Continuous Improvement Strategies in Corus - Essay Example

Table of Contents Table of Contents 2 Introduction 3 Quality Imperatives 4 Economic Imperative 4 Social Imperative 4 Environmental Imperative 5 Strategic Importance of Quality 5 Quality Philosophies 7 Quality Tools 8 Management of Quality 10 Conclusion 11 References 13 Introduction Corus Group is an international metals organization. The core competence of the company is providing steel and aluminium products and service to different market sectors. It is one of the top ten steel producers in the world. The customer base of Corus mostly comprises of businesses in the automotive, aerospace, packaging, engineering, building and construction markets (Datamonitor, 2008). Corus Group has operations in thirty different countries reaching over Europe, Asia and other international markets. In Europe, UK is the major market of the organization. The company is headquartered in London and employs 21,300 people in UK. (Datamonitor, 2008) Corus was created in 1999 through a merger of British Steel and Koninklijle Hoogovens, a Netherlands-based company. The company was experiencing under-performance and operational problems for a period of time. It needed to change in order to turn-around the whole company and restore its competitiveness. The change was initiated by two business strategies, Restoring Success and the Corus Way Programme, which focused on continuous improvement. It was only after the successful implementation when the company became profitable again. It became attractive that today, it has become a part of the Tata Steel Group. This paper aims at exploring and evaluating the continuous improvement strategies in Corus. It focuses on how Corus used its knowledge and experience of continuous improvement to win new customers and find new ways of achieving its objectives from limited resources. The paper has identified some key environmental, economic and social imperatives that drove the company to implement improvement strategies. It has disclosed several quality tools that the company has utilised in order to improve its business processes and performance. It has also pinned down the system of managing quality in the company's production sites. Quality Imperatives Economic Imperative Several years ago Corus bid for a Royal Navy contract for steel in one of the navy's destroyer vessels project. The project was considered as the largest Royal Navy contract awarded in history. Corus failed to acquire the project because the Royal Navy project consultants established that the company has no capability of meeting the high quality specification of steel plate required. Banking on the loss of the biggest contract, Corus management decided to invest in quality management and improvement of its machinery and processes. It has invested millions in their steel plate mills in order to be ready for any similar contracts in the future. Today, the steel manufacturing company focuses on meeting the needs of its customers and providing innovative solutions. Social Imperative In 2003, three Corus employees and four contractors were fatally injured on Corus sites. All serious incidents were cause for the greatest concern and were thoroughly investigated. Recommendations were being made to prevent recurrence, improve job satisfaction and maximize health and safety. The top management committee continually leads the company's initiatives of improving safety performance. They aim to have a continuous reduction of serious accidents as measured by lost time injury frequency rate. Environmental Imperative As a steel manufacturer, Corus believes that good environmental performance is critical to the success of its business. The company aims to improve such performance continuously. It places great emphasis on contributing to a sustainable society and carry out its business in a responsible manner. The climate change is a significant global issue. Corus recognises its role in contributing to the reduction of the problem of green house gases. Emissions to air and discharges to water were focused for reduction. The amount of waste produced was also scrutinised and required for reduction. Strategic Importance of Quality In 2000 up to 2003, the company has reported operational losses amounting to millions of Euros. This was caused by continuing high losses in carbon steel due to weak UK demand and unsustainable level of exports plus the weakening of Euro. (Corus, 2003) Faced with this problem, the company initiated quality management practices by implementing cost reduction measures, plant productive capacity reduction and manpower productivity improvement measures. (Corus, 2000) In 2004, Philippe Varin, CEO, initiated and launched the Restoring Success programme which aimed at closing competitive gap between Corus and the European competitors. The program includes waste minimization and process simplification where waste is reduced and unnecessary copying of activities is eliminated. (Times Newspaper, 2006) In 2005, Corus implemented a programme to create real value in steel. The programme was named - The Corus Way. The programme comprised of three key business goals: first, becoming the best supplier to the best customer; second, adopting world-class processes; and lastly, ensuring growth. By becoming the best supplier, the company draws on improved reliability, innovative approaches to market and partnership with other companies. Part and parcel of the programme is aiming at adopting world-class processes based on Continuous Improvement. The objective of continuous improvement is to eliminate and prevent waste while creating value in their products and services. (Corus, 2005) In 2006, the company has successfully completed the Restoring Success programme. It has delivered cost savings through cost reduction and improved operational efficiency. The programme has also delivered improvements in safety records and customer service performance. The programme has also improved the percentage of deliveries on time, from 74% in 2003 to 85% in 2006. (Corus, 2006) The programmes were implemented by the company through a top-down commitment. The top-down approach assured coordination across the four divisions of Corus which subsequently contain twenty different units and functions. The administration set up a virtual Corus Academy in April 2005. It was led by executive directors as a steering group of the programme together with a smaller implementation group. Since Corus is a global company, the need to communicate internationally is resolved by the virtual academy that focused on five work areas: standards, networking, training, tools & techniques and communication. Quality Philosophies Edwards Deming emphasized the role of management in setting quality and the importance of reducing variability in the process (Waters, 2002). The Corus Group understood this philosophy by creating corporate strategies where quality is integrated. The CEO and the executive management themselves had instigated and implemented the value of total quality management and continuous improvement programmes in the company. Joseph Juran stressed the definition of good quality as satisfying customer demand (Beckford, 2002). Similarly, the company focused their continuous improvement strategies in fulfilling the requirements of their customers and creating more value for their steel products. As a consequence, greater customer demand resulted to higher profit and growth for the company. The company realises that continuous improvement is a business tool that gives competitive advantage. It enabled Corus to overcome problems in its steel works by producing high quality steel plates. Continuous improvement or "kaizen" has been part of the company's culture since the implementation of the Restoring Success programme. According to Masaaki Imai (1989), kaizen means continuous improvement that involves everyone, managers and workers alike. Philip Crosby believes that the only performance measurement is the cost of quality (Beckford, 2002). At Corus, managers and workers became aware of the importance in reducing costs without jeopardising the quality. Rework, rejects and wastes are the company's major adversaries in attaining cost savings and improving work (Times Newspaper, 2008). By minimising rework and wastes, it has diverted its limited resources into productivity and profitability. Kaoru Ishikawa underscored the contribution of workers to quality and introduced the idea of quality circle (Ishikawa, 985). Following the idea, Corus has trained senior managers to raise awareness and has developed a team of continuous improvement coaches to bring about the required changes. In the long run, the company will be creating quality improvement teams that would be responsible for new ideas for increasing performance and improving processes. (Times Newspaper, 2006) Quality Tools The Restoring Success and the Corus Way programmes employ the concept of continuous improvement, which bring together all functions, systems and processes within the business. The programmes play a factor towards lean production. Lean production uses fewer resources more efficiently. It aggregates related principles of continuous improvement via total quality management; synchronicity and coordination via just-in-time management; and integration via computer-aided information management systems to the areas of design, factory management, supply and distribution (Forrester, Hassard, & Lilley, 1996). At Corus, lean production occurs where waste has been minimised, the work flow is smooth and the business is focused on customer needs. Corus identified seven key areas where waste needs to be reduced if not eliminated. Table 1 summarises the key areas, its impact on the business and the improvement strategies required. Table 1. Key areas and its strategies to eliminate wastes Key Area Impact Improvement Quality Tools Transport Unnecessary moving of materials wastes time and energy Reduce weight/size of pieces to ease handling Ishikawa diagrams, process flow charts, product design Inventory Too much stock increases costs of storage Ensure suitable customer outlets available to buy products so no build-up of stock occurs JIT, Pareto charts Motion People moving or travelling excessively and unnecessarily Use effective planning to ensure efficient performance Quality planning Waiting Times Wastes employee time or keeps customers waiting Equipment and timescales planned ahead Gantt charts; JIT, Process flow charts Over-processing Repeated activity wastes time Elimination of unnecessary steps in process Process re-engineering, Flow charts, SPC charts Over-production Extra material has storage costs Computer modelling reduces number of trials needed to obtain valid results Process re-engineering, SPC Charts, Six sigma tools Defects Reworking wastes time and materials Computer modelling minimises trial failures Zero defects, SPC charts, In one of the sites, the company has improve material flow by moving big machines such as nine metre guillotine with a six metre production foundation, relocated welding bays and re-routed workshops. The changes were implemented after a detailed process re-engineering, material flow mapping and cause-and-effect diagrams discovered that a lot of work were unproductive as well as potentially unsafe. In another site, it was taking the forklift truck 45 minutes to reach one steel coil. The cause of which is that the forklift truck had to move many other materials out of the way. The quality tools such Ishikawa diagrams and JIT led to the reorganisation of the coils into a new racking system. As a consequence, the storage capacity of the site also doubled. Corus also monitors and measures how its operations compare with other producers and competitors in the steel industry. This is a process called competitor and functional benchmarking where the company borrows ideas and best practices from those who are doing better (Rowbotham, Galloway, & Azhashemi, 2007). Corus is continually reviewing its activities to achieve best practice. It has shared relevant information both within and across Corus to drive improvement. It also shares out technical knowledge and information across the steel industry through the International Iron and Steel Institute (Times Newspaper, 2008). Management of Quality Corus has adapted three underlying principles of total quality management. First, the human resources are a company's most important asset. Second, the processes must evolve by gradual improvement rather than by radical change. Lastly, that business improvement must be based on quantitative evaluation of different processes (Kemp, 2006). Table 2 illustrates the different phases in introducing change when implementing the continuous improvement strategy in the Corus Way programme (Times Newspaper, 2008). Table 2. Five year programme for introducing change Year 2007 2008 2009 2010 2011 Nature of attitudes to change within the organisation Resistant (workers resist change) Adaptive (workers begin to adjust to new ideas) Accepting (workers start to apply new methods) Embracing (workers recognise the benefits) Performing (new ideas are fully adopted by workers) Expertise and responsibility for Continuous Improvement Continuous Improvement Coaches Champions and change managers Manufacturing and process managers Team Leaders Whole team The company has also implemented a quality management system. Around 80% of manufacturing operations were certified to the independently verified international standard, ISO 14001. ISO 14001 is more than a quality management system; it is also an environment management system. This management system takes the view that the establishment and implementation of the company's environment management system is of central importance in determining the company's environmental policy, objectives and targets (ISO, 2004). Minimising and managing risks are important components of the Corus management system. Potential risks are identified through techniques such as environmental audits, 'near miss' reporting and formal risk assessment. ISO 14001 helped Corus improve environmental practices and performance as well as increase cost savings. It has developed products that have better environmental profiles such as lighter steels for transport operation that consumes less energy in use. It has innovated products that have inherent environmental advantages such as reusability in construction and recyclable packaging. (Corus, 2006) Conclusion Corus has transformed is business operations and production in its mill sites through continuous improvement strategies. The company has produced quality products and services for customers with on time delivery. It has reduced waste through lean production and kaizen. It has reduced work time and has increased response time by giving more customers their orders on time. The company has become competitive in the steel manufacturing industry by driving down costs and increasing cost savings as well as profitability. It has attracted more customers through innovative products and services. The continuous improvement strategies of Corus as integrated in both their Restoring Success and the Corus Way programme was aimed to achieve satisfied customer, secure repeat sales and adopt world-class processes. It is part of the long term strategy of the company in order to develop the business. Aside from alignment with business strategy, a successful improvement programme requires commitment and support from both the top management as well as the workers. In a global company like Corus, a top-down commitment is very helpful in effectively communicating the sincerity of the company in quality improvement. Continuous improvement is a company-wide process that seeks to always build small changes into work practice. As a result, everyone in the company is empowered to develop their ideas and skills while enabling step-by-step improvement. It creates a new organisational culture where members of the organisation are challenged to change their behaviour, attitude and upgrade their work. References Beckford, J. (2002). Quality: A Critical Introduction (2nd ed.). London: Routledge-Wiley. Corus. (2003). Annual Review. London: Corus. Corus. (2005). Annual Review. London: Corus. Corus. (2000). Report & Accounts. London: Corus. Corus. (2006). Reports & Accounts. London: Corus. Datamonitor. (2008). Corus Group PLC. London: Datamonitor. Forrester, P., Hassard, J., & Lilley, S. (1996). Pulling it together and pushing it out: People and practices in 'post-modern' production. Proceedings of 2nd International Managing Innovative Manufacturing Conference. Leicester. Imai, M. (1989). Kaizen: The key to Japan's competitive success. New York: Random House. Ishikawa, K. (985). What is Total Quality Control New Jersey: Prentice-Hall. ISO. (2004). Environmental Management System - Specifications with Guidance for Use. Geneva: International Organization for Standardization. Kemp, S. (2006). Quality Management Demystified. New York: McGraw-Hill. Rowbotham, F., Galloway, L., & Azhashemi, M. (2007). Operations Management in Context (2nd ed.). Oxford: Elsevier Ltd. Times Newspaper. (2006, April 25). Continuous Improvement - The Corus Way. The Times 100 , pp. 61-64. Times Newspaper. (2008, June 12). Continuous improvement as a business strategy. The Times 100 , pp. 57-60. Waters, D. (2002). Operations Management: Producing Goods and Services. New Jersey: Prentice Hall. Read More