Case Study on Corus : Strategy of Contineous 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 revenuesof 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.

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. 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.

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. Continuous improvement contributes towards lean production. Lean production occurs where:

·                     waste has been minimised.

·                     the flow of work is smooth.

·                     the business is focused on customer need

Lean production uses fewer resources more efficiently. This increases productivity and can improve profitability. One aspect of lean production that helps to save costs of stock is the just-in-time (JIT) principle. Just-in-time means producing and supplying goods at the time they are needed. JIT also carries risks if the business has no stock it could be less able to cope if suppliers fail to deliver. Corus needs to balance these risks against the proven benefits.

Product development ideas may come from:

·  competitors - developing a product in response to competitors helps the industry as a whole to move forward

·  changes in technologies - arising out of research and development

·  innovation - using new ideas to make new products

·  employees - who see opportunities from working with products

·  the market - where customer demand suggests new products

Although continuous improvement usually focuses on small increases, Corus' established systems and quality procedures helped it to meet this step change:

• 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.
• Just in time procedures helped to meet tight deadlines

Corus developed the new steel product to help it win the Royal Navy contract. As a result, it benefited in many ways as a side effect of the changes:

• By using its existing CI procedures to guide its research and development and testing, Corus developed the new specification of steel required at a competitive price.
• 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.

The steelmaking industry also benefited. Corus adopts a practice of benchmarkingas part of its continuous improvement. It shares its best practice across the industry. Other steel businesses can now use the best methods of production to raise quality across the whole sector. Quality assurance is a vital requirement of continuous improvement, especially in the shipbuilding industry

Conclusion

In a competitive industry, businesses need to use all the resources they have, including skills and knowledge. Continuous improvement at Corus provides a process in which everybody can play a part in moving the business forward. Continuous improvement has helped Corus to meet the Royal Navy's increasingly sophisticated requirements for high specification steel products

Questions

1. Contineous Improvement Focused on what factors in Corus?
2. How lean production and Contineous Improvement are related? Discuss.