热轧精益生产试点成果汇报机密February 9, 2003此报告仅供客户内部使用。未经麦肯锡公司的书面许可，其它任何机构 不得擅自传阅、引用或复制。Improve HRMs product quality, OEE and stability with lean manufacturingEXECUTIVE SUMMARYHRM has achieved significant operation improvement during the six month pilot period. Both 1580 and 2050 improved their OEE and quality level. The realized bottom line impact during the pilot reached 63.1 Mln RMB, and the annualized financial impact is 150 Mln RMB.HRM has gradually build its operational improvement capabilities throughout the piloting process. Lean tools and improvement methods were widely used in HRM in solving problems. Moreover, lean and six sigma tools were combined in solving some quality problems. A group of improvement experts are developing in HRM. In order to sustain the pilot results and ensure the continuous improvement efforts, HRM also made changes in its performance management system and begun the implementation since beginning of this year. HRM has set detailed roll out plan for 2003 to further improve product quality and OEE, Baosteel company wide roll out plan is also under development. Six pilot quality problems have improved significantly, for ridge,scale,width, rolling crack, edge damage folding edge,average increase ranging from 24% to 67%, and for thickness precision, improving 1%. Work roll change time in both 1580 and 2050 reduced 30% to 10 minutes, backup roll change also reduced under target Maintenance efficiency in both 1580 and 2050 improved 10%, the stoppage time of two equipment strategy piloting equipment has potential to decrease 55% and 53%. Performance management team designed HRMs performance management system and process, setting up KPIs and KPI targets for 163 HRM positions. The successful pilot experience in HRM has set a good example for Baosteel overall improvement program and build a solid foundation for Baosteel to roll out “lean six sigma” program company wide. Baosteel should select a series of improvement projects based on Baosteel own business strategy and financial goals. At same time, those improvement projects would provide a training ground for a group of Baosteel own improvement experts. 2AgendaHRM Lean Pilot Progress Overview Summary of pilot resultsQuality improvement Roll change Maintenance Performance management Baosteel operational improvement roll out plan3BAOSTEELS UNIQUE SITUATION REQUIRES INTEGRATING LEAN AND 6 ACCORDINGLY AND IN A TAILORED APPROACHStrategic ChangeIncreasing demands, especially those in high-end products (e.g. automobile steel), require the quality to reach “zero defect” to win the competitionCustomers widely use JIT production, consequently requiring BaoSteel to delivery products JITPrice competition is the lasting issue in the steel industryInvestment management is also another important lever to improve ROC for capital intensive businessBaoSteel needs to integrate the best of lean and 6 and to design and implement operation program to address its unique operational challengesOperational ChallengeHow to improve the process capability and stability along the entire value chain, deliver “zero defect” products to high-end customers (e.g. auto makers), and increase capacity to raise production volume? How to eliminate wastes in the value chain via JIT production to improve on- time delivery from current 7080% to 98%? How to reduce cost to face the price competition? How to build the continuous improvement capability, instead of the spikes in improvement?4HRM PILOT FOCUSED ON PRODUCT QUALITY,MAINTENANCE EFFICIENCY, ROLL CHANGE AND EQUIPMENT STOPPAGE1580OEE 2001 HrsOEE=57.7%Calendar timeYearly maintenanceRoll changeBreakdow n and unplanned stoppageNet available timeSpeed lossEffective running hourdowngrad escrapNet producti on timerework First pass net production time1580Improve maintenance efficiencyReduce roll change timeEquipment strategyQuality improvement5OEE*20012002 (JanJun)2002 (JulDec)20012002 (JanJun)2002 (JulDec)15802050Bef PilotAft Pilot*:Speed loss maintain 2001 level, yearly maintenance allocate base on its periodFinancial impact realized through pilot(Jul.1,2002-Dec.31,2002) 10,000 RMBRoll changeMainte nanceQuali tyTotalIf improvement achieved could be sustained, the annualized impact is 150 million RMBHRM HAS SIGNIFICANTLY IMPROVED ITS OEE AND REALIZED SIGNIFICANT SAVING THROUGH LEAN PILOT67 4.55 3SIGNIFICANT IMPROVEMENTS CAME FROM PRODUCT QUALITY, MAINTENANCE AND ROLLCHANGERidge cold rolling downgrade （ 1580） tonJan-Jul, 2002 averageAug-Dec. 2002 AverageScale hot rolling final lock- out （2050） tonJan-Jul, 2002 averageAug-Dec. 2002 AverageWidth hot roll lock-out （1580） coilJan-Jul, 2002 averageAug-Dec. 2002 AverageFolding edge/edge damage temp lock-out（2050） %Jan-Jul, 2002 averageOct-Dec. 2002 AverageRolling crack temp lock-out（ 1580） %Jan-Jul, 2002 averageOct-Dec. 2002 AverageThickness precision（2050） %Jan-Jul, 2002 averageO