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Breaking down silos, waging the 'bottleneck war'

Aug 03, 2017 | 08:00 PM | Myra Pinkham


Engaged in what it considers a work in progress, Outokumpu Oyj’s Outokumpu Americas business unit has already contributed significantly to the realization of a company-wide drive to become the best value creator in the global stainless steel industry.

“We are in the process of implementing a new operating model that will ensure productivity gains at both our Calvert, Ala., and San Luis Potosi, Mexico, mills,” Mike Williams, head of Outokumpu Americas, commented on the initiative. Actions taken last year by the Calvert, Ala.-based unit delivered a 30-plus percent, year-on-year improvement in transformation or conversion costs and collectively earned Outokumpu Americas AMM’s 2017 Steel Excellence Award for Best Operational Improvement.

To achieve those results, the Americas unit focused on and took action in four key areas including:

• Implementing an employee-driven safety culture.
• Lifting mill productivity and efficiency through equipment and process improvements.
• Reaching nameplate capacity ceilings while improving yields.
• Upping sales engagement and enhancement across all of the markets the company wants to serve.

A majority of the initiatives were carried out at Calvert, which Williams identified as presenting the greatest opportunity for improvement.

“What we have done is take a very holistic look at our operating systems,” Williams commented on the strategy behind the results. Previously, Outokumpu Americas operations were “siloed,” he said, resulting in a very inward looking view of various roles and responsibilities and limited collaboration across the enterprise.

“We broke down those silos and created one integrated structure, including an integrated sales team and an integrated operational team for the Americas,” Williams explained. “We then looked at where our bottlenecks, inefficiencies and big gaps were and started to take a careful look at ourselves,” he recalled.

As part of that introspection, Calvert measured its performance against those turned in by both its peer facilities around the globe as well as competitors’ operations. “With that focus, we were able to target specific opportunities for improvement.”

Predictably, employee safety was a major focus. “Safety is No. 1, not just for Outokumpu but for the industry as a whole,” Williams noted. “It is important that our employees not only look out for themselves, but also look out for their peers and their teammates.”

To that end, the company implemented a safety observation process requiring every employee to make a specified number of safety observations involving their peers on a weekly and monthly basis. “It isn’t just reporting unsafe acts or situations, but also rewarding and acknowledging when everyone is doing it right,” Williams emphasized.

Collecting and analyzing such data can prove beneficial since the results can be shared among both the employees’ peers and managers, he noted. Last year, Outokumpu Americas saw a 33-percent improvement in safety and is on track to improve upon that performance this year.
The unit has also notched significant gains in productivity, efficiency, yields and costs as a result of identifying the root cause of the bottlenecks adversely affecting Calvert’s ability to meet its productivity and conversion cost goals. Using Six Sigma methodologies and problem-solving tools, cross-functional teams comprised of operations, accounting, human resources, quality and research and development staff, have been hard at work identifying the source of the bottlenecks and what best practices could be used to alleviate them. “As a result, over the past year we have improved our conversion costs by 30 percent and increased productivity at bottlenecked units by well over 20 percent,” Williams said.

He acknowledged, however, that more needs to be done in the “bottleneck war,” noting that, in some cases, the bottleneck simply moves from one process to another.

Taking similar actions to improve yields across the production sequence, Outokumpu is naming dedicated leaders to devise solutions from melting through the shipment of finished product to customers. Year on year, the company has increased yield levels by 8 percent which is significant; each one percentage point equates to approximately a $5 million per year savings, Williams said.

Over the past year, Outokumpu has also made major strides in the form of better planning and managing maintenance outages. Doing so has dramatically reduced the costs incurred when outages last longer than anticipated.

“By upgrading our employees’ maintenance outage skill sets and spending weeks instead of days preparing for outages, we have seen a 40- to 48-percent improvement in unit down to unit startup time,” Williams noted.

Looking ahead, Outokumpu Americas plans to undertake further efforts to improve its commercial excellence in the areas of customer engagement, supply-chain management, technical support and production processes, “It is a never ending process,” Williams emphasized.


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