Case Study

Changhong raises its competitive bar to join industry elite

Sichuan Changhong Group

Enterprise-wide collaboration through Teamcenter enables company to reduce product development time and costs and increase product quality to compete at highest levels

Fight for survival

While a giant in China’s household appliance manufacturing industry, Changhong, like most other Chinese manufacturers, suffered from the pain of struggling at the lower end of its global value chain. Many Chinese household appliance manufacturers have followed a beleaguered competitive road, where masterful product development technologies and breakthrough product lines have always been the purview of international giants. However, economic globalization and the ability to quickly allocate resources have leveled the playing field.

Management felt that to accelerate its concept-to-market delivery, lower manufacturing costs and increase its own value in such a fiercely competitive industry, the company urgently needed to improve its design, research and development capabilities. The company saw IT as the backbone upon which to build a new breakthrough development process, with product lifecycle management (PLM) the infrastructure upon which to create its new way of doing business. The company placed its transformative goals – that is, of acquiring intellectual property + in-house development + integrating domestic development forces – on Siemens’ PLM Software’s Teamcenter® digital lifecycle management technology.

The time for a change had become critical. “Without significantly improving its TV operations, Changhong would have to think about manufacturing other household appliances,” says Zhao Yong, chairman of Sichuan Changhong Group. Yong notes, “Our company is determined to become the first financially successful manufacturer of flat panel TV sets in China.” Changhong’s bold initiative – investing substantial money to build a plasma display panel (PDP) production line – was regarded by industry observers as literally a fight to survive in the high-stakes flat-screen technology market space. Changhong planned to produce 42-inch, 50-inch and larger sets, thus entering what the company calls “the upstream of the hi-tech media industry chain.”

Called the Hong’ou Project, it was divided into three phases with a total investment of more than $2 billion. Upon completion, the company would be able to produce six million PDP modules per year. Sichuan Hong’ou Display Devices Co., Ltd., a business unit of Sichuan Changhong Group, undertook the construction of the production line for PDPs and modules. If the project went as planned, the company would ultimately become one of the world’s top four producers of PDPs.

In April of 2007, Changhong officially received “approval” by the National Development and Reform Commission of the PDP Display and Module Production Project of Sichuan Hong’ou Display Devices Co., Ltd. Construction started soon thereafter on China’s first PDP production line. Located in Mianyang, pilot production was ready by July of 2008.

The production line, critical to the company’s future, imposed significant pressure on a number of the company’s staff, including Ren Zonggui, who oversees Changhong’s Operation and Management Department. That’s because although the manufacturing process had been optimized since the implementation of enterprise resource planning (ERP) in 2005, Changhong remained relatively weak in building information systems for design and development activities. In the past, for example, all of the bills of material (BOMs) needed for the ERP system were manually entered into the system, which was an error-prone approach.

In addition, no corresponding system was available to streamline research and development relative to managing product data, drawings, documents, etc. Zonggui notes, “Consumer electronic product innovation is so rapid that the knowledge of researchers and developers must be captured in an easy to use and instantly accessible system. Any setback, such as a change in personnel, often results in delayed research and development.”

These were other vexing issues. Due to intense market competition, Changhong usually launches several models at the same time to meet the needs of different consumers and to improve its chances of making strong market share gains. However, this means managing a very large database for the design and development organizations. To complicate matters, the company’s supply chain is made up of numerous parts and components manufacturers. Therefore, if one of Changhong’s designers needs to modify a product, a significant number of engineering change orders would have to be issued to upstream suppliers. Finally, should a product undergo numerous changes, design efficiency would be dramatically impaired. And there would likely be considerable errors associated with the changes.

In order to improve its design and development capabilities to an international best-in-class level, Changhong implemented Siemens’ Teamcenter in four steps.

First – standards-compliant data across different systems

During the process of implementing Teamcenter’s product data management (PDM) capabilities, Changhong established various integrated data models to enable complete parts and components management. This was accomplished by changing the original manual coding system to fully automated coding management. Now the company’s design reviewers and standardization workers can quickly search all of the information related to parts and components and compare existing pieces against newly added ones. The result: highly controlled parts inventories.

Using Teamcenter’s application integration and standard data/information interface capabilities, Changhong’s design and development platform is now able to leverage standards-compliant information across different systems, including ERP, computer-aided design (CAD), computer-aided manufacturing (CAM), computer-aided process planning (CAPP), etc. and easily extract the generated data or files. Relevant information is culled in a manner that ensures data consistency without compromising system integrity. Changhong successfully unified code-object consistency across various information systems and implemented the company’s “one code for one object” principle.

Second – scientific parts classification

Although the ERP software displayed the classifications of materials by codes related to material groups, the system was not intuitive and could not truly reflect the hierarchical relationships among materials. Teamcenter’s part family application was employed to classify parts in a systematic and controlled manner. This enabled applying relevant national standards, industry standards and company standards according to Changhong’s established uniform classification and naming rules.

Third – optimal part and component selection

Changhong then built its experiences, technical expertise and individual personal knowledge accumulated over the years into the Teamcenter system so that it could be shared and continually leveraged by other users.

During the process of developing products, the designers at Changhong now use Teamcenter to quickly retrieve all the products and product structures from across the enterprise, to obtain the appropriate product or part structure, and to produce variant designs and new product innovations.

In addition, the design department continuously simplifies and standardizes products and parts, thereby achieving commonization for optimal part re-use. The company’s objective is to use the smallest number of part types and mixes to address its diversified product lines. Through standardization, Changhong has been able to gain an enhanced understanding of its parts distribution, analyze commonization in its design BOMs and empower designers to use high-quality/low-cost parts.

There are other benefits. Using preferred parts to reduce the types, categories and specifications of materials helps to mitigate pressures across a host of processes, including purchasing, warehousing, capital outlay, quality control, etc. Teamcenter yields added value here as it provides the enterprise with comprehensive management tools for product parts, product families and product structures. It also supports the maintenance and use of a standard parts library, common parts library and assemblies library. Moreover, with Teamcenter, Changhong has achieved more efficient volume production, standardization and commonization across product lines.

Fourth – systematic approach to new part additions

While designers now typically select from existing parts, there are situations in which a part is not available and a new one must be created and added to a library.When this occurs, the appropriate group adds it through the “Request for Adding New Parts” approval process. This standardized approach ensures that designers are adding and accessing only the best parts, as well as eliminates the redesign of similar parts, improves product design stability and minimizes human error.

Improved go-to-market process, enhanced competitiveness

In August of 2008, the first complete TV set assembled with the first domestically produced plasma display panel – “China’s No.1 PDP” – rolled off the production line at Changhong. Yong points out, “Moving so quickly to a completely new enterprise-level development process would have been impossible without the valuable contribution of Siemens’ technology.”

Through Teamcenter’s enterprise system capabilities, the Changhong’s PDP project has achieved collaborative development among design organizations at three different locations in two countries, as well has enhanced collaboration between design and manufacturing. With Teamcenter, a substantial leap forward has been made in Changhong’s ability to innovate. The company has successfully transformed from a TV sets manufacturer to systems and components manufacturer, as seen in its PDPs, Integrated Circuit (IC) chips and built-in software applications.

Rapid, up-to-date and reliable information flow now occurs through all stages of Changhong’s PDP project – from development to process design, purchasing, manufacturing and so on. The result is breakthrough development efficiency and data accuracy, measurably reduced development times (a 9-12 month development cycle has been reduced to less than six months) and improved product quality. Specifically, the re-use of parts and development-related knowledge has slashed overall program costs, with new part/component development down some 40 percent. And today there is particularly strong collaborative development across facilities, i.e., China (Beijing and Mianyang) and South Korea.

In March of 2009, Changhong went to mass PDP production, with an annual delivery capacity of 2,000,000 plasma display panels – equal to that of Pioneer, a Japanese company ranked as the world’s No.5 producer of PDPs. Chairman Yong notes, “Siemens’ PLM solution is a very powerful engine for Changhong. Using Teamcenter for knowledge management and collaboration, we are now in position to move boldly forward amid the first tier of global PDP competitors.”

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