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4 Effective Solutions
to Cut Costs

1. Increasing Labor Productivity

Increasing Labor Productivity
The productivity of factory workers is much lower in China than in Europe or North America. Managers are aware of surprisingly few “best practices”.

 

We typically look for opportunities such as:

  • Reorganization of assembly & packing activities into cells;
  • Reorganization of machining & fabrication activities in a way that necessitates less labor time;
  • Semi-automation, to reduce the amount of time spent on each process;
  • Concentration of operators on their task, reduction of non-value-added work.

2. Reducing Costs of Non-Quality

Reducing Costs of Non-Quality
Is the factory aware of the money it loses because of poor quality? Here are the main sources of such costs:

 

3. Reduction of inventory

Reduction of inventory
By reducing set-up times and batch sizes, we can easily get work-in-process inventory down to 1 day in each workshop.

 

It allows for the following savings:

  • Less need for transportation of parts, by locating subsequent processes in an adjacent manner;
  • More capital freed up (less bank charges).

Read here for more information on how to reduce inventory in a Chinese factory.

4. Re-design of products

Re-design of products
When this option is on the table, product designs should be re-examined with the following questions in mind:

 

  • Is it possible to remove a few processing steps? (Example: using fewer screws by placing them differently).
  • Is it possible to make errors less likely? (Example: avoiding symmetrical pieces being inserted in the wrong side).
  • Is it possible to use more components in common between our different products? (Example: using only black zippers on jackets in all colors).

What our Clients
say

  • Our Suzhou factory was unable to ramp up production to fulfill our sales. This caused a lot of missed deadlines on critical shipments, not to mention lost sales. CMC consultants used LEAN tools and immediately identified bottlenecks. They quickly elevated the factory's production capacity, and then worked on stabilizing processes and increasing efficiencies. They have done a great job, and we are now working with them on our 2nd and 3rd most critical factories in China.

     

    Operations Director
    (USA)

  • Our management team was not displaying the energy my partners and I expected of them. By working with them on a few meaningful metrics for each department, and teaching us how to hold "daily accountability meetings" CMC created noticeable change in our factory. Now our managers spend hours each day on improvement projects, rather than their daily routine operations.

     

    Site Director
    (China)

  • Our planning process started showing its limits when volume increased suddenly last year. We were not sure what to do. Did we need a more powerful ERP? Did we need a totally different approach? We were lucky to find CMC, who sent us a planning & purchasing specialist and immediately made very relevant recommendations. After one month the planning process and the communication among departments was already a lot smoother.

     

    Factory General Manager
    (China)

  • First, CMC was able to convince the owner of our main supplier in China to engage in an improvement program. Then, CMC consultants worked swiftly to implement improvements on a test production line. This created even further buy-in from the factory's ownership, who could see that CMC's approach yielded better quality and lower costs, and and allowed CMC to duplicate it throughout the factory. The resulting stronger and more reliable supplier has been invaluable for our business.
     
    VP Global Sourcing
    (USA)
  • After repeated quality issues we suggested one of our smaller manufacturers work with CMC in China. After the addition of just a few key jigs, and some additional training, they were able to turn the entire factory situation around. We were surprised at how quickly the results were visible.
     
    Head of Operations
    (UK)
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