Name of Project: Steelman
Region: Region 1
Project Manager: Neo Lekaowa
1. Project Background
Productivity SA revisited the company...
Steelman is wholly owned by Staalbeer, a steel merchant with three branches in Potchefstroom, Vereeniging and Bothaville. Staalbeer is the sole supplier of raw material to Steelman and its sole customer absorbing all its produce. Steelman’s core business is to perform value adding activities to steel and bring it to the specifications that the customer requires.
These value adding activities are performed on steel products that are used in the construction and built environment industry. There are three main value adding departments all housed at the Potchefstroom branch, which are the roof sheeting, palisades and cut and bend for reinforcing. From Potchefstroom, value added products are supplied to the two other branches of Vereeniging and Bothaville.
The one contributing most to the bottom line is the roof sheeting line, where different types of steel roof sections are rolled from galvanized coil. The next is the palisade line where palisade sections for perimeter walls are welded. Lastly, it’s the cut and bend section, where steel reinforcing is cut and bent to customer requirements for load bearing concrete columns and foundations.
At the later stage the business shut down the cut and bend department as it was accumulating losses and introduced light steel manufacturing business.
Shortage and Fluctuation Steel Price
Load Shedding and its effects to Businesses
Eskom’s mandate is to ensure security of supply to service the South African economy and society. At all times there must be sufficient supply to meet demand, however electricity demand is not constant because of peak periods when demand is higher and continuous growth in the number of customers requiring electricity services. This means that the power system requires constant and prudent management of supply to meet demand but, today, Eskom faces the challenge of a constrained power system that will affect us until substantial new power capacity is available. Load shedding is a controlled process that responds to unplanned events in order to protect the electricity power system from a total blackout. Therefore, load shedding is used to manage our power system and protect it from such an event.
As South Africa strive to manage the country’s electricity, load shedding has a serious impact on industries that rely on continuous electricity production and Steelman is no different. While electricity is not the high-cost drivers, production becomes low, and some employees cease work. Steelman resort to the utilisation of generators however it is not enough. Prioritization of which machines need to stay on becomes critical. The available electricity is therefore used in the most critical productivity.
At the time of the first assessment, the business was not providing quality service to its customers, the products were not delivered well on time, the production throughput was not streamlined and there was too much waste in the production process.
Each business unit of cut and bend, palisade line and roof sheeting have their own matrixes of floor space utilisation, conversion cost, labour costs, and overheads. The cut and bend area had the largest and most expensive machinery in the whole company, however sales of products from this area yielded the least profitability as prices throughout the industry were fixed on weight. Based on this and collaborated with the MD Johan Roos the cut and bent area was the largest loss-making department and it was earmarked as the initial improvement area.
There were a lot on production inefficiencies as the general workforce needed more knowledge on improving productivity.
• The flow of materials from the cropper to the manual benders was not optimal as a lot of time was spent waiting for the crane to transport the materials at the same time reducing productivity as machine idle time was as high as 15%.
• Transportation waste of long lengths was identified where goods were delivered to one place as incoming material, however these are moved again with no processing to an area where they would be displaced from, a total distance of 45m. This created idle time for many of the products being produced as crane waiting time was sometimes longer that 10mins.
Production coming from the RSM machine was being placed on the floor requiring the operator to then spend additional time to package the product from the floor. The operator motion took up an additional 13mins.
3. Productivity SA Approach
Nurturing visit and financial analysis were conducted. Furthermore, the Future Forum was established and capacitated, an in-depth analysis outlining problematic areas was conducted and relevant interventions were identified. The champions to implement the turnaround strategies were identified and capacitated and were very instrumental to the implementation of the turnaround strategy.
It was then decided that the production planning system be modified to allow for confirmed orders from branches to be placed directly on the production schedule.
Secondly, orders from the branches of Bothaville and Vereeniging would be prioritised to consider delays of receiving products.
All nine members of the cut and bend area including the supervisor and management embarked on 7 wastes training to assist them in being able to identify the different types of wastes. This then allowed them to understand the effect of these wastes on productivity. Ideas of how productivity could be improved were initiated and refined. This was of great importance as we do believe that ideas to improve the work area should come from the people most affected by the current state. Based on our many years of experience it is more likely for an idea to be rejected by the shop floor employees if they feel that it was imposed on them, then them being an active part of the process.
Subsequently, Productivity SA engaged the entity to determine the impact of the interventions….
4. Results and Impact
Workplace collaboration and Impact
The Future Forum and Champions Training enabled a dialogue between management and labour and assisted in deliberating issues affecting business performance. Workers ability to cocreate solutions amidst the Covid-19 pandemic.
The Turnaround Solutions programme implemented in 2016 (renamed the Business Turnaround and Recovery Programme in June 2020) was hailed successful, with material improvements in waste management, business operations and worker morale. Key to the success of the intervention was the cocreation of solutions between the workers of Steelman and its Management Team.
Productivity South Africa engaged with Steelman as a follow up to unpack the impact of the TAS and identify whether there was room for further intervention. The initial impact of TAS included significant reduction in absenteeism, increase in worker morale and collective accountability. Mr Johan, in the follow up discussion, described his workers as a “thinking workforce” post the TAS programme, where workers were now giving input and adding value to problem solving and cocreating solutions. These interventions are worth celebrating as this investigation shows that even five years post the deployment of Turnaround Solutions, workers remained equipped and capacitated to continuously improve aspects related to machine reliability, management of redundant material and continuous improvements in factory layout.
At the onset of the Covid-19 pandemic, and the initial shutdown in April 2020, Steelman applied for relief through Government’s Covid-19 Temporary Employee/Employer Relief Scheme. This application was successful, and employees enjoyed the subsides wage benefit for a period of x months. All protocols were adhered to, including social distancing, sanitising and compulsory mask wearing. Steelman has thankfully not had a single case of Covid-19 amongst its employees.
The general expression conveyed was that the Turnaround Solutions programme had equipped the company and its employees to be flexible and adaptable to change, increasing staff morale and the ability to engage in and cocreate solutions. Mr Johan unequivocally attested the success of the staff’s ability to work together during the uncertain times of the pandemic was a direct consequence of the capacity building and training knowledge imparted during the turnaround solutions programme.
Going forward, Productivity South Africa has identified opportunity for further intervention, especially with a focus on collaborative problem solving and re-igniting the Future Forum as a platform for staff to increase and promote a collaborative relationship between management and the workers in the workplace. These forums serve as a basis for the identification of challenges and outlining the turnaround strategies and required interventions.