ConfidentialMemorandumto：AiBaojunGM,BaosteelZhaoZhouliDeputyGM,BaosteelZhouJianfengAssistanttoGM,BaosteelLiQingyuDirector,ESIPangYuanlinGM,HRCPlantImproveBaosteel’sperformancethroughimplementingleanmanufacturingThroughtheclosecollaborationwithHRCleandiagnosisclientteam,andunderthedirectionalguidanceofsteeringcommitteeandsupportofrelevantdepartments,wehavesuccessfullyfinishedleandiagnosisofHRCplantfromMarch26toApril23.Wehope,throughthismemorandum,toprovideyouthesummaryofdiagnosisresultsandsuggestionsonnextphaseleanmanufacturingpilotsinHRCplant.1.SUMMARYOFLEANMANUFACTURINGDIAGNOSISCONCLUSIONSBaosteelcurrentlyfacessignificantchallengesinsatisfyinggrowing,demandinganddifferentiatedcustomerneedsinabidtobecomeworld-classsteelcompany.Asthekeybottleneckpartoftheproductionchain,currentHRCperformanceonassetproductivity,productqualityanddeliveryperformanceneedstobesignificantlyimprovedforBaosteeltosecureandstrengthenitscompetitivepositiontogrowmarketshareinanincreasinglycompetitiveenvironment.BenchmarkingwithexternalandhistoricalinternalbestpracticesrevealsthatthecapacityutilizationandOEEofboth1580and2050lineshaveimprovementpotentialsofmorethan10%.Bottomuprootcauseanalysisrevealssignificantreductionpotentialinmaintenancetime,rollchangetime,breakdown,speedloss,rework(includingdowngrade),anddeliveryleadtime.Potentialannualnearterm(withinnext12months)financialimpactacrossallthreeareascouldreachRMB200millionintotal,andmid-term(1-3years)annualfinancialimpactcouldbeRMB600millionintotal.ThistranslatesintoNPVofXXXbillion.InvestmentrequiredtoreachthistotalisYYYmillion.1ConfidentialBaosteelshouldrealizesignificantimprovementpotentialandresultingfinancialbenefitswithinandacrossassetproductivity,productqualityanddeliverythroughacomprehensive3-5yearschangeprogram.Itshouldengageandempoweremployeesatoperationalleveltorigorouslyapplyleantoolsandstructuredproblemsolvingapproachtosetupsystemsandparticipativeprocessestopursue“Kaizen”-continuousimprovement.Tosupportleantransformation,BaosteelshouldalsostrengthenitsorganizationalcapabilitybysettingupContinuousImprovementOrganizationaswellaspolicydeployment(performancemanagement)systemtoinstitutionalizethechangeprogram,thusensuringthatBaosteel’sstrategicandoperationaltargetsaredeployedtop-downtoeachlevelofthecompany,strengtheningand/orsettingupappropriateperformanceevaluationandincentivesystem,andaligningemployee’sindividualKPIswithoverallcompanytarget.BaosteelshouldstartimplementingleanmanufacturinginHRCplant.HRCshouldkickstartthechangeprogrambyimplementinga6–9monthspilotprogramimmediately.Itshouldpursuebreakthroughinitiativestoimproverollchangetime,maintenancetimeusingleantoolsaswellassettingupappropriateorganization,systemsandprocessesforcontinuousimprovementbysolvingaselectednumberofhighpriorityproductqualityandbreakdownproblems.Itshouldstartsettingupperformancemanagementsystemandprocess,andtrack,evaluateandcontrolimplementationprocess,inparalleltoinstitutionalizethechangeprogramwithinHRC.Seniormanagementshould,withunshakableconfidenceandcommitment,leadandpromoteandrolloutanddeepeningofleanmanufacturingpilot.Leantransformationisasystematicprojectforcorporatereform(6sigmaisonepartofleanmanufacturing).Duringthetransformationprocessnewethicsandconductswillcollideandconflictwithcurrentmanagementsystem.Therefore,theseniormanagementshouldprofoundl...
