SGC Lean Manufacturing Consulting: Using Lean Principles to Improve Profitability and Quality

Many companies in China today are facing competitive pressures that they have not felt in the past. The slowing of the world wide economy and the large increase in costs both in manpower and energy over the last 10 years has cut into many companies profitability.

Saks-Gloweli is teaching its customers how to use lean manufacturing principles to reduce direct and indirect manpower costs, reduce energy uses, and to give an under pinning of a system so that the result are sustainable. Sustainability is the key!! It is easy to give short term results but sustaining the system is the most important part of ensuring the companies continues to get excellent financial results.

Background: Most clients’ team members have a limited knowledge of Lean Tools, i.e. time studies, line balancing, as well as statistical tools. The theoretical underpinning of these tools is not well understood. Without a strong understanding of the theory behind Lean Manufacturing (LM) and its components (Statistical Analysis, One Piece Flow, Systems Thinking), gains in productivity, throughput, labor cost reduction and quality improvement will be marginal.

SGC Lean Manufacturing Consulting: Using Lean Principles to Improve Profitability and Quality

Lean Methodologies:

Value Added Time (this is not efficiency) as a proportion of Cycle Time is an important measure that will give a clear picture of the level of improvement that is possible. Using Toyota’s measure of Value Added Time per minute, a typical manufacturing plant will be between 3 and 9 seconds. Over time, an expectation of 53 seconds is a worthy goal although this will take time. The point is that teaching an understanding of just how little Value Added Time exists in most processes allows us to focus attention on reducing all wasted time, especially the time when product waits with nothing occurring. This concept can also be done with support staff based on how much needed time it takes to do their jobs. This is the same concept as used with Value Added Time on the line.

Standard Work is a management tool that should be understood as separate and unrelated to either SOPs or Work Instructions. Standard Work is a tool that measures the elemental times for each step in a process and states the standard time involved in the process being measured.

SGC Lean Manufacturing Consulting: Using Lean Principles to Improve Profitability and QualityIn other words, in the assembly of a board, standard work would be the total cycle time for one unit, completed by only one person. This is the total process time. Once this time has been calculated, any number of resources can be reasonably calculated once customer demand is taken into consideration. This is a powerful management tool that allows for accurate predictions of each step within the process as well as being able to know when and where resources are needed.

Additionally management can monitor the process during the shift to determine if only standard activities are taking place or if there are non-standard activities that need to be examined and eliminated. Again the same practice can be used with indirect labor.

SGC Lean Manufacturing Consulting: Using Lean Principles to Improve Profitability and Quality5S is another tool that is based on eliminating waste. 5S and Standard Work are best used together. 5S begins with the idea of having all materials and tools placed in the most efficient locations for use by operators. All other activities within 5S exist to draw attention to non-standard activities in order to study and eliminate them. 5S is not making sure the plant is clean, although that has a part.



  1. Increase the understanding of the 7 wastes.
  2. Raise the understanding that each production line is a system and that each piece is linked to the others.

a. There are disconnects between the processes in the plant.

b.Currently are all batch operations without continuous flow.

c.Many parts are held in different places with much use of additional packaging.

d.Testing needs to be updated and other parts of the process need to be reviewed for pinch points.

3.     Learn to see the waste in the organization so that an emphasis will be placed on its elimination.

a.There are currently large wait times for the units. The actual production time compared to the output is small.

b.There is waiting time for each unit during assembly, Test and packaging

4.     Begin to use measurement systems that uncover the waste in the organization so that it is no longer invisible and is therefore treated as inevitable.

5.     Set up a maintenance program with preventative and predictive pieces to reduce unplanned downtime and ensure process quality.

SGC Lean Manufacturing Consulting: Using Lean Principles to Improve Profitability and Quality

Proposed action plan

1. Begin to teach the understanding of Lean throughout the organization using both formal classes and on the floor mentoring.

a) Target audience is production managers, leaders and manufacturing engineers.

b) Second is to get operators, 1st level IL, and maintenance involved

2. Gather data that demonstrates the extent of the current level of waste in manufacturing.

a)Wait time during operations. i.e., assembly, test

b)Wait time between operations.

3. Begin to implement one piece flow including.

4. Implement 5S in a more effective manner. 5S should be a means to an end (elimination of waste), not an end in itself.

a) Teach the reasons for 5S.

b) Establish 5S

c) Develop and implement a plan for 5S sustainment.

1. Develop Standard Work for each operation to be used as a management tool. Some Standard Work currently exists but it must be improved.

a)Establish Standard Work for each process throughout the organization.

b) Develop Supervisor and Management Standard Work for sustainment.

1. Analyze and improve all processes. This would be done by analyzing processes and gathering data in a systematic manner designed to gain insight into the process toward improvement. This would be accomplished by doing the following:

a) Begin with the quality issues that are the most costly to the facility.

b) Analyze the data in such a manner as to gain insight into the process.

c) Develop and test theories based on the data analysis.

d) Determine what the root cause of the problem is and where in the value stream it exists.

e) Test solutions and confirm those solutions.

f) Implement the solutions.

g) Develop a sustainment plan to ensure no recurrence


Skills Understanding:

(Accomplished primarily by mentoring through project reviews)

1. Understand how to develop and use Standard Work toward process improvement. (See above explanation)

2. Understand how to develop and use 5S effectively. (See above explanation)

3. Understand how to develop a detailed action plan.

a. Develop a Gantt chart with dates, resources and responsible parties.

b. Use this plan to gauge progress and to address problems before they significantly affect the project.

4. Understand how to engage all involved parties in any improvement projects.

a. No improvement is ever done within single department or area.

b. Involvement with all parties is critical to ensure satisfactory outcomes.


Productivity and throughput improvement of 60 to 100% is likely. This equates to many thousands of dollars reduction in costs as well as increasing plant capacity. These savings would go on year after year. These improvements will translate into increased business profit and potentially new business. Space will be saved and can be freed for other projects so that additional facility might not be needed. Process and quality improvements will also lower labor costs per unit produced through less rework, less scrap and more time spent on value added activities. Increased capacity gives much greater flexibility. More models can be built under the same roof and with the same equipment. Overall these techniques along with an understanding of corporate goals and objectives, while also considering the use of a balanced scorecard, will give sustainable results to your company.

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The Contributor

Saks Gloweli is a Management Strategy Consulting and Financial Advisory firm specializing in China and Asia Pacific, guiding global and Chinese companies to growth and profitability. SG has been in operation in China and Hong Kong and celebrates Shenzhen as a central hub of growth for China and the rest of the world.

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