Lean production management in Chinese enterprises

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Due to the relatively short period since the reform and opening up, Chinese companies lag behind Western and Japanese firms in terms of development time and capacity accumulation when it comes to lean production management. But from another perspective, Chinese companies have also benefited from the advanced management methods and technologies of Western and Japanese companies, thereby avoiding unnecessary detours. I. Current problems in the production of domestic manufacturing enterprises As of now, through management improvement efforts such as corporate restructuring, strategic planning, CIS systems, optimization of organizational structures, and development of marketing strategies, many Chinese enterprises have largely resolved issues related to their development orientation, organizational operation mechanisms, market expansion, and corporate philosophy. However, with the defined direction for the development of China’s green economy, greater integration into the WTO, and the gradual disappearance of policy advantages, Chinese companies are facing an increasingly competitive market. For many manufacturing enterprises, problems such as delayed deliveries, significant capital tied up in inventory, unstable product quality, inability to fulfill orders despite having them, and low efficiency in production systems have become fatal obstacles to their survival and development. Therefore, from the perspective of lean management, many Chinese manufacturing companies have decided to enhance process control in production management by introducing 5S, lean production management, and process reengineering; to improve the flexibility of their manufacturing systems and optimize the operation of these systems; to speed up their response to market changes; and thus to boost the overall competitiveness and profitability of the companies. Based on our research, the production systems of Chinese manufacturing enterprises generally have mild to severe issues in the following areas: ◆ Basic \"5S\" management ※There are still shortcomings in sorting and organizing; there are many problems at the work site, and the system for placing items in designated locations is chaotic. ※There is almost no visual management; it is unclear, there is a lack of signage, and searching for items wastes time. Problems cannot be detected in a timely manner. ※Standardized management is not adequate; production processes lack standardization, operational standards are imperfect, and standard setting is unreasonable. ※The equipment maintenance mechanism is inadequate, resulting in numerous failures and frequent shutdowns due to these issues. ◆ Production operations and the production site ※Some employees have outdated production concepts, and a order-centered approach to production operations has not been established. ※The production statistics and analysis system is inadequate, making it difficult to effectively assess the condition of the company’s production system. ※The production model results in large amounts of work-in-progress, which consumes significant capital and production space. ※Irregular color paste preparation and sample production procedures resulted in a significant loss of production time. ※The constant adjustments to delivery dates concealed many problems in the manufacturing process; issues that arose during production could not be identified and resolved in a timely manner, resulting in a slow response time for the system. ※There are no operational standards on site, and employees do not follow proper procedures, acting in a discretionary manner which leads to poor quality. ※There are no visual tools for standard operating procedure management at the site, leading to chaotic management; furthermore, there are no standards for on-site logistics management, which results in logistical disorder. ◆ In terms of quality management: ※The quality assurance system is not robust enough; inspection systems such as component inspection, manufacturing inspection, QC inspection, and self-inspection need to be strengthened. ※The process control capability for quality is weak, resulting in significant losses in quality-related costs. ※Visual management of quality, pre-production quality engineering diagnosis, preventive management, and post-production quality improvement measures are insufficient. ※Insufficient quality data analysis prevents improvements in work practices. ◆ In terms of managing the work environment and employee capabilities: ※The competence and management skills of frontline managers need to be improved, and their mastery of management techniques must be strengthened, particularly in identifying problems, solving them, and handling tasks independently. Training in advanced management concepts is also required. ※It is necessary to further create a favorable climate for improvement and enhance the working environment through methods such as employee training, slogans, and status boards. By focusing on improving the competence of employees and encouraging proposals for improvements, the overall standard of the company can be raised. II. Benefits of Implementing 5S and Lean Production As representative methods of modern enterprise production management, 5S and lean production management techniques can bring substantial benefits and improvements in production to domestic manufacturing companies, provided they are implemented effectively and utilized appropriately. Based on our experience, if the methods are applied properly and thoroughly, the implementation of 5S and lean production can help Chinese manufacturing enterprises achieve desired benefits and profit goals in at least the following three areas: 1. Organizational culture benefits. We believe that through the application of 5S and lean production, it is necessary to strengthen and deepen the following three cultural concepts within the enterprise: △ Enhancing a culture of striving for excellence in process quality, rather than focusing solely on quality inspection. Many companies take pride in their high quality, but the hidden truth is that this quality is achieved at the cost of a large amount of waste. It is not the effective control of the manufacturing process to achieve both the goal of improved quality and a reduction in waste. △ Precision, attention to detail, and strictness – whether it’s 5S or lean production, what matters is that efficiency comes from paying attention to details. This represents an excellent improvement over the tendency in Chinese traditional culture to settle for a superficial understanding. △ To truly put the customer at the center of attention, many companies consider delivery delays to be an acceptable practice; especially when, through communication with the customers, it is possible to prevent them from getting angry over these delays, production staff in such companies tend to see such delays as something entirely justified. 2. Economic benefits: Additionally, according to our research, for many manufacturing companies in China, by implementing 5S and lean production practices, economic benefits or improvements can be achieved in at least the following areas: △ A 30% reduction in quality losses. △ A 30% reduction in inventory levels (excluding appropriate amounts of raw materials and finished products). △ The production cycle is reduced by 25%. △ The downtime due to equipment failures is decreased by 30%. 3. Improvements in employee competence: We believe that by implementing 5S and lean production, the third benefit lies in the improvement of employees’ competence in the following areas: ◆ Selecting talents who can better drive the development and progress of the company. △ Enhance the overall sense of striving for excellence among employees. △ Improve employees' ability to identify and solve problems. △ Improve employees’ ability to master and apply modern management techniques. △ It is important to foster in employees the habit of working in a proper manner and maintaining good habits. Of course, implementing this approach will inevitably face significant obstacles; the key is to change employees’ mindsets through training, to establish clear and specific standards for work performance, to assign the most suitable people to carry out tasks, to use effective incentives to create motivation, and finally, to ensure that leaders at all levels of the company pay attention to this matter. The lack of any one of these elements will significantly undermine the effectiveness of the efforts and the resulting benefits. III. Some Key Points for Implementing 5S and Lean Production. To successfully adopt lean production management, we believe there are four key elements: 1. Clear objectives – it is necessary to have clear goals for the ultimate outcome as well as for the intermediate steps; therefore, various standards must be established, including standards for efficiency improvement, operational standards, status standards, and evaluation criteria ； 2. Change mindsets; only by having each employee alter their existing ways of viewing problems and carrying out tasks can work be effectively implemented ； 3. Ensure the right personnel are in place; for this task, it is necessary to make sure that \"those who are capable of doing the work will carry out the task\"" ； 4. Ensure proper coordination: the various components should be linked together in a logical manner, so as to avoid situations where a weak foundation makes it difficult to proceed with subsequent tasks. At the same time, it is important to avoid wasting too much time, which could result in nothing being accomplished in the end. Based on the above understanding, and in order to ensure a solid foundation for lean production projects in Chinese manufacturing enterprises as well as to keep the progress of such projects on track, we believe that 5S, lean production management, and process reengineering can be implemented through an integrated yet independent project approach. In this approach, the work done in one phase serves as the foundation for the work in the subsequent phases, while the execution of the later phases also serves to reinforce the results achieved in the earlier phases. When carrying out each part of the work, it is first necessary to establish clear goals, including efficiency goals, quality goals, and cost goals. It also conducts a systematic analysis of various behavioral factors that affect goal achievement, taking the optimization of production systems and the improvement of the company’s overall operational capabilities as its fundamental focus, rather than merely focusing on on-site management and improvement. Based on this positioning, the first step is to conduct systematic employee training and establish comprehensive operating standards, so that all positions have clear guidelines to follow when improving their work. A kanban system that enables standard operations while facilitating information transmission within the production system. The kanban is the visual aspect of the lean production method. On the one hand, it is necessary to have a set of on-site management methods that suit the actual conditions of the enterprise itself ； On the other hand, it needs to be mastered and implemented by all the workers on site. Based on the specific conditions of Chinese manufacturing enterprises, corresponding support systems are established in line with the goals, on-site quality management and TPM equipment maintenance are improved, production improvements are introduced, and various management tasks are refined. Therefore, the operation of the entire project must be driven by the ultimate goal. Under the approach of driving project operations with the ultimate project goals, the project must be completed in accordance with the following work structure. As shown in the figure below, establishing and refining the 5S and lean production systems is a highly practical task. The analysis, design, implementation, testing/adjustment, and further refinement of each component of such a plan must take place simultaneously. Moreover, it requires the joint efforts of all employees within the company; consulting firms cannot carry out these tasks on behalf of the company. The role of consulting firms is to utilize their experience, expertise, and specialized techniques to provide guidance, knowledge support, and advice to the company: 1. Research, analysis, and diagnosis – Understanding the current state of the company’s production and operation system, starting from the company’s value chain, in order to identify areas where working methods and approaches need improvement, as well as to uncover the underlying causes of problems within the production and operation system ； A \"Corporate Evaluation and Diagnosis Report\" is prepared, which objectively describes the data related to on-site basic management, equipment management, quality management, cost control, and material management, as well as the key areas for improvement, in the process of implementing kanban management. It also includes analyses of production capacity efficiency, quality factors, and cost factors, thereby laying a solid foundation for effective progress in the future. 2. Content of training efforts: An important aspect in achieving the goals set for improving production management is the determination and level of involvement of corporate leaders ； On the other hand, it is also inseparable from the active participation of all employees in the company. Initial training on corporate philosophy and concepts is highly necessary. During implementation, it is necessary to change certain *inherent ways of thinking and *inherent behaviors of people, in order to create a human-centered environment that facilitates the smooth implementation of lean production ； On the other hand, and most importantly, it is necessary to train a group of people for enterprises who understand the concepts and know how to operate them. Based on the needs for improvement, the training courses that should be established are: 1) 5S management and visual management ※Training on the basic knowledge and concepts of 5S? Key points for promoting 5S? Office 5S ※Production site 5S ※Establishment of 5S standards and evaluation 2) Lean production – Building fast, flexible manufacturing systems ※Training on lean production concepts and theories ※Value stream analysis ※Standardized work ※JIT production ※Rapid changeover ※Error prevention and problem solving 3) Kanban management and lean logistics management ※The significant losses caused by inefficient logistics to businesses, improvements in internal logistics, basic concepts of kanban, establishing a pull-based production system, classic methods for reducing inventory, setting up and implementing handling methods ※Just-in-time procurement and supplier management 4) TPM – Total Productive Maintenance ※The six types of losses associated with equipment, analysis of equipment utilization rates, analysis of reasons for equipment performance degradation, equipment maintenance and its relationship to quality and cost, the meaning and significance of TPM, methods for fault analysis, implementation of 5S in equipment management, approaches to promoting TPM, techniques for implementing TPM 5) Practical applications of lean quality management ※Training on the concepts and techniques of lean quality management ※Application of statistical techniques in quality management ※The seven QC tools 6) Methods for efficient on-site operations ※Overview of the basic principles of job design, methods for expanding work tasks, concepts and principles of industrial engineering, analysis of movements and elimination of waste in movements, definition of standardized work, the three elements of standardized work: cycle time, sequence of operations, and standard handling methods; requirements of standardized work regarding quality conditions, three tools for applying standardized work, creating operational methods that ensure the highest quality, minimum effort, and safety; first-in-first-out principle and product traceability, production layout designed to reduce effort, and methods for having multiple machines operated by one person. 7) Work instruction methods ※ The importance of instruction, incorrect instruction methods, the four stages of correct instruction methods, practical exercises for implementing correct instruction methods, the role and methods of task breakdown, and the application of instruction methods in actual work. 3. Content of project implementation: To reduce project risks and minimize the impact on the company’s current operations, a phased approach is generally adopted; each stage starts with a pilot area, and once the requirements are met in that pilot area, the method is then rolled out on a larger scale. The main contents are generally as follows: ※Implement 5S and visual management to create a transparent workplace. Establish the basic rules for on-site management, identify inefficiencies and waste in the workplace; in particular, by implementing the \"three fixes\" principle for materials, it is possible to trace logistics activities, thereby more effectively exposing waste in logistics. This approach helps to gradually foster among employees the habit of adhering to the established rules. ○Distinguish the materials stored on-site and establish storage standards (standards for location, time, and on-site inventory levels) ； ○Dispose of unwanted items according to standard procedures ； ○Designated markings for material storage areas, section identifiers, and markers to distinguish pathways ； ○Identification and treatment of pollution sources, establishment of cleaning responsibility areas, formulation and implementation of cleaning standards ； ○Establishment of inspection standards and evaluation criteria for 5S. ○Optimize the management of equipment spare parts, including the inventory management of essential items, the procurement channels for non-essential items, and the management of their wear and replacement cycles. ※Establish standard operating procedures and improve work standards; develop comprehensive work instructions, standardize manufacturing and inspection criteria, ensure seriousness in on-site quality management, strengthen process control over quality, eliminate wasteful operations, and enhance production capacity. ○Establish work standards and provide training for employees, completing multi-skill worker training ； ○Re-optimize the tasks and allocate the workload reasonably ； ○Optimize work standards to achieve standardized operations. ※Establish handling routes and standard handling procedures. By using appropriate handling methods, mixed shipments in small batches but frequent times can be carried out, thereby reducing work in progress and enhancing the responsiveness of the system, thus achieving the goal of flexible manufacturing. ○Use a transportation method with irregular timing and variable quantities, or irregular quantities and timing ； ○Determine the fixed handling personnel and frequency of handling ； ○Set a reasonable minimum intermediate inventory level ； ※Implement a kanban system: Establish a kanban management system within the production system, and use kanban signals to enable efficient logistics and just-in-time production throughout the process, thereby reducing work in progress and shortening the manufacturing cycle. ○Investigate the current status of logistics ； ○Draw a current logistics map ； ○Analyze logistics routes and draw Kanban flowcharts ； ○Determine the number of kanban cards. ※Establish a preventive maintenance system for equipment, thereby transforming fault repairs into preventive maintenance measures; this improves the processing accuracy and capacity of the equipment, while gradually reducing the number of downtime incidents due to equipment failures as well as the time required for repairs. This part of the work was obscured by the large number of items in production on site ； However, with the implementation of kanban management, the importance of preventive maintenance for equipment will become extremely prominent. ○Equipment assessment to identify critical equipment ； (The settings for key equipment are based on a comprehensive parameter) ○ Troubleshooting of existing equipment faults ○ Conducting self-inspections of the equipment ； ○Implement a planned maintenance system for equipment, including weekly, monthly inspections, as well as maintenance during shutdowns ； ○Establishment of equipment operation standards ○ Optimize the management of equipment spare parts, including the inventory management of essential items, the procurement channels for non-essential items, and the management of their wear and replacement cycles. ※Establish a lean quality assurance system, shift the mindset toward quality, define methods for on-site quality management, make quality issues visible, utilize tools for quality management to enhance traceability of quality, and adopt methods for analyzing quality issues ； On-site quality traceability application ； Description and solutions of the QC seven tools ； On-site quality management methods and QCC quality control circle activities. ※Creation of a proposal system and improvement of issues: By addressing quality-related issues at the production site, a proposal system was established to leverage individual improvements to gradually refine and optimize outcomes, thereby maintaining and enhancing the capacity for improvement. Establishment of the proposal system ； Improve the selection of improvement topics and refine the summary evaluation for the presentation of improvement results ； IV. Phase-based Evaluation: During the implementation process, it is necessary for employees within the company to communicate thoroughly at each stage in order to ensure the effectiveness of the work. At the same time, training on targeted methods is arranged according to the progress of work, in order to enhance employees’ skills and awareness for improvement. After each sub-project is completed, the company’s staff (or consultants) conduct thorough discussions, and then evaluate both the production conditions prior to implementation and the outcomes during the implementation process. Based on these evaluations, adjustments are made to the specific implementation plans in order to ensure the effectiveness of the project’s execution.