Outokumpu Steel Manufacturing Facility Planning And Operation Case Study
The Scenario
Outokumpu is an international stainless steel company with a turnover of 6 bn Euros.
At their Sheffield site, Outokumpu operated a SMACC (Stainless Melting & Continuous Casting) facility. It was proposed to spend millions of pounds on new equipment to improve the performance of the facility and Outokumpu needed to be confident that the investment would produce the best results possible.
The Challenge
Steel goes through a complex sequence of processes with materials added at each stage. The timing requirements of downstream processes significantly affect when upstream processes need to start, and hold-ups in downstream processes can affect the efficient operation of upstream processes.
Between main stages, the steel has to be transferred to specialist equipment and then to buffer stores awaiting the next major step. A combination of equipment such as cranes and transporters is used to move the steel between stages. The final, most capital-intensive, stage is a continuous caster. If not fed continuously, the caster will work below maximum productivity and if the gap is large it will need to stop, be reset and cleared at additional cost. Material arriving during caster reset cannot be used and has to be recycled – again increasing costs.
The key, and often conflicting, issues for Outokumpu were:
- How to increase efficiency and minimise waste and rework rates in the SMACC facility
- How to reduce inventory costs by improving intra-site and external supply logistics and the need for buffer stocks
- How to improve cycle times and responsiveness to schedule requirements
- How to prove improvements in the production process design before investing millions of pounds on new equipment.
However, the complex and interdependent nature of the production process made it impossible to fully understand the effect of changes in operating procedures or to know whether the anticipated benefits of new equipment would be reduced by newly created problems.
The Solution
Paragon was commissioned by Outokumpu’s Director of Management Services to develop a detailed model of the entire site using discrete event simulation tools within Paragon’s Information Manager environment. Discrete event simulation was essential as it replicated the way that independent process stages interacted on the site. The model was animated – allowing users to track what was happening to steel and relate it to familiar on-site processes and intra-site logistics. Key events (such as missed casts) could be seen occurring and traced back to production schedule, process time or resource availability issues.
The model enabled Outokumpu to:
- Set the operational data to accurately represent various stage cycle times, performance, and resource availability
- Consider alternative schedules, routing and resource assignment strategies, and to measure and record key performance parameters
- Simulate responsiveness to changing production schedules to test whether a schedule would be completed on time, and to determine
- How to operate the new schedule with minimum inventory and lost production and rework rates
- Configure the model to represent the introduction of new equipment and to experiment with possible plant layout changes
- Run alternative scenarios quickly (summary results for a 2-week production run could be provided in seconds) using large sets of data
The Benefits
The model yielded substantial improvements in process and operational planning, savings on inventory (which was reduced by £6m) and improved lead times and gave Outokumpu confidence in the effect of new equipment investments and therefore the return on those investments. It is also used weekly for scheduling analysis.
The model is so flexible and Outokumpu considered it such a useful tool, that they have subsequently used the model over several years to examine and improve efficiency at several of their plants – with widely varying layouts and equipment - worldwide.
The model has also enabled Outokumpu to consider completely new facility designs that include “best of breed” approaches to each step as revealed by their experience of modelling and improving existing facilities.