Assignment (Corus)

MBA

Business Strategy in the Global Environment


Table of Contents_Toc2675128521. Introduction........................................................................................................................................3

1.1 Continuous Improvement.............................................................................................................3

1.2 Who is involved...........................................................................................................................3

1.3 What would they be doing to enable improvements....................................................................4

1.3.1 New product development (NPD).........................................................................................4

1.3.2 Total Quality Management....................................................................................................4

1.3.3 Training and Development....................................................................................................4

1.3.4 Scheduling.............................................................................................................................4

1.3.5 Communication.....................................................................................................................4

1.3.6 Lean production and lean manufacturing..............................................................................4

1.4 Minimising of waste.....................................................................................................................5

2. Corus Culture.....................................................................................................................................5

2.1 Standardise, Improve and Innovate..............................................................................................6

3. Key Performance Indicators...............................................................................................................6

3.1 Customers satisfaction through KPI.............................................................................................7

4. Benefits of Continues improvement...................................................................................................8

4.1 Use CI to become more innovative and customer focused..........................................................8

5. Recommendations..............................................................................................................................9

6. Conclusion..........................................................................................................................................9

7. References........................................................................................................................................10

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1. Introduction Corus is an international metals company. It is a 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. (Corus, 2006)The company produces more than 20 million tonnes of steel each year, mainly in the UK and the Netherlands. (Corus, 2006) It has a global network of sales offices and service centres, employing around 42,000 people worldwide. (Corus, 2006) Corus is a leading supplier of steel to some of the most demanding markets around the world and it operates in more than 40 countries. (Corus, 2006) The key markets for Corus Construction & Industrial (CCI) include construction, engineering, mining, shipbuilding and rail etc.

The aims of this report are identify Corus’s technique of Continuous Improvement (CI), what would they be doing to enable improvements, type of culture Corus is developing, how will the vision plan help to develop this culture, customer satisfaction through key performance indicator (KPI) and benefits of CI in helping Corus to become a more innovative and customer focused organisation.

1.1 Continuous Improvement

This is often referred to using the Japanese term ‘kaizen’. Kaizen covers all processes in an organisation and involves making many small improvements wherever possible. This means that the organisation improves smoothly and consistently, rather than in irregular jumps. The goal is to improve processes and products over time, taking care to maintain improved performance levels while seeking out further opportunities for improvement. Everyone in the organisation is responsible for improvement and should try to improve all the time.

1.2 Who is involved

Continuous improvement influences the whole of the business. In order to be effective, all employees need to own and adopt CI principles, starting with senior management commitment. Under their leadership, CI works through the whole organisation. Everyone has a part to play in continuous improvement. Through various CI groups, all Corus employees can contribute ideas for improving their working practices. This empowerment of employees and managers helps them to feel valued and gives them job satisfaction.

Who is Involved?

Senior Management

CI Coaches

Employees

Raise awareness and develop CI

Training and assisting CI process

Implementing CI

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1.3 What would they be doing to enable improvements

1.3.1 New product development (NPD)

Using skills and expertise in a structured way enables Corus to create better processes and products. Corus used CI to support its new product development, 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.

1.3.2 Total Quality Management

Corus pays particular attention to the testing of its products because of its focus on quality. It adopts a Total Quality Management approach that aims to “get it right first time”.

1.3.3 Training and Development

(Corus case study, 2006)

CI centres on both training and development and employees are encouraged to get involved with the CI programme. CI enables them to grow in a variety of ways, by taking on more responsibility and becoming involved with teamwork and team building.

1.3.4 Scheduling

Scheduling for each element of the process ensures that bottlenecks are kept in minimum.

1.3.5 Communication

Learning within the company is achieved through opening communication channels. It also occurs from encouraging everyone to become involved by suggesting and applying changes.

1.3.6 Lean production and manufacturing

CI involves the related idea of ‘lean manufacturing’. This simply refers to the removal of waste. If wasteful activities are removed, employees are able to work smarter. Smart work involves spending time carrying out processes that create value for customers. One aspect of lean production that helps to save costs of stock is the just-in-time (JIT) principle. The business holds the minimum amount of raw materials and just enough finished product to meet demand. It requires well-organised systems to ensure supplies arrive and goods reach customers on time.

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1.4 Minimising of waste

Continuous improvement at Corus helps to eliminate waste in seven key areas.

(Corus case study, 2006)

2. Corus CultureIntroducing CI means changing the culture of a company, which means that members of the organisation are challenged to change their behaviour and upgrade their work. Continuous Improvement needs teamwork and a culture of willingness to improve. CCI has devised techniques to use to encourage this proccesses. CI involves the related idea of 'lean manufacturing'. This simply refers to the removal of waste. If wasteful activities are removed, employees are able to work smarter.

The Performance Improvement journey has resulted in some positive changes in the performance culture. Each team has identified its top three to seven Key Performance Indicators (KPIs) which are being tracked and compared across sites each month. Such KPI comparisons have led to discussions on areas where there have been significant performance gaps within the Group and often, these have resulted in improvement project opportunities. Most projects are being identified with a view towards impacting bottom line improvement and most of the projects are conceptualised along with an expected financial benefit. Training to facilitate improvements helps everyone understand where and how they can improve their work. Also everyone can put forward ideas and have a say in how processes can change for the better. (Engagement)

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2.1 Standardise, Improve and Innovate

(Corus Annual Report 2009)

Corus’s vision plan helps to develop this culture. The future belongs to organisations that can increase the pace of standardisation (to have a robust base), improve quickly on their current operations and continuously innovate to differentiate themselves from the rest. This can only be achieved by leadership, passion, process and knowledge. Corus ensures value creation for the system as a whole, starting from the customers to the suppliers. (Corus Annual Report, 2009)

In order to achieve its set goals and to keep on improving step after step, first of all organisation need to have constantly updated information about its current situation, that is set out in Vision plan. Vision plan required involvement and active support of all stuff. First stage was to identify what current processes looks like, maps of processes were drawn by workers. Next stage was identification of future state to be and ways of reaching it. However, introducing CI means the change of whole working process and the problem could be resistance to changes among workers. In order to make it easier to accept changes, 5 year plan involved timeline program for introducing change. (Corus Annual Report, 2009)

3. Key Performance IndicatorsThe Board and Executive committee monitor a wide range of performance indicators, both financial and non-financial, on a regular basis. Targets may be set at both the Group and divisional level to ensure that they are tailored to drive the priorities of each business. Financial KPI measures presented below are considered to be important indicators of the Group’s overall financial performance. Non-financial measures are important to note in understanding the overall performance of the Group. Whilst it may not be possible to ensure that the definitions and method of calculation are entirely consistent across businesses, and between years, they are considered to be an important indicator of current trends.

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Financial KPIs Non Financial KPIs

Basic earnings per share SafetyNet debt ServiceGearing SavingsWorking capital/turnover Physical performanceReturn on net assets Human resources

Marketing and SalesProductionPurchasing

3.1 Customers satisfaction through KPI

In selecting Key Performance Indicators, it is critical to limit them to those factors that are essential to the organization reaching its goals. It is also important to keep the number of Key Performance Indicators small just to keep everyone's attention focused on achieving the same KPIs. Such as:

Deliveries in time in Full Corus has set new KPIs which focus on meeting customer deadlines, such as

- A zero backlog of customer orders – this means customers always get their deliveries on time- Meeting targets for rolling steel plate in its allotted week.

Sales- Sales KPI include KPI samples of sales rep, sales contact by telephone, shops and

supermarkets management, customer loyalty, customer care etc.Marketing

- Marketing KPI include KPIs such as public relations KPI, promotion KPI, advertisement KPI, e-marketing KPI etc

Production- Manufacturing KPIs include material management KPI, order management KPI, productivity

KPI, quality KPI and maintenance KPI.

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4. Benefits of Continues improvement

4.1 Use CI to become more innovative and customer focused

Continuous improvement not only makes Corus more efficient but also provides many benefits to its external stakeholders

(Corus Case study, 2006)

This meant Corus had to develop a completely new product to meet this much higher specification if it was to win the contract. Its Research & Development expertise and knowledge came up with the new steel formula that had the required toughness and strength. Lean production principles helped to minimise waste and Just in time procedures helped to meet tight deadlines. Investment in new technologies and equipment, used alongside lean production techniques, enabled Corus to minimise levels of waste and reduce high manufacturing costs. It was able to meet customer deadlines, a vital element of making a business’ operations more competitive. Corus used CI to support its new product development (NPD), enabling it to meet the needs of its customers more closely.

Corus adopts a practice of benchmarking as part of its continuous improvement. It shares its best practice across the industry. Quality assurance is a vital requirement of continuous improvement,

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Corus can offer high quality products to its customers and this expands its customer base. Its investment in CI systems, research and development and the use of its employees’ knowledge have provided Corus with a distinct competitive advantage.

CI supports Corus’ aim to achieve satisfied customers and secure repeat sales and longer term orders. It is part of a long term strategy based on service to develop the business. It aims to improve operational demands to fulfill customer expectations and out-perform competitors.

5. Recommendations Corus can adopt other techniques such as 1. Six Sigma

Replace fixed ideas with fresh ones. Start by questioning current practices and standards. Seek the advice of associates Implement a solution right away, even if it covers only 50 percent of the target. Correct something right away if a mistake is made

2. Flexible Manufacturing Develop and execute the right trade-offs across various key factors. Adopt and internalize proven manufacturing excellence principles that are focused on the

bottom line. Integrate manufacturing with product design, planning and scheduling, sales and operations

planning, and service.

3. Kanban Not send defective products to the subsequent process The subsequent process comes to withdraw only what is needed Produce only the exact quantity withdrawn by the subsequent process Equalize production Stabilize and rationalize the process

Overall Corus can achieve higher customer confidence and loyalty, increased brand value and market share, decreased time to market and greater returns

6. ConclusionCorus is using CI to improve steel production in Scunthorpe. All employees are encouraged to be team members and seek improvement. CI supports the aim of satisfied customers and repeat sales and helps to secure the business. Working in teams enables employees to share their ideas and expertise. Using the expertise of staff helps the business to develop. It also empowers individuals to take on responsibility and provides them with increased job satisfaction. New product development may involve risk, such as investing time, resources and money in new technologies. However, it also creates business opportunities.

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7. References1. corusgroup.com , Welcome to Corus, [WWW]. Available from:

http://www.corusgroup.com/en/, [Accessed 10th July 2010]2. Reh F. John, Key Performance Indicators (KPI) How an organization defines and

measures progress toward its goals, [WWW]. Available from: http://management.about.com/cs/generalmanagement/a/keyperfindic.htm, [Accessed 10th July 2010]

3. humanresources.hrvinet.com, KPI examples, [WWW]. Available from: http://www.humanresources.hrvinet.com/sample-kpi/, [Accessed 12th July 2010]

4. corusgroup.com, [WWW]. Available from: http://www.corusgroup.com/file_source/StaticFiles/Corporate/Financial/Investor_visit_Scunthorpe_June05.pdf, [Accessed 12th July 2010]

5. thisisscunthorpe.co.uk, Corus laps up order, [WWW]. Available from: http://www.thisisscunthorpe.co.uk/news/Corus-laps-order/article-2396349-detail/article.html, [Accessed 14th July 2010]

6. thetimes100.co.uk, Product development through continuous improvement, [WWW]. Available from: http://www.thetimes100.co.uk/case-study--product-development-through-continuous-improvement--56-338-6.php, [Accessed 14th July 2010]

7. thetimes100.co.uk, Continuous Improvement The Corus Way, [WWW]. Available from: http://www.thetimes100.co.uk/case-study--continuous-improvement---corus-way--56-220-6.php, [Accessed 10th July 2010]

8. Corus Annual Report 2006, [WWW]. Available from: http://www.corusgroup.com/en/responsibility/cspr/news/prn_annual_brochures/

9. Corus Annual Report 2009, [WWW]. Available from: http://www.corusgroup.com/file_source/StaticFiles/Functions/Financial/annual-report-2008-09.pdf, [Accessed 15th July 2010]

10. media.wiley.com , Continuous Improvement Tools, [WWW]. Available from: http://media.wiley.com/product_data/excerpt/62/04717548/0471754862.pdf [Accessed 12th July 2010]

11. eHow Contributing Writer, How to Implement Continuous Process Improvement, [WWW]. Available from: http://www.ehow.com/how_2072968_implement-continuous-process-improvement.html, [Accessed 12th July 2010]

12. managing-innovation.com , Continuous Improvement: Specific Techniques, [WWW]. Available from: http://www.managing-innovation.com/tools/Continuous%20Improvement.pdf, [Accessed 14th July 2010]

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Assignment (Corus)