What LCC Manufacturers Want Most

In my last blog post here, I speak about the challenge in working with a LCC. Today I'm going to talk about the challenge in running a business in LCC and a golden opportunity for coaching and education.

For those that are familiar with running a factory in China, you've probably noticed the sharp increase in cost of resources (energy, material, labor) in the past 4 years especially around the cities near the Pacific Ocean: Shanghai, Guangzhou, Chaozhou, Shantou, etc. Government's mandate on increase in labor cost, inflation, and many other reasons add to the fact that more and more companies can't survive where they are today when the cost of production had tripled while the consumers are still paying the same prices. The phenomenon we are seeing today is that more and more companies (large or small) are moving inland where cost of resources are still low enough to run a profitable operation. Some companies have even packed up and moved to other LCC where the situation was more desirable.

There is still an advantage in staying near the ocean; the ease of access to exporting services and seaports helps them get their products to the customers faster, it's easier for your customers to visit you (don't have to take multiple bus rides, fly in a should-have-been-retired turbo-prop, etc), amongst other great reasons. The question becomes how does a company effectively reduce cost of production, enough to gain an advantage over its competition without having to move?

HereTryThis: For those of you that are knowledgeable about lean manufacturing, 5S, and Six Sigma approach to problem solving, this is your golden opportunity to take what you know and teach it to those who really need it. In my own experience, factories in China are rarely setup with a good foundation of Design for Six Sigma. Waste (in the form of T.I.M.W.O.O.D.) can be picked up in all aspects of the operation. The problem solving technique often used to speed up production is to throw more people at it; with the last labor rates it made sense but not with today's labor standards.

To start off, put together a team of experts (willing to travelling and residing in LCC) and hire a group of educated young intellectuals from the LCC to 1) help locate companies that need this service, 2) translate the material, and 3) become the liaison to negotiate contract. As this matures, automate this process and become a service that offers training that certifies local experts that can be contracted out to many different cities to work with more clients.