Less is more
Reposted from Vietnam Economic Times
Though “Lean management” is a proven method in accelerating positive change during “business-as-usual”, it is equally relevant and impactful in periods of crisis, such as Covid-19. Hong Nhung – Vietnam Economic Times reports.
After struggling to survive and overcome the looming crisis caused by waves of Covid-19, businesses in Vietnam are expected to cope with the uncertainties from unprecedented consumption demand, huge fluctuations in supply chains, and instabilities in the larger economy in the post-pandemic period.
A recent survey by Vietnam Report found that the majority of enterprises considered pioneers in digital transformation and who believe reform is crucial in overcoming challenges and seizing opportunities were more successful in maintaining their operations and recovering faster than others amid the crisis. In this context, “Lean management” or “Lean manufacturing” is regarded among the key solutions to removing obstacles facing production and business, creating new growth directions towards sustainable development.
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Lean management is one of the most advanced management models focusing on customer satisfaction and creating value through waste reduction. Mr. Nguyen Dang Minh, Chairman of the Advisory Board of the GKM Lean Institute, explained that “Made-in-Vietnam” Lean management’s philosophy revolves around gaining profit or creating added value for a company via utilizing employees’ intellect to continually improve the business process to minimize costs. In order to increase profit, enterprises have to keep revenue flows constant or gradually accelerate the company’s income, while at the same time reducing and eliminating waste as much as possible.
In 2019, GE Global began a transition to a Lean management strategy in operating and managing production and business operations. After nearly two years, its branch network throughout Asia has recorded an increase in revenue and production capacity, meeting market demand. “As a manufacturing facility, we strive towards a safer, higher quality, and more cost-efficient working environment,” said Mr. Khoa Nguyen, Lean Manager at the GE Dung Quat, one of two GE factories in the world specializing in manufacturing heat recovery steam generator (HRSG) technology systems.
“This is the reason why Lean is our priority and daily goal. We have identified more than 100 innovative ideas that help GE Dung Quat operate more efficiently, with a 40 per cent increase in capacity and a 25 per cent reduction in the production cycle,” he added.
To 2020, GE Hai Phong, one of seven GE brilliant factories, had exported more than 6,000 wind generator systems, earning annual export value in the hundreds of millions of USD. Lean best practices helped drive a 60 per cent increase in year-on-year export revenue in 2019. Such practices, combined with the introduction of new digital technologies, enabled the plant to meet growing demand and boost capacity. The team makes data-driven decisions every day using a range of tools that have improved every part of the plant. Lean has provided visibility of the challenges and areas to improve to enable widespread input and buy-in to fix issues quickly.
Similarly, Panasonic Vietnam puts innovation and technology at the heart of its business development strategies. With Lean management, the company insisted on obtaining high efficiency and lower losses and continued to strengthen its organizational culture to pursue higher productivity. This is one of its policies to achieve excellency and competitiveness in providing services, not only to customers but also to other companies within its group. Obviously, it can’t achieve efficiency or competitiveness without the support of technology.
Passing through challenges
The process from raw materials to manufacturing to the delivery of finished goods to end users, by the perfect management of resources, resulting in financial and time savings, is what Lean manufacturing is all about. “The adoption of Lean management will support industries that were badly affected by the pandemic,” said Dr. Majo George, Lecturer at the RMIT School of Business & Management. “With the help of modern technology and AI, several techniques could be used under the umbrella of Lean manufacturing, which can diminish waste, minimize supply chain disruptions, and create a balanced flow of products.”
At this stage of Covid-19, the manufacturing industry needs to develop agility within production and distribution networks to quickly reconfigure resources and maintain critical supply to meet global demand, according to Dr. Nguyen Manh Hung, also a Lecturer at the RMIT School of Business & Management. In the next stage, lean operations and optimization are needed to maintain competitive positions. During this time, manufacturers have invested in supply chain planning and control, developed solutions to better respond, and even predicted potential supply chain risks.
GE Dung Quat went through many new challenges during the Covid-19 pandemic. “In overcoming this period, we acknowledge the role of Lean management and its application and are making efforts to identify and eliminate waste and analyzing costs to bring about savings and standardize processes, and using checklist to manage more easily,” Mr. Khoa said.
As part of its localization strategy, GE has been reinforcing training and technology transformation in Vietnam over the years. The strategy proved to be heading in the right direction when the pandemic happened. While foreign experts’ movement was restricted, the Vietnamese crew managed to ensure smooth production for highly digital facilities.
“Innovation is at the core of GE’s operations, and this is what we talk about every day,” said Mr. Dinh Huu Hoang, Facility & Maintenance Manager at GE Renewable Energy Hai Phong. “The Covid-19 pandemic was an obstacle but also an opportunity for local employees to improve their skills, accelerate tech applications, and adapt to Industry 4.0. By actively updating technology during operations, many initiatives have been brought up in redesigning the system or creating new systems to fit the production context.”
On the other hand, advancements in Lean management can also reinforce manufacturing competitiveness and human resources development. Fashion companies such as H&M and Zara use Lean management methods so that workers have fewer areas to deal with, which results in less training time and cost. Lean concepts can be applied from purchasing, handling quality, and checking where continuous improvement is needed.
Adoption of Lean management can make the company more competitive and sustainable, as the system will enhance Lean benefits such as delivery time responsiveness to the customer and ensure smooth production and distribution of products. “In a Lean management system, several techniques have been used to reduce waste, minimize disruptions, and create a balanced flow of products,” said Dr. George. “In the post-pandemic period, it is important for companies to look into the possibility of taking all of the benefits from the latest technologies so that industries can come up fantastic outcomes at a minimal cost.”