Lean has rolled through our factories and generated profits at every turn. Now it’s time to get serious about savings and realize the next level of savings. Companies are pushing lean into the back office, but that won’t get it done. The savings will be good, but not great. After picking low-hanging factory fruit, there’s uncertainty around what’s next for lean.
Make it where you sell it, that’s next for lean. Like a central theorem, this simple phrase will become lean’s mantra, and it will change everything, including our organizations themselves. The big multi-national companies have already started their journey, and we can take our cues from them.
The major automakers have assembly plants on all continents – objective evidence of make it where you sell it. There are many benefits to make it where you sell it, but the top three are: speed, speed, speed. The automotive value stream without make it where you sell it: make a car, put it on a boat, deliver it to a dealer, and sell it. Make it where you sell it eliminates the boat: make it, deliver it, and sell it. Inventory is proportional to cycle time and eliminating the long boat ride shortens the value stream, improves response time and reduces inventory.
Make it where you sell it starts closest to the customer, and final assembly is the first to be established in-market. Engines and transmissions still ride the boat, but not for long. After final assembly, make it where you sell it targets big, heavy, expensive subassemblies, so expect in-market engine and transmission plants. (However, big ones like these may stay put for while due to technological, political, or cultural reasons.)
With one piece flow, right-sized machines, and short product runs, lean has taught us the most economic scale is far smaller than we’d imagined. We’ve learned for our factories smaller is better, and make it where you sell it extrapolates smaller-is-better to the organization itself. Here again, the big guys lead the way. Multinationals are breaking themselves into smaller units, right-sizing into smaller regional companies – still big, but smaller. Their in-country manufacturing creates nice tight feedback loops between customer and factory. And there’s an important benefit to the brand – it becomes a local brand. Not only can the brand better serve regional tastes, it provides goodwill in the form of jobs.
[Disclaimer: I don’t advocate outsourcing. I’m simply explaining the forces at work and their consequences.]
Lean cares about speed, not countries, and make it where you sell it causes jobs flow across company boarders. This is especiallylevant as countries compete for manufacturing jobs like their survival depended on them. For those countries that understand manufacturing jobs are the bedrock of a sustainable economy, make it where you sell it can be threatening. If you’re a country that doesn’t buy a lot of manufactured goods, you and your economy trouble – jobs will flow to where products are sold.
Make it where you sell it won’t stop at making, and will extend up stream. The next logical extension is design it where you sell it, R&D it where you sell it, and innovate it where you sell it. (The biggest companies are already doing this with regional R&D centers.) More jobs will flow across borders, but this time they’ll be the coveted thinking jobs.
Make it where you sell it is the guiding principle companies are using to become more responsive, more productive, and local. It has already broken the biggest companies into smaller ones. They’ve realized that the most economic scale is small, and they’re getting there using make it where you sell it.
Make it where you sell it will change all companies, even small ones. And the mantra for small companies: think narrow and deep.
I will hold a half-day Workshop on Systematic DFMA Deployment on June 13 in RI. (See bottom of linked page.) I look forward to meeting you in person.