Hisense Must Commit to the Manufacturing Industry in the Long Run and Strive for the Global Advancement
Houjian Zhou, Huizhong Dai
The manufacturing industry is an important part of Hisense and the foundation for Hisense’s sustainable and steady development. “If there were no manufacturing industry, Hisense never would have achieved its position today.” Therefore, Hisense will continue to focus on the manufacturing industry in the long run. However, many of our leaders and key members neglect the manufacturing industry and its continuous improvement, and even regard it as an insignificant business, which leads to less competitiveness, reduced efficiency, and even disorders in the manufacturing industry.
To strengthen the positioning of manufacturing industry in Hisense and reach a consensus from a strategic perspective, Hisense Group has added “leading advanced manufacturing with intelligence at the core” into Hisense’s mission statement. That is, Hisense must commit to the manufacturing industry in the long run and strive for the global advancement.
To ensure the implementation of this important strategy, the Group announced three requirements and mechanisms simultaneously: First, leaders in manufacturing companies must focus on the manufacturing industry and pursuing advanced manufacturing with intelligence at the core; this will be an important evaluation criterion of their performance. Those who do not strive to improve manufacturing will not be considered as qualified leaders. Second, we must emphasize advanced manufacturing, benchmark advancement and leadership on the global scale, and continuously pursue high goals. Third, there must be goals and results that can be accurately measured to demonstrate the effects of Hisense's renewed focus on manufacturing. All aspects of advanced manufacturing must be quantified in target values, and degrees of advancement should be measured and evaluated against high standard global target values.
Why should Hisense firmly focus on the manufacturing industry?
Hisense’s renewed focus on the manufacturing industry is not based on our interest, but rather on the development and national conditions of China, the global situation and environment, the micro conditions of Hisense, and practical experience and manufacturing industry data from developed countries. It shows that focusing on the manufacturing industry will be beneficial to Hisense in the long term.
The manufacturing industry is the basis of a strong country and the continuous improvement of its people’s standards of living. At present, the competitive advantage of manufacturing depends on the ratio of labor force level to its cost rather than the labor force cost alone. Hisense will achieve an even greater advantage if we continuously strengthen the application of cutting-edge technologies in manufacturing industry, constantly pursue the improvement of each link including production, marketing, research, supply, and management, and offset increasing labor force costs through faster labor productivity growth.
Moreover, unlike the processing industry, the manufacturing industry starts from defining products from user needs, through product R&D and design. Hisense always adheres to building a technology-based enterprise, placing high importance on user needs and product definition technology, and boasting solid capabilities in product R&D and design. This is one of the necessary conditions for us to develop the manufacturing industry and continue our long-standing advantage and competitiveness.
If we lose even the competitiveness in the manufacturing process, then we will have to give it up and depend on outsourcing. Our “cost” will be the “cost + profit” of other original equipment manufacturers, and our market competitiveness will be greatly reduced. Therefore, Hisense must adhere to the principle of “focusing on the manufacturing industry as our long-term profit advantage,” and all leaders and key members must value and develop Hisense’s manufacturing industry.
Hisense Group must make it clear that leaders in manufacturing companies, including those in the whole chain (production, marketing, research, supply and management), are not qualified leaders if they do not pay attention to the manufacturing industry. In this regard, the corresponding employment mechanism must be developed.
Concentrating on advanced manufacturing
and taking a global leadership role
How can Hisense manufacturing stand firmly and develop steadily? The Group has decided to concentrate on “advanced manufacturing,” which not only includes the essence of manufacturing, but also covers advanced means. We should not only follow the traditional manufacturing industry practices, but also introduce new methods and tools of modern manufacturing, making full use of developing advanced technologies and means, as well as manufacturing management technology (such as extending quality management to suppliers, supply chain planning management, and delivery management). In these ways, we aim to achieve the systematization, integration, informatization and intellectualization of the manufacturing process, and continuously improve it by benchmarking the highest global standards, so that Hisense may become a global leader in manufacturing. The key lies with improving the manufacturing capacity of complex products and the ability to quickly meet the needs of consumers through the integration of modern information technology and the manufacturing industry (manufacturing and service), to obtain competitive advantages.
There are two basic characteristics of advanced manufacturing:
First, communication technology, network technology and intelligent technology must be used at a high level. Otherwise, it cannot be defined as advanced manufacturing.
Second, an advanced manufacturing mode must be used. Under this mode, network, IT, and artificial intelligence (AI) are used to connect the links of supply chain including marketing and service, technology R&D, product design, process management, material purchasing, production and delivery, storage, and logistics to realize digitized design, intellectualized production, information-integrated management, and network-based operations. This mode can significantly improve labor productivity and effectively support Hisense’s goal of optimal operation in the innovation chain, supply chain and value chain based on intelligent decision-making, and achieve improvement both in quality and efficiency.
Quantitative results and final benefits are the
evaluation criterion of manufacturing
Advanced manufacturing should be embodied by the advancement in industry, technology, management, and the industrial market position. It is essential to use advanced manufacturing technology to produce good products with high efficiency that will satisfy more users. We should pursue specific technologies and application scenarios, set high, clear objectives of quality, efficiency, cost, delivery and market position, and gradually move towards a world-leading position. Increasing the significance of the manufacturing industry, pursuing intelligent advanced manufacturing, and achieving a world-leading position should be reflected in measurable quantitative results, and in economic benefits.
“Competition between companies is essentially a competition between the capabilities of their supply chain systems.” In this way, our pursuit of advanced manufacturing is the pursuit of advanced capabilities of our supply chain system. These capabilities consist of product power, marketing power, brand power and manufacturing power (including suppliers’ capabilities and collaboration).
In 2013, Hisense Group attached great importance to, and strongly promoted the efficiency improvement of manufacturing links. Remarkable results were achieved through 2017, but the effect has gone downhill since then. From the perspective of labor loss, the top three factors restricting Hisense’s continuous and substantial improvement in manufacturing efficiency have always been planning, product manufacturability and IE capacity, production organization and management level. It shows that we must pursue competitiveness from the perspective of the whole supply chain rather than focusing on a certain link in isolation.
Competitiveness and core manufacturing values are primarily reflected in quality, cost, efficiency, and delivery. The “rigid, balanced and full-load” production plan (supporting inventory planning, the second line of defense of the supply chain) based on high-level demand management and market forecast (the first line of defense of the supply chain) is the leading element that determines the competitiveness of the supply chain. It is also the premise and foundation of quality, cost, efficiency, and delivery competitiveness in manufacturing. Less planning and frequent adjustments will inevitably bring the bullwhip effect to the whole supply chain, and quality, cost, efficiency, delivery, and capital will be worse as a result.
Design for X (DFX) and IE (process, equipment, instrumentation, automation, intelligence, informatization, etc.) levels not only determine product competitiveness to a large extent, but also function as an important foundation for the quality, cost and efficiency of the manufacturing process.
The improvement of production organization and management level must rely on the improvement of talent structure, organization and process optimization, industry benchmarking, continuous learning, and adoption of advanced management ideas, tools, and methods.
The objective of advanced manufacturing is to meet customer needs with high quality and efficiency; that is, we can provide our customers with products and services with a better reputation and user experience than competitors. Marketing can accurately convey the advantages of our products and services to consumers, and aid in achieving a leading market share, status, and brand recognition. It can also be said that advanced manufacturing is driven by advanced marketing capabilities, that complements the competitiveness of products and services, market share, and brand status. There’s no doubt that advanced manufacturing cannot be achieved in an industry with low market share, low brand position, and large scale fluctuation, which competes with others only by offering a large amount of products and pricing strategies.
If our leaders and key members do not place renewed emphasis on the manufacturing industry, do not follow the rules of the industry, and only want to rapidly expand their business, it will lead to chaos. The delivery, efficiency, quality, cost, expense, capital occupation, and product structure will fall like dominoes, directly affecting our operation. If this situation occurs, it will be the result of leaders’ neglect of manufacturing industry and its principles.
Hisense’s advanced manufacturing strategy and its overall framework plan have been determined. It is hoped that all leaders and employees can quickly change their strategic understanding of the manufacturing industry, attach great importance to it, prepare for the goal of taking a leading position in advanced manufacturing, and make changes, take actions, and achieve results that support our mission of “bringing happiness to hundreds of millions of families.”