7 Challenges for Lean transformation in China

One would think that in the current environment, where many Chinese manufacturers make less than 2 % of profit on their sales and many Chinese companies are losing money, their leadership would be ready to switch their strategies and management approach.

Having lived and worked in different cities at China, over the years I have often been asked by people about what are the challenges for lean transformation at China. When I think about my real life experience, there are top 7 challenges that I found it impacting the lean transformation at China and I would like to share with you.

7 Challenges for Lean transformation at China

1. Culture:A lean transformation takes years, and strong support and involvement form top leadership. The role of the local culture is minimal. Actually, cultural norms stand in the way of addressing wasteful practices.

1. Organization Structure:Chinese live by hierarchy. When western groups (cowboy) meet Chinese groups (dragon), only the Chinese leader speaks. Hierarchical nature of Chinese organizations hinders the cooperation and joint decision making across departmental boundaries as well as up and down the chain of command. This Increase bureaucracy often hinders an organization’s speed to change. The communication across different departments tends to be less effective than in flat organizations. Also, the centralized decision making process of hierarchical structure it doesn’t promote employee involvement.

1. Reward System:Western (cowboy) competes with each other and rewards the best. Chinese (dragons) see competition as a threat to group harmony and didn't link the payment and reward system to actual performance, understand the implications of "Danwei" which means "work unit" in the Mandarin language and refer to a place of employment in the People's Republic of China when the Chinese economy was still more heavily social, Chinese don’t move from company to company as westerns do. They usually spend an entire career in one place, and in one group of people.

Consequently, seniority determines rank and pay rather than actual performance.Also, operators usually get paid by the number of pieces that they produce rather than product quality, and seldom control the products they receive or produce.

1. Skilled Work Force:Until recently, China's competitiveness was based on one key ingredient: an abundance of cheap, low-skilled labor Lack. Chinese manufacturers have Short-term thinking on the employees’ side and depend on low-skilled migrant workers in particular who might not come back after Chinese New Year.

1. Supply Chain: The whole supply chain would need to be restructured. Chinese factories often make products in big batches and thereby creating large inventories. Manufacturers are not focused on streamlining the flow in their supply chain. The manufacturers themselves encourage a batch-and-queue organization, because they often purchase full containers at a time. Their suppliers give low prices when materials are purchased in large quantities.

1. Automation versus process improvement: Leadership didn't focus on process improvement. In Japanese factories, processes are automated only when they are physically hard or dangerous for workers. The objective is to keep improving each process by using the operators’ brains. In contrast, Chinese factory owners usually think automation is a solution to reduce their costs and their quality problems. They automate their existing bad processes.

1. Efficiency: All Chinese manufacturing industries experienced the most rapid technological progress over the second reform period, but this was not accompanied by significant efficiency improvement.

The author

Shady is Quality Manager at General Motors China, Executive Director of ASQ-QMD Middle East, and founder of Auto-Dictionary. In 2012, Shady had been selected by Society of Automotive Engineering (SAE) as recipient of "2012 Young Industry Leadership Award"

Shady’s strong work ethic is underscored by his commitment to education; he has a bachelor degree in Automotive Engineering and Master in Business Administration. He is Lean Six-Sigma Master Black Belt, and Red X Master.

Shady’s research is focused on continuous improvement process, Six-sigma, and Lean implementation. He has published several manuscripts in refereed journals and conferences. His latest book "Critical Success Factors of Six-sigma Implementation" had been published on March 2013.