Steel Manufacturer

Case Statement:

Your client is a steel manufacturing company, and they have to expand production by 10%. You are required to analyze the existing manufacturing setup and suggest possible methods.

BCG

Profitability

Manufacturing

Moderate

I: Your client is a steel manufacturing company, and they must expand production by 10%. You are required to analyze the existing manufacturing setup and suggest possible methods.

C: Do we need to expand the company as a whole or production in a singular production unit? Meaning, are we not able to reach the capacity of our existing plant?

I: Yes, we are not able to do so.

C: I would want to understand the end-to-end manufacturing process, from the initial steps to the final product. Could you provide an overview of how we go about with this?

I: Okay, sure. We pass steel slabs that are produced within the same premises through multiple rollers on a single line conveyor belt. There is application of heat involved that converts the slabs into a hot rolled coil of steel.

C: Is the process 100% automated or is human intervention involved?

I: There are people involved hands-on in the process.

C: Looks like I have sufficient information. I would like to begin by exploring the value chain of the process. It involves the raw material, inbound logistics, the processing, outbound logistics. Should we concentrate on a specific aspect to identify the causative factor of our production capacity limitations?

I: Yes, you can try to look at the processing of the steel.

C: I would consider the three factors involved in the processing of the steel. The people – the number, their training and productivity. The process – the standard operating procedure and its efficiency. The technology – the rollers and heat application machines. Would you like for me to look at one specific factor?

I: What could be wrong with these factors?

C: The production unit might not have enough people, or the ones present may not function at the required productivity. We may not be allocating the required resources to train them for the job. The process may have efficiency issues due to the technology for the machines being obsolete. The machines may be facing maintenance and breakdown problems.

I: That is right. The problem lies with the machines facing frequent breakdowns due to which we’re losing two hours of production each day. Could you look into this?

C: Alright. Where exactly are we losing time? In the pre-repair phase, during the repairing process or after repairing? Meaning, do we not have the required spare parts and personnel to repair our equipment? Is there inability to do so due to some internal factory issue? Or is the quality of the repair in question?

I: I think we have reached the problem which is the unavailability of the spare parts. Could you tell me how we can resolve this?

C: Yes certainly. If the spare parts are not accessible, is it because they unavailable in the market for us to purchase? Or is there an issue with timely procurement?

I: We’re not able to procure it timely, which is why we’re losing time which was meant for production. Can you give some suggestions to the client?

C: As an immediate step, the spare parts can be stored near the respective machines, and the staff can try to carry a toolkit containing the most commonly used spare parts. They can utilize the downtime due to break down to finish other maintenance activities in the unit (parallel processing). In the long term, they can look into the possibility of a potential equipment upgrade in order to minimize the occurrences of breakdown.

I: This looks good. We can close the case now.

Background Information:

Company – is a steel manufacturing company that has a single plant in Odisha with a production capacity of 2 MT.

Competitor – no major change in landscape, company-specific issue.

Consumer – the hot rolled steel coils are sold to business that can utilize it to produce finished goods.

Product – only one product, hot rolled steel coil – company owns end to end production of the good.

Case recommendations:

As an immediate step, the spare parts can be stored near the respective machines, and the staff can try to carry a toolkit containing the most used spare parts. They can utilize the downtime due to break down to finish other maintenance activities in the unit (parallel processing). In the long term, they can look into the possibility of a potential equipment upgrade in order to minimize the occurrences of breakdown.

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