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Kaizen in Action in Asia - Mark Reed

In 2003-2004, my assignment involved establishing a continuous improvement (CI) initiative in China for a Fortune 200 company in the industrial gases and specialty chemicals industry. The undertaking was quite large and involved strategic planning, training and coaching personnel, and managing the rollout of CI across their Asian facilities. I also conducted Kaizen and other events to introduce their employees to the different tools they would use to uncover and make improvements. As I proceeded, I kept notes about the events we conducted. We began the year with introducing people to continuous improvement and its tools. Here are my notes on two events we completed early in the year—one standardized a freight forwardng work process and other used Kaizen to improve component receiving

Standardization of Work

Early in 2003, I led a Kaizen event in Korea to introduce people to one of the most powerful tools of continuous improvement. The focus was on the freight forwarding work process. A project team had been formed a year earlier to make improvements in that process. It was chartered with the task of improving shipment tracking and communication with customers about the status of shipments and reducing the cost of operation.

Work Process   Freight Forwarding  
  • Dissatisfied customers
  • Excess cost
  • Using nine different companies to move freight - each with its own work process
  • Waste in work process including unnecessary paper work and handling, search for information, delays in getting responses to questions
Action   Use elements of Kaizen to standardize the work process  
  • 20% hard cost savings ($250,000 US)
  • Soft savings by eliminating unnecessary work
  • Improved customer satisfaction

The company was dealing with nine different freight-forwarding companies to ship their products within Asia as each of its plants operated independently. As a consequence, the company had nine variations in how freight forwarding was handled. These variations required logistics personnel (about 50 in the region) to manually fill out forms, fax forms, place telephone calls in attempts to get information, fend off phone calls from concerned (and sometimes angry or desperate) customers. Also, since each of their plants was a small customer to its freight forwarder, no plant was getting good pricing and service. When customers called requesting delivery information, our personnel had to go through great pains to get any information on the status of the freight. Most of the time they were not able to provide a timely answer for our customers. Employees were frustrated, and their customers were frequently not satisfied with the responses they were getting to their information requests. The project team had met several times during the year, but it was not able to produce any improvements.

Because there was no "standard work process" in use, we could not perform a Kaizen event. What was needed was to develop one standard work process stripped of the waste we could detect in the existing variations. We could then give all the business to one freight forwarder with an alternate in case there were problems with the primary forwarder's performance.

We used the mapping activity of Kaizen to describe the current variations in work, uncover a backbone, and establish a standard process (see Customizing the Kaizen Process in the Kaizen Desk Reference Standard). Our mission was to increase customer satisfaction and reduce the cost of the freight forwarding work processes that was being used in Asia by establishing a standard work process stripped of the waste observed in the current nine variations. All of the participants were logistics managers for their countries. We had participants from eight countries: China, Indonesia, Japan, Korea, Malaysia, Singapore, Taiwan and Thailand. All of the participants spoke English very well.

About two weeks prior to the event, we collected work process information by survey from each participant. We mapped the backbone work process and noted its variations during the meeting. The mapping went very quickly due to the fact that they did an excellent job on filling out the information sheets. As we walked through the process using our map, it was obvious to all what the major sources of waste were. We wound up with a good start on a single standard work process that was suitable for all eight countries, and an action team that was charged with putting the finishing touches on the process. We had a list of "Do's" and "Don'ts" that all agreed we didn't violate. All the team members were satisfied that the new work process would work for their plants.

We also set up an action team to compile all of the details regarding volumes, costs, numbers of shipments, routing, etc. They were also going to define what actions logistics personnel would be responsible for and what actions the Freight Forwarder would be responsible for.

All of the team members were confident that, with the combined business we would be able to get vastly improved service and pricing from the freight forwarder. The expectation is that we will wind up with one freight forwarder at about a 20% hard cost savings and get preferential treatment on deliveries (resulting in shorter delivery times), on-line status tracking with access for our customers (taking a great burden off our people), and a single point of contact for each country. The freight forwarder assumes responsibility for completing all shipping documents as required by each country. These are just the highlights. All of these expectations were based on the knowledge that team members had of what was available for larger customers of the freight forwarders.

We expected to have all of the action items completed by the end of the month and have a contract signed with a freight forwarder. The savings should start coming in May. The 20% cost savings represents about $250,000 USD. There will also be significant soft savings including huge amounts of work eliminated for the logistics personnel (tracking down delivery status, filling out and faxing forms, dealing with concerned customers, etc.). We also expect a significant increase in customer satisfaction.

There was one comment made in Korea that I'm still enjoying. On the second day we had broken off into sub-teams to work on action items. One of the sub-teams was laying out the logistical details - routings, volumes, costs, etc. They had put together a spreadsheet that they were going to use to collect all the details from the other team members. At the end of the day the two sub-teams did a progress report. The representative from Malaysia presented the results of the work of his sub-team. I had given them a quick Working With Others lesson just prior to the report-outs. After he explained the spreadsheet, he clarified whether the team understood what he presented (in broken English): "Who here don't get it?" It was a delight to see the skills we were teaching in action.



I led a Kaizen event in Chu-Pei, Taiwan in the spring. The event focused on a receiving process for a component the company uses to store and transport their products. Most of the components are shipped from the company's plants in the U.S. and some from Japan. After employees receive the components in the warehouse and record them in inventory, they have about eight quality control tasks they perform including affixing new labels, weighing the components, leak testing, etc. The components were being moved and stored numerous times, the operators were walking all over the plant to get tools, supplies and paperwork.

Work Process   Component Receiving  
  • Delays in fulfilling orders
  • Excess cost
  • Lots of waste in process
Action   Kaizen  
  • Cycle time reduced by 26%
  • Uncovered and corrected 11 safety problems
  • Identified another opportunity to reduce cycle time even more

The goal of the event was to reduce the amount of time it took to complete the inspections. We reduced it by 26% by cutting out the unnecessary work steps and reducing the travel. By traditional thinking, the whole inspection work process is waste, but due to the stringent quality requirements required by our customers, we cannot eliminate the inspection. They value it and are willing to pay for it, so that means that it is not waste.

The team in the Chu-Pei event was quite different than the team we had in Korea. Several team members spoke only Chinese. We had three operators on the team. The plant manager was also on the team. (Interestingly, when we wrote up the ground rules for the team, the plant manager came in with "Everyone's equal.") Everyone participated well. I missed about half of the discussion due to the language barrier, but one of the CI managers in-training translated for me.

The Kaizen process worked well. Having to wait on the translator slowed it down quite a bit, but we still accomplished our goals. We had posted a pre-event flyer (in Chinese) asking for suggestions about a week prior to the event. None were submitted. However, the team members eagerly provided their suggestions during the event. All of the improvements came from suggestions of the operators - none were mine and none came from the plant manager.

The whole process was new to them. They had never done anything like this. The discussions were lively with good participation. There was lots of laughter, and the mood was very positive.

Most of the discussions during the brainstorming session were in Chinese, so I only heard summaries of the discussion. But from what I could tell based on body language, they were enjoying it. I usually knew who "owned" the suggestions and made sure to recognize that person - which seemed to be well received by all.

We also uncovered eleven safety problems. Some were serious. All were resolved. It didn't seem that anyone's ego was bruised as a result. There were comments like "...we would have never known this was happening if we hadn't done this event."

Another interesting learning from Chu-Pei: We took on the event in response to a request from the plant. They were being pressured by the business area to speed up their process. The components are currently in "receiving" from 7 to 10 days - including warehouse receiving, recording, inspection, labeling, touch-up painting, documentation, etc. They had established a goal to reduce it to no more than five days. Since we're in the "Pilot" phase of the CI rollout and are doing events just for the training, we hadn't done the strategic planning process including high-level value stream maps that precedes a comprehensive CI implementation. It assures that you point your events at the right targets.

When we took a preliminary look at the high-level value stream on the first day of the event, we saw that the biggest opportunity for reducing cycle time was not in the process we were working on! The biggest delay was the paperwork. They were taking three to four days to process the certificates of analysis that assure the customer of the quality of the product they bought. We went ahead with the event on the receiving process anyway, since there were plenty of improvement opportunities in it and our primary intent was training. However, we scheduled a follow-up event on the paperwork. After that event I'm confident that we'll have reduced the cycle time still further, perhaps reaching just three days. The next step should be one-piece flow where we consolidate all of the work processes (receiving, inspection, painting, labeling, etc.). After a good flow event, we should be down to less than eight hours from a beginning of seven to 10 days!

The CI Initiative

The CI initiative became a great success for its company and continues to thrive today. Within just 11 months, we established Lean/CI within in a business unit operating in 8 countries with over 1.3 billion dollars (USD) in revenues and 4,500 people. During that period, we engaged, energized and trained personnel to master plan the implementation of Lean/CI and implement 145 Lean improvement events. The savings in the first year (while we were still training personnel) were over $30 million (USD). This first year included six weeks during which the project was on hold due to SARS. The response of people was both amazing and uplifting. Their energy, devotion to learning and contributing, and intelligence made it all possible. Our tools and training made their path easier to travel and faster to complete, but it is always people who power organizational change and they deserve the credit.

About the Author

Published May 2004


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