Product development through continuous improvement
Corus is part of the Tata Steel Group, the world’s sixth largest steel producer. Within Europe, Corus is the second largest steel producer with average annual revenues of around £12 billion. The company produces more than 20 million tonnes of steel each year, mainly in the UK and the Netherlands. It has a global network of sales offices and service centres, employing around 42,000 people worldwide. Corus is a leading supplier of steel to some of the most demanding markets around the world. Corus Long Products Business (CLPB), a business unit of Corus, has steel manufacturing facilities in England, Scotland and France. These produce different steel products – from steel plate to steel rails and wire rod. The key markets for CLPB products include construction (for buildings), engineering and machinery, mining and earthmoving equipment, shipbuilding, fastenings and rail. The principal manufacturing site in Scunthorpe covers 2,000 acres and employs 4,000 people. The site consumes 6.5 million tonnes of iron ore and 2 million tonnes of coal each year to produce 4.3 million tonnes of steel products. This case study focuses on how Corus used its knowledge and experience of continuous improvement (CI) to win new business. Continuous improvement is a tool that gives competitive advantage. This means the business can move ahead of competitors and increase its market share. Using skills and expertise in a structured way enables an organisation to create better processes and products. Corus used CI to support its new product development (NPD), enabling it to meet the needs of its customers more closely. Developing innovative products through continuous improvement is at the heart of Corus’ business strategy. Continuous improvement enabled Corus to overcome problems in its steel works. Several years ago Corus bid for a Royal Navy contract for steel for T45 destroyer vessels. Up until that date, this was the largest Royal Navy contract awarded. Corus did not get the work because the business at that time was not seen to have the capability of meeting the high specification of steel plate required. Losing the contract showed Corus it needed to invest to improve its machinery and processes. It invested around £8 million at the Scunthorpe plate mill in order to be ready to meet the requirements of any similar contracts in the future. The investment, together with its established Continuous Improvement practices, has enabled Corus to win a recent contract to supply steel for two new Royal Navy aircraft carriers. The £3.8 billion carriers, HMS Queen Elizabeth and HMS Prince of Wales, will enter service in 2014 and 2016 respectively. Corus will supply more than 80,000 tonnes of structural steel for the carriers. They will be the biggest and most powerful surface warships ever built for the Royal Navy. CURRICULUM TOPICS • Continuous improvement • New product development • Lean production • Stakeholders
GLOSSARY Revenues: the total value of sales. Markets: the range of means by which consumers can buy a particular product or alternative to it. Continuous improvement (CI): an ongoing process of seeking to make improvements to company practice. Market share: the percentage of sales within a market that is held by one brand or company. New product development (NPD): the bringing of new products or services into a consumer or industrial workplace. Waste: an unnecessary or wrong use of money, substances, time, energy, abilities. Lean production: an approach to production that seeks to minimise waste and inefficiency.
Continuous improvement (Kaizen)
Since the 1950s many manufacturing techniques based on quality have been developed. ’Kaizen’ is one of these and is Japanese for ‘continuous improvement’. This focuses on making small continuous improvements across all functions, systems and processes within a business. For example, waste is a cost to Corus....