According to the Swindon Business News, "Manufacturers of items such as luxury jams, hand-built furniture and studio-quality home audio equipment are leading a UK manufacturing revival, according to the South West Manufacturing Advisory Service (MAS), with more Wiltshire businesses creating high-value, niche products to compete against cheaper foreign imports." Turning manufacturers into niche producers is not going to lead a "manufacturing revival" in the UK or anywhere else. South West MAS is a publicly funded lean consulting and training outfit that is pretty steeped in all of the things that can make a company look lean, but not actually be lean, and this ‘niche strategy’ seems to be pretty standard fare from any of the tools-oriented lean ‘experts’.
Lean manufacturing is not about ‘niche manufacturing’. However, there seems to be a disturbing trend – an ugly undercurrent – of thinking that when a manufacturer becomes lean, it abandons high volume products to cheap labor countries and concentrates on small markets, unique products, places where it can command premium prices necessary to cover the high cost of low volume manufacturing. That sort of thinking misses the point of lean by a very wide margin. It misses the point entirely of my recent posts concerning economy of scale versus lean.
I recently cited an article about Chrysler’s Belvidere, Illinois plant. The key point to take away from the description of the it is "the Belvidere plant is flexible enough to vary the production mix between three products anywhere from 0 to 100 percent of each model." The plant can make the car that only 5% of the customers want at about the same cost as the car 70% of the customers want. Volume of any particular product becomes almost insignificant to the cost so long as the total volume of all products is sufficient. Niches disappear because everything becomes a niche. There is no built in cost penalty for Chrysler to produce a small volume of any of the three products – so there is no requirements that there be premium pricing for the low volume products.
The power of the flexibility of the Chrysler plant is directly related to the other important data point in my post: Chrysler is rolling out a record breaking ten new products in the same year. It will obviously be a while before Chrysler, or anyone else, can build all ten in the same plant without regard to volume, but every step in that direction is a giant step leaner. If Chrysler did have the flexibility and minimal set up time to build all ten in one plant while maintaining quality, they would bring Toyota to their knees.
Lean is not about abandoning high volume to the Asians and surviving by nibbling away at the fringes of the market with a collection of ‘innovative’ products, using lean tools and tricks to make them. Implicit in that approach is that lean isn’t going to save much money so you are going to have to charge high prices anyway – the same old economy of scale thinking. Lean is about using the lean methods to obliterate the high volume products all together.
If Walmart understood the power of lean, a lean supplier could provide them with a different product in each store – each product tailored to the local tastes and requirements of that store’s customers. That is the definition of ‘mass customization’, a term often bandied about.
Customization, without the ‘mass’ part is not lean and is nothing new. The guy from South West MAS says, " “It is almost inevitable that some of the more traditional, high volume, low variety, labour-intensive production will be lost to China and India." High volume, low variety means that everyone gets the product with average features, which means that everyone is dissatisfied to some degree. A mass customization strategy means that there are no ‘high volume, low variety’ products anymore. A company like LaZBoy is out to destroy the market for mass produced, one model fits all chairs. They are striving to make it possible for everyone on the block to have a different LaZBoy chair, each to the owners preference, with no two alike, and to do it for a price comparable to the mass production, overseas price. That is what mass cusomization are all about. A prerequisite to success is lean manufacturing that drives the cost down.
It seems the lean manufacturing world is comprised of people who can’t see the forest for the trees, and people who can’t see the tress for the forest. We need to see and appreciate both the big picture, strategic and economic bases for lean; as well as the detailed, shop floor practices and tools of lean. Mass customization at the strategic level is bound to fail unless it is supported by SMED, pull systems and the other lean tools. The lean tools bring little to the bottom line unless they are supporting a marketing strategy that defies economy of scale.
I sure hope the good folks in the Swindon area – and everywere else – figures this out before "luxury jams, hand-built furniture and studio-quality home audio equipment" is all the manufacturing they have left.