Posted by: Knightbird | August 10, 2016

Giant Bicycles and Lean Management

My son in law builds mountain bike trains and rides them on Giant Bicycles. So this curious mind wanted to know a bit more about the company, specifically whether they used the principles of Lean Manufacturing.

Giant bicycles are made in Taiwan, a tiny island country with a population of 23 million in an area of less than 14,000 square miles. That makes is just larger than the state of Maryland, and Taiwan pales in comparison to Alaska’s 266,000 square miles. Started in 1972, Giant is the world’s largest manufacturer of bicycles. A former largest bicycle manufacturer and the bicycle of my youth, Schwinn, declared bankruptcy in 1992. Bicycle design went through incredible periods of innovation, sport adaptation and market differentiation. Schwinn did not adapt.

The low end of a market is always susceptible to cheap knockoffs from emerging economies. However, as my son in law, an avid mountain biker told me, quality and reliability are very important to mountain bikers, and there is a market for people willing to pay for high end bicycles. I wasn’t aware that high end mountain bicycles can cost more than $10,000. Giant participates in this market.

Taiwanese bicycle manufacturers recognized in the late 1990’s and early 2000’s that they faced intense competition from low cost manufacturers like China. Their industry formed an alliance referred to as the A Team and in 2003, the A Team brought the Toyota Production System to Taiwan. At the time this article was written in 2008 [LINK HERE], one alliance member had effectively “lowered our parts inventory by 15 percent, reduced lead time by 60 percent and raised productivity by 25 percent since our implementation of TPS/TQM/TPM in 2003,…”

Today, Giant has about $2 billion in sales annually. [LINK HERE] 2002 revenue was approximately $445 million. Revenue increased by 350% for Giant since implementation of lean management systems. And it is still being used at Giant, but I could find nothing to indicate that they had transferred their lean culture to other non manufacturing areas such as finance, human resources, document management or other administrative and development areas.

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