“Lean is needed more than ever”
Professor Netland, during the Corona pandemic many production sites came to a halt. Critics blame lean management for destroying supply chains. Is this justified?
No, because a lot of critics, who make Lean an additional culprit to this crisis, associate Lean with the smallest possible storage. The concept is not about zero safety stocks and Lean definitively does not carry any blame for the pandemic outbreak. When your demand implode and suppliers struggle, excess inventory is of little help anyway. The key differentiators of Lean are customer focus, short lead times, and a culture of continuous improvement. Lean is needed more than ever. I bet that lean companies will do better in this crisis than their competitors.
So, you are not expecting a global turnaround or a reorganization of supply chains?
What happens after the pandemic remains to be seen. It is clear that the world will not be the same after corona. Right now, however, a globally functioning supply chain is the way out of this crisis. Although products bear “made-in” labels, they are actually “made-in-the-world.”
Due to the pandemic, the pause button has been pressed, but not the reset key. Some critical industries will have to be rethought. But, generally speaking, we got the global supply chains we have for a reason. Water always seek the easiest path, and so does economic activity. I believe globalization of supply chains will continue for most products.
Will global supply chains be more crisis resistant in the future?
Certainly, companies will become more aware of any risks in the short or medium term, and perhaps they will maintain larger safety stocks. It is obvious that risk management will again be discussed in boardrooms. But even this would not be of great help with a pandemic this size. No matter how large the storage is: If there is no market due to a lockdown, they do not need to produce anything. Besides, unlike toilet paper and facemasks, most products are made up of a large number of subcomponents. To use an analogy, having your cupboards full of sugar does not help you make pancakes if you’re out of eggs. What is needed is a system perspective, which requires governance structures beyond the single firm.
Can companies who are betting on Lean overcome the crisis more easily?
Yes. Lean has a lot to do with speed. It is about the ability, to efficiently and quickly manufacture products according to the needs of the market. This is the big advantage of Lean. It is definitely not the only, single answer to the crisis, however it is an important aspect: First of all to rapidly increase the production of urgently necessary goods (such as ventilators and protective equipment) and secondly to restart all the other businesses smoothly — always balancing demand with quality products. Therefore, Lean is not to blame, but part of the solution.
About the interviewee:
Prof. Dr. Torbjörn Netland is assistant professor at ETH Zurich and Chair of production and operations management (POM). Before joining ETH, he worked at the Norwegian University of Science and Technology (NTNU) and SINTEF Technology and Society in Trondheim, Norway. Netland’s research focus is operational excellence, global operations, smart manufacturing, and behavioral operations. He has a particular interest in methods for productivity improvement in the manufacturing industry and the related management of production improvement programs in multinational companies. He is a multiple recipient of the Shingo Research Award.
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