Corus Group: Business Process and Operations - Essay Example

CORUS GROUP – Business Process and Operations Executive Summary The nature of operations management is to create a competitive advantage to an organisation. It must manage the production of quality goods as well as the services embedded in the organisation. Operations management involves not just the manufacturing side but also the other functions of an organisation. Effective operations management includes principles of quality, lean production, just-in-time, continuous improvement and so on. This paper examines the operations management principles that are reflected in an organisation, Corus Group. The company is engaged in the manufacturing and services of steel and aluminium products to a broad range of market in the whole world. The organisation implemented a philosophy and culture which they called The Corus Way in order to sustain competitiveness, productivity and profitability. Along with this philosophy is the practice of continuous improvement programmes across the company. Specifically, this paper explores the problems at the Port Talbot Strip Products site. The site was experiencing lost, damaged and stolen equipments in their depot operations. Using quality tools and techniques, this paper arrives at a proposal for using an online computer based material resource programme as well as four recommendations for the improvement of the depot operations in accordance to the Corus Way. 2. 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) The process flow in the manufacture of steel products at Corus can be summarized in the Figure 1 provided below. Figure 1. Steel Manufacturing at Corus Corus implemented a quality programme to create real value in steel. The programme was named – The Corus Way. 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. The continuous improvement programme focuses on making small improvements across all function. This paper aims at exploring and evaluating a selected business process and operations in Corus, particularly in the Port Talbot Strip Products site. For purposes of this paper, the centre of interest is on inventory management at the Port Talbot Site, specifically the equipments and materials used by employees. 3. Current Situation One important department at every Corus plant is the central engineering department. The personnel are in-charge of all the repairs, maintenance and fabrications needed for the plant operation. Engineering personnel acquire their needed tools and equipments at the Equipment Depot. The equipment depot’s function is to provide the equipment needed by workers to perform their jobs and responsibilities such as assembly and repairs. Inexpensive tools such as hammers, screwdrivers, and so on are provided to employees. Each new employee is initially provided with a toolbox and a minimal number of tools. Those tools are theirs to keep. At the end of the year, the department give them a token amount of money that they need to replace the tools. Other tools that are not issued to employees and are needed to complete a job are checked out in the equipment depot. These equipments are either too bulky, only needed occasionally or are too expensive to lose. When the job is completed, the employee must return the checked-out equipment. Management is not sure of the total monetary value that can be attributed to carrying excess inventory. However, they are aware that it is essential to have the minimum inventory required in order to cut on costs. The equipment depot operation at Port Talbot site provides equipment needed by central engineering personnel. Often, pieces of equipment become lost, stolen, or damaged. These equipments are never checked back in and made available for others. The monetary value of lost and stolen equipment has reached an alarming amount. The types of problem in the depot operation can be categorised into two - hard and soft problems. Hard problems or tangible problems are problems that that can be measured. These quantitative problems are the monetary value of lost, damaged and stolen equipments which is relative to the number of equipments that are not checked back in. Soft problems are intangible problems that are difficult to measure. These problems include the dissatisfaction of maintenance personnel with regards to unavailability of materials and the low morale and discouraged depot employees. A summary of the equipment depot’s causes of the problem is illustrated in the Fishbone diagram below. Figure 2 Fishbone Diagram of Equipment Depot Problem Four areas of operation were being analysed – man, material, machine and method. The people aspect was evaluated. It showed that the people were not trained in good housekeeping and warehousing. The underlying cause of lost, damaged and stolen equipments is due to the lack of commitment from the personnel in order to improve the operations. The number of materials in the storage depot is massive with different equipments kept for various uses. Lack of tagging and categorizing of equipments contributed to equipments being misplaced and materials being lost. Furthermore, the quality of service that is given by the depot personnel is low due to high amount of time needed in locating the equipments. This also created long queues of waiting workers who needed the equipment. The system of equipment check-in and check-out in the depot is still done manually. This approach causes inaccuracy of records or lack of it. The main contributing factor to lost, damaged and stolen equipments is out dated system of warehouse management. The manual check-in and check-out was only effective when the equipments were still minimal. During the previous years of growth and business improvements, the method has become ineffective and cannot function well in handling the growth. 4. Possible Solutions One possible solution is for the company to update their warehouse management system by developing and implementing an effective material resource planning that is computer based. The MRP programme relies on the inventory stocks records, master production schedule and the bill of materials. The inventory stocks records provide information about levels and availability of stocks held on site. The master production schedule details what products need to be produced in the future and when they are needed. The bill of materials stipulates what materials are needed to produce particular items and how these materials are assembled. (Waters, 2002) Manufacturing resource planning (MRP2) is another computer-based system which does all that MRP does plus some other modules such as master scheduling, capacity planning, personnel requirements, purchasing, delivery of goods and cash flow forecasting. With all the additional information and the power of computing, management can manipulate what-if plans and analyse the effects of different decision options. (Hill, 2005) Another viable solution for the company is to implement a Kanban system when issuing equipments and tools. Kanban is a Japanese term that means ‘signboard’. The idea of kanban is to create visual indicators to allow the depot-in-charge to determine whether the equipments and tools have been utilised by the central engineering personnel through a Kanban card that lists pertinent information about the quantity as well as description of the material. When the Kanban card has been placed on a signboard categorized according to the sub-teams of the engineering department, then the depot personnel will know where such equipment can be located. The Kanban system may only be a manual system of visual indicators. It eliminates the need for production planners and supervisors to continually monitor schedule status because the signboard reflects the status at a glance. (Arora, 2007) 5. Proposal for Change As with the equipment depot section, the focus of their improvement should be on availability of materials and timely response of service to the workers. Availability of materials is the primary concern of the section. In order to ensure that materials are on hand at the depot, the in-charge needs to monitor the movement of each material, tools and equipments. Furthermore, monitoring is needed in order to obtain the existing level of inventory in the plant. The wait time is another area that matters to the depot because their customers are busy workers and should not waste time to get in line. Figure 3 describes the prioritization matrix for the problems incurred in every important activity in the depot. The criteria for prioritization are the effect on productivity, effect on personnel morale, ease of solving the problem and speed of solving it. The productivity of every personnel is a major factor for the analysis because productivity is one of the driving forces for improving the operations and achieving high product outputs. It is considered as a key result area for a manufacturing plant (Rowbotham, Galloway, & Azhashemi, Operations Management in Context, 2007). Another factor considered is the effect on morale to personnel. Morale can both affect the productivity as well as the success of implementing a program. People with high morale are more motivated to work harder in order to succeed. On the other hand, low morale workers can affect other workers such that they will become a liability to the company. (Sommer, 2003) The ease and speed of solving a problem is a major component of identifying priorities. Those problems that are easy to solve requires lesser effort and resources. Those problems that are faster to solve requires lesser time with lower cost implications. In project management, resources and time are critical success factors that need to be considered. (Williams, 2008) Activity Effect on Productivity Effect on Morale Easy to Solve Speed to Solve Total   5 1 2 2   In-charge monitor tools High - Monitoring requires most of in-charge time Medium - Activity is part of responsibility Medium - Other methods can be benchmarked High - Computer based program is available     3x5=15 2x1=2 2x2=4 3x2=6 27 Personnel wait for tools High - Personnel has nothing to do High - Personnel are disgruntled Medium - Involves whole Engg dept Low - Existing system is manual     3x5=15 3x1=3 2x2=4 1x2=2 24 Personnel check-in tools Medium - Check-in time is time consuming Medium - Activity is part of responsibility Low - requires a new system of doing Low - Existing system is manual     2x5=10 2x1=2 1x2=2 1x2=2 16 Personnel check-out tools Medium - Check-out time is time consuming Medium - Activity is part of responsibility Low - requires a new system of doing Low - Existing system is manual     2x5=10 2x1=2 1x2=2 1x2=2 16 Legend: 1-low 2-medium 3-high Figure 3. Problem Prioritization on Equipment Depot This paper recommends the first solution of creating a material resource planning system that is computer based. As part of the decision matrix, the criteria for decision-making are similar to the criteria for prioritization. This is done because the both matrix addresses the same problems. The proposals are evaluated based on the criteria and rated to acquire the most relevant and effective solution. Below is Figure 4 that illustrates how the decision was based. Developing a material resource programme tops the list as the most relevant solution. Although both material resource programme and manufacturing resource programme provides higher effects on productivity, the manufacturing resource programme is more complicated and requires more integration to the business processes of the plant. Because the priority problem is on monitoring the level of inventory and availability of the tools, equipment and materials, the material resource planning is a more fit solution than the manufacturing resource programme. Proposals Effect on Productivity Effect on Morale Easy to Solve Speed to Solve Total   5 1 2 2   Material Resource Programme High - System improves productivity High - Personnel wait time will be lower High - System is simple to implement High - Computer based program is available     3x5=15 3x1=3 4x2=6 3x2=6 30 Mfg Resource Programme High - System improves productivity High - Personnel wait time will be lower Medium -System is more complicated Medium - Program requires more integration     3x5=15 3x1=3 2x2=4 3x2=6 28 Kanban System Medium - System requires manual monitoring High - Personnel wait time will be lower Low -System requires change in activities Low - System is manual     2x5=10 3x1=3 1x2=2 1x2=2 17 Legend: 1-low 2-medium 3-high Figure 4. Decision Matrix on Recommended Solutions 6. Description of New Situation The nature of work in the equipment depot is service. Quality of service is entirely in the eye of the customer. In this case, the customers are the maintenance personnel who requested the equipment as well as the management who needed a report on the management of inventory. A dissatisfied customer has had a poor quality service regardless of the cause of the problem (Rowbotham, Galloway, & Azhashemi, 2007). Zeithaml, Parasuraman and Berry (1990) identify five dimensions of service quality. These are tangibles, reliability, responsiveness, assurance and empathy. Generally, the perception of service quality is seen a gap between the customer’s expectations and actual experience. Customers have a zone of tolerance which may be wide or narrow depending on their perceptions and expectations of the service. Service organisations must focus and devote their improvement efforts to the areas that matter. The proposed solution will not create major changes in the existing process flow. However, it will improve the work of the depot in-charge in terms of physically monitoring of records and physically checking of the requested materials. Furthermore, the in-charge can prepare the material on the depot check-out counter before the requesting personnel arrive. Since the material resource programme has the necessary information about the tools or equipments needed, the requesting personnel can personally verify the location as well as the next availability of the material using their computers. Time is not wasted waiting on the check-out area of the depot for the availability of the information gathered by the depot in-charge. Figure 5. Existing and proposed process flow 7. Justification of Change The equipment depot will benefit a lot from an implementation of a warehouse management system that is integrated on the material resource plan. With new programme, depot-in-charge can plan in advance and prepare the equipments and materials needed as per production schedule. In this way, the depot will be efficient in issuing equipments and materials. With the implementation of the continuous improvement programme, the company is following the principles of lean production. This method of manufacturing management is effective in cutting costs and increasing efficiency of work processes. The role of the equipment depot is essential to the success of lean production strategy. As controllers of equipment needed in the job, depot personnel must appreciate and buy-in to the idea of lean production. Long wait times and unavailable equipments or materials are major no-no under the lean production strategy. (Womack, Jones, & Roos, 1991) 8. Conclusions In summary, the organisational wide programme which was implemented in Corus plant has created positive impacts on the company and the employees. With the Continuous Improvement Programmes that accompanies the Corus philosophy, every department of the company is prepared and tooled to face any problems and challenges in order to attain the organisation’s goal of restoring success. At the operational level that is the focus of the paper, it was identified that the equipment depot operations has created financial losses due to equipment losses and damages. An investigation was conducted to identify the needs and requirements of the section in order to eliminate and prevent the problem from recurring. Results showed that the depot needs to develop a new system of warehouse management. The aim of this paper was to explore and evaluate the business process improvements of the company. It is evident that the programme is established across all functions of the business and is accepted by employees. However, with the results of the analysis, it shows that the effectiveness of the program on its impact on the business depends on the resources provided by the organisation such as human, knowledge and financial resources. This paper recommends the following according to number of priority: 1. The equipment depot should implement categorizing and tagging of equipments in order to improve the accuracy of tracking equipments. Immediate action is required. 2. The equipment depot should plan the development of a computer-based warehouse management system. Planning and proposal should be done as soon as possible. 3. Training and development of depot personnel must highly be considered by management. 4. Performance management system is highly recommended for development in order to further improve the operations. 9. References 10. Arora, N. (2007). Kanban Guide. India: Add Value Consulting, Inc. Caplan, R. H. (1982). Practical Approach to Quality Control. Business Books. Continuous Improvement - The Corus Way. (2006, May 24). The Times 100 , pp. 61-64. Datamonitor. (2008). Corus Group PLC. London: Datamonitor. Hill, T. (2005). Operations Management (2nd ed.). Palgrave Macmillan. Imai, M. (1997). Gemba Kaizen. London: McGraw-Hill. Rowbotham, F., Galloway, L., & Azhashemi, M. (2007). Operations Management in Context. Boston: Elsevier. Rowbotham, F., Galloway, L., & Azhashemi, M. (2007). Operations Management in Context (2nd ed.). Oxford: Elsevier Ltd. Sommer, D. (2003). Avoiding Project Failure. Business Technology Research Center. Waters, D. (2002). Operations Management: Producing Goods and Services. New Jersey: Prentice Hall. Williams, M. (2008). The Principles of Project Management. Canada: Sitepoint Pty. Ltd. Womack, J., Jones, D., & Roos, D. (1991). The Machine that Changed the World: The Story of Lean Production. New York: HarperPerennial. Zeithaml, V., Parasuraman, A., & Berry, L. (1990). Delivering Quality Service: Balancing Customer Perceptions and Expectations. The Free Press. Read More