For years the low wages in India and China have attracted the manufacturing – and increasingly research and development functions – of global companies. However, this will not last forever.
Manufacturers and developers working in two of the world's fastest-growing economies must now find ways in which to work smarter to drive down costs and continue to attract businesses.
Bradley R Staats, from the University of North Carolina, who helped software company Wipro implement its Lean Six Sigma strategy in India, explained these industry shifts mean companies must change the way in which they work.
"Things are getting commoditised in the industry and there's pressure to do more with less. This is where Lean can help," he told the Times of India.
Wipro now delivers more than 1,600 of its 4,000 to 5,000 contracts in accordance with the Lean Six Sigma principles, delivering an average saving of at least 20 percent.
Applying Lean Six Sigma in China
Based on the Toyota Production System, Lean Six Sigma is perhaps most easily applied to manufacturing operations, since little to no adjustments have to be made to the original seven wastes.
WABCO, a supplier of commercial vehicle components, recently opened its Six Sigma Lean production facility in Jinan, the capital city of China's Shandong Province.
The company first launched a Lean Six Sigma pilot, in collaboration with the Shingijutsu Institute, in 2005 in both Europe and China. It now has Lean Promotion Offices at a number of production sites in South America and Europe.
WABCO's new 11,000-sq m facility acts as a demonstration platform for the company's Lean Six Sigma programme, as well as being targeted at boosting local production to meet the double-digit growth rates being seen in Asia.
Leon Liu, WABCO Asia president, said: "The launch of our Jinan factory represents another major milestone for WABCO in China. Together with our Qingdao factory, we will continue to deliver high-quality, cost-efficient products while further satisfying customer requirements for speed and flexibility."
Adapting Lean Six Sigma to Different Environments
Indian company Wipro is among those which have successfully adapted Toyota's Lean philosophy to an entirely different business environment.
The changing nature of business and the industry it is working in, including higher wages and larger outsourcing contracts, meant there was a need to alter the way things worked, the Times of India reported.
Within a software development context, the removal of waste included factors as cutting the time it took to begin on a new project or avoiding more than one person taking up the same role.
Work began on implementing the Lean principles in 2005 and now significant savings are being seen.
Bradley R Staats, who spent three years working on the project with Wipro, told the news provider: "For one of the customers, the gains stretched to over 70 percent after we used Lean for minimising efforts while delivering the project."
Further signalling the growing importance of process improvement within the emerging economies of India and China, IndiaFirst Life Insurance recently announced it would be rolling out its Six Sigma Certification to 15 projects across the company, IIFL reported.
It described the application of Lean Six Sigma as a "logical extension" following its SO 9001:2008 certification. The company was the first in the country to be awarded the standard after just seven months of operation.
Dr P Nandagopal, managing director and chief executive officer of IndiaFirst Life Insurance, said the launch of the programme "is a key cornerstone in laying a solid foundation of running stable and efficient operations and driving continuous improvements to achieve highest levels of customer satisfaction".
"This program is a four dimensional initiative aimed at top-line improvement, bottom-line improvement, service quality improvement and overall cost reduction," he added.
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