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Exploring improvement trajectories with dynamic process cost modelling: a case from the steel industry
Högskolan i Dalana.
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.

Place, publisher, year, edition, pages
2010. Vol. 48, no 12, 3493-3511 p.
Keyword [en]
Cost analysis; Exploratory data analysis; Manufacturing strategy; Process industry; Simulation; System dynamics
National Category
Business Administration Production Engineering, Human Work Science and Ergonomics
URN: urn:nbn:se:kth:diva-11696DOI: 10.1080/00207540902725288ISI: 000276471900007ScopusID: 2-s2.0-77951109178OAI: diva2:279531
QC 20100810Available from: 2009-12-04 Created: 2009-12-04 Last updated: 2010-08-10Bibliographically approved
In thesis
1. Strategic and operational capabilities in steel production: Product variety and performance
Open this publication in new window or tab >>Strategic and operational capabilities in steel production: Product variety and performance
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.
Trita-IIP, ISSN 1650-1888 ; 09-08
Steel production, system dynamics, product variety, production strategy, cost models
National Category
Production Engineering, Human Work Science and Ergonomics
urn:nbn:se:kth:diva-11642 (URN)978-91-7415-507-5 (ISBN)
Public defence
2009-12-18, M311, Brinellvägen 68, KTH, Stockholm, 13:00 (Swedish)
QC 20100810Available from: 2009-12-04 Created: 2009-11-27 Last updated: 2010-08-10Bibliographically approved

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