LEAN PRODUCTION helps solving problems (article in DIRECT INVESTMENTS #02(92) 2009)

After Alexandra Starikova

Russian Coating JSC op. (RC) is developing Lean Production (LP);  developing, not introducing, because in opinion of Valeriy Abramov, the General Director,  the lean production is impossible “just  to introduce and to calm down”. The process must be continuous, like it was with the forefather of the lean business–philosophy at TOYOTA concern, whose conveyor is recognized as   the fastest in the world.

FROM POBEDA RABOCHIKH TO RUSSIAN COATINGS 

In  2008 Russian Coatings celebrated  its 170-th anniversary. The enterprise is a successor of the plant Pobeda Rabochikh, the famous paint production of the Soviet times. All the government automobiles of the Soviet Union in the period from 1930-th till 1980-th had been painted with enamels worked out here.

"After the revolution the foreign experts had left the enterprise. They were the only people who knew the ratio of ingredients required to receive the proper composition and colour of  paints. The workers who had seen the process of production decided to try to restore the formulations. They had been mixing the ingredients until they got the proper ratio. The plant began to work again, and the achievements of the collective found their reflection in new name of the plant – Pobeda Rabochikh (Victory of Workers)" – says Valeriy Abramov.

Today, after nearly two hundred years the RC workers will have to use a foreign know-how. In general, the word composition “lean production” is not new. Born in Japan being restricted with its own resources the system has been winning its popularity by scrupular saving the working time and material and technical means.  In opinion of the method supporters the introduction of the program can reduce production expenses by 20 – 40 % a year. It’s not a mere chance that more and more number of enterprises follow the way of LEAN. E.g., the Holland power-generating company NUON the time of capital repair has been reduces by 33%, the combustibles use efficiency increased by 5%, and available generating power – by 7%.  The Russian TGK has got 6.5 million rubles of economic effect owing to introduction of more than 250 rationalization proposals in 2004.

- What are the results of LEAN expansion at RC? – I asked the General Director when we were in the resin shop manufacturing varnishes and resins for OEM, industrial and decorative paint materials.

- To  translate LEAN into a language of economic effect is rather difficult, - answers Valery Nickolaevitch.  It’s easier in situation with American version of this system in which  everything is directed onto quick result. As for us, we are supporting the Japanese approach intended onto constant improvement of all processes. But how to know the economic effect if, for example, the monitors on managers’ tables are installed on the left side and the buttons on the equipment in production shops have the legends? Yes, it will save the minutes that can be used with favour for our enterprise. We shall have the effect difficult to be calculated though.

However we do have the economic effect of some projects on modernization performed in frames of Lean Production. First, in the shop of car refinish paints the obsolete metallic mixers have been replaced  by new stainless ones costed 1.8 million rubles. It reduced the raw material losses and today our enterprise saves minimum 1.4 million rubles per year. Secondly, the new equipment has enabled us to simultaneously produce more number of various colours: earlier their spectrum was limited with 20 per month and today it is 25 – 28. By this means we do not have any more to produce the paints of certain colour with a stock for 2-3 months and hence we can use our warehouse spaces more efficiently.
 
Another example – replacement of dispersing (grinding) equipment. Four more productive and less power-intensive ball mills costed 11 million rubles have provided the triple increase of the shop productivity from 1200 to 3800 t/year. In general, during the previous 5 years we spent approximately 10 million USD for our equipment modernization, 405 of the sum were used in 2007. The same year RC proceeded to develop LEAN.

One of the leading components of the system is so called "5S program", that is sorting, self-organization, systematic cleaning, standardization, self-improvement. The main task of our management team at the first stage is to bring to our personnel an idea that an everyday labour can be arranged more efficiently through small, as they seem to be, improvements. E.g., making order in subsidiary rooms with their rubbish having been accumulated by years, or organization of the work of a separate working place with 2-hour stock of raw materials instead of 5-hour stock.

- It turns out that LEAN is just a forgotten scientific organization of labour?

- It is a way of life. You can introduce a great number of useful initiatives, but all these initiatives can “dissipate” at the stage of realization because they will display themselves independently of each other. That is why it is important to go away from the usual philosophy of "introduction" when after reaching a certain level the people usually settle down. Usually when the production is going well, everyone is relaxing.  Do you know why TOYOTA conveyor is the fastest in the world? Because they accelerate it if the car production indices are getting to approach the planned 100% mark. The Japanese create the problem deliberately in order to mobilize the personnel on its solution.

The meeting in the resin shop is devoted just to the questions of developing the LEAN production. The main task is to overcome a syndrome of lazy Emelya.

- How do you manage it?

- Sometimes, it is only necessary to prompt a person an algorithm of his actions. For example, a chief of one of the production bays never could understand the way of calculation of economic effect of reduced rout of a truck loader. She thought that this calculation should be done by the Planning Department. So I was to explain her that extra 500 meters of run should be multiplied by the number of "runs" per day, per number of working days a year, price of petrol and in such a way to get the annual figure of reduced expenses.

Mikhail Smirnov, Chief of the Resin Shop: "In the beginning we had some problems. People have been accumulated their habits by many years. So we can not think that they can manage everything immediately and under the lash. But today I see that people are beginning to think in the frames of LEAN production".

AUTOCRACY

The RC expenses for 1.5 years on the development of management and LEAN production made up 9.3 million rubles. Among the reasons that have pushed our enterprise to choose the Japanese philosophy is not only the necessity to reduce the cost of processing and to speed up the orders fulfillment. For some time the conditions of LEAN introduction have been laid down by the partners. So such a condition has been laid down from 2008 by one of our basic clients - AutoVAZ. Following this concept helped us to form our relations with many foreign clients, e.g. with TOYOTA concern.

The strategic direction of RC is production of paint materials for automotive industry. During more than 80 years, the users of our products have become almost all the leading producers of cars, buses, automobile components. They are AutoVAZ, KamAZ, IzhMASH, UAZ, CEAZ, MAZ and others. The RC share is one-third of domestic market of automotive coatings. But the LEAN philosophy supposes  the strengthening and expanding one’s positions.

"Alongside with products of Russian automotive industry, - says Valeriy Abramov,- there are also cars of large foreign concerns in our country – VOLKSWAGEN, RENAULT, TOYOTA. However it is rather difficult to suggest our materials to such clients, and also the problem is not in the materials themselves, but in the technology of its application. The production of automobiles has begun in the Western countries; the first assembly line has been invented in America. So the methods of painting have been worked out also there. As for Russia, we have legged behind in this field. But when a western car producer comes at our market, he requires the same application processes to which he has accustomed, the same paints with which their conveyors are working.

Take TOYOTA, for example. They produce 8 million cars per year. All their cars are painted with one and the same paints in Japan, China and Europe. Our knowledge in this sphere was insufficient, therefore RC undertook such a measure as to create a joint venture with one of  the world leaders in the field of science, development and manufacture of car paints, that is with DuPont company."

JV DuPont Russian Coatings was founded in 2006 with initial investment amount 16 million USD. On the spaces presented by the Yaroslavl enterprise we have arranged the production of paints for car bodies, plastic parts, external and internal mechanical components of light cars, heavy trucks and buses.

"During the time of our cooperation we have mastered about 15 paint materials, - continues Valeriy Abramov. DuPont lays rather high requirements to the production of paints, but today our OEM do not differ from those that our partner produces at any European or American plant. The first sign became the contract on supply of our products for the painting line of TOYOTA (Leningrad region); besides we began the talks with GENERAL MOTORS, VOLKSWAGEN, RENAULT. We value any client. Today an enterprise can manufacture 30 thousand cars per year, and tomorrow it can increase the output to 300 thousand cars. Therefore one should orientate not on the significance of this or that client, but on the prognosis of car production volumes".

Before the crisis, the experts considered that owing to foundation of JV the RC company will be able to occupy up to 50% of the car paint market of Russia and CIS countries. Today we have not yet heard any distinct prognosis; the Russian automotive industry carries out the policy of wait-and-see counting on the state support. And foreign market is correcting the production volumes: the same TOYOTA has reduced the output in 2009 almost by 1 million cars. As for RC then here a preferable program became  the  program called for minimizing the expenses of the late 2008 – early 2009.

"This is a partial rebuilding of production-economic and financial activity of the company", - explains Valeriy Abramov. In particular, aiming on performing the supplying duties, on reduction of the finish products and raw materials stock. As for the investment program, then our attention will be concentrated on the projects the payback period of which will be less than one year. The programs on optimization of the personnel number and power-supply are being realized; alternatives for expensive raw components are being searched”.

The people at RC consider that anti-crises measures are sure to give some appreciable results already in the nearest future, and the company will continue its way to the leading positions in strategic sectors of the market. They acquainted me with the JV Technical Centre that deals with creation of new paint materials, adaptation of their properties to technological modes of paint application. They have the equipment that allows to simulate the process of OEM painting in conditions of any automotive plant.

"To the international enterprises producing the cars in the mode of industrial assembly the Centre innovations open the opportunity to increase the level of localization of products at the cost of using the domestic paints, - explains Valeriy Abramov. By various evaluations the introduction of complete painting cycle of a car enables to increase the localization index by 5 – 8% of a car cost.

NO LIMIT TO THE PERFECTION

- What is the purpose of those who choose LEAN as ideology?

- To become better than others. For us it is to attain the leadership in each segment of the paint market: decorative, car-refinish, industrial, powder and OEM materials.

- What bothers to perform these plans?

"The obsolete infrastructure that we have inherited from the Soviet times. If the modern  similar plant in the West occupies 6 hectares, then with us it is 16. We are the hostages of large economy with not well thought-out logistics, therefore we are trying to go away from "long ways". E.g., the Powder Paint Plant is built on a separate site with an adequate infrastructure. We are arranging a new shop of water paints the next door with our storage complex.

- What does LEAN system prompt in relation of common strategy of the enterprise development?
 
- The LEAN stimulates development at the cost of striving for the aim that is always moving aside. E.g., this year we nominally sold 30 tons of products, then the next year we should increase this amount to 33 thousand tons. In reality, we do not reach this level. However, if we manage to increase the output by 9% in comparison with 10% planned then it will be our success. The main thing is to determine some vector. In general LEAN is not just economy itself, it is the belief, it is internal motivation and longing for improvement.

Other articles