A set of "Combination boxing" to reduce the cost by 20 million yuan, Huzhou "GiantKONE" first-half order increased by 116% year-on-year

Xinhua News (Reporter Wu Miaoli, Tan Weidong) 137 elevators (escalators) for Wuxi Taihu Jinyuan, 34 elevators for Beijing Century Star City Industrial Park, 81 elevators for Beijing Zijin Xinganxian ... since this year, endless orders flew to GiantKONE Elevator Co., Ltd. in Nanxun, Huzhou. As of the end of June, the company's orders exceeded its pre-determined targets by an additional 116% year-on-year, making it one of the fastest growing companies in the country.

In the face of many difficulties, "GiantKONE" can still maintain good momentum of development, the secret lies in the rainy day, with neat "Combination move" to control costs. Qian Jiang, Chairman of the company, said in an interview with us that in the recent three years, especially since last year, various measures have been adopted to strictly control costs, basically digesting the unfavorable factors brought about by the rise in raw material prices. "We will at least reduce the cost of 20 million yuan per year."

Combination movement I: Joining the global sourcing chain. "GiantKONE" is a joint venture established by Zhejiang Giant Elevator Co., Ltd. and one of the world's largest elevator companies, KONE Corporation, Finland in 2005. Thanks to the global unified management model and procurement network of KONE Corporation, Finland, “GiantKONE” greatly enhances the bargaining power of suppliers and can get the prices of bulk purchases, greatly reducing the pressure of raw material price increases. Taking the electronic control system and signal system, which account for 21% of the elevator manufacturing cost, as an example, since the global procurement network began to be shared in 2006, the purchase price of "GiantKONE" has dropped by one-third.

Combination movement II: Implementing just-in-time production. Just-in-time production comes from "Toyota Automobile" and requires that no link can be "Early" nor "Late." “Elevators are mainly linked to real estate projects. Actually, most of the civil engineering projects will be delayed. As a result, we can't build the elevators according to the contract but we can't deliver them on schedule and receive the payment. Instead, we continuously increase the inventory.” Qian Jiang explained to the reporter, the company’s approach. It is to implement dynamic management of orders and provide products when customers really need them. As a result, the production cycle time for elevator standard products was shortened to 7 days, inventory funds were revitalized, at least more than two-thirds lower, and the storage cost was greatly reduced.

Combination movement III: Quality cost focus by all employees. In an interview, the reporter found that the company had a quality announcement and rewards and punishments notification mechanism, and each workshop had a self-check bonus ticket, and everyone was an inspector. Although the minor issues were recorded on the self-checking ticket, the quality consciousness of the employees was thus mobilized. "Reducing losses in production and minimizing costs based on quality assurance."

Combination movement IV: Optimizing production model. In the 30,000 m² workshop of “GiantKONE”, we found that a sheet production line introduced in 2003 was particularly quiet. The technicians told us that this production line, which was mainly responsible for painting and drying processes, would be suspended at the end of July because this line consumed up to several hundred thousand yuan per year in diesel fuel. The energy consumption was high and it was not environment-friendly. The company has turned the parts of this process from home-made to outsourcing. In the past two years, Giant Co., Ltd. has outsourced about 10% of its mechanical parts production. "In the face of challenges, we must change the methods and ideas, and rely more on scientific methods to improve the level of operation and management. The severe market situation is also an opportunity for self-transformation and surpassing of an enterprise!" said Qian Jiang.

Excerpt from: "Zhejiang Daily" Front-page Report on August 1