CONTINUOUS PROCESS IMPROVEMENT SYSTEM AT

CORUS
Introduction Submitted by Group IV

1. Corus is a steel manufacturing company and is a subsidiary of Tata Steel, part

of the giant Indian conglomerate. Corus focuses on meeting the needs of its
worldwide customers and providing innovative solutions. It manufactures, processes
and distributes steel and aluminium products worldwide.

2. Corus has steel manufacturing facilities in Scunthorpe, Teesside, Scotland

and France. The key markets include construction, energy and renewables,
engineering and machinery, mining and earthmoving equipment, shipbuilding,
fastenings and rail. The principle of manufacturing 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.

The production process

3. 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

4. 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. 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,
Corus needs to differentiate its business from its competitors in order to continue to
grow.

5. Corus 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. Corus 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.
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Continuous improvement

6. Continuous Improvement is often referred to by the Japanese word ‘Kaizen’.

Kaizen means ‘change for the better’ and covers all processes in an organization.
These include engineering, IT, financial, commercial and customer service
processes, as well as manufacturing. Continuous improvement 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.

7. Continuous Improvement starts with management and under their leadership

works down through the organization. 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

8. 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

9. 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. Corus 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 as ‘takt’ 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 corus. For
employees to work to a smooth paced process needed a significant culture change.

Implementing a continuous improvement culture

10. A CI culture means that everyone can put forward ideas and have a say in
how processes can change for the better. CI needs teamwork. In corus, a CI
manager coordinates the process. 40 CI chosen workforce received training to
facilitate improvements. CCI has put together a ‘toolbox’ of techniques, which the
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coaches use with managers, employees and operators. These help everyone
understand where and how they can improve their work.

11. Corus 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

12. 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

13. 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.
Corus (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, leveling and inspection) can be
scheduled accordingly.

14. 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.
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Target setting

15. 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.

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

Key performance indicators

17. 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

18. 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

19. There are significant costs involved in setting up a Continuous Improvement

programme, including:

• Allocating employee time to participate in group work

• Training coaches
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• Setting up a manual of tools and techniques

20. 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.

21. By empowering its workers, Corus has gained a more committed workforce,
which helps to drive further improvement. KPIs show that the Corus is achieving its
targets for rolling steel in planned weeks and is delivering almost 100% of
customers’ orders complete and on 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.

Product development

22. The steel for the new aircraft carriers needed to meet a very high
specification. Materials for warships have to be able to endure the unique conditions
in which they operate, such as extreme temperatures or high seas. This contract
required grades of steel with strength and toughness higher than those Corus had
put forward for its previous contract bid. This represented a new product opportunity
and using innovations Corus used CI to support its new product development (NPD),
enabling it to meet the needs of its customers more closely. Thus, Corus developed
the new product out beating its competitors. Corus's established CI systems and
quality procedures helped it to meet the following step change:

• It's Research & Development expertise and knowledge came up with the new
steel formula that had the required toughness and strength.
• Lean production principles helped to minimise waste since lean production
uses fewer resources more efficiently. This increases productivity and can
improve profitability
• One aspect of lean production that helps to save costs of stock is the just-in-
time (JIT) principle. Just in time means producing and supplying goods at the
time they are needed. The business holds the minimum amount of raw
materials and just enough finished product to meet demand. It requires well-
organised systems to ensure supplies arrive and goods reach customers on
time. Just in time procedures helped to meet tight deadlines. This reduces
costs and so helps to improve the return on investment for shareholders.

Product testing

23. Steel making is a large-scale manufacturing process. Manufacturing involves

taking all of the raw materials involved in making steel and turning them into tangible
outputs. Producing large quantities reduces the cost of each piece. This is known as
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'economies of scale'. In order to test the new steel formula properly during
development, Corus needed to find a way of making small batches for testing.
Product testing is an important part of development. The small batches enabled
Corus to create prototypes to test and discover how well each prototype met the
required specification.

24. Corus needed to examine which elements of the steel manufacturing process
affected the strength and toughness of the plate. It was important to test various
factors to see what impact changes in each would make to the finished product:

• The steel chemistry - what ingredients made the steel 'recipe' better?
• The reheating conditions - how did the temperature affect the steel?
• The rolling schedule - did different mill processes have an effect?
• The cooling speed - did the speed of cooling affect the product?
• The additional heat treatment processes - would additional heating change its
qualities?

25. The product testing stage enabled Corus to make sure the final product met
the required brief from the design team. It used computer-modelling software to
identify the impact of changes in each factor. By understanding the best combination,
Corus came up with the winning formula.

Outcomes

26. Corus developed the new steel product to help it win the Royal Navy contract.
As a result, it benefited in many ways as a side effect of the changes:

• By using its existing CI procedures to guide its research and development and
testing, Corus developed the new specification of steel required at a
competitive price.
• Investment in new technologies and equipment, used alongside lean
production techniques, enabled Corus to minimise levels of waste and reduce
high manufacturing costs.
• It was able to meet customer deadlines, a vital element of making a business'
operations more competitive.

27. The steelmaking industry also benefited. Corus adopts a practice of

benchmarking as part of it's continuous improvement. It shares its best practice
across the industry. Other steel businesses can now use the best methods of
production to raise quality across the whole sector.
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28. Quality assurance is a vital requirement of continuous improvement,

especially in the shipbuilding industry. Steel products for this industry require
approval by shipping classification societies, such as Lloyds Register of Shipping.
This independent body carries out its own assessment of the test programme to
ensure that materials meet full requirements for the shipping industry. Without this
approval, Corus would be unable to use its materials for this type of job.

29. By meeting the higher specification, Corus gained Lloyds Register approval
for the new steel plate it developed for the Royal Navy. This approval means that
Corus can offer these high quality steels to other customers. This expands it's
customer base. Its investment in CI systems, research and development and the use
of its employees' knowledge have provided Corus with a distinct competitive
advantage

Conclusion

30. In a competitive industry, businesses need to use all the resources they have,
including skills and knowledge. Continuous improvement at Corus provides a
process in which everybody can play a part in moving the business forward. Working
in teams enables employees to share their ideas and expertise. Using the expertise
of staff helps the business to develop. It also empowers individuals to take on
responsibility and provides them with increased job satisfaction.

31. New product development may involve risk, such as investing time, resources
and money in new technologies. However, it also creates business opportunities.
Continuous improvement has helped Corus to meet the Royal Navy's increasingly
sophisticated requirements for high specification steel products. However, in meeting
these needs, it has also opened up other business opportunities. By winning this
contract, Corus is now able to make this higher-grade steel available as part of its
product portfolio. As a long-term strategy, it will help the business to outperform it's
competitors and increase its market share. It aims to improve operational demands
to fulfill customer expectations and out-perform competitors. However to enhance its
performance further, the following is recommended:

• Cost reduction can be achieved by recycling steel.

• Recycling does not affect quality and also preserves natural resource.
• Efficient SCM would immensely help due long-term orders.
• Using Value chain analysis, identify areas in which value can be added or
costs reduced.
• Created key targets for managing and reducing emissions.
• Seek new ways of reducing the amount of energy used in its
manufacturing and recycling operations.
• Give high priority to risk management in order to reduce the number of
accidents at work.