Over the past 25 years we’ve worked with seven different metal producers: five steel, one powdered metals, and one aluminum.
We’ve worked with Sheet, Strip, Plate, Rod, Wire, Shapes, and Pipe; Carbon, Stainless, Specialty, and Silicon Steels; Coated, Painted; Integrated’s, EAF’s, Finishing Plants, Service Centers; and their Customers.
The following is meant to be both instructive and entertaining. Hopefully, it will make you feel like your own operations are not quite as screwed up as you thought!
Introducing Your Customer to Your Competitors: Let’s start with a steel user (also a client of ours). They were using the steel produced by our silicon steel client in their transformers. We were watching the operator run the laminations press: steel strip was being blanked into transformer laminations. We noticed that, in addition to our client’s steel, there was also a coil of Japanese steel sitting in queue for this same machine.
We stopped to chat with the machine operator, and happened to ask how he liked the Japanese steel.
“I love it! He said. “It has a ‘slipperyness’ that allows the machine to run much longer without a jam.”
So here’s a question for you: Do you think “slipperyness” was specified in the steel purchase agreement?
2nd question: Why do you think the US transformer plant was also utilizing a Japanese steel supplier (No. It was NOT cheaper). It was because the domestic producer’s delivery performance was un-reliable and his lead times were long!
3rd question: Do you think the user would have been using this Japanese steel, if the domestic supplier had been reliable and responsive?
We call the general category exemplified above (long lead times and poor reliability) “Introducing your customer to your competitor.” Needless to say, this is NOT something we generally wish to do!
Contrary to the common belief, far more customers change suppliers due to delivery issues than do because of price. And, when you focus on lead time reduction and on-time delivery performance, you force the resolution of a myriad of cost and quality issues as well.
You will be pleased to note that the above “slipperyness” issue was resolved by our steel producing client, and that the root issues were alleviated: Missed deliveries were cut by 75%, and lead times were cut by 40% to 80% depending on product type. Huge operating performance gains took place while we freed up $150,000,000 in cash via inventory reduction!
Re-setting Up the Set-up: Then there was the aluminum finishing plant client of ours. We were watching a change-over on a slitter. The operator was adjusting all of the knives for the next slitting job.
We suggested the obvious idea of making the set-up external to the slitting operation.
“Oh, we already do that” was the response.
It turns out that they had several full time set-up guys that located the knives on the spare arbor while the first arbor was in use. The operators always received a pre-set arbor for each job.
The operators were “eye-balling” the knife gaps and basically repeating the arbor set-up before running each job!
The operators had no gap gauges. Only the set-up guys had gauges. However, the operators, through experience, knew that some of the gap targets used by the set-up guys were wrong.
To make matters worse, the arbors were typically set-up on the prior shift. The operators could not just walk over and explain the issue to the set-up guy. There was virtually no communication between the set-up guys and the slitter operators.
The solution was extremely simple, and saved the company considerable wasted time, as well as significantly reduced the amount of scrap generated.
We established a temporary procedure in which both the set-up guy and the operator reviewed the designated gap targets, and agreed on any corrections required, for each product gauge. This was done for each “first time” gauge, and continued until all typical gauges had been agreed upon. Revisions were made to the set-up documentation.
We also provided the operators a set of gap gauges of their own so that they could spot check whenever they suspected something was awry. Double set-up efforts were completely eliminated.
It’s Physics: We were doing a brief “overview of lean” for a group of steel operators. When we mentioned that most change-overs can be considerably sped up through the SMED process, one operator said “It can’t be done at our operation”. When asked why, he said “It’s physics”.
Needless to say, we had to dig in a little deeper. The change-over that he referred to was in changing the chemistry of a galvanizing pot.
I asked “Can you describe the current change-over process?” His example was the adding of a coating metal to the molten pot so as to change the coating chemistry.
“What do you do now” I asked.
“We take the required number of ingots of the new metal and throw it in the pot. Then we wait for it to melt and spread evenly throughout the pot.”
“Hmmm” I said. “What do you think would happen to the change-over time if the added metal was in the form of shavings instead of ingots?”
“What if the new metal was already melted and you simply poured it in?”
“How do you mix the new blend” I asked.
“Convection” He said.
“Do you think that some sort of stirring device might speed the homogenization process?”
Needless to say, the blending “set-up” was dramatically improved, and for very low cost. The operator that had challenged us in the meeting eventually became one of our strongest supporters. He was always asking “Why” and “Why not”!
Individual Process Preferences: We were observing a temper mill operation during a shift change.
The day shift operator had the machine truly humming. The mill was producing excellent quality and spitting out the tons.
However, as soon as the new operator took over he began “tweaking” all of the settings. He was eventually able to get the mill running well once again.
Obviously, the problem was that each operator had his/her own set of “rules” for how the mill should be set-up.
The solution was Standardization, Documentation, and Enforcement. We asked them to develop a set of standards that they all would follow.
Up front, we had them agree to “let the data decide” which set of parameters would be used. The “criteria” for evaluating the various alternatives was also established by consensus of the operators: Speed, quality, etc.
Within a few weeks, machine settings had been standardized, and area productivity soared!
Breaking with Convention: As you squeeze the WIP inventory down, you will often run into the problem of miss-matched shift patterns. That was the case of the hot strip mill at one of our client sites.
The hot strip mill ran 24 x 5; Monday through Friday, 3 shifts, continuous operation. The problem was that the HSM fed downstream processes that ran 7 days per week. This disconnect caused the build-up of inventory and extended lead times.
We suggested the obvious solution: “Why not run the HSM two shifts/day, seven days a week?”
As you might guess, the VP of Operations said “you can’t run a HSM that way. It has to be continuous to be cost effective.” (expletives omitted!)
We asked our usual “How about we try it for a month?” The CEO agreed and the test was begun.
When we returned to the site a month later, and asked the results we were told “Over all costs had gone down!”
It turned out that in the 5 days of continuous operation, operating equipment problems were often tolerated during the week. The mill would “limp along” waiting for the weekend for repair. With the new shift pattern, repairs were made each day on the off-shift, thereby boosting productivity and overall yield.
Why Do Lean?: We had just completed a brief Lean Overview class for all employees at a steel finishing plant. That evening we ran into one of the operators and started to chat. He said he had enjoyed the class, et al. So we asked “Why would you want to reduce inventory?”
“Safety” He said.
He then went on to explain that a friend had recently been killed in the plant. It seems that steel coils, in WIP, were double stacked, and even extended into the aisles.
“The ram truck couldn’t see him, and he was hit when he stepped out from behind a stack of coils” He said.
Within a few weeks we had a “no double stacking, no coils in the aisles” policy in place and operating. You can think of these initial restrictions as the first iteration of kanban controls , limiting the amount of inventory between operations.
After six months, lead times had been cut in half. Missed deliveries were cut by 77%. An entire finished goods warehouse was eliminated (no longer needed). Quality and costs jumped dramatically.
We noticed, however, that the operation was stopped and the remaining coil removed, even though the quality and gauge all looked good. They did this for the first dozen or so wraps at the start of each coil as well.
“We know it goes out of gauge when you get down to ~ 2” left on the mandrel” the operator said.
“Let’s try running it until it goes out of gauge, level, or surface quality.” we suggested.
You guessed it: It ran until the strip rolled off the mandrel!
For years they had followed precedent, throwing away the first and last twenty feet or so. I hate to imagine the number of tons that were scrapped due to this one unchallenged protocol.