Lean management in China

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Lean management in China

What is lean management?

Lean management (LM) concept originated in the Toyota Production System. The goal of Toyota was to reduce the cost of doing business while eliminating waste. On this basis, lean management is also an “accurate management“, which refers to a long-term approach to work that systematically seeks to achieve small, incremental changes to improve efficiency and quality. Lean management in China faces unique, but solvable challenges.

Toyota plan, the birth of lean management

Source: Toyota Global, Toyota plant

Why is lean management important for China?

Embracing lean management in China allows businesses to increase competitiveness. With the continuous improvement of the global industrial chain, manufacturers need to improve their competitiveness.

Secondly, Chinese firms are faced with deteriorated management efficiency as they are breaking away from former state‐controlled mass production. They demand flexibility of manufacturing and advanced manufacturing research, which is the goal of lean management.

Thirdly, systemic overcapacity in nearly all sectors in China – from aluminum foundries to fabric mills drives fierce competition on price. A 3% price move can be the difference between life and death for many factories. Lean management in China can prevent the problem of overproduction and paying a higher carrying costs.

Principles of lean management that should be implemented in China

Lean management in China

There are five essential principles for implementing lean management in China:

Visible support and involvement from management on different levels

Management on all levels should provide complete support for lean production, and sustain the program. High level managers and mid-level managers need to embrace lean management practices on order to set good examples for employees. 

All staff involvement and change in work habits

Continuous improvement is the key of lean management, which completely depends on the passionate involvement of all employees. They should conduct “continuous improvement” events, document results in one-point lessons and complete daily check to engage in lean production.

Thinking lean and combining with Chinese culture

Thinking lean means only doing things that create or add value. It is important to focus on what the customer is willing to pay for, to determine what activities are wasteful. Moreover, when deploying lean production, companies should break traditional concepts and combine it with the culture in China.

Establish a human resource management system that support lean management as a long-term task

The success of LM in Japan is closely related to the long-term employment system. The situation in China is on the contrary. Chinese enterprises have broken the lifelong secure job since the reform and opening-up at the beginning of 1980s. The HR departments of Chinese enterprises are often more engaged in assessing, punishing and firing employees and pay less attention to staff training.

The practice of Toyota is to train employees before manufacturing vehicles. They provide lots of On the Job Training including basic operation skills and multi-skills. Even more importantly, they train their staff to diagnose and solve problems, which is the basis for continuous improvement.

Long-term commitment to lean management

It is impossible to accomplish lean production in one action. Many Chinese enterprises ignore the concept or just take some lean management steps to show to demonstrate their leadership abilities.

For example, many enterprises have gotten Quality Certificate, but it can’t guarantee the quality of their products. As a result, they spent costs without quality improvement. During deploying lean management, all staff, including the management and ordinary employees must prepare for a long-term battle since lean is an endless course.

Examples of lean management in China

First Automotive Works (FAW), the prototype of the Ford production system in China, began to introduce lean management to China in late 1980s. The FAW Transmission Plant, which introduced Just-in-Time (JIT) method, is viewed as one of the best plants in China. In a result, the Chassis Branch of FAW reduced its work-in-process by 70% by deploying LM.

Shanghai Automotive Industry Corporation (SAIC), which is one of the most successful holding companies in the Chinese automobile industry, is another typical case for adopting lean management in China. In order to reach the quality regulation, SAIC first established unique system ‘Special Production Zone’ within its subordinated factories. From 1994, SAIC selected Shanghai Automobile Gear Works and other 4 factories as a breakthrough to practice ‘Team Work Method’, ‘Just-In-Time Production’, ‘JIT Delivery System of Components’ and ‘Systematic Supply’. SAIC’s introduction and promotion of lean management resulted in the mutual function of inner and outer elements with the privilege of capacity improvement.

Shanghai Automotive Industry Corporation was one of the first Chinese companies to implement lean management

Source: Shanghai Automotive Industry Corporation was one of the first Chinese companies to implement lean management

How Daxue Consulting can help implement lean management in China

The implementation of lean management in China includes not only changes in company’s technical system, but also changes in thinking. It includes the creation of an “improvement plan” and conducting events and workshops to train employees on the principles of lean management.

Here are some possible steps to a lean management consulting project in China

  • Start with a feasibility analysis to understand what is practical in your industry in China
  • Expert interviews with lean management experts in China.
  • Go on a learning expedition through China to learn more about how the business landscape in various regions can be conducive to lean management practices.
  • Competition analysis to understand how your competitors are implementing lean management.
  • Employee engagement survey to gauge potential problems where employees may not be engaged or willing to get on board.
  • Employee training to create a plan that will help all levels of management and staff understand new lean management practices.
  • Create a new business plan in China based on market research findings, distributor and supplier analysis, and analysis sustainability analysis.

Contact us to start your project in lean management in China today, email dx@daxueconsulting.com.


Branding concepts in the context of China report by daxue consulting from Daxue Consulting