Once again we somehow predicted it over a year ago. This prescience is getting downright spooky, but at least we’ll try to use this newfound power for good rather than evil.
In a post last year we (again) decried the outsourcing lemmings that chase low labor costs overseas rather than focusing internally to improve fundamental operations. The problem we pointed out is that with a flood of lemmings, those low labor costs have a habit of increasing, thereby driving companies to look for other hunting grounds. Perhaps, as we predicted, eventually including Africa.
The fundamental flaw in that logic is the fact that many overseas companies are focusing internally and leveraging lean manufacturing methods to dramatically improve efficiency and customer service. When companies that simply chase lower labor costs pull their heads out of the sand, they’ll realize that they now have competitors that are so efficient that labor cost differentials are meaningless. Some of those competitors may be from Africa.
The recent Lean summit Africa has spearheaded the formation of the Lean Enterprise Africa (LEA), which will facilitate the sharing of knowledge and expertise in Lean thinking. Conference chair professor Norman Faull of the University of Cape Town’s Graduate School of Business believes that there is vast potential in South Africa for the Lean approach, and that LEA will make the power of Lean accessible to organisations across the spectrum of South African industry. "Lean tools can have a tremendous impact, not only for businesses but also for government. The healthcare industry, for example, is under pressure to operate more efficiently with reduced budgets, and could reap the benefits of Lean thinking," he says.
It’s not entirely new to Africa. Remember that three carat diamond ring you bought your bride? Oh… that’s right… we’re in manufacturing, not private equity. Let’s reduce the size a bit. Remember that half carat diamond ring you bought your bride?
Lean Summit Africa lead sponsor, De Beers Consolidated Mines, began implementing Lean principles and philosophies in the organisation more than two years ago. MD David Noko said in his opening address at the event that Lean tools were being used to transform the core culture of De Beers Consolidated Mines, but could also play a role in transforming South Africa by increasing its competitiveness in the global arena.
But here’s the bottom line:
More than 350 delegates attended the Lean Summit Africa at Cape Town’s International Convention Centre, and plans are underway to make the conference an annual one.
Sure, that’s no match for the 2,000+ attendees at a typical AME Annual Conference. But those are 350 people from companies in a low labor cost part of the world that are also learning how to improve internal efficiencies and leverage employee knowledge through lean.
Do you still think just chasing low labor costs is enough to keep your company competitive?