continuous-improvement-as-a-business-strategy-a-corus-case-study-introduction

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Continuous improvement as a business strategy
A Corus case study

Introduction

The steel manufacturing company Corus focuses
on meeting the needs of its worldwide customers and providing innovative
solutions. It manufactures processes and distributes steel and aluminum
products worldwide.Corus is a subsidiary of Tata Steel, part of the giant
Indian conglomerate. Tata Group includes businesses in many industries – for
example, chemicals, automotive, telecommunications, leisure and consumer goods
(such as Tetley Tea). Tata Steel acquired Corus in 2007 as part of a strategy
of international expansion.Steel is everywhere in our homes and all around us.
Corus Construction & Industrial (CCI), a business unit of Corus, has steel
manufacturing facilities in Scunthorpe, Teesside, Scotland and France.

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The key markets for CCI include construction,
energy and renewables, engineering and machinery, mining and earthmoving
equipment, shipbuilding, fastenings and rail. The principle manufacturing site
at Scunthorpe covers 2,000 acres and employs 5,500 people. The site consumes
6.5 million tonnes of iron ore and 2 million tonnes of coal each year to
produce 4.3 million tonnes of steel products. CCI products go into
a range of leading edge developments.

The production
process

Modern steel production is a large scale
operation dealing in huge quantities of materials and products. The process of
steel plate production has several stages:

  • Receipt of pre-cut steel slabs from the steel plant
  • Reheating of slabs
  • Rolling to achieve required dimension and mechanical properties
  • Initial inspection for surface or quality defects
  • Cutting to order size
  • Marking with unique identities
  • Cold levelling to agreed flatness standard
  • Final inspection
  • Loading and despatch to customer

Producing large volumes helps to drive down
the costs of running huge and expensive steel plant. Overall, this results in
steel being a relatively inexpensive product, typically around 50 pence per
kilogram, about the same as a kilogram of potatoes.In a major building project,
such as a shopping complex, the cost of the steel can be as little as 5% of the
overall cost of the project. Because of these issues, CCI needs to
differentiate its business from its competitors in order to continue to
grow.CCI’s business strategy is to produce quality steel to satisfy customer
requirements, focusing on delivering products at the right time in order to
secure profitable business. A key challenge is to meet the increasing demands
for more steel, at increasing levels of quality and to comply with more
demanding delivery requirements.It would be straightforward to meet these
challenges using brand-new facilities. However, a new ‘greenfield site’ steel
mill could cost more than £300 million to build. CCI therefore needs to make
process efficiencies and quality and delivery improvements with its existing
manufacturing plant. This presents challenges when older facilities are not
well structured to use modern manufacturing techniques and processes.This case
study focuses on the process of Continuous Improvement (CI) at the CCI steel
plate manufacturing mill at Scunthorpe. It will show how Corus is finding new
ways of achieving its objectives from existing resources.

Continuous
improvement

Continuous Improvement is often referred to
by the Japanese word ‘Kaizen’. Kaizen means ‘change for the better’ and covers
all processes in an organisation. These include engineering, IT, financial,
commercial and customer service processes, as well as manufacturing.CI involves
making continual small improvements to a process rather than big changes at
irregular intervals. This requires close monitoring and control, changes to the
uses of manpower, machinery, methods, materials and money to improve business efficiency.Continuous
Improvement starts with management and under their leadership works down
through the organisation. The underlying theme is that everyone is responsible
and has a part to play in making improvements. All employees must work together
to identify the steps needed to improve working practices. Planning meetings
help teams to focus on satisfying customer needs. Visual management techniques,
such as flow charts and wall charts make clear what resources are necessary and
who is responsible for each part in the process.

Reducing waste

Everyone has the opportunity to eliminate
waste. This is any activity or process that does not add value. A key question
to define waste is ‘would a customer pay for that process?’

There are seven main areas of waste for any
business:

  • transportation – moving materials or products about
  • inventory – keeping too much or the wrong stock
  • motion – people moving or travelling excessively
  • waiting times – allowing products to wait for processing
  • overproduction – making too much
  • over processing – doing too many processes during manufacture
  • defects – errors or flaws in the product causing rework or needing to
    be scrapped

Production processes that minimise waste are
referred to as lean production’. In these processes, the aim is to use less of
everything, for example, space, materials or time.

CCI in Scunthorpe is looking to reduce waste
in its plate manufacturing process. It has adopted the concept of ‘flow’. This
means that the products are ‘pulled’ through the process according to customer
demand.All parts of the production process, from the supply of raw steel (slab)
to the finished steel plate, are carefully planned. Scheduling for each element
of the process ensures that bottlenecks are kept to a minimum. Each process is
paced (known astakt’ time) to control the amount of product in each
stage of the process. This ensures that processes operate smoothly without
overload or delay and keep the desired output and quality.Tonnage was the
traditional key measure of productivity for CCI. For employees to work to a
smooth paced process needed a significant culture change.

Implementing a
continuous improvement culture

A CI culture means that everyone can put
forward ideas and have a say in how processes can change for the better. This
is known as engagement.CI needs team work. In Scunthorpe, a CI manager
coordinates the process. 40 CI Coaches chosen from the workforce received
training to facilitate improvements. CCI has put together a ‘toolbox’ of
techniques which the coaches use with managers, employees and operators. These
help everyone understand where and how they can improve their work.An
organisation needs to know where it is going in order to be able to put in
place the resources it needs to achieve its plans. This is set out in a vision.

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Scunthorpe plate mill has set out a 5-year
vision improvement plan which will help in the process of developing a CI
culture for the business. Everyone in the organisation has to understand and
actively support the plan. Workshops for all employees have taken place to
explain the vision and why the change is necessary if CCI is to remain
competitive.

Process
mapping

Helped by the CI Coaches, workers have drawn
maps of their processes. These show the links between the stages of
manufacturing as well what information flow is needed. The maps show:

  • details of tonnages
  • number of products
  • rework cycles
  • inspection points
  • stocks
  • delays
  • costs

The first part of this process is a ‘current
state value stream map’. This shows what the systems and processes are like
now.The next stage considers what the ‘future state map’ would look like. This
highlights what CCI needs to do to achieve this state, for example, investing
in new processes, equipment or additional staffing.Scunthorpe plate mill has 16
system maps. These link to each other to give an overview of the whole process.
For each of the 16 systems, a number of rules about stock levels and stock
rotation have been set up:

  • Stock rotation ensures that the plates for one customer do not become
    buried beneath others and therefore delayed.
  • The required amount of slab steel (‘feedstock’) must be in front of
    the mill by the Tuesday of the week in which the material is to be rolled.
  • By rolling plates in the planned week, the mill is properly paced and
    all ‘downstream’ processes (such as cutting, levelling and inspection) can
    be scheduled accordingly.

Using the value stream maps has helped CCI to
improve process flows and the working environment. It has also reduced
unnecessary motion, transport and processing.By taking these small steps and
involving everyone in the vision, the delivery of product has increased from
70% of plates on time to 92% on time.

Target setting

CI working requires everyone to think
differently about the way they work. It was recognised that people might be
resistant and cling on to old ways of working.The key was getting all workers
to see change as their responsibility. The CI coaches support the teams and
individuals and promote or ‘champion’ new ways of working.

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To help workers accept the changes, the 5-year plan established a timeline for the programme of
introducing change. Over time, the team and individuals are empowered to take
responsibility and make decisions for them.

Key
performance indicators

An important part of the Continuous
Improvement programme was the creation of Key Performance Indicators
(KPIs).Previously, the only measure at Corus was the number of tonnes of steel
rolled. This did not show whether it met customers’ needs or whether the steel
needed rework because it didn”t meet customer requirements.Corus has set new
KPIs which focus on meeting customer deadlines, such as:

  • a zero backlog of customer orders – this means customers always get
    their deliveries on time
  • meeting targets for rolling steel plate in its allotted week

Corus monitors and measures how its
operations compare with other producers and competitors in the steel industry.
This process of benchmarking means that Corus is continually reviewing its
activities to achieve best practice.Corus shares relevant information both
within and across Corus to drive improvement. It also spreads appropriate
technical knowledge and information across the steel industry through
international groups such as the International Iron and Steel Institute.

The benefits
of continuous improvement

There are significant costs involved in
setting up a Continuous Improvement programme, including:

  • allocating employee time to participate in group work
  • training coaches
  • setting up a manual of tools and techniques

However, Corus is already seeing the benefits
of CI with:

  • reduced waste through lean production
  • improved product quality
  • reduced rework time
  • faster response times, giving more customers their orders on time
  • becoming more competitive by driving down costs
  • retaining/gaining customers through innovative products and services.

By empowering its workers, Corus gains a more
committed workforce which helps to drive further improvement.KPIs show that the
Scunthorpe mill is achieving its targets for rolling steel in planned weeks and
is delivering almost 100% of customers’ orders complete and on time. Scunthorpe
Plate Mill aims to have all orders complete and on time by March 2009, while at
the same time reducing lead time.

The principles of team working help to create
a more flexible workforce. This gives Corus the capacity to increase or change
production when necessary. In addition, Corus employees are more likely to be
satisfied and motivated when they feel that they are making a contribution.
They can see their expertise helps to create a more effective company.

Conclusion

Corus is
transforming production at its Scunthorpe plate mill through Continuous
Improvement. This way of working encourages all employees to behave as team
members to identify and support work improvement opportunities. Increasingly
employees at every level are making improvement their responsibility, which
provides employee job satisfaction.Continuous Improvement helps Corus to
provide quality products and services for customers with on time
delivery. CI supports Corus’ aim to achieve satisfied customers and
secure repeat sales and longer term orders.It is part of a long term strategy
based on service to develop the business. It aims to improve operational
demands to fulfil customer expectations and out-perform competitors.

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