World class manufacturing : a steel industry case

M.Ing. (Engineering Management)Abstract: The steel industry is faced with a challenge to remain competitive and on the cutting edge. Over the past ten years the industry has been under enormous pressure due to declining global steel demand. The decline in global steel demand can be attributed to slow economic growth and the emergence of substitute materials such as aluminium. Low steel demand has created a competitive environment for global steel manufacturers that requires companies to produce steel at optimum cost, quality and deliver timely. ArcelorMittal South Africa is no exception to this new reality. This research focuses on the use of World Class Manufacturing (WCM) as an engineering system that is deployed to improve quality, cost and reliability in the sinter-making plant. The research follows a comparative case study method where an ArcelorMittal Germany site (with WCM) (site B) is compared to an ArcelorMittal South Africa site (without WCM) (site A) to identify, and close, business and operational gaps of key driving factors of quality, cost and reliability. The WCM practises by Hayes and Wheelwright are today’s fundamental global best practises of WCM implementation. From the comparison study of the key drivers of cost, quality and reliability, the following is deduced: an average of R30 million in losses in Site A over the seven months study period due to lack of efficiency in optimising cost driving factors (i.e. raw material and fuel rate). Site A has 15% more defect material (i.e. return fines) than Site B. Site B has higher plant reliability due to higher Mean Time Between Failure (MTBF) and a total unplanned stoppage time of 519 hours less than that of Site A over the seven-month study period. Drawing from research findings, a framework is drawn which includes: objective (i.e. optimum business performance), objective key drivers and actions to close the gaps to meet the objective between the two sites for each factor (i.e. cost, quality and reliability). Some of the high impact actions to close the gaps for cost, quality and reliability are: implementing a raw material management system to ensure higher by-product usage, creating a quality plan that manages quality from suppliers to the end product and implementing autonomous maintenance which allows plant operators to conduct small maintenance tasks to improve MTBF