Daily Archives: June 18, 2009

The Lean Guru

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According to a recent article in Industry Week, the basic principles of lean — waste reduction, customer centricity and flow optimization — are fairly simple in theory but when it comes to putting lean principles into practice, even the most well-intentioned manufacturers can run up against some roadblocks. That’s why many manufacturing firms begin their lean journey by seeking the counsel of a consultant … a lean guru.

The article makes a great point. A consultant brings more to the table than simply helping organizations conduct kaizen events or create value-stream maps. Hiring a consultant is an excellent way for management and leadership to signal a change within the company and to use the consulting event to define and formulate a revised purpose or a reason for being. This helps you get lean on the fast track, and considering that lean is a great fix for a down economy that can help you sense demand, source successfully, streamline services, and reduce inventory, which reduces waste and lowers cost, how can you go wrong? Especially when Consultants are Cheap.

Are We Moving Away From China?

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Editor’s Note: This is Dick Locke‘s third post as a regular contributor on Sourcing Innovation. (His previous guest posts are still archived.) Dick, who has delivered seminars to over 100 companies across the globe, is a seasoned expert on International Sourcing and Procurement who wrote the book.

I just read through AMR Research’s “Supply Chain Risk, 2008-2009: As Bad as It Gets“. It rightly points out that it’s been a scary year. It does do a very thorough job of criticizing China. I know that AMR is just reporting what their clients report to them so I can’t fault AMR for what they say.

Among the things they say

     China is the world capital of supply chain risk.

And, because of such concerns,

      The move away from China sourcing starts with higher value-added work, boding ill for the Dragon’s ambitions to outdo Japan’s ascent from a cheap labor to high-tech economy.

If such a move has taken place, it’s not apparent yet in the computer industry.

Here are statistics from the US International Trade Commission: HTS 8471 is computers and peripherals. Data is January through April.

Country   2008 YTD 2009 YTD Percent Change
Thousands of dollars YTD2008 – YTD2009
China   $9,101,153 $8,407,280 -7.60%
Mexico   $1,734,089 $1,863,850 7.50%
Malaysia   $3,166,961 $1,150,911 -63.70%
Thailand   $1,138,875 $818,513 -28.10%
Singapore   $953,493 $543,373 -43.00%
Japan   $537,601 $383,673 -28.60%
Canada   $280,130 $232,428 -17.00%
Taiwan   $276,369 $207,521 -24.90%
Ireland   $221,564 $171,436 -22.60%
Hungary   $244,124 $147,130 -39.70%
Philippines   $234,714 $130,273 -44.50%
Germany   $125,194 $104,954 -16.20%
United Kingdom   $103,245 $94,534 -8.40%
Korea   $152,459 $88,018 -42.30%
Israel   $47,296 $52,556 11.10%
Subtotal:   $18,317,267 $14,396,450 -21.40%
All Other:   $290,471 $211,065 -27.30%
Total:   $18,607,738 $14,607,515 -21.50%

Sources: Data on this site have been compiled from tariff and trade data from the U.S. Department of Commerce and the U.S. International Trade Commission.

Comparing the first four months of 2009 to the same four months of 2008, computer imports into the United States dropped 21.5% in value. Imports from China only dropped 7.6%. China is increasing its share of imports.

I don’t think this is a sign that computer manufacturing is returning to the U.S. However, one sign that nearshoring may be taking hold is that Mexico is one of only two countries whose absolute value of imports increased. It jumped from number three country to number two.

These USITC reports are especially useful when sourcing. Look for both high value countries and rapidly growing countries. Your best sources will probably be in those countries.

Dick Locke, Global Procurement Group.