News China, 06/25/2018

People, projects and the latest issues of interest from Staufen

HOW TO RELOCATE YOUR FACTORY IN CHINA

Due to the dynamic change in the global and domestic economic environment, many companies made decisions to relocate their production bases to China, as well as within China, moving to smaller and more affordable inner provinces. These decisions are subject to some key changes such as land licensing by the government, rising of labor costs, emerging of new local markets, etc. Of course, factory relocation is a high complexity activity, with several challenges. The decision makers have to consider the impact on their supply chains, but also they have to take into account the local laws, manufacturing costs, future developments, and more.

However, factory relocation also presents huge opportunities to improve operations. In recent years, Staufen’s experts have run dozens of projects, helping international and local companies in successfully relocate their factories in China.

Our clients came to us with the expectation and request to become ‘leaner” at their new premises. They all wanted to reduce wastes existing in operation, to reduce production lead times, to improve productivity and production flexibility, to increase output per square meter, to improve material flows, just to name a few. However, their new layouts that they were showing us were a simple copy and paste of their previous factories with just a boost in size in consideration of future production volume increase.  If these clients didn’t realize it, they would have invested much more than actually needed for the new factory, as currently the price of land and labor is constantly rising in China!

Staufen experts helped them realize how designing a factory following Lean principles would have made them save a lot in their initial investment as well as in their future operations.

From our experience and perspective, every Lean factory planning project has its specific context and industrial specifications, but a Lean mindset and Lean methodologies can be applied in each project. We emphasize process layout determines construction layout and more efforts should be put on Lean process designs, which should be value-stream oriented. Lean processes include not only value-adding production processes, but also all the supporting processes, e.g. warehousing, inbound logistics, finished goods shipping, etc. The target is to have a Lean production system with achievable high productivity and maximum output per square meter, as well as a reasonable minimum warehousing and logistics area in the new factory.

To help you understand how a Factory planning project works and what kind of benefits it can bring you in the end, as an example I’d like to share with you one case study, a relocation run at one of our client, which took place in 2017.

The client is a leading construction equipment manufacturer in China, whose expectation was to have a Lean factory planning before its relocation. After alignment with the client in terms of the project targets, e.g. improve productivity, shorten production lead times, reduce production areas and reduce production cost, etc., the project team was set up with the client’s cross-departmental stakeholders and Staufen consultants. We first analyzed the as-is production system and then based on the company’s forecasts for the next 5 years and their product portfolio, we redesigned them to be more productive and with minimum waste allowing our client to not need any increase in space and manpower in the new factory. At the same time, the production lead times were dramatically shortened.

After that, the whole project team was engaged in calculating and simulating areas needed in the new factory, we call it LPU (Layout Planning Unit), which was very important for the layout planning. In this stage, we suggested our client to reserve some reasonable areas for long-term development, however we didn’t recommend our client to leave too much space for warehousing, as reasonable limited warehousing areas can push a factory to continuously improve its operation towards becoming Lean(er). After all the LPUs were defined and agreed among different departments, the layout scenarios development began. A target driven planning is the right way to fulfill the project targets. After serval rounds of workshops and intensive discussions, we prepared a number of factory layouts which we evaluated with our client in a systematic way to select the final one which was then passed to the construction design institute. This project lasted for ca.3 months with significant results.

We hope this article has helped you grasp the benefits of Lean Factory Planning for your new plant in helping you reducing initial financial investment as well as future running costs.

If you would like to get more information about our services, please don’t hesitate to get in touch with us, our team will be happy to assist you.

Written by Ding, Shaoting.