Manufacturing reliability: the Dofasco story: this Canadian mill used a reliability maintenance program to slash costs and improve product quality (but your mill still makes better paper.).

Editor's Note: At the recent PIMA 2002 International Management Conference held in San Francisco, California, USA, the Manufacturing Reliability Specialist Group sponsored presentations about the need for increased and improved reliability within the manufacturing community. This article is based on one of those presentations.

Experience is a great teacher--and we can learn from the successes of other companies, even other industries, as well as from our own. The transition of Dofasco, Canada's second largest steel producer from a high cost manufacturer to a very efficient steel manufacturer is a case in point. Dofasco's transition coincided with its decision to focus on reliability within maintenance.

BACKGROUND BASICS

Like the United States paper industry today, the North American steel industry in the early 1990s Laced increasing global competition from bigger, faster, and more efficient modern operations; lower prices from lower cost operations in developing economies; or both. Some industry producers failed to make changes and are no longer manufacturing steel. Others, such as Dofasco, embarked on a painful period of change and achieved profitability in a highly competitive market.

Today Dofasco annually supplies CD$ 3 billion (US$ 1.88 billion, based on a CD$/US$ rate of 0.627) of steel to North America's automotive, manufacturing, construction, and packaging industries. The company's site in Hamilton, Ontario, Canada, produces 4.5 million tons of flat rolled steel per year. Although it uses different raw materials and more robust equipment, steel making is similar to that of pulp and paper making because it is a continuous process using natural resources and considerable energy. It also requires huge capital investment, and the market is predominantly in developed countries.

PROBLEMS AND SOLUTIONS

Early in the 1990s, Dofasco recognized some internal and external problems. Internally, its equipment availability was at a plateau of 78%. Quality was not improving and was 76% of prime yield shipped. On the maintenance side of the business, 70% of the work was reactive--unplanned and emergency. Only 30% was planned work.

Externally, the market had changed to global suppliers. This decreased prices and increased costs. The supply-and-demand driven market had changed the pricing formula from Cost + Profit = Price to Price - Cost = Profit. As profits declined, Dofasco faced two options. Do nothing and see continuing erosion of shareholder value or make radical changes to improve.

After making the decision to change, Dofasco management recognized that quality, throughput, cost, safety, and environmental integrity were key success factors. They also determined that these factors depended heavily upon equipment reliability and maintenance practices. The strategic goal was to do better and more with less.

On the operations side, Dofasco developed a comprehensive solution built on a reliability objective. The company adopted a three-pronged objective:

* A reliability-focused maintenance process

* Reliable business practices

* Enabling reliability software systems.

RELIABILITY-FOCUSED MAINTENANCE PROCESSES

A reliability-focused maintenance process comprises a series of inputs, steps, and outputs. If a step is missed, skipped, or performed inadequately or below standard, a defect called a functional failure occurs within the process. Conversely, the output of a healthy maintenance process is that the asset performs reliably at its optimum cost. Figure 1 shows the reliability driven maintenance process.

[FIGURE 1 OMITTED]

SHIFTING PARADIGMS

As it changed, Dofasco relied heavily on software solutions to support the business practices required to accomplish its goals of improved asset reliability. Although the company recognized that a computerized maintenance management system (CMMS) was important for efficiently conducting maintenance work, additional technology was necessary to support data-intensive reliability practices. For example, the company collected condition information on all critical assets. Their processes relied on these data for rapid decision making to support proactive work.

After implementing a reliability-driven maintenance process and supporting practices and technology, Dofasco emerged as a shining example of what is possible in a battered industry by focusing on asset reliability.

WHAT WAS ACHIEVED?

Dofasco achieved a complete reversal of its maintenance workforce effort. Instead of spending 70% of their time on reactive assignments, workers now spend 80% of their effort hours on planned and scheduled work. This proactive approach has resulted in an average equipment availability increase from 78% to 91%--a 12% improvement in uptime.

The boost in uptime contributed to the overall improvement in product quality. This rose from 76% in the early 1990s to 91% of prime yield shipped in 2001.

Smarter maintenance effort and improved equipment reliability had a significant impact on machine repair operation inventory. This yielded a 33% reduction in maintenance spare parts inventory.

Doing better and more with less also produced huge cost savings through a decline in the required workforce. While the overall site workforce, including salaried personnel, dropped 44%, the maintenance workforce decreased by 51%. Operator involvement in the reliability effort was apparent.

Today, Dofasco is the most profitable steel producer in North America. Dow Jones ranked it as the number one steelmaker in the world. Dofasco received national awards for the "best use of innovation and technology in maintenance" and "best maintained large plant." These are notable awards for a company representing a declining segment of North America's manufacturing community.

RESULTS SPEAK VOLUMES

Dofasco will readily admit that recognizing and accepting that a problem exists before it is too late is the first step in solving the problem. After clearing this hurdle, Dofasco benchmarked the magnitude of its problem and developed strategies for change to lessen the gap. The company then embraced the use of technology and invested in training for widespread use of the technology to help employees work smarter, not harder. Considering the similarities of the two industries, steel and paper--the capital and asset intensiveness, the technologies deployed, and the global business pressures--the paper industry can learn well from the Dofasco experience.

IN THIS ARTICLE YOU WILL LEARN:

* The internal problems and market pressures that contribute to eroded shareholder value

* The chief components of a reliability-focused maintenance process.

* The cost benefits associated with a shift to reliability focused maintenance

Acknowledgements: The author appreciates the efforts of Gino Palarchio at Dofasco for providing the material used in this article.

ADDITIONAL RESOURCES:

* Dofasco's home page: www.dofasco.ca

* For information about PIMA's Manufacturing Reliability Special Group, or the 2003 International Management Conference: www.pimaweb.org

About the author: John Yolton is vice president of HSB RT, a consulting firm. He serves on PIMA's Manufacturing Reliability Specialist Group and is an active member of the TAPPI Maintenance and Mill Engineering subcommittee, Contact him by email at [e-mail] or by telephone at [phone].