Scientific Operation and Creates Value
— On Operational and Value Control in Steel Structure Fabricators
Part 2
5. Let Time and Space to Create Value
All production takes place within a limited footprint. Output value per unit area is a key indicator of management effectiveness.Facility size and equipment capability are the hard constraints on capacity. Factories must staff accordingly to maximize the utilization of assets and drive profitability. Managers must closely monitor the load on production space and equipment to identify efficiency bottlenecks and eliminate non-value-adding waste. On the other hand, for fabricators with limited facilities, increasing shifts is necessary to fully utilize the available space and boost operational efficiency.
6. Leveraging Data Analytics and Sharing for Proactive Control
Fully utilize management systems to provide accurate data and real-time reports. By analyzing and sharing this data, we can reduce labor costs, achieve paperless offices, and implement proactive control before and during processes.Today,the internet has sparked a third economic wave. Simple, traditional management methods can no longer keep pace with the new era or satisfy customer demands. Management practices that were once successful now appear inadequate. Senior and middle management must keep up with the times, humbly learn advanced concepts, and have the courage to abandon outdated ideas and "experience". We should fully leverage 5G internet technology, utilize office and production management software (such as MRP and MES)and adopt smart devices to serve the company, bringing tangible benefits and competitive advantages. We must avoid inefficient methods like "human wave tactics" and strive to move from the "Red Sea" of cutthroat competition to the "Blue Ocean" of uncontested market space.
Take component numbering during production as an example. We have evolved from handwriting numbers on components, to stamping steel marks on them, to pasting bar code and QR code labels, and now to the widespread application of the more advanced Radio Frequency Identification (RFID) technology. RFID readers capture information from chip tags attached to components and transmit it to a backend system, where it is centrally processed into material receiving lists. Compared to the early days of manually checking and verifying each component’s number against lists and then entering the data into systems, the efficiency is simply incomparable. RFID technology not only drastically reduces manpower input but also ensures greater data accuracy and enables real-time data sharing,it also allows us to track the real-time status of components via satellite positioning technology, thus achieving comprehensive and dynamic control over all components.
With the rapid data transmission of 5G networks and the integrated application of Artificial Intelligence (AI), equipment intelligence, and robotics, we are entering an era of transformative change in the manufacturing industry—this is also its future development direction. As the saying goes, "Whoever stays at the forefront of the times will stand out in the competition and become a leader in the industry."
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7. Reducing Waste in Human Management, Machinery, and Materials
As the saying goes, "Saving is Having." As companies expand, various forms of consumption and waste inevitably follow, making cost control a core factor affecting profit. In the face of fierce market competition, cost awareness is very important for everyone, from top management to front line workers.
To achieve this, companies should implement rigorous project cost control (Job in Progress). This means clear accountability for every task and monthly monitoring. We must focus on streamlining organizational structures, clearly defining roles and responsibilities for every department and employee, executing budgets and performance reviews, maximizing equipment utilization, and setting clear consumption targets. Essentially, we must perform subtraction on the "Cost" in the "Volume-Cost-Profit" equation. The more we reduce costs, the higher our profits will be.
In China as sample, the demographic dividend is fading. Rising labor costs are becoming a heavy burden, while customer demands for quality and speed are increasing, and commercial terms are becoming stricter. Consequently, the steel structure industry is facing massive consolidation. Apart from state-owned enterprises, joint ventures, listed companies, and large private firms, smaller and medium-sized private enterprises are finding operations increasingly difficult. Many are diversifying, changing industries, renting out factories, exiting the market, or becoming subcontractors for larger firms. Companies are repositioning themselves to find new paths forward to join the the competition in global market.
Currently, trade protectionism and tariff conflicts are rising. For example, the U.S. tariff policy on Chinese steel products and other countries have further eroded competitiveness. Since price differences between Chinese, Southeast Asian and Middle-East products were already minimal, this makes the situation worse. Demand from the U.S. is shifting toward Southeast Asia and the Middle East. Additionally, fluctuating exchange rates, unstable trade policies, and strict environmental regulations have driven up and destabilized raw material prices, increasing operational risks. The days of relying solely on high processing fees for survival are over. Steel Structure Fabricators must leverage various management tools to enhance competitiveness and aggressively cut costs to ensure healthy development.
8. Conclusion
Generally speaking, no company can make profit without scientific and effective control. In price-driven industries, cost is undoubtedly the primary management target. According to the "Volume-Cost-Profit" analysis, cost and efficiency are key determinants of profit, which is hidden within every link of business operations. Therefore, while increasing revenue, we must use practical management tools to “Dig out the profit from every singles step”.
With over 20 years of experience in steel structure production and management consulting, our ForMc team comprises professionals who have served in steel companies across various countries. We are familiar with international standards such as AISC /AWS (USA), EN1090-2 /ISO 3834-2(EU), CWB W47.1/W59.1 (Canada), and JIS (Japan) etc.
ForMc participates in the Process design of steel structure factories,System management,Training on international standards and Bidding requirements.We provide high-quality, professional and efficient services to help steel structure enterprises enter high-level international markets.
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