What Kind of Printing Companies Won't Be Eliminated After the Pandemic?

The COVID-19 crisis in 2020 has acted like a typhoon, sweeping across enterprises nationwide and rapidly altering the structure of China's economic development.

During the pandemic, some companies reduced salaries across the board, others laid off employees, and many companies went bankrupt, while a large number of small and medium-sized enterprises faced severe cash flow issues. This crisis is accelerating the transformation of the market.

The rapidly changing market has left many business owners feeling confused, and millions of workers are anxious. When the nest is overturned, how can the eggs be intact? Our manufacturing sector, particularly printing companies, must now consider transforming their operational management models.

1. The Greater Crisis Facing Chinese Manufacturing Comes from Its Own Management

During the pandemic, the greatest crisis for China's manufacturing sector is first and foremost a survival crisis. Companies must ensure sufficient cash flow to survive.

However, the real crisis for many businesses stems from their own management. Due to the pandemic, most businesses experienced a reduction in orders during the first quarter, but with the post-pandemic economic recovery, businesses are likely to face a surge in orders. The consequences of “not having enough to eat” and “not being able to handle too much” are equally severe.

Pain points in daily management, such as delayed delivery times, high quality loss, difficulty in recruitment and retention, and high costs, become more prominent and acute. This ultimately leads to stagnant sales and significant profit reductions. As the saying goes, “Those who do not plan for the future will have worries in the present.” In order for a business to survive the crisis and stay ahead, it must undergo a transformation in its operational management model.

This “transformation” refers to the change from Industry 1.0 to Industry 4.0. To achieve this transformation, businesses must systematically complete the construction of a technological system and implement "lean management, informatization, automation, digitalization, and intelligence," which is what we commonly refer to as the "five-step development process."

Among the "five steps," lean management is the foundation for building a strong enterprise; digitalization is the necessary path to bridge the gap to intelligent manufacturing; and informatization is the essential tool and method for solidifying management, as well as the key technology required to achieve automation and intelligence.

2. Lean Management is the Foundation of a Tall Building

First, let's focus on lean management. The essence of lean management is the elimination of waste, with the core concept being to reduce waste, lower costs, and improve efficiency. In short, lean management involves continuously optimizing processes and reducing waste through lean principles and methods. This approach helps businesses improve their performance metrics and goals in operational management, establish a control system for ultra-low production costs, and enhance the company's core competitiveness.

Lean management must be built on a foundation of standardization. Standardization means ensuring that the company "does the right things" and "does things correctly." Businesses need to establish and perfect their quality, production, and supply chain management processes, implement a scientific performance evaluation and compensation system, and ensure continuous improvements and innovations in management, thereby achieving standardization.

Additionally, the value of people must be fully reflected in the management process. Standardization is the foundation of lean management; without standardization, lean management cannot be achieved.

3. Digitalization is the Necessary Path for Enterprises to Cross the Intelligent Manufacturing Gap

Next, we look at digitalization. In our manufacturing enterprises, it is common for customers to inquire about accurate prices and delivery times. The overall speed of response within the company becomes a key weapon for winning business opportunities, and digitalization is necessary to achieve this.

Imagine an ideal situation: when the sales personnel receive an inquiry, the information immediately enters the Customer Relationship Management (CRM) system and is simultaneously processed in other systems. Through the pricing module in the ERP system, prices for different quantities, materials, structures, and delivery locations are calculated, along with the price components. The Supply Chain Management (SCM) system provides feedback from material suppliers and collaborating suppliers, and the Manufacturing Execution System (MES) offers delivery times based on different order placement conditions.

These tasks can be completed in a few seconds. While the sales personnel are still confirming details with the customer, the response to the inquiry has already been generated. The salesperson or an intelligent robot can then confirm the information before submitting it to the customer.

What used to take hours or even days for price calculations can now be done in a few seconds. To achieve this, businesses must reinvent their operational models and provide the best experience and value for their customers throughout the entire process.

4. Information Technology as an Essential Tool for Solidifying Management

Next, let's focus on information technology (IT). In the age of the internet, businesses must adopt the mindset that "IT equals business." We must recognize that IT is both a technology and a tool, and it must serve management purposes. At all times, businesses should adhere to the logic that "management comes first, technology follows."

The planning and construction of IT information systems must be based on a deep understanding of the company's business and development needs. The focus should be on aligning IT with business goals, enterprise strategy, management control models, and business processes, while analyzing industry development trends and anticipating potential changes within the company.

IT information systems must be capable of efficiently processing the growing volumes of data generated by daily operations, optimizing algorithms, and even providing automatic analysis and "fail-safe" processing of the foundational database. This continuous simplification of employees' complex and tedious work, along with the reduction of repetitive and inefficient labor, ensures that the business's needs and development can be continuously met, while managing the various resources involved in the company's operations.

The construction of an enterprise's IT information system must be carried out in stages. The management achievements obtained in daily operations should be solidified using IT management methods and technological tools, allowing both tangible and intangible assets to be accumulated and used as the foundation for future innovation and continuous improvement efforts.

Among all IT information systems, the ERP system is the core. Its primary purpose is to help businesses manage and calculate costs, enabling the company to have a clear view of its "break-even line" and synchronize the flow of information, logistics, and cash. This synchronization of the three flows—information, logistics, and cash flow—is the true indicator of an enterprise's realization of digitalization.

With an ERP system, businesses can quickly identify which customers and orders are unprofitable, and even pinpoint which part of the production process is causing the loss, allowing for timely corrective actions.

Moreover, the ERP system provides the "data-driven" core for future smart manufacturing. ERP provides raw data, while MES handles data collection and transmission. This data includes information about quality control processes, raw material and product traceability, and equipment parameters and safety data.

The real-time data exchange between ERP, MES, and equipment forms a "logistics, information flow, and cash flow" integration system, an intelligent reporting and feedback system, and intelligent control system. This enables smart operations related to manufacturing tasks tied to orders. The combined interaction between ERP, MES, and equipment creates a data-driven intelligent manufacturing architecture. The focus of operational management shifts at each stage of business development, and these changes in the operational model are part of the necessary path for enterprises.

In 2020, competition in the Chinese market will become even more intense. When competition reaches its peak, three outcomes will emerge: profit margins will approach zero, products will shift from tangible to intangible, and the market will enter the era of fine-tuned management. For printing companies, this demands an accelerated change in mindset and the transformation of operational management models. Only by understanding the development trends in the market can businesses seize opportunities and ultimately achieve greater profits.

(Author is the General Manager of Shanghai Realscheme Enterprise Management Consulting Co., Ltd.)