Steel founders grapple with customer perceptions.
"There |is~ only one purpose for any business: to create a consumer."
Borrowed from management guru Drucker, the above quote is used by Raymond Monroe, executive vice president, Steel Founders' Society of America, to underline the challenges confronting American steel casting producers. More pointedly, he asks, "How is the steel casting producer doing at the critical job of creating new customers? The creation of new customers must become the cornerstone of the steel casting industry's future prosperity."
Monroe offered his comments, prepared by himself and Malcolm Blair, SFSA technical and research director, during the organization's National T&O Conference on November 11-13 in Chicago.
They based their discussion on several recent SFSA studies of steel casting users that examined customer perceptions and satisfaction regarding delivery, quality and service from steel casting producers. In addition, more than 30 other speakers from throughout the industry reported on a variety of research projects and other ways that steel founders are trying to improve the competitiveness of their products.
Monroe explains that "A rapid drop in demand for steel castings along with reports of customer dissatisfaction in the early 1980s led to the formation of the SFSA Quality Assurance Task Force. Appointed by the SFSA board of directors, the job of the task force was to talk with prominent customers about their concerns. In the 1970s, high levels of demand had hidden some of the underlying problems with steel casting use, but these became quickly apparent in the 1980s."
Table 1. Important Material Characteristics to Designers Carbon & Low-Alloy Steel Castings Rank Characteristic 1. Strength 2. Price 3. Consistency 4. Dimensional Accuracy 5. Weldability 6. Fatigue 7. Toughness 8. Machinability 9. Hardness High-Alloy Steel Castings Rank Characteristic 1. Strength 2. Corrosion Resistance 3. Weldability 4. Consistency 5. Dimensional Accuracy 6. Price 7. Machinability 8. Elongation 9. Toughness 10. Creep
Part of what they discovered, says Monroe, was that "No longer was quality mainly concerned with fitness for service. Quality now meant the ability to process without difficulty. Unless steel castings could be improved, their use would decline."
Some of the task force's early work determined that inclusions, caused by reoxidation during pouring and gating, were the most common cause of machining problems. They also identified inconsistent dimensions and poor-quality production welds along with lack of soundness in the castings used in pressure applications as major problems for steel casting users.
To address these issues, SFSA appointed a Technical Steering Committee with the task of formulating a Strategic Technology Plan in 1989 to address these key customer issues. The plan found that market research was necessary.
This was followed up by a study in which design engineers were queried about their perceptions of steel castings and how they compared steel castings with other competitive products, including ductile iron, fabrications and forgings.
At the same time, designers were surveyed to determine their requirements in terms of material and component characteristics. In this work, the engineers were asked to pick out the two most important characteristics of the components they design.
"This selection process," Monroe says, "is more like the real world selections where only a few characteristic drive the design and the rest of the material properties must be accommodated."
In the case of carbon and low-alloy steels, and the higher-strength steels, "strength" was ranked as the most important factor in design.
"Since many designs are limited by the specific fatigue or toughness behavior of the materials, this high ranking for strength was surprising," Monroe says. "It may be a result of its use in the formulation of design concepts. Strength remains at the heart of design. Service and durability problems are commonly resolved through the use of a 'stronger' design."
This emphasis on strength should translate into a marketing opportunity for steel casting producers, he adds. "Steel casting designs tend to be stronger than most of its common competitors like ductile iron and fabrications," Monroe says. "Knowledgeable users and designers replace ductile iron castings or fabrications to gain needed strength."
Regarding casting performance versus other materials and processes, the SFSA survey of users' perceptions presented a mixed picture when it came to "strength".
In the area of strength, the designers generally rated the strength of carbon and low-alloy steel castings similar to fabrications, better than ductile iron but poorer than forgings, according to Monroe. Both fabrications and forgings were rated much higher in strength than castings in the high-alloy market.
Perceptions of component "quality" also presented interesting paradoxes as demonstrated by the survey. Monroe reports that "Customer perceptions of quality were even more negative. Steel castings were poorer in quality than any alternative. This was true to specific quality issues as well. Steel castings were rated significantly poorer than forgings in soundness, inclusions and surface finish.
"They ranked poorer than fabrications in inclusions, tolerances, surface finish and soundness. Ductile iron castings were rated similar to steel castings. The negative impression of steel casting quality is supported by negative views in a number of quality related areas."
Among these were "delivery." Monroe points out that "Improving delivery must be a priority task for steel casting manufacturers. This was cited as the most important feature of customer service in the high-alloy area and as the first issue after support and service for carbon and low-alloy are castings. The SFSA customer survey shows that steel castings are rated poorer than all competitive products when it comes to delivery."
Where steel castings showed perception advantages among users was in the areas of price, service and support. In the service and support area--technical assistance for design and manufacturing--steel castings received their highest rating.
Opportunities for Growth
Recognizing numerous market challenges confronting them, steel foundries are facing up to many of the less-than-positive perceptions of metal component users. Encouraging news from the SFSA customer survey indicates that 76% of the respondents believe the quality of steel castings is improving.
And if steel founders want to stay on the right track, there are numerous opportunities to improve both individual foundries and the entire industry's position in the marketplace, Monroe says.
On a company specific basis, he offers the following recommendations:
* develop the most complete listing of mechanical properties possible for commonly produced grades;
* identify successful conversions to steel castings from other materials and processes;
* prominently use quality certifications (e.g., ISO 9000);
* strongly commit to on-time delivery;
* reduce lead times;
* reduce casting development times;
* develop accurate activity-based cost systems so castings can be accurately priced;
* add machining and other value-added services;
* improve training of the direct sales force.
On an industrywide basis, several things can improve the steel castings image in the marketplace:
* develop guides for converting fabrications or forgings to castings;
* promote the strength of steel castings as a major advantage;
* support research for developing rapid tooling and prototype technologies;
* develop an activity-based cost accounting program for industry use;
* organize active customer and design training programs to lower the barriers to casting use.
SFSA's ongoing market research is helping the industry pinpoint where it stands with its customers. With this baseline of knowledge in place, steel casting producers are well positioned to take on the challenges of product quality, service and delivery.
Their efforts were apparent during the conference as numerous industry speakers discussed their work to develop new clean steel technologies, investigate innovative molding practices, and invest in research and process control programs.
Monroe sums up these efforts by pointing out that "We must use our energy and resources to provide innovations that our customers want. Our innovative activities must be backed up by a clear understanding of our customers wants and needs. The creation of new customers must become the cornerstone of the steel casting industry's future prosperity.
"Our marketing efforts require a profound understanding of the marketplace. Market research is the foundation of our overall marketing efforts."
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|Title Annotation:||Management Report; Steel Founders' Society of America National T&O Conference|
|Author:||Kanicki, David P.|
|Date:||Jan 1, 1994|
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