Ajith Prasanna Perera is an Associate Member of CIMA working at Bodyline (Pvt) Ltd as Manager-Supply Chain heading the sourcing division. He has 10 years' experience in the apparel industry and has worked in marketing and finance before joining Bodyline. Ajith has a Master's from the University of Leicester.
The garment manufacturing industry in Sri Lanka faces many challenges as a result of low cost apparel manufacturers worldwide, and now seeks options and tools to stay competitive in the market.
The economic growth in the country has resulted in high cost of maintenance for companies, specifically challenging the management of operational costs of the business. The ‘price per unit’ which was once a competitive advantage in the industry in Sri Lanka, is no longer able to attract the high volumes of countries such as China, Vietnam and Bangladesh who are offering better pricing options. The need to differentiate is seen as the future strategy where the industry is analysing ways and means of staying competitive.
With this in mind many large organisations in the country have looked at lean Manufacturing as a valuable tool to promote new strategic positioning. Lean allows more creativity in innovations, enhancement of employee motivation while offering solutions to the brand owners at a competitive price.
The concept can reduce the operational cost in manufacturing by eliminating the process waste, empowering people with greater communication, increasing productivity in the execution process and turning the organisation into a learning organisation.
However, for lean to deliver meaningful change to an organisation, the implementers should first understand the organisation and then introduce lean where it makes sense rather than the other way around.
The learnings below are from analysis of a few Sri Lankan organizations in the apparel sector involved with lean initiatives.
1. Always a ‘big picture’ approach
Liker (2004 p.6) described that an organisation should review its holistic picture using the 4P’s model (Toyota way). This model emphasises that an organisation should always focus on long term thinking in business process re-engineering while respecting its people and partners in their journey.
Some organisations may try to understand and implement lean without knowing what the organization as a whole would want to achieve. For example the organisation would want to move in to Just in Time (JIT) production considering that it enhances speed. However based on the organisation’s processes, the cost of supporting a team may increase drastically where the cost of operations will be impacted.
The way to start would be to understand the ‘bigger pain’ points in the organisation as a whole and then think what is needed to change as priority. For example, if the organisation is suffering from severe working capital constraints, changing the floor plan with lean will not be the answer but instead to get back to the basics.
2. Focus on systematic elimination of waste and not just waste elimination
The significant impact from lean comes with the focus on elimination of seven kinds of waste in an organisation’s process (Schonberg, 1986). This is an area where the authors found that most organisations have benefited in operations.
The principles will direct an organisation to differentiate and eliminate activities which are non-value adding.
For example, there is a major contribution to an organisation’s working capital from its raw material sourcing and stock holding. The lean theory helps the organisation understand the causes of non-value add activities such as stock holding and develop mechanisms to reduce same.
Many companies in the industry have originated from mass manufacturing and the stock holding days averaged between 65 to 85 days. With lean implementation they have managed to reduce stock holding to an average between 20 to 40 days, which creates a positive contribution towards working capital management and space saving.
Example: Space savings from managing inventory/supply chain logically.
3. Get management attention and use the whole organisation
Many organisations start lean with a selected consultative team and allocate the total responsibility on making the change while not necessarily providing the due authority.
Lean leads to more of a cultural change in an organisation. Culture involves people and the whole team. Therefore the responsibility cannot be given to a focused group but must be with the total management. One may ask why it should only be the management. The answer to that is the culture of this country. Organisations in Sri Lanka are driven with hierarchical layers no matter how open the culture would be. Therefore it’s the management that will drive the change in any organisation and not the workers. However for ‘change’ to work, one may have to consult all levels.
4. Review financial benefits but don’t push for targets without understanding how they impact performance.
This subject might become controversial for some but the correct implementation of lean is expected to deliver positive financial results. However pushing ideas with a financial target in mind might not be the best approach. This could lead to divided attention and sub-optimisation.
The financial figures should be reviewed as a feed-back mechanism, where it indicates whether the selected initiatives are working or not. For an example, the company might put targets on stock holding days and control the inventory to manage working capital. However in an apparel manufacturing organisation, predicting the future issues and working to a plan with 100% accuracy is not possible/ practical. Therefore there needs to be some level of planning for contingencies. Strict control on inventory will result in a ‘sewing line open’ situation if the ‘in-house materials’ are rejected due to quality concerns. In such a situation, the cost of ‘stopping production’ could be much greater than the lean initiative.
Therefore there should be a practical approach to what you would wish to objectively target for.
5. Make it simple
This would be the key to success in lean implementation. The lean theory may sound very complex but the knowledge it gives will be basic and very practical for a learned individual. However when cascading the information to the next level, convert the message to a known, simple language rather than using complex words.
People should find lean to be easy to understand and implement rather than seeing it as a complex animal.