Small and medium-sized manufacturing needs a self-transformation of management| micro horizon

Xie Hong/Wen Recently, a colleague in the membership department was very excited to tell me that our member company, Liwang Hi-Tech, did a "Lean Management Improvement Week" activity with the theme of "Lean Production, Efficiency Improvement" after New Year's Day in 2022, and the effect was very obvious:

The enterprise business focused on the high-end smart phone industry and the transformer of the new energy automobile industry, and used 5 days to make improvement attempts in two production lines, achieving an efficiency increase of 82% and 164% respectively, and the improvement week has actually saved 40 people. If promoted throughout the company according to this management level, it is expected to save 400 people in 2022, close to or reach half of the company's total existing number of people.

I invite Lu Zhen, the founder of Foshan Zhenjia Enterprise Management Company and the chief lean consulting expert, to the Guangdong Association for the Promotion of Small and Medium-sized Enterprise Development (hereinafter referred to as the "Promotion Association") to discuss with the Counselor of Liwang "Lean Management Improvement Week". Lu Zhen said that the reason why lean management is improved on a weekly basis is because enterprise changes require a brainstorming with intensity, pressure and the pursuit of the ultimate, which promotes the improvement of the production site of the enterprise in an all-round way and greatly improves the performance of the enterprise.

Improvement Week has several important aspects of design: One is the need for high goals. Only by high goals can we expose real problems, and only when we achieve high goals can we form incentive potential energy and create model projects. The second is to greatly compress the improvement cycle. Everyone involved in the activity must participate in the improvement of every detail with high intensity and concentration throughout the whole process, and dedicate everyone's ultimate thinking. The third is team combat. Enterprise production is not a production department thing, must be the enterprise and production-related departments linked together, including finance, procurement, research and development, etc., to form a support system to achieve high efficiency manufacturing. The fourth is to adopt the most advanced methodologies and research tools. Fifth, time management. Sixth, on-site improvement and continuous iteration.

In the practice of Liwang Improvement Week, the goals proposed by both teams were relatively conservative, only proposing a 30% increase in production efficiency. But when the whole staff went all out, the effect was beyond imagination. One of the production lines increased the final efficiency by up to 164% by changing the direction of the assembly line, adding a small assembly line, unifying the direction of the baseplate, and increasing the use of automatic copper foil soldering machines.

The reason why the Promotion Association and Zhenjia Consulting Company jointly launched the "Lean Management Improvement Week" plan is that the gap is large and the room for improvement is large; second, a large number of lean improvement practices have proved that as long as enterprises pay attention, lean management can definitely make an effect. Liwang company's original labor and sales accounted for more than 15%, lean experts judged that squinting eyes can achieve more than double the efficiency improvement.

Amazing lean management

Lu Zhen believes that after decades of development and precipitation, enterprises represented by midea and so on stand out in the fiercely competitive industry, which can represent the highest level of Manufacturing Management in China. However, the gap between the overall level of China's manufacturing and the world's advanced manufacturing countries is still huge, which is mainly reflected in the gap between many small and medium-sized manufacturing industries and advanced manufacturing countries.

He mentioned that the proportion of raw materials and sales of Midea's company reached 70%, and the other 30% should include production costs, profits and labor costs, and its labor costs and sales accounted for only 2.7%. Most of the small and medium-sized manufacturing labor and sales ratio are more than 10%, and the room for improvement is huge.

There are many examples of lean management improvements that have revitalized enterprises.

Shunde Shengye Electric Company's main product capacitors were originally exported to the United States. After the Sino-US trade war, tariffs have increased significantly, and now the main market has become a domestic market, accounting for more than 70% in turn. The gross profit margin of the company is 45% when it is mainly exported, and the gross profit in the domestic market is 25%-30%, and it may be lower. Through the introduction of lean management, the production efficiency of Shengye Electric has been greatly improved. In 8 months, the overall production capacity of Shengye Electric increased by 99%, and the overall efficiency increased by 54%. However, for the improvement results of Shengye Company, Lu Zhen feels that there is still room for continuous improvement.

Fengming Electronics Company, which is also a member of the Promotion Association, is also a capacitor production enterprise, the market has always been dominated by domestic, and it has long been accustomed to the fiercely competitive environment in China, and has also turned lean management into the normal state of daily management of enterprises. As companies are more adapted to competition in the domestic market, their companies naturally have a larger share of the market.

Suzhou Gutechnium Company, an enterprise engaged in the production of electronic components. The Promotion Association invited Wu Nianbo, chairman of the company, to Guangdong to share the practice of building a "happy enterprise". However, there are always enterprises that believe that while Gu technetium is building a "happy enterprise", although the internal is harmonious, the profit margin of the enterprise is too low and lacks competitiveness.

In 2019, Gutechnium fully introduced lean management, and the business outlook was renewed: 126 times a year carried out "improvement weeks", employees independently participated in more than 4,000 improvement proposals, 408 people participated in the "improvement week", the average improvement efficiency of TPM (full production and maintenance) reached 23%, and the annual customer complaints decreased by 39%. In 2019, the enterprise business increased by 33%, the profit margin increased by 122%, and the recently disclosed 2021 performance forecast will increase the profit margin by another 112.83%-164.28%. Enterprises in the disclosure of the core competitiveness of listed companies has a paragraph described as follows: "the advantages of the introduction of new ideas of lean management".

In 2018, Belle, the shoe king who was on the verge of bankruptcy, began to deeply introduce the lean operation system, from strategy to daily management, BPD explosives development, team leader cultivation and other system-wide improvement management tools, and established a BBS management system for enterprises. Corporate profit margins increased from 2% in 2018 to 12% in 2020, and the on-time delivery rate increased from 30% to 90%.

Hongqiao furniture, also from the members of the Promotion Association, after more than a year of lean improvement, this traditional furniture manufacturer has been full of great vitality, which is a world away from Lu Zhen's joke that "when I first entered Hongqiao furniture, I found several production lines in the warehouse". From 2018 to 2020, corporate sales increased by 43%, gross margin increased by 129%, and delivery punctuality increased by 142%.

Zuo Boliang, general manager of the enterprise, said that there are two windfalls in lean management: First, a large amount of inventory is reduced, so that the company has tens of millions of more liquidity when the state tightens its bank in the first half of 2019. Second, lean management improves the on-time delivery rate and quality assurance of enterprises, so that enterprises have the ability and qualification to become more high-end international and domestic terminal seating and office equipment suppliers.

Lu Zhen has been engaged in lean management services for small and medium-sized manufacturing industries for more than 4 years, and has participated in lean improvement management services in more than 30 industries. He said that the easiest goal for enterprises to participate in lean management is to multiply profits, not by increasing sales, but by directly reducing costs, reducing labor costs, reducing land space, improving production efficiency, reducing inventory, and improving delivery punctuality and quality. These improvements basically do not need to increase equipment investment, and the improvements are immediately productive, immediate and very controllable.

The key is that the boss of small and medium-sized enterprises should update their concepts, let lean management become the "C position" of the enterprise, and create a lean management model project within the enterprise as soon as possible. Lu Zhen believes that lean management is divided into three levels, one is communication, the second is transmission, and the third is inheritance. As an operating institution, medical treatment does not knock on the door, and the government, associations, and the media are needed to jointly promote the lean management of enterprises and jointly promote the high-quality development of small and medium-sized manufacturing industries. The work of professional management consulting companies is to pass on the teaching, and every manufacturing enterprise must do a good job in inheriting the lean management ideas, methods and tools of generations of workers. Small and medium-sized manufacturing needs a management change from the inside out.

Reshape the industrial structure

Zhongshan Xinshengshi Electromechanical Company is the hidden champion enterprise in the production of chandelier fans in the world. In the past two years, under the attack of various unfavorable factors such as the Sino-US trade war and the rise in raw materials and freight rates, enterprises have still been able to grow against the trend. The root cause is to hedge the cost increase in other aspects through lean management and efficiency improvement.

Chairman Lu Qirong believes that lean management superimposed on technological innovation are the two magic weapons to change the industry pattern in the future. Since last year, he has closed the real estate and other business sectors and returned to manufacturing with all his heart. Lu Dong admitted that returning to the manufacturing industry, his heart will be solid, and there will be great opportunities for reconstructing the manufacturing industry with new thinking.

Made in China is currently facing a period of huge industrial adjustment opportunities, and one of the key issues is to enhance industrial concentration. This is the middle and late stage of a country's industrialization, the process of industrial capital entering the industrial system and gradually forming industrial trusts. At the same time that China's manufacturing has entered this stage, it has ushered in the rapid development period of the consumer Internet, a large amount of social capital has been invested in the consumer Internet, and the problem of China's industrial concentration has not had the opportunity to be put on the agenda.

Today, China's Internet development has entered a new stage of industrial Internet, capital will enter the industrial system, and China's industrial development also has needs. In what way to achieve an appropriate increase in the concentration of China's manufacturing industry? Digital empowerment, management empowerment, capital empowerment or superposition. Danaher Group of the United States is the world's most successful industrial-type merger and acquisition integration company, known as the king of "empowering" mergers and acquisitions, which is to adopt this superimposed empowerment model.

In order to improve the management level of the manufacturing industry, Midea has continuously iterated its own lean management, from ISO9000, Six Sigma, Toyota model to Danaher management. Today, Midea's companies also have their own industrial capital, choose different tracks to invest, and form an industrial integration company. One of the most important links is management empowerment superimposed on capital empowerment, and the output management ability of the United States induces changes in the industrial structure.

Industrial structure changes are caused by external forces, such as mergers and acquisitions, and the collapse of old structures caused by internal imbalances of forces. In the industry, some companies adopt lean management, and some do not. It turns out that peers who are evenly matched in the pro-cyclical development of the economy are a problem of making more and making less; in the counter-cyclical of economic development, the improved enterprises survive, and the enterprises that do not improve are eliminated, which is the competitive pattern of your death and death. The imbalance of power, the collapse of the old industrial structure, the new structure will be formed under the joint action of new management, new technologies and capital, shaping a new pattern of industry.

In the past enterprise management practice, lean management is only a management method and tool, and changing the industry is a quantitative change process. In the window period of economic restructuring and industrial change, the variable role of lean management may turn into qualitative change, thus triggering changes in industrial structure.

Chinese-style management

The development of management thinking is often positively correlated with the rise of enterprises in the host country, with the rise of Motorola, Six Sigma developed; when Toyota rose, the Toyota management model was deeply rooted in the hearts of the people; when Danaher was commercially successful, there was Danaher's DBS (Danaher Business System) management system.

In this regard, Lu Zhen is deeply touched by a large number of lean management practices. China's manufacturing industry is changing at a fast pace, and if management theory can't keep up with the changes in practice, it will fall behind. The current degree of activity and complexity of Chinese manufacturing is much higher than that of any country in the world, and when Chinese enterprises rise, they may form the management ideas and methods of Chinese enterprises, such as Midea's production management and Huawei's R&D management.

Lu Zhen mentioned that it is not how much knowledge you learn in college and learn IE engineering to become a lean expert. Just as a theory class talks about swimming, it is better to put people in the water to flutter. Once you learn to swim, twenty years from now, it's a practical kung fu. In exchange for knowledge, twenty years may be forgotten. Learning to lean is learning to swim, and it is a successful experience process. He said that the promotion association is now developing a "five-star manufacturing" team leader management system, and has the opportunity to develop lean management engineers in the future, which requires enterprises to have the successful practice experience of "lean management improvement week".

The Japanese Toyota management is good, but its inheritance is a master-apprentice model, and it is difficult for China to learn in place, the most important thing is cultural differences. Danaher summarized Toyota management, forming a clause that the West can understand and enforce, and also applies what he has learned.

In our Lean Improvement Week practice, we found that many employees of enterprises without much culture did better. One is humility, and the other is the entanglement of no original knowledge. The biggest cost of education and change is untangling. The reason why many small and medium-sized manufacturing bosses are self-righteous and difficult to change their original concepts is that they have entanglements.

The way to untangle is to understand the emptiness of things and enter into what is called a state of meditation. The "Lean Management Improvement Week" is to introduce through high goals, and the participants must concentrate all their energy and enter the state of "work Zen" without distraction. Some companies let R&D personnel retreat, that is, to unshackle the original concepts and let the mind enter a new free world, which may be the application of the "Tao".

Suzhou Gutechnium, originally a model for building a "happy enterprise", later the enterprise introduced lean management, with the Chinese culture of Dun Lun exhaustion, combined with lean management. Enterprise employees with Chinese cultural influence, the introduction of other management, resilience, mobilization ability, landing ability are extremely strong. In general, enterprises can do a dozen or dozens of improvement weeks a year is already very remarkable. Gutechnium can do 126 games a year, many of which are not tasks set by management consulting agencies, but are the result of spontaneous internal enterprises.

In the period of structural adjustment and industrial change of economic development, small and medium-sized manufacturing industries are facing unprecedented challenges, and both management and concept need an innovation. Small and medium-sized manufacturing industries, instead of sinking in the fiery and dangerous industrial changes, it is better to let go and first carry out a self-change from the inside out.

Just like Liwang, Shengye, Fengming, Gutechnium, Belle International and other enterprises, in fact, they have not encountered real risks, the difference is whether the boss is willing to make changes, and the company is willing to normalize lean management. The power of normalcy is what the Tao Te Ching says, "The enterprise does not stand, and the cross does not do it."

(The author is the president of Guangdong SME Development Promotion Association)

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