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Strategic and operational capabilities in steel production: Product variety and performance
KTH, School of Industrial Engineering and Management (ITM), Production Engineering.
2009 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

Steel producers that employ niche market strategies are continuously seeking to reduce production cost while maintaining adiverse product mix. The business model is typically based onmarketing of high–strength special or stainless steels. However,the desire to avoid direct cost competition is over time gradually leading towards increased product variety and smaller ordervolumes (tonnes per order) for each product.

This thesis analyses how production cost is linked to productvariety in steel strip production. Results are based on new modelsfor assessment of opportunities for performance improvement inhigh product–variety steel production.

The need for flexible production processes increases with increasing product variety. Operational capabilities linked to processflexibility determine the extent to which steel producers caneliminate in–process inventory and accomplish close coupling between process steps. Niche market producers that invest inprocess flexibility improvements can lower production costs bothdue to reduced work–in–process and lower energy consumption.An additional benefit is reduced environmental impact.

The following problems are addressed:

• Development of a method to assess the influence of productvariety on performance in steel production.

• Development of models of continuous casting and hotrolling that account for product variety and cost effectswith consideration of varying degrees of process flexibility.

• Development of a strategy process model that focus on thestrategic value of operational capabilities related to processflexibility.

Investments in operational capabilities regarding process flexibility have a strategic impact. An appreciation for the effectsof process flexibility should permeate the organisation’s daily work since the accumulated contribution of many, seemingly unimportant, incremental changes significantly influences thestrategic opportunities of the company.

Abstract [en]

Stålproducenter med nischmarknadsstrategier försöker ständigt sänka sina produktionskostnader samtidigt som en varierad produktflora bibehålls. Affärsmodellen bygger i typfallet på försäljning av höghållfasta specialstål eller rostfria stål. Strävan att undvika direkt priskonkurrens leder dock med tiden gradvis till ökad produktvariation och mindre ordervolymer (ton per order)för varje produkt.

Denna avhandling analyserar hur produktionskostnaden är kopplad till graden av produktvariation vid tillverkning av band.Resultaten bygger på nya modeller för utvärdering av förutsättningarnaför prestandaförbättring i stålindustri med stor produktvariation.

Behovet av flexibla produktionsprocesser ökar med ökande produktvariation. Praktiska förmågor kopplade till processflexibilitet avgör till vilken grad ståltillverkare förmår att eliminera mellanlager och åstadkomma en tät koppling mellan processteg.Nischmarknadsproducenter som investerar i förbättrad flexibilitet kan sänka sina produktionskostnader både genom minskad mängd produkter i arbete och reducerad energiförbrukning. Detta medför också minskad miljöbelastning.Följande problemställningar adresseras:

• Utveckling av en metod för att utvärdera inverkan av produktvariationpå prestanda vid ståltillverkning.

• Utveckling av en modell för stränggjutning och varmvalsningsom tar hänsyn till produktvariation och kostnadseffekterför olika grad av processflexibilitet.

• Utveckling av en strategimodell som fokuserar på det strategiskavärdet av operativa förmågor kopplade till processflexibilitet.

Investeringar i operativa förmågor vad avser processflexibilitet är av strategisk betydelse. Förståelse för betydelsen av processflexibilitetbör genomsyra det dagliga arbetet eftersom det samladebidraget av många, till synes obetydliga, små förändringar haren avgörande inverkan på företagets strategiska förutsättningar

Place, publisher, year, edition, pages
Stockholm: KTH , 2009. , xiv, 126 p.
Series
Trita-IIP, ISSN 1650-1888 ; 09-08
Keyword [en]
Steel production, system dynamics, product variety, production strategy, cost models
National Category
Production Engineering, Human Work Science and Ergonomics
Identifiers
URN: urn:nbn:se:kth:diva-11642ISBN: 978-91-7415-507-5 (print)OAI: oai:DiVA.org:kth-11642DiVA: diva2:278611
Public defence
2009-12-18, M311, Brinellvägen 68, KTH, Stockholm, 13:00 (Swedish)
Opponent
Supervisors
Note
QC 20100810Available from: 2009-12-04 Created: 2009-11-27 Last updated: 2010-08-10Bibliographically approved
List of papers
1. Exploring improvement trajectories with dynamic process cost modelling: a case from the steel industry
Open this publication in new window or tab >>Exploring improvement trajectories with dynamic process cost modelling: a case from the steel industry
2010 (English)In: International Journal of Production Research, ISSN 0020-7543, E-ISSN 1366-588X, Vol. 48, no 12, 3493-3511 p.Article in journal (Refereed) Published
Abstract [en]

Improvement trajectories are sequential managed chains of improvement initiatives required to handle changes in competition and market. This paper presents a five-step framework, based on dynamic process cost modelling, which was developed during a four-year research project at a major stainless steel producer, to support the selection of an improvement trajectory based on strategic requirements to combine high product diversity with cost reduction. The framework aims to develop insight into what manufacturing capabilities are required to reach the strategic goals by combining system dynamics simulation with process cost modelling and visual exploratory data analysis in an iterative modelling procedure. The applicability of the five-step framework is demonstrated through a case study from the steel industry, in which a goal driven analysis is used to assess process requirements based on performance and market considerations.

Keyword
Cost analysis; Exploratory data analysis; Manufacturing strategy; Process industry; Simulation; System dynamics
National Category
Business Administration Production Engineering, Human Work Science and Ergonomics
Identifiers
urn:nbn:se:kth:diva-11696 (URN)10.1080/00207540902725288 (DOI)000276471900007 ()2-s2.0-77951109178 (Scopus ID)
Note
QC 20100810Available from: 2009-12-04 Created: 2009-12-04 Last updated: 2017-12-12Bibliographically approved
2. A lean production strategy for hot charge operation of a steel mill
Open this publication in new window or tab >>A lean production strategy for hot charge operation of a steel mill
2007 (English)In: IET International Conferene on Agile Manufacturing, 2007, 158-167 p.Conference paper, Published paper (Refereed)
Abstract [en]

This paper aims to show how a strategy based on lean production can aid the implementation of hot-charge operation in steel strip production. Key parameters in a lean strategy for steel manufacturing are identified, and it is shown that lean production targets the difficulties that are traditionally associated with hot charging. Hot charging amounts to a closer level of integration of the continuous casting and hot rolling processes. The conclusions are that implementation of hot charging can be seen as a waste-reduction process within a lean production strategy, and that there are substantial cost savings to be made once the full benefits of a lean production strategy are considered.

Keyword
Hot charging; Lean manufacturing; Manufacturing strategy; Steel production; Waste reduction
National Category
Metallurgy and Metallic Materials
Identifiers
urn:nbn:se:kth:diva-11697 (URN)10.1049/cp:20070022 (DOI)2-s2.0-67649194918 (Scopus ID)978-0-86341-816-7 (ISBN)
Note
QC 20100810Available from: 2009-12-04 Created: 2009-12-04 Last updated: 2010-08-10Bibliographically approved
3. Assessment of Best Scheduling Practice in Continuous Casting and Hot Rolling of Stainless Steel Strip by System Dynamics Simulation
Open this publication in new window or tab >>Assessment of Best Scheduling Practice in Continuous Casting and Hot Rolling of Stainless Steel Strip by System Dynamics Simulation
2007 (English)In: Sheet Metal 2007, Trans Tech Publications Inc., 2007, Vol. 344, 897-904 p.Conference paper, Published paper (Refereed)
Abstract [en]

A rapid flow of materials with little intermediate buffering between steel mill and hot strip mill has many benefits. One is energy savings due to raised charging temperature in the reheat furnaces of the hot strip mill. Another is that tied capital is freed up, thereby improving mill economy. Still, it is not unusual that average lead-time is in the order of days, or even weeks.

The aim of the present work was to show how lead-times from casting to rolling could be improved by changes in the scheduling function. A System Dynamics model of a stainless steel strip production facility with continuous caster and hot rolling mill was created. The model was used to study the dynamics of the system in response to changes in parameters that defined the scheduling configuration.

More frequent schedule updating generally resulted in less work in process (WIP) and shorter lead times from casting to rolling, with resulting higher charging temperatures. The amount of oscillation in the system was also reduced. More frequent work roll changes were required when scheduling frequency increased, resulting in an increased fraction of setup time in relation to total processing time. Therefore, a development towards increased scheduling frequency may have to be complemented by efforts to reduce changeover times.

The conclusion was that dynamic scheduling routines with frequent schedule updating result in better overall performance of the system due to lower WIP and better heat utilization. Dynamic scheduling routines with frequent updates make the system respond better to changes in the system and give better overall performance. The result is lower WIP, increased energy efficiency and less oscillation in the system.

Place, publisher, year, edition, pages
Trans Tech Publications Inc., 2007
Series
Key Engineering Materials, ISSN 1013-9826 ; 344
Keyword
hot rolling, continuous casting, hot charging, stainless steel, production scheduling, simulation, system dynamics
National Category
Metallurgy and Metallic Materials
Identifiers
urn:nbn:se:kth:diva-11699 (URN)10.4028/www.scientific.net/KEM.344.897 (DOI)000247343400110 ()2-s2.0-34248553843 (Scopus ID)978-0-87849-437-8 (ISBN)
Conference
12th International Conference on Sheet Metal (SheMet 2007), Univ Palermo, Palermo, Italy. Apr 01-04, 2007
Note

QC 20100810

Available from: 2009-12-04 Created: 2009-12-04 Last updated: 2013-10-14Bibliographically approved
4. A cost model for the effect of setup time reduction in stainless steel strip production
Open this publication in new window or tab >>A cost model for the effect of setup time reduction in stainless steel strip production
2007 (English)In: 1st Swedish Production Symposium, 2007, 1-8 p.Conference paper, Published paper (Refereed)
Abstract [en]

Setup time reductions facilitate the flexibility needed for just-in-time production. An integrated steel mill with meltshop, continuous caster and hot rolling mill is often operated as decoupled processes. Setup time reduction provides the flexibility needed to reduce buffering, shorten lead times and create an integrated process flow. The interdependency of setup times, process flexibility and integration were analysed through system dynamics simulation. The results showed significant reductions of energy consumption and tied capital. It was concluded that setup time reduction in the hot strip mill can aid process integration and hence improve production economy while reducing environmental impact

Keyword
Steel production, hot rolling, continuous casting, manufacturing flexibility, production economy, setup time reduction, lean production, system dynamics
National Category
Production Engineering, Human Work Science and Ergonomics Business Administration
Identifiers
urn:nbn:se:kth:diva-11700 (URN)
Note
QC 20100810Available from: 2009-12-04 Created: 2009-12-04 Last updated: 2010-08-10Bibliographically approved
5. A dynamic cost model forthe effect of improved process flexibility in steel plants
Open this publication in new window or tab >>A dynamic cost model forthe effect of improved process flexibility in steel plants
2008 (English)In: The 41st CIRP Conference on Manufacturing Systems, 2008, 45-50 p.Conference paper, Published paper (Refereed)
Abstract [en]

Reduced setup times in the rolling mill generate flexibility which allows shorter leadtimes through continuous casting and hot rolling. Traditionally known as schedule-free rolling, this flexibility allows the rolling mill to handle variations without the need for buffering. Cost models based on system dynamics methodology are used to assess the economic potential. Effects on inventory, energy and work roll consumptions are analysed. The simulation results show that investments in flexible processes can be evaluated with dynamic cost models. There is an opportunity for significant cost reduction, but also lowered environmental impact due to reduced energy consumption.

Keyword
hot rolling; setup time reduction; cost estimation
National Category
Production Engineering, Human Work Science and Ergonomics
Identifiers
urn:nbn:se:kth:diva-11701 (URN)10.1007/978-1-84800-267-8 (DOI)000256581900009 ()
Note
QC 20100810Available from: 2009-12-04 Created: 2009-12-04 Last updated: 2010-12-07Bibliographically approved

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CiteExportLink to record
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Citation style
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