5 steps for a Chinese factory to improve its efficiency

by Renaud Anjoran on 15 June 2012

The attitude of many Chinese manufacturers can be very frustrating.

The boss is usually focused on negotiating favorable prices and pushing production out the door. Not on learning from mistakes and looking for solutions. I explained all this in Why few Chinese factories are adopting lean principles.

I am reading a practical guide called Becoming Lean: Inside Stories of U.S. Manufacturers (a set of essays gathered and edited by Jeff Liker). It lists five improvement stages for a factory that wants to become the best in their industry.

The main obstacle is the factory’s mentality

With encouragement from their biggest customer, most Chinese factories can probably accept to go down step 1.

The really conceptually challenging steps (for the manufacturer with a “mass production” mindset) are steps 2 to 4. But achieving step 1 already allows for impressive gains in efficiency and reliability.

It is very hard for most Chinese manufacturers to accept counter-intuitive ideas such as these:

  • A machine should be shut down after just enough production was made;
  • Safety stock should disappear from the production floor;
  • Three small machines dedicated to separate product lines are better than one large machine;
  • Running one product for an entire shift is seldom a good idea; it is better to change over frequently during a shift;
  • Finger-pointing should disappear, as a condition for a stable and committed workforce.

If the owner does not understand these concepts, a full “lean” transformation is impossible. But a “step 1″ transformation is possible.

Benefits of a successful transformation

What these factory owners don’t know is the benefits of a successful lean transformation:

  • Faster production cycles, which means more production with the same infrastructure;
  • Much higher labor productivity (increased by 30-50%);
  • More flexible production, lower MOQs;
  • Less quality problems, much less rework or reproduction;
  • Less working capital eaten up by inventory;
  • Less employee turnover rate, because work is more varied and there are more opportunities to learn (modular manufacturing).

Step 1: stabilization of processes (it takes up to 2 years)

The goal of this first step is to achieve consistency in production, and to show everybody in the factory that changes are not threatening.

These two conditions are necessary before reducing inventory levels and before re-organizing the material flow in depth.

How to achieve consistency?

1. Standardized work instructions

Each operator should be given a standard, and be trained to follow it. Be very clear about the right way to perform each operation on each machine.

2. Jidoka

What are the components of jidoka (a coined word in Japanese that is often translated by “automation with a human touch”, by opposition to automation)?

  • Stop assigning 1 human operator in front of each machine. Make sure each machine doesn’t need constant supervision, and free humans to perform value-adding work;
  • Operators should tend to a machine only when needed. This way, they can supervise several machines;
  • Right-size the tooling;
  • Reduce setup time;
  • Use several small machines, rather than one large machine.

3. Product-oriented production flow

Chinese factories are often specialized in one product line only. When this is not the case, it is best to specialize the machines by product line.

Machines that are used for making the same product should be placed in an adjacent manner.

4. Preventive maintenance

Make sure machines don’t stop unexpectedly. You will need them to run without a fault when they are needed.

5. Mistake proofing

Certain causes of problems can easily be eliminated thanks to simple “poka yoke” devices. Sometimes, the best solutions are the simplest and the least expensive.

6. 5S

After you have remodeled the production flow, you can do some housekeeping:

  1. Remove from the shop floor the items you don’t use routinely,
  2. Have assigned locations and labels for everything you retain on the shop floor,
  3. Have production operators clean their workplace at shift end, so that they notice details like spills, frayed cables, or broken lamps
  4. Use checklists and audits to monitor daily practice of the above three steps,
  5. If possible, make the first three steps a habit of every worker (no need to audit them any longer).

Do not start with a 5S program. It will not bring impressive cost reductions, and operators will resist it. It should come after jidoka was introduced.

Step 2: improve the product flow

Production should run as continuously as possible. Reduce batch sizes and in-process inventory.

If you have made tooling changeover faster and if the machines don’t break down frequently, it is possible. But keep making efforts to drive batch sizes down.

Step 3: the products follow a certain sequence

Organize delivery from one station to the other in the exact sequence in which it is needed.

This logic should not only apply internally. Work with sub-suppliers if possible, and purchase components in smaller batches. The suppliers need to trust you before they make efforts, so go for single-source and long-term contracts — even if the unit price goes up a little.

Control the components, and send them back if they are defective. Ot seems obvious, but it is very rarely done in China. The boss should not purchase components from his friends!

If critical component suppliers have minimum order quantities that get in the way of lower batch sizes, try to find a way to reduce them.

Step 4: pull, don’t push

Each material should be replenished by upstream processes. Use pull signals (such as “kanban” cards), rather than high-tech solutions.

Remember, you don’t need computers to organize the production flow. There are often no computers on the production floor of many Toyota factories. Make everything visual (place graphs on walls…).

Step 5: try to level production

Produce a leveled quantity and mix of products across all the value chain.

Leveling production is a constant battle if demand needs to be forecast. But it is actually not that difficult for manufacturers that produce only after they receive orders, as is usually done in China.

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