NLMK USA Process Excellence

Posted by in Process Excellence | January 6, 2015
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In some companies, doing the same things over and over again because “that’s the way they’ve always been done” or “don’t fix it if it’s not broken,” are accepted ways of running the business and approaching one’s work.

At NLMK USA and throughout the International NLMK Group, we believe in something infinitely more elegant and pragmatic – Process Excellence. For us, it is both an operating philosophy and a practice for all of our employees located at all of our facilities. Our ultimate objective is to deliver value to our customers through safe, highly efficient and reliable production and service delivery processes. This objective is achieved through relentless pursuit of continuous improvement and the elimination of waste, which we believe are prerequisites to being a leader in the global market.

In the end, it is our belief that Process Excellence can contribute to superior business results while at the same time supporting a work environment that’s marked by high levels of personal achievement, satisfaction and engagement. It comes down to achieving excellence in 1) Safety, 2) Quality and 3) Operational Efficiency – our credo.




At NLMK, we are committed to attaining the very highest levels of Process Excellence through a single-minded devotion to the continuous improvement of safe, highly efficient and reliable production and service delivery processes.

This quest for even higher levels of performance is well underway through the implementation of sustainable improvement processes such as 6S, A3, SEI and Standardized Work. These Lean Manufacturing tools are the cornerstones for contemporary manufacturing companies worldwide.

Our parent company has taken on the initiative to improve the operational efficiency of all companies in the NLMK Group. The US division is on the journey with them, learning and implementing new methods and optimization initiatives every day. The idea is continuous improvement – improvement that is not only on-going, but lasting. And lasting in a way that it impacts the organization in meaningful ways at the bottom line. But it is much more than that – it is a core cultural change that is rooted in the constant pursuit of excellence, waste elimination, ‘learning to see’ opportunities to make things better across the entire organization and by every employee. The system is called NPS – the NLMK Production System and has been modeled after TPS – the Toyota Production System. Our parent used Toyota consultants to aid in the inception of the program and get it started on the right path.

NLMK believes that Process Excellence is a people-centric activity and philosophy. In our business, problems are solved by people, not machines. To ensure that our workforce has the highest level of preparation to become highly proficient problem-solvers, and to help the company eliminate as much waste as possible from its operations, we have been leading a series of communication and educational activities related to the principles of Lean Manufacturing.

Here is an example. In the summer of 2014, we held events at both NLMK USA facilities called Process Excellence Days. This day was a mix of communication, food and entertainment for the entire workforce. The optimization teams set up tables illustrating the progress made in their respective improvement A3 projects and used interactive techniques to illustrate and educate the employee base about lean technology and success realized to date through the application of our new methods.

We are also implementing Visual Process Management in a number of ways. VPM is centered on the concept of quickly being able to look and understand what is right and what is wrong about a process. Our goal is to be able to walk into an area of our plant and within minutes be able to gain a complete understanding of the state of safety, product quality and operational efficiency. This is a great tool for being able to communicate to the workforce what’s important. We use visual dial indicators to report the state of our KPIs (Key Performance Indicators). We use 6S to clear away the waste and excess in order to reveal where the opportunities lie. We also hold training sessions with our operating work force and make it clear that everyone ‘has a voice’ in making us better as a company.

To incite a cultural change and a change in operating philosophy, communication is the key. Everyone in the organization needs to know what is important and needs to be pulling in the same direction toward a core set of organizational goals, which we call KPIs (Key Performance Indicators). NLMK USA has used a number of communication techniques to ‘get the word out’ to the shop floor.

Besides the obvious importance of one-on-one communication, we have installed electronic shop floor communication screens at strategic locations around the facilities to communicate critical information about safety, quality, KPI performance, optimization and our customer base. We communicate developments in a monthly corporate newsletter. We have begun training the salaried workforce in the core concepts of Lean Manufacturing as it has been applied through TPS using ‘Think Tank Forums’. These are small groups of cross-functional resources from the salaried workforce who are reading about TPS theory and application. The groups get together monthly to discuss how TPS principles can be applied and how to create a ‘learning organization’.

Kaizen in Japanese means ‘to improve continuously’. NLMK USA has begun using Kaizen to evaluate improvement opportunities on the shop floor and to make them happen. Kaizen Events refers to highly focused improvement projects that typically target a particular process, work area, set of equipment or value stream. The events are highly focused, typically involving a cross-functional group, and can include suppliers and customers of the improvement target. At NLMK, Kaizen strives to identify the “least wasteful way” so that space, time and tempo are carefully orchestrated to produce a product or service.

When the commitment was made to change our culture, a Process Excellence Core Team was formed to support the necessary learning and change management that would occur. While improvement is everyone’s responsibility, true Kaizen is led by this group and itself is a cross-functional team of engineering professionals, metallurgists and Six Sigma green and black belts.

Kaizen at NLMK comes in many forms. The largest part of it is our Optimization Initiatives. These are large scale projects intended to make sweeping improvements to core technology, utility consumption, corporate logistics and other categories. This level of continuous improvement starts with project definition by the Management Board and works down through the organization as teams are formed and is termed ‘top-down optimization’ which adjusts the mean levels of our KPIs in a meaningful way. Another form of Kaizen comes in the form of ‘bottom-up optimization’ and is very intensively driven by the operators on the shop floor. Variation in the process is managed through an on-line SPC (statistical process control system) and reaction to ‘special cause variation’ in real time by the operators not only helps get problems solved faster, but it drives a reduction in variation within our KPVs (Key Process Variables). Proper selection of the KPVs is critical and only those with a direct connection to a business level KPI are selected for monitoring and control.

All of these Kaizen forums connect together to the same improvement initiative – improve our product and process to add increasing value for the customer.

The “voice of the customer” drives our key strategic initiatives and prevails throughout our service and product value chain. Our Process Excellence effort is fundamentally designed to continuously improve our ability to both meet and anticipate customer needs in a highly responsive, cost effective manner.

The “voice of the customer” refers to the mindset, process and the ability for capturing customer requirements and using that information to provide the customer with services and products that meet their stated as well as unstated needs.

In addition, our daily management control includes the monitoring of the following key customer dimensions:

  • Product Defects
  • Customer Concerns
  • Rejected Material

6S is a method and philosophy for organizing the workplace. It is a foundation stone for all activities in support of Process Excellence and is best described by the phrase “a place for everything and everything in its place”. 6S allows waste to become more visible in the process and therefore easier to identify and eliminate.

The key targets of 6S are workplace morale, safety and efficiency. Efficiency is improved by assigning everything a location; therefore, time is not wasted by looking for things. When done correctly, 6S also allows the employee to quickly discern when something is missing from its designated location.

Advocates of 6S believe the benefits of this methodology come from deciding what should be kept, where it should be kept, and how it should be stored. This decision-making process usually comes from a dialog about standardization, which builds a clear understanding among employees of how work should be done. It also instills ownership of the process in each employee.

At NLMK, 6S is being expanded into the entire organization. The process is complete when a sustainable program is established complete with auditing to established standards.

The 6S’s are. . .

SAFETY: In all things – safety first! When scouring an area for opportunities to improve ergonomics and efficiency, it serves as a perfect opportunity to also identify and correct hazards and unsafe conditions.

SORT (Seiri): Going through all of the tools, materials, etc., in the working area and keeping only essential items. Everything else is stored or discarded.

SET IN ORDER (Seiton): Focuses on efficiency. The intent of this second step is to arrange workplace tools, materials and information in a manner that promotes workflow For example, tools and equipment should be kept where they will be used (i.e. straighten the flow path), and the process should be set in an order that maximizes efficiency. For everything there should be a place and everything should be in its place (demarcation and labeling of location).

SHINE (Seiso): Shine refers to the need to keep the workplace clean as well as neat. The key point is that maintaining cleanliness should be part of the daily work – not an occasional activity initiated when things get too messy.

STANDARDIZE (Seiketsu): Work practices are operating in a consistent and standardized fashion. Everyone knows exactly what his or her responsibilities are to keep the above three S’s.

SUSTAIN (Shitsuke): Refers to maintaining and reviewing standards with the discipline to ensure that the previous four S’s are routinely followed.

The core of any company, and its level of achievement, is rooted in its capacity to solve problems and improve. How well and how quickly an organization can get to the root cause of problems that impact cost and efficiency is key to their long term success. Without a formalized method of solving problems in place, it is human nature to scratch the surface of a problem and fix only the ‘symptoms’ or what is perceived to be a single acting source variable (when in most cases, problems are multi-variable).

At the end of it all, it becomes necessary to critically evaluate the organizational problem solving capability and establish a disciplined approach that is tried and true in the industry. Also taken from the lean core tools of TPS, the A3 methodology is just that – a disciplined problem solving method that places a heavy emphasis on planning, analysis and evaluation to get to the true root cause or source of the problem at hand rather than simply identifying and correcting symptoms. Once the root cause is determined, defining what to do to fix that problem (we call ‘countermeasures’) falls quite readily into place.

The A3 method was named based on a lean principle that any problem can be boiled down to core principles and can be represented on a single piece of ‘A3’ paper. Representing all of the key aspects of the method used on a single piece of paper is Visual Process Management at its best. It means being able to look quickly and assess the problem solving process for everything that it was. For the Japanese, A3 is a learning tool as well because it teaches a disciplined and consistent approach to solve real issues in a concise, lean and effective way. The method by which you get to the end result is as important as the end result itself. Why? Because it reinforces and teaches you discipline and mastery of the methods you may need to tackle a more difficult problem next time.

The foundation of A3 is an older and more fundamental premise called PDCA – Plan, Do, Check, Act. Everything Toyota does is rooted in this continuous improvement cycle, and the biggest part of A3 is the planning part. Once the sources of the negative results are discovered through planning, measurement and discovery, it is then time to act (Do). But simply implementing changes and not evaluating their effectiveness at addressing the problem source is not acceptable, so the process ends back around and evaluates the effectiveness of the changes. Once verified, controls are established to ensure the countermeasures do not deteriorate and KPI performance goes back to previous levels. If the countermeasures were not effective, we go back through the PDCA cycle again, OR we Act in the sense that we start the cycle again to generate the next increment of improvement.

The components of A3 problem solving are. . .

CLEAR PROBLEM STATEMENT & OBJECTIVE (Plan): Define the scope of the problem – what are we trying to accomplish? Include contributing details from the history of the problem. Context is required for full understanding. Ensure the importance of solving the problem is clearly stated in terms of business level impacts

MEASUREMENT & UNDERTANDING (Plan): Verified measurement systems must be the first order of business. If you cannot measure a process, you cannot change it within the realm of a predicted result. If you cannot change the process, you cannot improve it. So it is clear why measurement is the first area of focus. Once the capability to accurately measure the problem is verified, next the investigation must begin which starts with data collection. Through the process of understanding the issue, it is also critical to establish through your measurements what the current state is and in that context, what the future state is that we desire to achieve through the effort.

ANALYSIS OF CAUSE (Plan). With data in hand, various TPS tools can be used to ascertain the root cause of the problem. A commonly used technique is 5-Whys. Others include good old fashioned brainstorming (only in a structured way using fishbone diagram tools), Failure Mode Effect Analysis (FMEA), analytical techniques (technical studies performed to generate more data about the nature of the failure) and statistical analysis.

DEFINITION OF COUNTERMEASURES (Plan). Once the absolute root cause or causes are defined, then the team defines the countermeasures necessary to either eliminate the problem or control a variable that links to the problem directly.

IMPLEMENTATION (Do): Compared to the planning stage, implementation should be done quickly. Why? Because if we took the time and effort to thoroughly understand and analyze the cause, the degree of confidence we have in our countermeasures is much higher than it would otherwise be!

FOLLOW-UP AND CONTROL PLAN (Check): After the new process has been in operation for a period of time, end back around and evaluate data or check the product or observe the process to verify that the countermeasures were effective. If so, work to put controls in place such as Preventative Maintenance Practices, Standardized Work Procedures or In-Line Statistical Process Control (or others). The goal is to ensure the problem, with regard to that specific root cause, never comes back again.

Some of the most critical and value-added improvements we can make as an organization tap into resources that work with the product and process on a daily basis. Engaging our shop floor operators and maintenance personnel in Kaizen is a critical piece of the culture change. To exclude them from the process would be a huge oversight. The System for Efficiency Improvement was developed by our Parent Company to bring optimization and efficiency improvement up from the shop floor. It is based in three primary areas of front line control and centers on real-time corrective actions to observed problems in the process, focused maintenance activity on top equipment failures on the Pareto, and real time corrective action for internal product non-conformances.

In all cases, immediate reaction to problems on the shop floor provide for the best opportunity to determine root cause (while conditions are ripe for discovery!) and it engages operators to be attentive and reactive to process variation. Variation management is achieved through on-line SPC (Statistical Process Control) which utilizes control charts.

When special causes impact the process, red points on the control chart are generated outside of normal limits. An ERP level system was created to start with on-line SPC focused on control of Key Process Variables (KPVs). The KPV’s are discretely linked to business-level KPIs so by controlling one, you control the other. When special cause non-conformances occur, the operators are asked to investigate immediately. They are asked to enter into the system (termed the SEI) a root cause, a detailed root cause and an immediate corrective action taken. This data is then analyzed after the fact to help assess where the problem areas arise. While the operators may have made adjustments to the process to get it back into control, management and engineering are looking at the summarized data from the SEI to come up with preventative measures using A3 techniques to solve the problems permanently. It is the A3 methodology applied on a large scale basis to many critical variables at every operation in the process. If we are reacting to process variation on this order of magnitude, the level of long term improvement that can be realized is staggering. The NLMK teams are excited about this new system and are working now to implement it at every operation in the US.

Standard work is another foundational cornerstone of lean. It ensures that operations are safely carried out with all tasks organized in the “least wasteful way” sequence to ensure a stable, repeatable and unambiguous process to achieve reliable output of processes and superior quality. Standard work serves as the baseline for the continuous improvement process.

Standard work is critical to the process of on-going improvement because there can be no improvement without first having an established standard to base it upon. Standard work is not a rigid set of rules that never change; rather, standard work reflects the currently identified best practice way to produce a product or service to meet customer requirements. Employee input and suggestions are important to consider incorporating into standard work. Implementing it for the first time involves taking best practices from experienced operators coupled with product and engineering experts to generate a baseline starting point set of procedures upon which future procedural improvements can be evaluated.