Научная статья на тему 'Practices of kaizen implementation at industrial enterprises'

Practices of kaizen implementation at industrial enterprises Текст научной статьи по специальности «Экономика и бизнес»

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LEAN PRODUCTION / KAIZEN SUGGESTION / KAIZEN PROJECT / RATIONALISATION / SELF-LEARNING ORGANISATION / БЕРЕЖЛИВОЕ ПРОИЗВОДСТВО / КАЙДЗЕН-ПРЕДЛОЖЕНИЕ / КАЙДЗЕН-ПРОЕКТ / РАЦИОНАЛИЗАТОРСТВО / САМООБУЧАЮЩАЯСЯ ОРГАНИЗАЦИЯ

Аннотация научной статьи по экономике и бизнесу, автор научной работы — Markov D.A., Markova N.A.

The paper presents research into the effectiveness of kaizen suggestions at industrial enterprises. As a methodological basis, the study uses scientific works by both Russian and foreign experts in the improvement of production system performance, as well as theories of personnel motivation and leadership, concepts of lean manufacturing, rationalisation, and kaizen. The information basis of the research consists of statistics provided by domestic industrial enterprises to ensure validity of conclusions. The key findings include propositions and recommendations that can be applicable to industrial enterprises to improve the existing production systems and implement lean manufacturing. Evidence shows that kaizen suggestions at industrial enterprises reach high effectiveness within 3-4 years after the introduction of the lean manufacturing concept, and, being relatively low-cost, lead to a significant economic benefit through cost reduction.

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Практики внедрения кайдзен на промышленном предприятии

Статья посвящена исследованию эффективности кайдзен-предложений на промышленных предприятиях. Методологической базой исследования послужили научные труды отечественных и зарубежных специалистов в области повышения эффективности производственных систем, а также теории мотивации персонала и лидерства, концепции бережливого производства, рационализации и кайдзен. В качестве информационной базы для обеспечения достоверности выводов использовались данные отечественной статистики российских промышленных предприятий. Основные результаты исследования состоят в том, что предложенные выводы и рекомендации могут быть применены на промышленных предприятиях при совершенствовании действующих производственных систем и внедрении бережливого производства. Выводы свидетельствуют о том, что высокой эффективности кайдзен-предложения на промышленных предприятиях достигают через 3-4 года после начала внедрения концепции бережливого производства и при сравнительно небольших затратах на внедрение обеспечивают значительный экономический эффект за счет снижения издержек.

Текст научной работы на тему «Practices of kaizen implementation at industrial enterprises»

Denis A. MARKOV

Cand. Sc. (Econ.), Associate Prof. of Management and Marketing Dept.

Perm National Research Polytechnic University

29 Komsomolskiy Ave., Perm, Russia, 614000 Phone:(342) 219-85-51 e-mail: damarkov@pstu.ru

Nina A. MARKOVA

Sr. Methodologist, Higher School of Business and Economics

Perm National Research Polytechnic University

29 Komsomolskiy Ave., Perm, Russia, 614000 Phone:(342) 219-85-55 e-mail: fk@pstu.ru

Practices of Kaizen Implementation at Industrial Enterprises

The paper presents research into the effectiveness of kaizen suggestions at industrial enterprises. As a methodological basis, the study uses scientific works by both Russian and foreign experts in the improvement of production system performance, as well as theories of personnel motivation and leadership, concepts of lean manufacturing, rationalisation, and kaizen. The information basis of the research consists of statistics provided by domestic industrial enterprises to ensure validity of conclusions. The key findings include propositions and recommendations that can be applicable to industrial enterprises to improve the existing production systems and implement lean manufacturing. Evidence shows that kaizen suggestions at industrial enterprises reach high effectiveness within 3-4 years after the introduction of the lean manufacturing concept, and, being relatively low-cost, lead to a significant economic benefit through cost reduction.

JEL classification: J33, Mil, M51

Keywords: lean production; kaizen suggestion; kaizen project; rationalisation; self-learning organisation.

Introduction

Kaizen is one of the lean manufacturing principles described in detail by J. Womack and D. Jones in Lean Thinking: Banish Waste and Create Wealth in Your Corporation. Kaizen was first applied by Japanese businesses to solve urgent problems in the context of limited resourc-S es and reduced demand for products. By putting the creativity of its own employees to good ^ use, the Toyota Company not only cut its costs, but also remained a leader in machine building £ for many years, having built a philosophy successfully employed by various industries in the > US, Europe, and Russia.

is The process of kaizen implementation requires no excessive initial investment, while the

H economic benefit can many times exceed the rewards paid for employees' suggestions. Kaizen ^ assumes that transformations are not radical but gradual. However, it is crucial to arrange a ¡5 steady flow of suggestions, which should come from the enterprise employees creating added S value for the product, as they are the ones who "stand at the forefront" and sometimes see the @ entire value stream.

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The purpose of this study is to assess the effectiveness of kaizen suggestions at industrial enterprises.

The tasks of the study are:

• to perform comparative analysis of the terms "suggestions for improvement", "continuous improvement", and "kaizen";

• to determine the factors influencing kaizen implementation process;

• to assess whether kaizen suggestions can be effectively implemented at the Russian industrial enterprises.

Theoretical approaches to kaizen research

There are a large number of terms commonly used in the Russian periodical literature to denote kaizen. We will highlight the differences in terminology. According to S. Zinchenko [5. P. 9], the term "suggestion for improvement" dates back to the Soviet era. It implied that the employees of an enterprise made suggestions for improving manufacturing procedures, except for those related, for instance, to modifying the incentive system and other organisational aspects. One can still come across the term "suggestion for improvement" used instead of "kaizen" in a number of articles by the Russian researchers.

Another term, considered together with kaizen, is "continuous improvement". The term owes its origin, firstly, to E. Deming, who focused on improvements related to the quality of products and manufacturing process (which is known as the PDCA cycle - "plan-do-check-act"), and secondly, to S. Shingo, J. Womack and D. Jones, who also employed this term as one of the lean principles (as part of the "House of Lean" [3]) but meant not only improvements related to the product quality, but also those aimed at combating various losses in order to increase customer satisfaction. As noted by M. Rother, the Toyota Company added to the PDCA cycle the "go and see" principle "...to achieve an ambitious target state used by learning organisations" [14. P. 171]. At the same time, the top management needs to reach a state where continuous improvements meet the strategic objectives of an enterprise and simultaneously contribute to boosting the workforce productivity and production processes effectiveness, given that some employees may not be ready to participate in developing a learning organisation [15. P. 2].

The term "kaizen" comprises the following features:

• a combination of "continuous improvement" and engagement of each employee in the process;

• kaizen is an "umbrella" for a number of lean tools and principles (such as kanban, justin-time, total productive maintenance, etc.) [16. P. 239] i.e., on the one hand, it improves their application (implementation) and, on the other hand, allows for enhancement of existing procedures and processes.

Thus, kaizen answers the question "how?" and engages all the enterprise employees in continuous improvements. It should be noted that, engagement builds upon a change in personnel motivation and in the employees' and managers' way of thinking [16. P. 239], which is a lengthy process in itself. The change toward Toyota's way of thinking is critical for the improvement and involves the following: when an enterprise has no problems, it means that it stands still and does not develop, which is already a problem. M. Rother also notes that Japanese employees perceive problems as something positive, as an opportunity for self-development, unlike most employees in other countries, and that "small problems are being solved (rather than being "swept under the carpet" or having the blame shifted to other employees without identifying the reasons for their occurrence)" [14. P. 194].

Employees can be engaged in kaizen in a number of ways. For example, at Canon, line managers respond positively to suggestions for improvement, help employees fill in the necessary forms, offer them useful advice, and try to identify even the slightest inconvenience caused to employees. Specific goals are set for the number of suggestions and areas for improvement,

and competitions and games help increase interest in the process. The rewards for suggestions are paid before the pay day [7. P. 150]. At Russian enterprises, for example, AO Novomet-Perm, intangible incentives are used in addition to material remuneration for the best suggestions at the year end, such as having the kaizen competition winner's name posted on the Recognition Board or a family dinner in a restaurant with the director [9]. At ZAO "Public enterprise Naberezhnochelninsky cardboard and paper mill named after S.P. Titov", in order to have their qualifications for the position validated or improved at the performance appraisal the employees should submit several suggestions for improvement and/or participate in implementing a kaizen project [2. P. 96]. The study into factors having impact on employees' motivation for continuous improvement identifies management support, training opportunities, improvement of personal performance, remuneration, job satisfaction [17. P. 1480]. Therefore, remuneration is not the main factor to influence employees' motivation for improvement.

The process of kaizen establishment and promotion at the enterprise in many ways depends on both the leaders working at the enterprise and the personnel training system, as the promotion of any lean tool requires employees who are able to lead, "infect" with ideas, explain and demonstrate what to do and how to do it. Employees' commitment to the enterprise, goals and tasks it faces improves the corporate culture and contributes to kaizen development.

As noted by M. Imai [7. P. 42], a worker who performs routine duties (follows instructions, performs standard operating procedures) is, as a rule, of low qualification. As their experience grows, s/he starts pondering how to do work faster, improve its quality and his operating procedures. At this stage it is important for managers to support the initiative of employees, to create conditions for them to realise their ideas. And managers at various levels learn to respond adequately to the employees' suggestions, consider ideas, hear requests and questions, support rather than punish. The more experienced employees become in submitting suggestions, the higher their interest in creating value for the customer and in the successful development of their enterprise is. Suggestions that may seem insignificant at first sight may provide significant economic benefit to the enterprise. Moreover, the more prepared the employees are to implement the changes, the more adaptable the enterprise is, which is one of the distinctive features of the self-organising and self-developing organisations [12. P. 861].

Empirical study of kaizen projects at Russian industrial enterprises

The analysis of "Manufacturing systems of Russia" and "100 best industrial improvement suggestions 2012" ratings show that kaizen at Russia's industrial enterprises features the following key elements:

• a regulation on the submission of proposals, officially approved and announced to the personnel;

• a clear and transparent incentive system for participation in the programme;

• a system to train the personnel to submit suggestions;

• a functional proposal implementation system;

• organised work to promote the participation in the proposal submission system;

• organised work to encourage employees to participate in the proposal submission system [6. P. 76].

It also revealed that the most widespread and most effective suggestions were those aimed at organising and optimising the workplaces, material flows, and cooperation between workers from different shops, areas, and industries. It was noted that 100 out of 179 enterprises participating in the study had been implementing kaizen for more than 4 years. This corresponds to the statement of Kenjiro Yamada, the Managing Director of Japan Human Relations Association, that "kaizen implementation takes 5 to 10 years" [7. P. 140]. Russian authors R. A. Nugaybekov and A. V. Baranov claim that implementation of a proposal submission system takes no fewer than 6 years after an enterprise starts its transition to lean manufacturing [13. P. 219]. The management needs this period to overcome the employees' resistance and

build a new manufacturing system based on lean principles actively using other lean tools. The statistics on the kaizen suggestions implementation at some Russian manufacturing enterprises are described below. For this purpose, the raw data for calculation is given in Table 1 [1. P. 61; 8; 10; 11. P. 336].

Table 1

Kaizen suggestions' implementation at some Russian manufacturing enterprises, %

Enterprise Year when lean implementation has begun No. of years the concept has been in use 2010 2011 2012 2013 2014 2015 2016

KAMAZ PTC 2006 12 83.38 86.01 88.76 89.47 89.04 99.06 99.09

ZAO Novomet-Perm 2007 11 n/a n/a 80.04 44.23 37.87 n/a n/a

ZAO Experimental Plant Micron 2005 13 As above 70.71 n/a 60.34 54.83 54.60 As above

PJSC Novosibirsk Aircraft Production Association named after V.P. Chkalov (JSC Sukhoi Company) 2008 10 >> n/a As above 38.83 53.57 58.19 >>

Source: KAMAZ PTC 2006-2016 annual reports. Available at: https://kamaz.ru/investors-and-shareholders/information-disclosure/annual-report/; JSC Sukhoi Company official website. Available at: http://www.sukhoi.org/dku/; Sukhoi production system: 2016-2017 results and prospects. Available at: http://www.up-pro.ru/library/production_management/systems/ps-sukhoi-2017.html.

The data in Table 1 demonstrates that only after the lengthy transition to lean manufacturing the enterprises are able to successfully introduce kaizen and the proposal submission system works correctly. On average, kaizen implementation rate reaches 63.76 %, i.e. every second suggestion is put into practice.

An example of kaizen at PAO Motovilikhinskiye Zavody (Perm) is provided below. It mainly produces finished metal products, except for machinery and equipment. The enterprise is engaged in the production of special-purpose steel grades, equipment for the oil-and-gas industry, road-building equipment, coal mining industry equipment, and military machinery. The company is a modern machine-building enterprise with a well-developed metallurgical complex operating in two sectors, i.e. metallurgy and machine building.

The introduction of lean manufacturing in late 2013 was motivated by a number of problems, such as overproduction; unbalanced supply of components and materials; errors in delivery scheduling resulting in conflicts with customers and suppliers; low sales margin; cash gaps due to untimely delivery of finished products, etc. [4]. The primary tasks were to reduce production costs; build a transparent management system, and improve the operating performance. The management decided to develop the Operating System Motovilikha (OSM) based on lean principles and tools (methods). One of the first steps in OSM implementation was to provide training to all the personnel from the top management to workers, teaching them the basics of lean manufacturing (cascade method). In 2014 the company started to implement lean manufacturing in reference areas; in 2015 it proceeded to standardisation of all company processes and introduction of Total Productive Maintenance (TPM); and in 2016 it began synchronizing the internal manufacturing flows and dealing with suppliers basing on lean manufacturing principles.

Training is currently available to all categories of employees, the workshops are held for the heads of departments to obtain practical skills of process optimisation, theoretical and practical training of foremen in OSM tools is provided under the Masters' School program.

The company has achieved great success since the OSM was established. For example, the project to increase the drill pipe output produced the following results:

• level of work in progress reduced by 27.5 %;

• lead time shortened by 20 %;

• internal defect rate reduced by 86 %;

• efficiency ratio (the ratio of value creation time to production lead time) increased by 10%;

• obtained economic benefit amounted to 8.7 million rub..

Employees are engaged in kaizen basing on "Regulations on filing, recording, implementation, and promotion of personnel for participation in the process of continuous improvement". Improvements in all aspects of enterprise operation as per the Regulations can be divided into 2 types, i.e. kaizen suggestions and kaizen projects (Table 2).

Table 2

Kaizen project and kaizen suggestion

Parameter for comparison Kaizen suggestion Kaizen project

Originator One employee - one idea One or several (a group of) employees

Economic benefit No or minor (up to 10 thousand rub. a year) economic benefit or another non-financial one Established economic benefit of more than 10 thousand rub. a year

Submission and implementation trends of kaizen suggestions and kaizen projects are presented in Figures 1 and 2. Figures 1 and 2 show that the implementation rate of kaizen suggestions increased from 26.37 % in 2013 to 84.78 % in 2015, as did that of the kaizen projects, which indicates the success of kaizen implementation.

For the purposes of kaizen project organisation, a special document filing scheme, a list of required documents (Table 3) along with the rules and regulations regarding their completion and the following approval procedures are available at PAO Motovilikhinskiye Zavody.

Remuneration is paid depending on the derived economic benefit:

• for the total saving from 10 thousand to 500 thousand rub. - 2 % of the achieved economic benefit, but not more than one salary;

• for the total saving of 500 thousand rub. and more - 1 % of the achieved economic benefit, but not more than two salaries.

An example of implementing the kaizen project entitled "Cost reduction for the stock item manufacturing orders, including low-tonnage (40-45 MT) ones with alloying element extraction" in the steelmaking shop No. 21 at PAO Motovilikhinskiye Zavody is illustrated below.

The Problem was that about 2.5 tons of molten metal still remained at the bottom of the steel-pouring ladle after casting steel into forging ingots in the shop. As this amount is not enough to cast another forging ingot, the metal was poured into a special-purpose mold and, once solidified, was transported to the scrap recycling shop (as reusable scraps). After processing, this metal (underfill) is dumped again into the arc furnace as charge. However, in liquid state the underfill still has high-alloy properties and is a steel of quite a good quality.

The employee's Suggestion was to add the underfill to the next heat instead of pouring it into the mold. This shall increase the prime yield, decrease the power consumption of the Complex Steel Processing Facility (CSPF), and reduce the cost of expensive ferroalloys, as part of chemical elements is derived from the recast underfill. The employee filled in the necessary documents that were signed by the management. Based on the documents filed at PAO

18,000

12,000

6,000

Submitted kaizen suggestions

Implemented kaizen suggestions

2013 August-December 2015 2014

Fig. 1. Submission and implementation of kaizen suggestions at PAO Motovilikhinskiye Zavody

400

350

300

250

400

Submitted kaizen projects

Implemented kaizen projects

2013 August-December 2015 2014

Fig. 2. Submission and implementation of kaizen projects at PAO Motovilikhinskiye Zavody

Motovilikhinskiye Zavody, the Project data sheet contained all the necessary elements, including:

• the project goal - to reduce costs;

• the direction of cost reduction - reduction of material costs;

• targeted indicators: 20 % reduction of production costs for the carbon and alloyed stock items, elimination of underfill transport to the shop No. 23, increase in prime yield by eliminating reusable scrap by 2 %, reduction of the unclaimed metal annealing by 10 %, saving in expensive ferroalloys (including additional materials) due to reclaiming by 5 %, and cutting electricity and energy costs by 2 %.

The calculation of the economic benefit was attached to the Project Data Sheet. It was recommended to produce 10 heats using the proposed method basing on the data in Table 4 to calculate the economic benefit. The intermediate calculations are presented in Table 5, and the final benefit is calculated in Table 6.

Table 3

Documents required to file and track a kaizen project at PAO Motovilikhinskiye Zavody

No. Document Purpose Document elements and responsible persons

1 Project data sheet Assesses project feasibility, necessary expenditure for project performance, and estimated economic benefit. Economic benefit calculation enclosed to the data sheet specifies the project costs and estimated direct and indirect economic effects. The calculation of the economic benefit is signed by the project initiator, enterprise economist, and the head of the division where it is to be implemented Project name, the leader and participants, lead time, necessary resources, directions for cost reduction, target indicators, inputs and outputs of the project, and project results. To be signed by the project manager, agreed by the Chairman of the Operation Systems Development Committee, and approved by the Head of the organisation (division)

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2 Operational work plan Determines the project lead time, reflects the specific steps and dates to take them, indicates the progress of the project to permit necessary adjustments Composed by the responsible drafter by the decision of the project manager or by the manager him- or herself. To be signed by the work team, project manager (for the focus area), and the Customer. Terms and scope of work under the operational work plan are not subject to change during its entire lifespan

3 Weekly work plan Serves as a more detailed description of the tasks specified in the Operational work plan and is composed basing on the tasks that need to be addressed in accordance with the Operational development plan deadline, taking into account deviations from the deadlines set for the current calendar week Task completion deadline and its status are indicated

4 Project work acceptance certificate Assesses and confirms the results (economic benefit), and justifies the incentive compensation to be paid for the kaizen project A statement shall be attached to the certificate to confirm the economic benefit. To be signed by the head of division and by the economist

Table 4

Raw data to calculate the economic benefit of the kaizen project

Parameter Value

Average pouring amount per heat, MT 54

No. of heats per month, ea. 6

No. of heats per year, ea. 72

Average underfill weight per heat, MT 2.5

Underfill amount per year, MT 180

Table 5 Intermediate calculations to evaluate the economic benefit of the kaizen project

Parameters Values

Consumption index

Consumption index before the event 0.21

Consumption index during the event 0,18

Direct steelmaking costs, rub./MT 28,666.6

Consumption index reduction 0.03

Consumption index reduction per annual program, MT 116.64

Transportation of underfills to the shop No. 23

Capacity of 1 transportation car, MT 60

Underfill amount required for transportation, MT 180

Loading/unloading costs per car, rub./car 1,150

Reduction in specific power consumption of DSP-60 (arc furnace)

Specific power consumption for the heats with exclusion of reusable scraps after underfill casting, kWh/MT 477.1

Specific power consumption for the following heats, kWh/MT 462.6

Reduction in specific power consumption, kWh/MT 9.5

Electricity tariff, rub./kWh 1.3

Reduction in specific power consumption of CSPF

Specific power consumption for the heats with exclusion of reusable scraps after underfill casting, kWh/MT 104.3

Specific power consumption for the following heats, kWh/MT 89.3

Reduction in specific power consumption, kWh/MT 15

Electricity tariff, rub./kWh 2.55

Table 6 Economic benefit of the kaizen project, rub./year

Cost item Economic benefit

Consumption index 3,343,602

Transportation of underfills to the charge recycling shop No. 23 3,450

Specific power consumption of DSP-60 48,016

Specific power consumption of CSPF 148,716

TOTAL 3,543,785

As it can be seen from Tables 4-6, the savings resulting from the kaizen project implementation will amount to 3,543,785 rub. a year. The benefit obtained should be compared with the costs of paying rewards to project participants. According to the "Regulations on filing, recording, implementation, and promotion of personnel for participation in the process of continuous improvement", the total saving exceeded 500 thousand rub., consequently, the amount of reward will be 35,437.85 rub. (i.e. 1 % of the obtained benefit).

Conclusion

Kaizen is an integral part of lean manufacturing. The implementation of the proposal submission system assumes that the enterprise deals with the elements like motivation, training, and leadership that are relevant to both employees and the enterprise, since intangible incentives have no less an impact on employee motivation than material ones.

The above example of implementing the kaizen project demonstrates that PAO Motovi-likhinskiye Zavody having been into transition towards lean manufacturing for over 4 years introduced the kaizen system that works properly and possesses all the key elements. The economic benefit from the kaizen project is expressed as the annual cost savings.

The study identified the distinctive features of kaizen application at industrial enterprises, determined that kaizen implementation is not possible until the enterprise has applied lean manufacturing for a number of years, and proposed an indicator to assess kaizen implementation, i.e. kaizen suggestion implementation rate.

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Практики внедрения кайдзен на промышленном предприятии

Марков Д. А., Маркова Н. А.

Статья посвящена исследованию эффективности кайдзен-предложений на промышленных предприятиях. Методологической базой исследования послужили научные труды отечественных и зарубежных специалистов в области повышения эффективности производственных систем, а также теории мотивации персонала и лидерства, концепции бережливого производства, рационализации и кайдзен. В качестве информационной базы для обеспечения достоверности выводов использовались данные отечественной статистики российских промышленных предприятий. Основные результаты исследования состоят в том, что предложенные выводы и рекомендации могут быть применены на промышленных предприятиях при совершенствовании действующих производственных систем и внедрении бережливого производства. Выводы свидетельствуют о том, что высокой эффективности кайдзен-предложения на промышленных предприятиях достигают через 3-4 года после начала внедрения концепции бережливого производства и при сравнительно небольших затратах на внедрение обеспечивают значительный экономический эффект за счет снижения издержек.

Ключевые слова: бережливое производство; кайдзен-предложение; кайдзен-проект; рационализаторство; самообучающаяся организация.

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Сведения об авторах:

Д. А. Марков, канд. экон. наук, доцент ка- Пермский национальный исследовательский

федры менеджмента и маркетинга политехнический университет

Контактный телефон: (342) 219-85-51 614000, РФ, г. Пермь,

e-mail: damarkov@pstu.ru ул. Комсомольский проспект, 29

Н. А. Маркова, старший методист Пермский национальный исследовательский

Высшей школы бизнеса и экономики политехнический университет

Гуманитарного факультета 614000, РФ, г. Пермь,

Контактный телефон: (342) 219-85-55 ул. Комсомольский проспект, 29

e-mail: fk@pstu.ru

Ссылка для цитирования: Markov D. A., Markova N. A. Practices of Kaizen Implementation at the Industrial Enterprise // Известия Уральского государственного экономического университета. 2018. Т. 19, № 5. С. 130-140. DOI: 10.29141/2073-1019-2018-19-5-10

For citation: Markov D. A., Markova N. A. Practices of Kaizen Implementation at the Industrial Enterprise. Izvestiya Uralskogo gosudarstvennogo ekonomicheskogo universiteta - Journal of the Ural State University of Economics, 2018, vol. 19, no. 5, pp. 130-140. DOI: 10.29141/2073-1019-2018-19-5-10

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