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 multinational 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. Without make it where you sell it, the automotive value stream looks like this: 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.
"Lean cares about speed, not countries."
Make it where you sell it starts closest to the customer, so final assembly is typically the first phase of manufacturing 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 that smaller is better for our factories. 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.
Lean cares about speed, not countries, and make it where you sell it causes jobs to flow across company boarders. This is especially relevant 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 your country doesn’t buy a lot of manufactured goods, your economy is in trouble. Jobs will flow to where products are sold.
Make it where you sell it won’t stop at manufacturing. It will extend upstream. 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 are getting there using make it where you sell it.
Make it where you sell it will change all companies, even small ones. If small companies are to survive this new normal, they’ll need a mantra of their own: Think narrow and deep.
Editor’s note: Mike Shipulski is a leading authority on lean manufacturing, product development, and design for manufacturing and assembly. His column will appear every other month, alternating with Austin Weber’s “On Campus.” E-mail Mike with comments via email@example.com or follow his blog at www.shipulski.com.