A Lean Cost Management

Lean management philosophy is an important part of manufacturing operational management in enterprise. To enhance cost control will be effective way to improve enterprise core competition and reduce manufacturing cost.Company A met big challenge along with her strategy transition from traditional to digital business, high operational cost results in market share lost with less competitive price; as well as cash flow was highly impacted by high volume raw material and finished goods inventory; bottleneck of production equipment impacted quick response time to meet market forecast; imbalanced line cycle time led to unreasonable equipment investment, and impact site capacity improvement as well, etc.There are 5 chapters to be deployed, chapter 1 will introduce the overall status of digital camera industrial as well as the big competitive challenge that A company faced, and chapter 2 will introduce some theories to be used, suck as production cost management and Lean production.Chapter 3 to 5 will be our focus, we will investigate and figure out relevant improvement solutions in terms of cost reduction from three major sections- effective cost management, process optimization and process capacity programming.Chapter 3 mainly focuses on effective cost management, we will approach activities based cost management methodology to analyze the cost composition of digital camera, and approach cost efficiency and more profit margin, to collect operations information with using value stream map analysis tools; re-design VSM to reduce cost and optimize process; use Kanban tools aligned with information system to manage manufacturing process visibility, and build more effective Lean manufacturing working cell and establish new cost management system.Chapter 4 introduces how to use optimized technology principle to optimize assembly process, with identifying the bottleneck and balance the line resource to reduce inventory and variable cost and improve line capacity; we also approach constraint theory to re-balance production capacity and resolve production plan for multiple products.The topic in Chapter 5 is to analyze the balance of project cost and revenue from break-even point perspective, we present a sample to do linear analysis for factors of production cost, sales revenue and production volume, to identify the production volume at break-even point is critical for overall production plan, and which is also a very important index to layout the production throughput for purpose of approaching the maximum margin, we will conduct sensitivity analysis for the key factor of fixed cost, and make a conclusion that which will blow up margin with fixed cost reduction.At last, in chapter 6, We look forward to further carrying forward with consolidating company A Lean cost operational system practices and the investigation we made in this paper.The investigation in the paper will focus on current status analysis instead of rationalism study, the major objective is to identify problem and gaps and work out solutions for problem solving, and the key deliverables could be valuable reference for other corporations in similar industry.