Kaizen blitz the muda out of the firm’s globalization strategy

Abstract

The global production and global supply chain environment of the 2020 decade and beyond requires strategic retooling by industries and firms, both for efficiency/viability and to minimize some of the negative impacts of globalization. This paper conceptualizes firms utilizing some LEAN manufacturing principles and extending these beyond the internal organizations to their global production and global supply chain environments. These considerations include value stream maps and spaghetti diagrams executed through Kaizen blitz events to remove muda (waste) with some expanded definitions and understanding. There are also arguments presented for increased discrimination in globalization strategies considering the value/volume dynamic.

Keywords

climate change supply chain global production LEAN

Introduction

The overall global business environment is dynamic and turbulent. The first section of this research supports the dynamic nature of the global business environment. The second and third sections note two significant issues (not the only issues) businesses face today in their global interactions and interconnectivity within this dynamic environment. The first of these is the vulnerability of supply chains relative to escalating dynamics in the geopolitical landscape. The second is the carbon footprint (e.g., climate impact) resultant from the global trade of goods and services. Both of these are exacerbated by volume and non-optimized value streams in the product/service realization process(s). The fourth section of this article proposes a more strategic LEAN value stream, utilizing several traditional and emerging LEAN manufacturing methodologies.

This conceptual study is a theory adaptation, extending LEAN manufacturing principles in novel and practical ways to urgent and relevant global value streams and supply chains that address the practical gaps in firms’ strategies. This study contributes academically to the disciplines of General Management, International Business, Strategic Management, and Operational Excellence by extending LEAN principles to current issues of supply chain vulnerabilities and climate impact as an element of global business strategy. There are also practical implications for industrial utility, suggesting tools and methodologies for firms to embrace in their continuous improvement process.

The turbulent environment of globalized business

The decade of 2020 has experienced significant disruptions in the global business landscape, and many industries and firms have questioned their global production and/or global supply chain strategy. This is an amalgamated result of a downturn in trade and Foreign Direct Investment (UNCTAD, 2021; United Nations Conference on Trade and Development, 2021), environmental/climate concerns, supply chain shortages, pandemic disruptions/uncertainty, some tighter/adverse and protectionist trade policies, run-away inflation, global economic and political concerns, and shifting technologies. Setup by the previous decade—Brexit, the Trump Administration tariffs and rhetoric, raising awareness of the climate change crisis, and the power dynamics/tensions between the US and China (Jones, 2020; Thompson, 2021); were already in motion before the SARS-CoV-2 (Covid-19) global pandemic. It can be argued that these dynamic geopolitical factors aggregate and/or compound for an extreme level of environmental turbulence—Entropy.

Entropy is defined in the terms of environmental turbulence as the quantitative measure of disorder or chaos in a system. When a system has lost all order (disorder), it has reached maximum entropy… entropies of distinct disequilibrium events, such as an earthquake followed by a tsunami, followed by a radiation leak event. (Kipley et al., 2012a: 253)

Kipley et al. (2012a) suggest quantitative methods for calculating the environmental turbulence or entropy of an industry or system and the full impact on the firm, but Figure 1 suggests the global, industry, and firm likely and/or reciprocal relationships. The higher turbulence (arguably even entropy level) of the early 2020 decade will specifically (e.g., specific industries more than others and/or exclusively specific industries) affect industries, and in turn, the industry will typically affect the firm. The firm’s response and management (firm’s environment) can affect the industry relative to its market share, sole-source position, etc. A specific firm’s effect on the global environment is typically minor unless that firm is significant in mass or they represent a scarcity/necessity dynamic. That said, each firm’s response can contribute toward both industry and global difference and impact, such as collective efforts in responding to climate change.

Figure 1.

Global, Industry, and Firm Environmental Influences. Note: Model influenced by literature (Ansoff, 1975, 1979, Kipley et al., 2012, 2012b).

The vulnerability of supply chains

Within the geopolitical turbulent global environment and the increased industry (e.g., many affected industries) turbulence, several issues have become apparent in the present and future. Significant supply chain interruptions have uncovered international dependencies in global business. Thomas Friedman notes that firms have evolved from interconnectedness to interdependence, where a rival failing can be as significant and detrimental as a competitor succeeding or thriving (Friedman, 2019). For decades, firms have considered a rival failing a competitive advantage, but Friedman notes that the interconnectedness and dependence firms have on each other is now changing this principle. Michael Porter’s Diamond (Theory of National Competitive Advantage) suggests that “related and supporting industries” are one key to competitive advantage (Porter, 1990). The disruption of a single material, component, or logistical supplier (e.g., supporting industry) has shown to have a significant impact globally.

Firms have traditionally kept their supplier list confidential for competitive advantage. In past decades, firms have rationalized and consolidated suppliers [typically touted as a supply chain best practice] (Industry Week, 2008; Lilliecreutz, 1998), and otherwise worked to realize lower costs in materials and logistics. There was often distrust in supply chain transparency, as this was exploited by the purchasing firms (Lee, 2017). Suppliers would thus guard their sub-tier list and companies would not share their supplier list with competitors or customers. Future strategic considerations will require more transparency and redundancy in the supply chain. The 2020–2022 supply chain disruptions suggest the need for greater transparency and further support the concept of global interdependence. Additionally, dynamic green technology shifts and environmental initiatives are also resulting in regulatory transparency in materials, processes, and sources.

The carbon footprint and climate

The strategy of firms has traditionally focused on maximizing profits and revenues with some ancillary social initiatives (e.g., Corporate Social Responsibility [CSR]). Some other definitions of environment-targeted programs include Global Corporate Citizenship (GCC), Environmental Social Governance (ESG), Sustainability, or Carbon Neutrality. ESG is often utilized for two definitions:

1. A firm or industry’s environment-specific policy and strategy engaged in its CSR program.

2. Regulator, governmental, or other policy or mandated governance on environmental initiatives and targets.

Various regulations, industry commitments, and/or peer pressures are likely to continue to suggest that engagement in climate impact is not optional as shown in Figure 2, where ESG is operationalized as a regulator or government requirements.

Figure 2.

The Relationship of ESG, CSR, and GCC. Note: A depiction of pressures beyond altruistic, suggestive of required actions by the firm. It is important to note that some definitions of ESG are not regulatory (are otherwise defined as firm or industry self-governance) but this model operationalizes it as regulators/policy.

Figure 2 illustrates that ESG (as operationalized in Figure 2 note) exerts regulatory pressure on the firm, and GCC exerts peer pressure on the firm. Firms are required to move beyond just ancillary efforts, as Friedman (2019) speaks of the interdependence of firms and industries around the world where a “rival failing” presents risk or harm to others. In some countries like India, Corporate Social Responsibility spending is not optional (Prasad et al., 2022), as regulators have implemented mandates. Several industries have stepped up with commitments to carbon neutrality or specific quantifiable improvements within set timeframes (World Economic Forum, 2021; Zhao et al., 2022). Industry commitments thus also enact requirements and/or pressure on firms. Some specific firm’s accomplishments and/or industry commitments can become exemplars and embolden or influence regulators. The result is that there are both vertical and horizontal pressures on firms to engage in carbon neutrality. There is also growing pressure on both industries and firms for data and evidence with transparent reporting (Klaaßen and Stoll, 2021; Tang et al., 2022), suggesting results over touted initiatives or actions.

Economists and trade theory suggest that free markets and trade boost the global economy as well as the economies of the countries trading, and industries and firms have benefited from trade. Companies have realized both revenue and cost benefits from globalization. There are two (Nunnenkamp et al., 1994) reasons firms typically expand internationally or globalize: (1) the globalization of market (e.g., new or expanded markets thus increasing revenue), (2) the globalization of production (e.g., reducing costs in one or more factors of production [labor, material, logistics, or capital]). Firms have globalized supply chains, markets, and their production efforts indiscriminately over the last number of decades to realize revenue and cost savings. The carbon footprint or environmental collateral from the global transport of goods and services in volume and distance is significant. The maritime shipping industry alone produces over 1036 million tons of CO₂ annually primarily driven by the inefficient consumption of bunker fuels (European Commission, 2021; Kiln Digital, 2012). In 2021, the choked ports and harbors with hundreds of ships in queues further illustrated the logistical magnitude of globalized business and the potential for climate impact.

The value/volume dynamic shown in Figure 3 is one area that firms should consider in the longer-term future strategy, as the high-volume: low-value globalization has strained systems and the environment. The number of container ships globally in 2021 was over 5400 (Statistica Research Department, 2021), with some of the largest ships carrying up to 24,000 containers. Each of these containers is typically further transported via truck or rail at either one or both ends of the maritime journey, with a further carbon footprint.

Figure 3.

Globalized Production Benefits Relative to Value/Volume. Note: This model is presented as savings (cost), but can also be extended to margin (revenue/sales).

Manufacturing firms can be either high-value: low-volume (example—aerospace), or high-volume: low-value (example—consumable industrial products) in their outputs. This will likely require a discriminate strategy for future success compared to the short-term economic decisions of past decades, especially if firms become economically liable or socially responsible for their climate impacts.

In the overall consideration of the carbon footprint, a more strategic and discriminating strategy is required in the movement of goods and services. Future global production and supply chain strategic improvements include two assumptions. The first assumption is that this is not the end of globalization (Olivié and Gracia, 2020) nor is fully deconstructing all of the interdependencies, integrations, and traditional globalization benefits pragmatic or even possible (Farrell and Newman, 2020). The second assumption is that global business needs strategic retooling both for efficiency/viability, and to minimize some of the negative impacts of globalization (Roches, 2020). This strategic retooling (by the industry and the firm) needs to be both aggressively dynamic and emergent, including long-term systems and structural planning. The new paradigm also suggests that firms may need everyone to pull together to realize industry, national, and global targets for climate change.

Strategic and lean value stream improvements

Supply chain vulnerability in the dynamic and turbulent global business environment and carbon emissions relative to industrial global logistics are both areas requiring urgent improvement(s). Some would suggest that cost-cutting and low inventory systems (typical components of LEAN manufacturing systems) exacerbated the supply chain issues of the 2020 decade, or that more frequent replenishing systems add transport (e.g., carbon footprint contribution), but there are also some misconceptions about these perceptions (El Masri and Matkó, 2022; Hadwick, 2020; Thakur-Weigold, 2022). Many firms have embraced the concepts of LEAN manufacturing within their organizations over the last few decades. The LEAN goal is to create processes that are demand-driven, do not hold significant inventory, and are as efficient as possible in the production of goods and services (Ndahi, 2006). Historically, LEAN manufacturing principles, Total Quality Management (TQM), Continuous Improvement (CI), Operational Excellence (OpEx), and Toyota KATA have helped firms navigate difficult industry environments and strengthened their competitive advantage. A tenet of TQM is the Plan, Do, Check, Act (PDCA) approach to continuous improvement, and the Toyota Improvement KATA expands on this with a four-step process: 1) Determine the vision or long-term strategic target/objective/challenge, 2) Understand fully the current condition relative to the specific situation, 3) Establish the next target condition, and 4) Conduct experiments to achieve the target condition in continual improvement by using the PDCA cycle (El Masri and Matkó, 2022). A number of these proven methodologies can be instrumental in solving some of the current issues.

After the SARS-CoV-2 (Covid-19) global pandemic and recent supply chain interruptions, adaptations to inventory and supply chain strategies have been conceptualized and implemented with a goal of resiliency (Cekerevac et al., 2022; Ivanov, 2021). Additionally, the drive for carbon neutrality is aggressive and is forcing radical changes in industries and firms.

LEAN manufacturing principles are associated with waste reductions and thus aid in climate impact and logistical considerations (Lim et al., 2022; Touriki et al., 2021). LEAN can not only help but maybe some of the best tools to engage (Lim et al., 2022; Thakur-Weigold, 2022). LEAN manufacturing’s key focus is to remove various forms of waste (Gupta and Jain, 2013; Smith, 2014). This usually means the classic seven forms of muda (waste) including transportation, inventory, motion, waiting, over/extra processing, overproduction, and defects. In some cases, a more holistic waste identification includes muda, mura (inconsistency), and muri (overburden) as non–value-added and thus causing costs and risks to the organization (Ohno, 1988; Smith, 2014). Feld (2000) suggests that “five primary elements for lean manufacturing are (1) Manufacturing Flow, (2) Organization, (3) Process Control, (4) Metrics, and (5) Logistics” (Feld, 2000: 1, Figure 1). Most of these waste definitions and LEAN elements can apply to the global production and/or global supply chain environments and are more significant. Within a manufacturing shop, transportation or waiting means distance in feet or meters, and time in minutes or hours. When these are extended to global environments, the feet or meters become miles, and the minutes or hours extend to days, weeks, or months.

Of note, inventory has historically been a form of muda in LEAN manufacturing, but during the Covid-19 pandemic era, some literature and firms have suggested that the muda of waiting has cost more than that of inventory, and have thus suggested some modeling is needed for resiliency to hedge against the current and future supply chain risks (Fonseca and Azevedo, 2020; Ivanov, 2020; Patrinley et al., 2020; Ponomarov and Holcomb, 2009) accepting some level of inventory as a necessary evil. Some have suggested and/or countered arguments that the entire concepts of LEAN manufacturing and/or Just-in-Time (JIT) concepts are outdated (Hadwick, 2020). Acceptance of some level of muda is not ideal, and thus the goal should be to understand and address the root cause. In the planning step of the TQM, PDCA process (Plan, Do, Check Act), or to understand fully the current condition relative to the specific situation (the Toyota Improvement KATA), firms will often use a few tools to assess and strategize. Two of these tools are the Spaghetti Diagram and the Value Stream Map.

Spaghetti diagrams

An interesting concept for strategically improving global production or supply chains is an adaptation of the spaghetti map or spaghetti diagram. A classic spaghetti diagram (Daneshjo et al., 2021) includes obtaining a schematic or map of the firm and/or entire area where the totality of operations occurs. Lines are drawn on this schematic to show where the product, person, and processes occur and the transit between/among these processes (e.g., the routes). Different colors or styles can be dedicated to different operations and/or can differentiate between person, process, or product. In an unimproved process, this typically results in a depiction of the process represented by a jumble of lines that cross back and forth and all over the operational area—resembling a bowl of noodles or spaghetti. Post-improvement diagrams are typically (when done correctly) less movement, less distance, and even fewer operations.

Adaptation of this tool to include a world map instead of the firm’s internal operational area can allow the totality of a firm’s global production or supply chain to be considered. A typical current state would likely see a similar jumble of lines, but instead of over square feet, this would be over miles and continents on a world map. This can illustrate the overall transport of goods and services (e.g., carbon footprint), but also suggest areas of vulnerability and interdependence in the supply chain. A spaghetti diagram on a global scope can lead to understanding how localized or global the supply chain is for each operation and the global movement—suggestive of logistical and transportation waste. In Porter’s Diamond (Porter, 1990), some countries do better than others with certain industries or products and may have different respective factor endowments (e.g., some resources such as raw material, condition, trained workforce, etc.). The supporting industries can be extended to supply chains. This suggests that there is greater success where there is geolocalized access to the processes, products, and materials needed. If globalizing an assembly plant to a foreign location where there are no component or raw material suppliers, then all materials would need to be imported, are subject to tariffs, freight considerations, etc.; and necessitate global transport. A typical firm might have localized products and materials but then have to ship the unfinished product to another country for a specialized paint, electroplating, heat-treatment, or similar process. This can not only drive muda/waste in transportation and logistics but can cause the muda—waiting (time delays). A spaghetti diagram will quickly show how central a firm’s operations are to its supply base, or how isolated or removed it is from these resources. In the supply chain issues of 2020–2022, firms are discovering that they do not know their downstream supply chains and that many of these are globally interconnected and interdependent (Lachvajderová et al., 2022). If the entire supporting supply stream were understood and could be mapped, it could uncover a lot of global movement suggestive of both waste and risk. An assembly plant in a foreign location may go through a localization effort for raw materials and supplies rather than import them to support this assembly plant and recognize savings in logistics and transportation costs, but if the sub-tiers are still dependent on imports/exports there can still be costs, delays, and risks that flow through to the finished result. Because many suppliers have typically guarded their supplier list as a competitive advantage, firms can navigate these issues by contractually requiring some LEAN engagement with their suppliers. A supplier can use a spaghetti diagram and show their supply stream as unnamed entities, but still reveal the global movement. A list (or at least counts and locations) of sole-source versus redundant suppliers along with a global map of product movement can suggest where there is waste and potential for interruptions. Firms can sometimes also help their supplier find a viable alternative through either design changes and/or a common supplier to localize a particular supply. The result of some of the geographical and logistical supply chain dynamics can lend to decision-making including vertical integration, design changes, dual sourcing, and/or altering location strategies for either the production or the supply base.

In addition to the LEAN forms of waste, the spaghetti diagram can also lead to the discovery/recognition of the climate impact and logistics that are involved in some value/volume products and suggest a strategy change. Firms may find that they are moving significant volumes of product for nominal and/or null savings, or potentially even at a loss. A challenge and proposal for the decade of 2020, is to rationalize what is globalized to assure the value (e.g., profit impact) versus the collateral (e.g., the strain on various systems and environment) is significant. This may become increasingly a viable strategy if firms or industries become financially incentivized or penalized relative to their climate impact. This is very dynamic (e.g., turbulent environment) as shifting technologies can quickly change volume/value dynamics—for example, lithium (electric) versus fossil fuels (Gruber et al., 2011), as well as all the other elemental, technical, and component constituents implicated in the technology shifts. Climate change response would suggest that moving massive quantities of goods for marginal Cost of Goods Sold (COGS) improvement (e.g., high-volume: low-value) should be minimized and rethought in the current and future strategies, and priority should be given to high-value: low-volume. The spaghetti diagram can be a first step to realizing the extent of logistics and transportation in this equation if the volume data is additionally considered.

Value stream maps

Another significant tool in LEAN manufacturing is the value stream map (Abisourour et al., 2019; Bodek, 2004; Feld, 2000). Before firms make any improvements, it is important to sort out all of the steps that are seen in the spaghetti diagram and understand which are part of the value stream and which are one of the forms of muda. An adage in LEAN manufacturing is that the best way to improve a process is to eliminate the need for it. Using a value stream map assures organizations do not optimize waste (e.g., a fix or improve a process they do not even need or want), but rather work to remove all the non-value operations or costs possible. If this process is extended to the global production or global supply chain environment (Ferreira et al., 2022; Suarez-Barraza et al., 2016), firms might find that an entire logistic or transportation (e.g., muda) event surrounds a process that could be localized, removed, or otherwise accomplished. Often where there are logistics and transportation muda, there are also other forms such as waiting, quality defects (e.g., damage), and resulting overproduction. Removing non-value operations can remove potential delay points and risks in the supply chain, but can also reduce the climate impact. Several LEAN tools are gaining popularity in environmental impact reductions, and LEAN/Six Sigma is sometimes referred to as the Green Lean Tool and utilizes environmental value stream mapping (Gholami et al., 2021).

Kaizen blitz

Firms may go through various LEAN initiatives for isolated improvements or adopt a comprehensive LEAN program as a longer-term strategy. In the case of a specific improvement project, firms can use the kaizen blitz for quick process improvement(s) through a multi-discipline engagement over a few days (Laraia et al., 1999). The kaizen blitz can be proactive (improvement or efficiency gain) or reactive (corrective action). This dedicated multi-discipline effort can be deployed to respond to the early 2020-decade supply chain issues and/or carbon-reduction initiatives. The execution of some spaghetti diagrams, value stream maps, and finding muda in excessive transportation, logistics, waiting (delays), overproduction, quality issues, etc.; can be completed with great benefit in just a few days using a kaizen blitz. It may take longer to make the changes, but the diagnosis and strategy can occur quickly in these events. Additionally, LEAN facilitators can be deployed to the first-tier suppliers to lead these intensive and short events, and flush out further muda and/or supply chain risks. Kaizen teams are multi-disciplined and provide different perspectives, and are given carte blanche to temporarily disrupt, experiment, and improve operations—challenging the status quo.

Discussion

The global production and global supply environments of the 2020 decade are more dynamic than in recent decades and many industries and firms are impacted. A few considerations suggestive of this increased environmental turbulence include technological discontinuities, logistics and transportation concerns relative to the climate impact, and global supply chain disruptions. Some technological changes may also exacerbate some of the supply issues through demands for materials such as lithium and/or have future environmental challenges that the new technologies bring such as dealing with batteries at the end-of-life (Qiao et al., 2021). In the dynamic and urgent climate crisis, firms must consider a strategic approach to achieve carbon neutrality and/or even to contribute a carbon deficit. Firms may have to revisit some strategic processes including outsourcing versus vertical integration, supplier volume (e.g., rationalized/consolidated versus deliberate redundancy), supply chain and sub-tier transparency, and geographical considerations in the suppliers chosen (e.g., localized supply bases). Firms should consider utilizing a kaizen blitz—a short, multi-discipline LEAN initiative—to drive out areas of waste and risk in the global supply chain and global operational footprint. This blitz should deploy some traditional LEAN manufacturing tools, adapted for the global production/global supply chain environment and scale. These include creating spaghetti diagrams and value stream maps to fully appreciate the muda factors of logistics, transportation, and delays around the world that may also cause secondary muda such as defects (damage) and overproduction or inventory. This can help implement a resilient and optimized supply chain, and reduce overall environmental impacts. The kaizen blitz (inclusive of tools such as the spaghetti diagram and value stream map) can quickly uncover waste and risk and identify actions, but some of the actions may take longer to implement.

The kaizen blitz can also be proactive in preparing a firm for further climate response eventualities (e.g., goals, mandates, or objectives). It can also proactively consider shifting technologies, and the implications for supply chains and strategy (for example, shifting to electric energy, etc.) Finally, organizations may find that moving away from globalizing high-volume: low-value operations and giving priority to high-value: low-volume can reduce the collateral impact and/or liability of their organization’s globalization.

Further research and limitations

This proposal is not intended as a comprehensive strategic approach, as it suggests short-term improvements in specific areas. It is also not a “once and done” process, but ties into the TQM—PDCA continual improvement process, and every improvement should be continually critiqued and perfected. This research is not a comprehensive tutorial on any of the LEAN manufacturing tools. These few tools are suggested (with an overview of their intended purposes) to have potential utility on a global scale to uncover some risk and waste (muda), responding to the dynamic geopolitical, geosocial, and climate environments that many industries and firms are experiencing. Experienced LEAN practitioners can help facilitate these events and tools with the firm’s multi-discipline task force, utilizing the conceptual applications outlined in this conceptual theory adaptation study. Most of the literature and practice for these tools are not typically extended to this global scale. The value of this paper is to theorize this extended utility, and this extension has implications for both industrial trials and further academic research. Most of the concepts in this paper are manufacturing-centric, but many service firms have adapted and implemented successful LEAN programs, and consequently—further research or industry trials may find extensions to other industry sectors.

Footnotes

Declaration of conflicting interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author(s) received no financial support for the research, authorship, and/or publication of this article.

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