Examples: Lean Strategy in the Global Supply Chain and Its Crisis

Strategy

Lean production has been adopted into other industries to promote productivity and efficiency in an ever‐changing market. In global supply chain and outsource scale, IT is necessary and can deal with most of hard lean practices to synchronize pull system in supply chains and value system. The manufacturing industry can renew and change strategy of production just in time.

The supply chains take changes in deploying second factory or warehouse near their major markets in order to react to the consumers’ need promptly instead of investing manufacturing factories on the lost‐cost countries. For instance, Dell sells computers directly from their website, cutting franchised dealers out of their supply chains. Then, the firm uses outsourced partners to produce its components and deliver components to their assembly plants on these main markets around the world.

Zara made decision of speeding their fashion to the consumers market by fast‐producing cloths within five weeks with their local partners in Spain and never involved in mass production to pursue new styles and keep products fresh.

The other way to avoid market risk and control the supply efficiently is to cut down in stock. P&G has done the goal to cooperate with Walmart and other wholesales companies by building the response system of stocks directly to the suppliers companies (Martin 2005). With the improvement of global scale supply chains, firms apply lean practices (JIT, supplier partnership, and customer involvement) built between global firms and suppliers intensively to connect with consumers markets efficiently.

Crisis

After years of success of Toyota’s Lean Production, the consolidation of supply chain networks has brought Toyota to the position of being the world’s biggest carmaker in the rapid expansion. In 2010, the crisis of safety‐related problems in Toyota made other carmakers that duplicated Toyota’s supply chain system wary that the same recall issue might happen to them.

James Womack had warned Toyota that cooperating with single outsourced suppliers might bring unexpected problems (Hopp 2011; Ohno 1988). Indeed, the crisis cost a great fortune and left Toyota thinking whether the JIT practice has problems about outsourced suppliers without enough experience and senior engineers could not achieve the monitoring job close to their suppliers out of Japan. That is proven as the economy of scale becomes global, the soft‐learn practices become more important in their outsourced suppliers, if they could keep good Sensei relationship with their partners and constantly modify production process to perfection. Otherwise, Toyota begins to consider whether to have more choices of suppliers of producing the same component; it might bring more safety on risk‐control and reduce the huge cost that might happen in the future.

The appliance of JIT in supply chain system is the key issue of lean implementation in global scale. How do the supply partners avoid causing production flow? Global firms should make more suppliers who can compete with each other in order to get the best quality and lower the risk of production flow at the same time.