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The Labor Cost Change in ShangHai (1995-2013)

558 1,324

2,453

5,134

6,072

8.35 8.28 8.19 6.77 6.19

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

1995 2000 2005 2010 2013

Chinese Yuan Yuan-Dollars Exchange Rate



67

160

300

758

981

67 141

234

530

650 1.00

1.13

1.28

1.43

1.51

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

0

200

400

600

800

1,000

1,200

1995 2000 2005 2010 2013

US Dollar US dollar(Adjusted) Inflation Rate


Another Side of the Coin: the Quality of the Laber

Maslow's Hierarchy of Needs


Another Side of the Coin: the Quality of the Labor

- More Education and Internal Motivation

- More Passion, Effectiveness and Creative with Freedom

- Can be encouraged because of Honor & Responsibility

- Less Patience to Tough work and External Motivation

- Hate Repetitive & Mechanical Working, No Passion without Freedom

- Cannot be encouraged because of the lack of Safety


Another Side of the Coin: the Quality of the Labor

No Motivation

Motivation (Right Way)

Motivation (Wrong Way)

No Motivation

Motivation (Right Way)

Motivation (Wrong Way)

Deferent External

Motivation

Encouraged by

Honor & Responsibility

Minus Feedback

by Wrong Motivation


The fact of Economic Crisis


2-ways to Cut Cost

Cost

- Training Budget

- Employee Size

- Salary Level

- R&D Budget

- Process Waste

- WIP

- CoPQ

- Long Lead-time Cost Operation

Excellency

Cost Down

Marketing

Share Loss

Cost Down

Performance

Down Marketing

Share Loss

Performance

Down

Cost

Operation

Excellency

Cost Down

Performance

Maintenance

Grab Rival’s

Share

Sales Up

Performance

Maintenance

Grab Rival’s

Share


1st Phase Summarization

High Labor Cost Economic Crisis

Cost Down

Pressure

10 times than Yr.1995 less opportunities in market

Shortcut

- Cut employees

- Stop training & education

- Stop consulting

- Stop staff-developing

- Stop technical research

Long Road

- Analysis of process waste

- Cut WIP

- Shorten Lead-time

- Make products with balance

- Follow client’s takt

Downward Spiral Upward Spiral

Bankrupt Success


The right way to cut cost



The time period we pay our employees to work

3 hours Value Added Time

Social Loss

Utilization Loss

Performance Loss

Quality Loss

Organization Loss Method Loss

Bad product design

Bad line/station layout (many walk)

Bad work method (many jig change)

No automation

No mechanization

Line balance etc.

3-4.5 hours Standard Time

4-5.5 hours Productive Time

6-7.5 hours Presence Time

Paid Time 8 hours

Planned:

Set up change

PM / Cleaning

Unplanned:

Lack of material, component

Lack of Worker

Tool/Jig breakdown, etc.

Shut down

Union’s meeting

Company event

Coffee break etc.

Variation of worker competence

(unskilled operation/sabotage)



Cost element Kind of COPQ

Controllable poor-

quality cost

Prevention cost

- Quality planning

(for test, inspection, audits, process control)

- Education and training

- Performing capability analyses

- Conducting design reviews

Appraisal cost - Test and inspection

- Supplier acceptance sampling

- Auditing processes

Resultant poor-

quality cost

Internal error cost

- In-process scrap and rework

- Trouble shooting and repairing

- Design changes

- Additional inventory required to support

poor process yields and rejected lots

- Reinsertion and retest of reworked items

- Downgrading

External error cost

- Sales returns and allowances

- Service level agreement penalties

- Complaint handling

- Field service labor and parts costs incurred

due to warranty obligations



Custer’s Needs User’s Experience

Consumer expectation

experienced service

service delivery

service quality

specification

management perception

external communication

1st Gap

2nd Gap

3rd Gap

4th Gap

5th Gap


Value Added Operating Time

Net Operating Time

Operating Time

Available Operating Time

Op

era

tin

g

Ra

te

90%

Per

form

an

ce

Ra

te

Qu

alit

y

Ra

te

Ove

rall

Equ

ipm

ent

Ef

fici

ency

95%

99% 85%

Stop Loss

Speed Loss

Quality

Loss

Idling / Micro Stoppage

Speed Down etc.

Rework / Repair / Scrap

Start up Yield

Planned: (Set up etc.) - Shift Meeting

- Set up, exchange, Adjustment

- Preventive Maintenance

Unplanned: (Fault) - Lack of materials, parts

- Lack of workers

- Machine breakdown etc.


Net Work Time = Machine CT x Total Production Pieces

Value Add Work Time = Machine CT x Good Quality Production Pieces


Needs and Prudcuts

Cost of Low Productivity P-Course

Project to raise effectiveness

Cost of Poor Quality

Cost of Over-period Delivery

Cost of no-valuable Design

Cost of low-uptime for Equipment

Cost of Human-resource

Q-Course, Statistical Course

Project to improve quality

Reset layout in workshop

VSM analysis

DOE, Design of experiment

Value Analysis & Engineering

TPM,

Total Productivity Maintenance

TQM, Total Quality Management

QCC, Quality Control Circle


2nd Phase Summarization

Cut the Extra Cost for Poor Performance

P Productivity

Q Quality

D Delivery

D Design

E Equipment

HR Human

Resource

Rebuild the Company Production System

Learn from the Excellent Company: like Toyota

Lean Production (Toyota Production System)

Further Question: How lean production works?


Identify value from client’s view

Make the VSM analysis (Value Stream Map)

Flow Process

Pull Process

Continuous improvement

5 Principles for lean Production

How lean production works


Lean Production Performance - 1 pcs flow - Anden system - Sequential Pull System - Flexible Manufacturing Cell

- KANBAN - VSM Analysis - Heijunka Box ……

Lean Production Premise - Shorten setup time - Shorten exchange dies time - Stable quality performance - Continuous quality KAIZEN awareness - 5S - Reasonable factory layout - Less waste from door to door - Low employee turnover

- Standardization - Good company culture - Less off-going time for equipment - Low lead-time - Accurate order forecast - Accurate & flexible production plan - Partnership with suppliers & clients ……



Company which can satisfy all the

premises for lean production

Company With lean-production system

=



Case study

A case-study to show

How to build the company’s system to

satisfy the premise for lean-production


Training

Guidance

Diagnose

Approach

Implementation

Finding problem

“ Problem solving approach ”

Lean tools and methodology

Advice for solving the problems

Follow the lean implementation

Set Kaizen target

P D C A

Lean knowledge transfer

Consultant

Experience and Tips

Help to achieve the targets

Maintain the results and create long term lean production system

Case study : Italian “Z” company in China (Large size)

Case study



Productivity

W I P

Quality

Lead Time

Production

Space

Production

Dept.

Quality

Dept.

Engineering

Dept.

Logistics

Dept.

R&D

Dept.

Top

Management

Case study



Lead time 20%

W I P 35%

Productivity 20%

Defective 50%

Efficiency

5S , VM

Knowledge

Mindset

Tangible

Results

Intangible

Results

Production space 20% Lean System / Culture

Case study


Step by step for promoting lean system

Management Infrastructure

KAIZEN Activity QCC 5S Activity

Human Assets

Staff Development Training Plan

Continuous Improvement

Poka-Yoke Reasonable Layout

SMED Standardization

Minimum Lot Size Shorten Lead-time

Balanced Production TPM & TQM

Production Quality Design Delivery Equipment Human

Resource

Chinese

Culture

Western

Culture

Lean Production KANBAN JIT JIDOUKA Pull & Flow


The successful triangle

Thanks a lot

The End

copyright 2014 jma consultants china. all rights … for italian companies...ⓒcopyright 2014 jma...

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