Source: Huzhou Daily

Compared with the same period last year, GiantKONE Elevator Co., Ltd. increased its sales revenue by 60% in the first half of the year, while increased profits by 246%.

With this data report, a question was hovering in my mind: What is behind the significant difference? After all, there was no major fluctuation in the sales price per elevator this year and last year, not to mention the cost rise of raw materials.

Chairman Qian Jiang puncture the fallacy with one remark. He said that in the past three years, we have adopted various measures to strictly control the cost and launched a combination of boxing, basically digesting the unfavorable factors brought about by the rise in raw material prices. In this regard, at least a reduction of 20 million yuan in costs per year.

Firstly, joining the global procurement chain. In 2005, after joining forces with Finland KONE, Giant joined the group's global unified procurement network. The reputation and huge material consumption of KONE Corporation enabled GiantKONE to greatly increase the bargaining chips of the suppliers and obtain the prices of bulk purchases.

The person in charge of the production department said that taking the electronic control system and signal system accounting for 50% of elevator manufacturing costs as an example, after sharing the global procurement network in 2006, “Our purchase price has dropped by 10%, which is significant for the manufacturing industry."

Then, GiantKONE Elevator Co., Ltd. began to implement lean production. Lean production originates from "Toyota" and requires that each production link cannot be "early" nor "late". The core idea is to eliminate waste. For this strange term, Qian Jiang gave the reporter a most popular explanation: "It is necessary to achieve the goal of just-in-time production and zero inventory, because elevators are mainly linked to real estate projects, and in fact, most of the civil engineering projects will be delayed. As a result, we can't build elevators according to the contract but we can't deliver them and receive payment as scheduled. Instead, we continue to increase inventory."

It is reported that to better implement the lean production model, the company sent the heads of the Information Management Department and Production Department to Toyota Corporation last year to learn their best practices. Next month, Qian Jiang himself will also fly to Japan. The organic combination of external experience and internal reality allows GiantKONE Elevator Co., Ltd. to establish a scientific dynamic management system for orders, so that products can be provided when customers really need them, thus shortening the production cycle of elevator standard products to 7 days. Inventory capital can be revitalized, at least reduced by more than two-thirds, greatly reducing the storage cost.

When I conducted interviews at workshop or management office of the company, I could always find forms with the record of rewards and punishments. Qian Jiang said that that was the third combination move they made. Originally, the company has accumulated a set of strict quality publicity and reward and punishment notification mechanisms over the years. For example, in the production workshop, the self-examination award ticket makes each employee an inspector. Although the above records are all minor issues, the quality awareness of employees was thus mobilized. "Reducing the loss from production and reducing the rate of defective products from each link is also a magic weapon for us to reduce our costs."

Meanwhile, the company also made great efforts in optimizing the production methods. Technicians said that in this regard, we once reluctantly cut off. In 2003, the company introduced a helium welding production line, mainly responsible for painting and drying. In July last year, this production line was suspended because the annual consumption of diesel fuel was as high as several hundred thousand yuan, which is not conducive to environmental protection. The company now turns the components of the painting and drying process from home-made to outsourcing.

It is understood that the production process for an elevator is numerous. But GiantKONE Elevator Co., Ltd. has outsourced about 10% of the mechanical component production, which again greatly reduced the production costs.

In addition, I observed in two parking sheds in front of the company's production workshop that the bicycles, motorcycles and electric bikes were neatly placed by category, with the heads and the rears of bikes next to each other respectively. Qian Jiang explained that this was not lack of humanity, but that it was necessary for workers to develop good habits of science and norms in daily minor matters. Only if norms are strictly followed can an enterprise be invincible forever in the severe market competition.

Huzhou Daily Reporter Zheng Feng