Lean production to spark upgrading
Software is at the core of “Industry 4.0.” Nevertheless, before you can get to sensors, robotics, automated guided vehicles and so forth, you’ve got to return the focus to the place of production. “Lean production” comprises a set of management concepts pioneered by Toyota to foster production-line methods that generate precision and rational workflows while reducing costs and raising quality.
About 20 years ago, King Wang introduced lean production at Keyarrow, where he is now chairman. The company even stepped beyond manufacturing to found a lean-production management consulting firm. When we walked into Keyarrow’s plant at the Taichung Industrial Park in Taichung’s Xitun District, the clean working environment and orderly production lines immediately suggested a sense of freshness and innovation.
A production cycle that would take a typical factory producing machine parts two days to finish can be completed here in four hours. A new line just added this year has in fact dropped that production cycle to under 30 minutes. What’s more, most factories look for economies of scale by putting completed goods in a warehouse and waiting for customers’ orders to ship out. But Keyarrow can wait until customers place an order before beginning production, while still delivering goods faster than their competitors. Wang notes, “We have zero inventory. Finished goods never sit in the shipping area more than two hours before collection.” That’s a remarkable statement.
And it raises a question: “What kind of software do you use to manage a production process that is so lean?” Wang’s answer is even more astonishing: “This factory doesn’t use any computers to control production, but it still has achieved leaner production than factories that do!”
As we walk through the plant, Wang reveals its secrets: It turns out that the production line achieves lean production via “visual management.” Casting one’s eyes across the production floor, one can see 20 carts, which travel between processing stations. Once the process at a station is completed, the materials are placed on one of the carts, ready for the next step in the process.
“There used to be 200 of those carts, but because there were so many of them, no one paid them any mind,” notes Wang. Workers lacked a sense of urgency. But with only a few of them, workers finish working on what they are brought quickly. One sees the quantity clearly, so it keeps people on their toes. “Furthermore, in this factory, doing things in the right order takes precedence over all. Upon discovering a mistake, most factories are reluctant to shut down the line, so they’ll just pull out the problematic workpiece and go on to the next. But as soon as we find a mistake, we stop. We wait for the root problem to be sorted out before making the next item.” He then gets to the heart of the matter by divulging another secret: “In this way we created a certain invisible tension, wherein everyone actively steps up so that no one else will have to tell them what to do.” This is the “orderly production” of which Keyarrow is so proud.
Lean production emphasizes that “demand equals supply.” Wang says that inventory is like the water level of a reservoir. As the level gradually declines, many little problems become visible. With greater management focus on the individual links in the corporate chain, such as workflow, purchase orders, staffing, and delivery, steps that add no value can be eliminated from the process bit by bit.
“There’s nothing unusual about solving problems by spending money,” he notes. “What we aim to tackle are those things that you can’t solve simply by throwing money at them.” Take, for instance, their new production lines. With lean production improvements, lines with equipment costing NT$30 million can be replaced by lines costing only NT$6 million. With those lower costs comes a drop in the length of the production line from 90 to 22 meters and a shortening of the production cycle from two hours to 30 minutes. When the assembly lines and production cycle were longer, a consultant once suggested that they consider buying automated guided vehicles and a barcode tracking system. But with lean improvements to the production lines, there was no need for such expensive solutions.
Wang says that in terms of Industry 4.0, Taiwan hasn’t lacked smart manufacturing technologies so much as a commitment to sticking to the correct routine—because even if you get the right machinery, the steps in the manufacturing process must still be managed by people. Consequently, before looking at possible localized equipment upgrading, there is a need to turn to the root issues, creating a standardized workflow for the production line and implementing “lean management” approaches as much as possible. Only then will machinery upgrades be meaningful.
Apart from offering internships, industry is providing machinery to colleges and universities so that students can train on the latest equipment.