This document discusses alternatives to lean manufacturing for companies seeking to differentiate themselves and remain competitive. It outlines five alternate strategies that top manufacturers employ: 1) Partnerships based on information sharing with suppliers, 2) Offering supplementary services, 3) Faster innovation cycles through collaboration, 4) Production flexibility, and 5) Local sourcing. While lean manufacturing provides benefits, these strategies can deliver added value that customers will pay a premium for. Implementing them requires close collaboration between manufacturers and suppliers.

1. Today’s competitive manufacturing environment has
led to the adoption of lean manufacturing techniques
as a way to reduce overall costs by eliminating waste
at all levels, reducing inventories, while at the same
time improving productivity.
But as lean practices have become widely adopted,
manufacturers have found it increasingly difficult to
differentiate themselves from competitors solely by
achieving cost efficiencies.
The question is, therefore, what are the alternative
strategies manufacturers can focus on to improve their
global competitiveness in the long run?
High Value
Manufacturing
5 ALTERNATE STRATEGIES TO EXPLORE

2. 1
De Treville, S. & Trigeorgis, L. 2010, “It May Be Cheaper to Manufacture at Home,” Harvard Business Review, October 2010.
2
Lapide, L. 2010, Change Your Inventory Mindset, viewed June 6, 2014,
3
Jorgensen, B. 2012, The limits of lean, viewed June 6, 2014
Although lean manufacturing does produce some benefits, let’s not forget it is a
concept that was introduced in the 1970s and 1980s in the context of mass manu-
facturing.
As a result it is sometimes inadequate to meet today’s customer demands in a
responsive manner. This is particularly true when the lean option limits your ability to
customize products or when your production needs to be postponed until you can
more accurately predict demand. Some suppliers may excel at lean manufacturing
but require a long window or scheduled forecast, limiting your flexibility in changing
to market requirements, especially in an economic context where demand can vary
greatly and unexpectedly1
.
Also some organizations have realized that disruptions can emerge when supply
chains become “too lean.” That is the case when lean advocates the elimination of
good inventory, such as safety stocks or buffer inventories2
. For example, natural
disasters like the earthquake and tsunami that devastated Japan in March 2011 and
the flooding that paralyzed Thailand in October 2011 have created disrupting
shortages in the electronics industry because electronic product supplies were highly
concentrated in the region and all inventory redundancies in the supply chain had
been eliminated3
.
Some organizations have already managed to be as lean as
they will ever be and are desperately looking for other sourc-
es of competitive advantage within their supply chain.
THE LIMITS
OF LEAN
MANUFACTURING

3. Other than lean,
what are the
alternatives in
delivering value?
?

4. 5 ALTERNATE
STRATEGIES TO
EXPLORE
Research projects studying best-in-class manufacturers
indicate that they typically owe their success to the
application of one or more of the following strategies4
:
•Partnerships based on information sharing
•Supplementary services
•Faster innovation cycles
•Flexibility
•Local sourcing
4
Chick, S., Huchzermeier, A. & Netessive, S. 2014, “Europe’s Solution Factories,” Harvard Business Review, April 2014.

5. As a result they can manage just-in-time inventory,
adapt to unexpected changes in market conditions,
reduce customer returns or even prevent break-
downs.
These partnerships can take many forms and often
involve the use of information technology such as
EDI (Electronic Data Interchange) or ERP (Enter-
prise Resource Planning) systems with collaborative
portals for both clients and suppliers.
However you do not necessarily need to invest in
expensive or complex technologies to achieve the
same benefits. Many of the activities that affect
production line efficiency take place at the design
stage. Manufacturers can therefore enlist the
collaboration of their suppliers to optimize their
products’ design and to minimize the resources
needed during manufacturing and assembly. As an
added benefit companies that take these steps can
also expect to reduce the number of suppliers
and/or purchase orders they manage and increase
overall productivity along the assembly line.
Partnerships enable manufacturers to share information with their suppliers,
such as demand predictions, stock levels, failure rates, etc.
PARTNERSHIPS BASED ON
INFORMATION SHARING
ALTERNATE STRATEGIES TO LEAN MANUFACTURING IN DELIVERING VALUE

6. 5
Mohr, S., Somers, K., Swartz, S. & Vanthournout, H. June 2012, Manufacturing resource productivity, viewed June 25, 2014
When that is the case manufacturers should seize
the opportunity to tap into the expertise of their
suppliers.
So if your customers value products that cause
minimal environmental damage, you should
consider working with a supplier that can help you
apply eco-design principles at the product design
or optimization stage. By optimizing product
design you can considerably reduce the consump-
tion of energy and raw materials during produc-
tion. It is a particularly interesting approach if you
are using hazardous or nonrenewable materials or
if such measures facilitate compliance with industry
regulations5
.
Also if you offer supplementary services, such as
maintenance plans, it is in your best interest to
reduce breakdowns and perform preventive
maintenance. Again, your suppliers can help by
suggesting materials with different product
attributes that are more appropriate for the intend-
ed use of your products and that will improve the
level of performance for users.
Cost and quality are still key selection criteria in the manufacturing world, but
manufacturers are increasingly noticing that some customers are willing to
pay a premium for value-added services.
SUPPLEMENTARY SERVICES
ALTERNATE STRATEGIES TO LEAN MANUFACTURING IN DELIVERING VALUE

7. 6
Bluestein, A. 2013, “Debunking the Myth of Innovation,” Inc. Magazine, September 2013.
Thus, when suppliers/partners are in a position to
rapidly change product specifications, they
definitely add value, which in some cases can
make up for the unit cost savings they would other-
wise realize by selecting a low-cost, low-value
supplier.
People often have a misconception about innova-
tion, thinking that true innovation has to be disrup-
tive. But the reality is that you don’t need to invent
a revolutionary product to be an innovator. In fact
research indicates that the most successful compa-
nies devote about 70 percent of their innovation
assets (time and money) to improve existing
products for existing customers, as opposed to
inventing things for markets that do not exist yet6
.
Manufacturers can innovate by simply enhancing
existing products to provide a better customer
experience. But, while innovation takes many
forms, it almost always requires manufacturers to
enlist the creativity and collaboration of their parts
partners.
In this respect manufacturers may be wise to select
parts vendors located near their manufacturing
facilities or that offer both product development
and manufacturing capabilities, because innova-
tion tends to happen when engineers and produc-
tion people work together on site.
In certain industries customers expect new things all the time.
FASTER INNOVATION CYCLES
ALTERNATE STRATEGIES TO LEAN MANUFACTURING IN DELIVERING VALUE

8. Considering that the application of lean principles centers on the elimination of waste in all forms,
manufacturers typically avoid shipping containers that are half full. They prefer to wait until the
container is full, but this approach is not always realistic when customers require fast deliveries for
small lots of customized products. Not to mention that the late delivery of seasonal products can
increase customer returns and lead to potential overstock.
Here again it depends on your industry and customers’ needs, but sometimes flexibility in terms of
production schedule, delivery method, location and quantity is what customers value the most.
Flexibility—or the lack thereof—is probably the most
common criticism against lean manufacturing.
FLEXIBILITY
ALTERNATE STRATEGIES TO LEAN MANUFACTURING IN DELIVERING VALUE

9. ALTERNATE STRATEGIES TO LEAN MANUFACTURING IN DELIVERING VALUE
7
De Treville, S. & Trigeorgis, L. 2010, “It May Be Cheaper to Manufacture at Home,” Harvard Business Review, October 2010.
But there are many other significant benefits,
such as greater agility when changes in the
market necessitate supply chain adjustments,
better predictability of delivery times and faster
deliveries.
Local sourcing may also be favored by custom-
ers who value minimal environmental damages
or who prefer to support their local communities.
Similarly in some industries, such as defense and
aerospace, prime contractors have to meet local
content requirements.
Last but not least, local sourcing provides manu-
facturers with better control, in that they can visit
the facilities more often for quality control
purposes. As a result they lower their exposure to
risks of disruptions in the global supply chain.
Such risks need to be assessed on a
case-by-case basis, but typically the costs result-
ing from a disruption in a local plant are much
lower than those caused by a disruption in a
factory overseas7
.
As indicated earlier the proximity of your parts supplier is likely to foster
closer relationships, which can lead to faster innovation cycles and a better
integration of the design and production processes.
LOCAL SOURCING

10. At a time when manufacturers still face intense competition
from overseas as well as the usual domestic competition,
there is still a need to reduce costs and improve productivity,
without negatively impacting quality.
But as lean methods become more widely adopted, manufacturers need to find
other sources of differentiation. Value-added strategies, such as partnerships based
on information-sharing or joint product development and manufacturing efforts to
foster innovation, can not only lead to the realization of benefits that are at least as
valued—if not more—by customers for their cost savings, but that are also not so
easily copied by low-cost, low-value competitors.
However, just like lean manufacturing, successfully implementing such strategies
requires manufacturers to work collaboratively with their suppliers in the true spirit of
partnership. As a result manufacturers who want to increase their competitiveness in
the long run should increasingly select their vendors based on their ability to create
value in a variety of ways.
IS IT THE END
OF LEAN
MANUFACTURING
AS WE KNOW IT?
PROBABLY NOT.

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