Application of Lean Thinking in Supply Chain Management by the Small and Medium Sized Manufacturers in China

Abstract

With increasing pressure for higher wages and growing competition from other developing countries such as Vietnam and Mexico, China can no longer rely heavily on cheap labor supply as a competitive advantage to secure her position as the world’s largest manufacturing base. Other competitive edges, such as lean manufacturing and lean supply chain management that help cut cost and reduce waste, have to be explored. Using a self-administered questionnaire survey, this study investigates the current status of lean thinking application in supply chain management by the small- and medium-sized manufacturers (SMMs) in China. It also explores if there are benefits in the application and the challenges faced by the SMMs in implementation. The findings suggest that application of lean thinking in China is not widespread. For those firms that have applied lean thinking, the major benefits obtained include reductions in cost, waste, inventory, labor, and cycle time. The major difficulties encountered lie in the accurate communication of the requirements between workers and managers and the collaboration with supply chain members. Proper application of lean thinking in supply chain management can bring substantial benefits to the manufacturing industry. Managers can use this research to benchmark their lean thinking application and revise their supply chain strategy accordingly.