Third Visit – GrandSun Lightbulb Plant considerations, Highlights

27 September, 2004

Special Success

• Should work! Hrant Vardanyan’s highest motivation!

• And should work something big, tangible, producing something that people use everyday – VERY VISIBLE.

• Enthusiasm, dedication, DIGNITY.

Plant Specifics

• The plant is old, but has very big capacity

• Production is knowledge intensive: - quality;- research and innovations;- efficiency

Plant Specifics• Research and development is the key• In the former Soviet Union there were

few centralized institutes for lighting devices

• We hope that from the quoted

$10Msome portion should go for

R&D

Plant Specifics

• Certainly, to compete with Philips, one need the following:

• Proper R&D facility

• A lot of outsourcing

• A more developed infrastructure

• However, all this is possible: if we start today, we will have something tomorrow.

Plant Specifics

• Different aspects of transportation, since the plant is really big

• Actually many quality related issues in all workshops

• Many optimization, layout and management issues at every corner

• cleanliness requirements

Plant Specifics

• First of all:• Operation of such a huge plant is a challenge• hard to market, huge investment to recover• You cannot afford paying high salaries to most of

the workers in the initial stage• Correct management – it takes time to get your

RPM. Cyclic operation of the glass smelter.• Correct salary policy

Plant Specifics – Losses, overheads

• Where are the main losses of this huge plant?

• What for the company have spent the mentioned $10M?

• Property tax; heating, lighting, maintenance

• Used glass production technology requires certain percentage, around 10%, of glass as input with the raw materials.

Plant Specifics – Losses, overheads

• CLEANLINESS:

• Dirtiness does not allow to even think and see the important problems!

Future success depends on

• R&D investment (H2-s example, when in 3 years considerable advances are achieved through around a $1M investment).

• CLEANLINESS

• Marketing – being done, needs more...

• A lot of IE implementations: layout, OR, quality control, management, certification...

Infrastructure• What does this plant add to Armenian

infrastructure?• Positive example of success in general and

particularly in a high-tech area, albeit with mature, primitive technology.

• Experience of specialists, knowledge.• Relatively “relaxed” quality issues, in

contrast to Huntsman, where peoples’ lives depend on the quality of construction materials.

You have to pay attention to:

• %-age of the used capacities;

• Times, production timecicle,

• Yields, also:

• PLEASE MENTION POTENTIAL IE PROBLEMS. E.G.:

• OR; EOQ;

• TRANSPORTATION;

• SCHEDULING.