Stanford Business School recently published an article by Ian Chipman on an innovative solution to improve working conditions in the developing world dubbed “lean manufacturing,” which eliminates wastes, and “emphasizes efficiency and responsiveness to increase production quality,” according to Stanford research.
Stanford Professor Jens Hainmueller, MIT’s Greg Distelhorst, and Brown’s Richard M. Locke surveyed Nike supplier factories that embodied this new program. According to the article, workers in lean environments “perform a variety of tasks while taking an active role in process improvements.” For instance, “sewing, ironing, and packing might all be linked in a single process in one integrated system.”
Hainmueller explains that he and his fellow researchers were interested in uncovering how lean manufacturing environments affected labor standards. They were pleasantly surprised by their findings.
“This is something Nike committed to for business reasons, to increase efficiency and be more productive. The beautiful result is that there is a business case for [lean manufacturing] and it’s in the company’s best interest to sustain it, but it also seems to have these positive social consequences. It’s a win-win.”
Lean adoption saw labor compliance improvement between a third and a half of a letter grade. “Overall, lean adoption reduced the probability of serious labor violations by 15 percent.” Hainmueller explains that lean adoption can bridge “the gulf that marks the difference between an unacceptable and an acceptable factory in Nike’s eyes.”
Lean adoption did not uniformly impact all the foreign countries in which Nike has set up factories. Non-lean Indian and Southeast Asian factories that adopted lean manufacturing environments saw massive improvement to their labor compliance scores, but the same fate did not befall Sri Lanka and China – Nike’s largest manufacturer.
The reasons, according to Hainmueller, are complex. “The broader interaction between the government and the companies matters quite a bit, in terms of enforcing some of these labor standards, and ensuring that workers have a way to consult the courts, or sue the company, or engage in protest in order to improve things.” The Chinese gap notwithstanding, Hainmueller remains “optimistic about the implications for sustainably aligning a company’s global business operations and corporate social responsibility efforts.”