyota (Browning & Heath, 2009; Cox & Chicksand, 2005). Nowadays, lean production usually refers to a collection of principles governing waste elimination and value creation (see for example Womack & Jones, 2003) that have been applied in different industries, organizations, and countries (Calloway, 2004; Holweg, 2007).

The success of the Japanese automobile manufacturing companies such as Toyota and Honda in the last few decades has provided strong evidence of the benefits derived from lean production (Calloway, 2004). Similar successful examples of lean thinking application can also be found in other businesses or industries such as passenger airplane manufacturing (Horng, 2007). In SCM, some of the key elements of success include “flow”, “integration”, “sustainability”, “cost”, and “service” (Handfield & Nichols, 1999; Simchi-Levi, Kaminsky, & Simchi-Levi, 2008). In many ways, lean thinking can be regarded as an enabler of recognition of these essentials. Application of lean thinking in SCM has been witnessed all over the world. In the UK, many food and farming supply chains have applied lean thinking (Cox & Chicksand, 2005). In the US, companies such as Buck Knives, New Balance Athletic Shoe, and Ariens Co. have enjoyed improvement brought by lean management (Kator, 2007). As consumer markets become increasingly competitive, unpredictable, and volatile in recent years, cost minimization, flexibility, and resource optimization are the strong incentives for supply chain members to adopt a lean approach (Weber, 2009).

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