Tag: LEAN

China Manufacturing Survival: From LCC to “HCM”

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October 9, 2008
by David

Here is a sequel to my previous post Southern China Manufacturing Strategies.

Southern China has a great opportunity to move from the bankrupt LCC (Low-Cost Country) model to what I call the “HCM” (Highly-Competitive Manufacturing) model.

When labor is not cheap, how can manufacturing in China remain competitive:

Go Local:
If the next step in the value chain is physically located in the region, then it may add value to locate manufacturing there. Obviously if the product is being sold locally, there is value there. But also if the region can offer more competitive sources of raw materials and components, there can be a good business case for locating there.

Go Green:
It makes sense to consider “green” or other emerging technologies as
a way to add value to the operations. Going from plain vanilla
products to similar products, but “branded greener” (and sold at a
higher price) with marketing and technology backing it up. Everyone
“wants” to go green, but not everyone has the know-how and capital to
do it. As Southern China has have the nexus of light-manufacturing experience, overseas
technical contacts, and educated engineers, and you could more likely do
this successfully in the here than you could in Vietnam or even some
inland Chinese region with cheaper labor and rent.

Go Flexible:
As stated before, a factory can add value by being more flexible: going after smaller orders, offering ultra-quick turnaround service, and customizations can all be viable strategies. But in order to be successful at this, the factory must move from a mass-production model to a leaner, more flexible model. Generally speaking, this would require the deployment of demand-flow technology, kanban management, and lean manufacturing strategies.


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The Change Junkie Mantra

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September 15, 2008
by David

Here’s the mantra;

Keep it Lean, Keep it Simple, Keep it Real, Keep it Going

Here’s what I mean:

  • Keep it lean
    Generally, dysfunctional or under-performing factories are operating
    inefficiently, and lots of low-hanging fruit can be gathered and hauled
    away by utilizing lean principals.
  • Keep it simple
    Identify concrete problems and propose limited but effective solutions.
    If you are responsible for leading a turn-around, the complexities of
    perfectionism are simply not part of your world! Go for a quick fix for
    80% of the problem and go snag the remaining 20% later after you’ve
    become a hero.

  • Keep it real
     Make sure you accurately measure progress (inventory reduction,
    operating cost reduction, on-time delivery, production cycle time,
    etc.) against accurate baseline data. If a performance indicator is
    really difficult to measure, it may need to be changed to one which can be measured easily.  (e.g., SMART KPI)
  • Keep it going!
    Ensure that your performance is repeatable by establishing
    transformational best practices as written procedures, on which all
    relevant personnel are trained.
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Q&A: Waste Reduction: Where to Start?

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September 8, 2008
by David

I recently answered another question posed by a Linkedin user. Below is the question and my answer (designated as “best answer”).

The question:

What are the specific waste elimination projects you have identified in your business? Please provide details of strategy of waste identification, tools used and results achieved.

In this turbulent economic times, waste elimination should get required priority in each business. I am looking for some ideas to be shared to all.

My answer:

I’m involved in manufacturing in China, and my comments below may be relevant to that enterprise, and not to yours. But here’s my experience for your reference.

In starting waste reduction projects, I like to concentrate on a limited number of measurable results which:

  • Are easily measured
  • Can be obviously seen as succeding
  • Have the most positive immediate effect on the organization

In my experience (and others may have differing experiences) an early concentration on WIP vs. Output, inventory turns, and manufacturing turnaround times (from reciept of order to shipment) are helpful. While these are not the only items to measure, I believe that getting these metrics “on track” will lead to benefits in other areas.

As for a few of the tools used:

  • VALUE STREAM MAPPING (to identify waste in the process, and more importantly to teach the team how to identify waste)
  • ONE-PIECE FLOW (to ensure that lines are balanced and bottlenecks can be easily identified, elevated, and optimized.)
  • PRODUCTION FLOOR KANBANS (showing planned production quantities, actual production quantities and production yields)
  • CDC or IN-LINE INSPECTION (where each operator is responsible for (C)hecking previous operators work, (D)oing his/her own process step, and (C)hecking his/her own work prior to passing the workpiece on to the next step.

Once you have gotten the low-hanging fruit out of these, you can move on to others.

Hope this helps
David

It is easy to disagree with my advice, as I advocate stressing the practical implementation up front, and choose to “backfill” the cultural or theoretical components of lean after the initial jumpstart. In my experience, it’s best to jump right into the lean strategies after one or two training sessions (so that everyone knows how we identify waste, and how to map a value stream). This way, the early “wins” speak for themselves, and help sell the concept much better than hours and hours of brainwashing/cheerleading.

The cultural aspects are extremely important and should not be disregarded, I only advocate that give a taste of things to come before the immersion in theory.

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Going Lean: How to Start

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September 5, 2008
by David

Early in my China experience, I had mentioned to several friends that I was taking my factory “lean” as part of a turnaround strategy. My European and American friends laughed, called me a dreamer and promised I’d be sorry I tried it. The (racist and incorrect) thinking then was that Chinese people were incapable of assimilating new ideas.

After achieving some initial success (yes, Chinese assimilated the new ideas and even implemented them!!!!), I was told that it wouldn’t last, and that I’d go back to the “old way” to ensure cost effectiveness in operations.

After several successes, I am now being asked how to do it. Here are the steps I’ve taken to implement lean in several facilities:

  1. Choose the right team
    You could start by giving large lectures on what lean is, what are the the benefits, and how reaping those benefits are necessary for your organization’s health and ultimate survival. Those who are interested enough to ask questions, even those who are initially opposed to the change, will make good team members. Those who are uninterested or unable comment will probably not make good team members. While everyone will ultimately be involved in some respect, there may be a core team of evangelists whom you can count on to support the overall effort.
  2. Limit expectations
    I would usually choose benefits such as improved inventory and throughput, as these highly visible results. There can be many, many more benefits, but in the early days I like to limit them to just a few as it helps to focus the group’s attention on the deliverables.
  3. Flowchart existing processes
    Have your people prepare a flow-chart, with cycle times, tracing the flow of materials from purchasing through-to shipping.
  4. Map the value stream (critical!)
    Teach them what a Value-stream Map is, and let them map the same value streams they previously flow-charted. Revise the map if necessary reflect any waste the team overlooked, then compare the map to reality and revise with the team. Utilize the Theory of Contraints in balancing the processes.
  5. Work together to identify waste
    Work with them to determine which are value-added process steps and which are waste.
  6. Strategize & implement
    Formulate strategies which can be employed to eliminate or at least reduce the waste. Make elimination of waste a project (or multiple projects, as appropriate) and use standard project management techniques to make it happen.
  7. Repeat as necessary

Some hints:

  • Start the journey by identifying low-hanging fruit. You might want to have some quick and visible “wins” early on. Make sure you celebrate those wins.
  • You may wish to assign some project leaders who have a stakeholding in the process improvement.
  • Show the math… how reducing waste in the process, end to end, will improve inventory and delivery performance. Make sure “wins” are celebrated as quickly as possible.
  • I assigned the Chinese translation of “The Goal” as required reading to all my managers and some staff. It helped get them to easily understand the Theory of Constraints.
  • Don’t be afraid to take risks… if you don’t, your team certainly won’t. You do not achieve change without risks, and no one will take risks if the costs are deemed too high. (Drive out fear).
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Southern China Manufacturing Survival Strategies

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September 5, 2008
by David

If you’ve spent any time in the Pearl River Delta recently, you’ve probably spent much of it discussing the rising cost of manufacturing here. Margins are being squeezed by ever rising material, labor and logistical costs. People running facilities here are talking about moving inland, moving out of China, or closing up shop. But there are alternatives to going broke or opting out. Here are a few I’ve explored, both in my own facility, and in conversation with other factory owners and managers.

  • Change product mix Concentrate more on higher margin production, those with more design or technology value.
  • Outsource labor-intensive process steps Within existing product mix, try to outsource the more labor-intensive process steps and concentrate in-house on the higher value-added processes.
  • Add value with flexibility Change production management to competitively manufacture low volume/high mix/quick turnaround, allowing for higher margins.
  • Go lean When costs rise, reducing waste throughout the organization becomes more important. If “lean” was just a buzzword yesterday, it will be a competitive advantage tomorrow
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