operations

CEMEX’s Strategic Mix Business Turnaround:

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Example how a commodity seller can become a solution provider growing market share.

CEMEX is one of the rare firms executing lean business strategy beyond the merger & acquisition stage.

Article here: https://www.strategy-business.com/article/00325

These are my unedited notes, however I HIGHLY recommended reading the article. Twice.

  • Also leveraged mergers & acquisitions including entering new businesses in ready-mix concrete and aggregates

Strategy

long track record in lean operations (“ruthless operating efficiency”) evolved to become one of the most successful companies from an emerging market, and developed a high level of customer responsiveness. It delivers cement within 20 minutes of receiving an order in many locales. Its international business strategy enabled CEMEX to grow rapidly during the 1990s and early 2000s, when it became one of the biggest cement companies in the world.

  • while maintaining consistently high profitability levels. (In 2014, the company reported US$2.7 billion EBITDA on revenues of $15.7 billion.)

 

developed a capability for environmental sustainability:

  • decreasing the company’s own fuel use

  • removing or mitigating pollutants in materials

  • and looking for ways its products and services could lead to sustainable practices for all the industries CEMEX serves.

 

get good at postmerger integration, and extract more value out of those assets than the former owners.

 

“Enforcing is really the right word. A good example is the emphasis we put on closing the books on the 1st or 2nd day of every month. A lot of managers initially wondered why it was so important to do this. They thought nothing would be lost if they did their closings on the seventh or eighth day. But we believed that having that information readily available would increase the likelihood that managers would make the right decisions. And the practice had a very high-level overseer: Mr. Zambrano himself, into whose email inbox all of these reports flowed. This was not subject to negotiation.”

accounting management

 

[any] product has a disadvantage in that a customer can find a substitute for it. A solution, by contrast, cannot be that easily replaced. So we started to develop offerings that more closely resembled solutions.

 

“For CEMEX to play that kind of role, the company needed new capabilities. We needed a new kind of executive, connected with the environment, who understood the real needs of any given locality. We changed old habits; for instance, in the past our people were not prepared to interact with our communities or with the media. We had become an efficient company with an inward-looking culture. But our operational guys realized that they needed to be able to talk to the media, and to local communities and their leaders. The operational guys had to recognize that it wasn’t enough to lower costs; they also had to connect with local people and address their concerns — for example, about the dust generated by trucks picking up materials.”

“The sales guys had to learn not to wait for people to come in with orders; if markets were soft, they had to go out and propose solutions to problems that had not yet been brought to public attention. “We don’t just mend holes in your street — we can prevent those holes from recurring for the next 30 years.” selling concrete

Partly it’s a matter of how we talk about these things with customers. We’re not just selling cement or ready-mix; we’re helping you build a street. We’re helping you build a home. We aren’t selling a product to you; we’re working with you on a solution.”

each business must recapture transport dollars. We won’t dictate how you do it, but we require that you recapture all your freight somehow.

Left to their own devices, big companies will continue to act big. They’ll put in more rules, procedures, and standardization. When you’re running a hyperlocal business like ready-mix concrete and aggregates, you can’t allow that to happen. You have to fight all the time to be small

about 40% of the direct cost of cement is wrapped up in [energy use], you need to watch the expense of fuel and electricity carefully.

ways to start 5S and implement Lean in a job shop environment

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“I recall you inquired about ways to start 5S and implement Lean in a job shop environment.”

– email excerpt I recently sent that may help some others on this who are also looking for more of the ‘how to’

For 5S:

  • You can find a lot online and many books may provide a good guide; where in your facility you start may provide additional leverage. 

  • I prefer to let problems determine the counter measures, so perhaps you have a problem this can potentially address. Initially focusing on this 1 spot that would make the biggest difference to help people experience benefit. You’re probably familiar with the 5 steps – Sustain seems to be the one most people do not ensure, so Sustain may be the one to place more emphasis on regularly after.

  • Communicate with everyone what’s being done & why. There’s a typical 15% productivity improvement from a #5S rapid improvement event the operators in that area will experience. We had an operator who was quite pleased because they didn’t need to search the shop for their tools.

  • Once you’ve done this, look for the next area. Once you have a few done, you may want to have a similar system to your Job Instruction where different people support each other on progressing areas and it’s visible to all. I like my employees to have friendly reviews of each others areas. We also have a map up of each area in the plant to clarify zones, however you might not need this.

  • John in the tool room is actually a great example - even if not through the 5S steps – of how much easier work can be through organization;

  • I can provide examples from several different plants I’ve done if it helps

  • also read Getting at the Larger Purpose of 5S by Karl Ohaus here: http://www.lean-transform.com/articles-by-our-partners/getting-at-the-larger-purpose-of-5s

Implementing Lean in a Job Shop

  • Every job regardless of quantity has repeatable processes, they just might be more broad. For instance, you still receive an order, order material, receive it, setup a machine, do the work, and ship it. Even if it’s a single piece order.

  • Always being set up, and preparation for each new job for quick turn around may enable time based competition; you’ve already started quick changeover which is a big part of this, and 5S will help reduce search times.

  • You can look for commonalities in parts or setups; you may want to look into how Procedure Quantity Analysis helps you route product. I would do both

  • Pay attention to whether the most common problems are due to materials; supplier relationships can play a big part if you are experiencing external delays regularly; this may show up through value stream mapping or some other method of tracking defects in your process.

  • For us it is missing information: 49% of all problems are due to missing information, initially in the sales process and if it isn’t available up front it triggers 2-3 problems due to the same missing information (plus associated rework increasing lead times to customers)

  • I have yet to see a job shop where it cannot be applied

I hope this helps; curious how things are going; and feel free to reach out anytime

Best,

Ryan Cartier

7 Wastes for Crushing in Quarry & Mine Operations

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Not everyone easily spots the waste in their disorganization, including mining & quarrying operations, yet it still adds cost & time, impacting your tonnage, output, and profits.

The ability to identify waste enables people to a problem to solve, a starting point to develop them.

Waste: Any activity that consumes resources without creating value for the customer, or Any activity for which the customer is not willing to pay.

All wastes fall into 7 categories (below).

Use this as a checklist draft to help you identify where the wastes are in your quarry or mine and remove them to make your work easier. *draft – looking for more examples of these:

1.     OVERPRODUCTION

What is it? Producing what is unnecessary, when it is unnecessary, and in an unnecessary amount; - more, earlier, or faster than is required by the next process or customer.

Quarry / Mine Examples:

  • Producing products/aggregates which are not required customers

  • Producing products during a time of the year when they will not be used

  • Producing more product than there is demand for by customers

  • Providing copies of reports to people who have not asked for them & will not actually read them

  • CC’s on emails

  • Mining capacity surpassing the plant’s ability to process, or making more aggregate than is required by the next process - before it is required/can be processed, or faster than needed (that waits before the next step can process or consume it)

Causes

Misalignment to customer demand. Inaccurate forecasting. Large volume shots. Batching. Equipment breakdowns. Weather (preventing processing). ‘Making the month’ instead of making to demand.

2.     TIME ON HAND (WAITING)

What is it? Waste of which the causes originate in waiting from materials, operations, conveyance, inspection, as well as idle time attendant to monitoring and operation procedures.

Quarry / Mine Examples:

  • Delays when parts haven’t arrived; stock outs; waiting for equipment, parts, tools or supplies

  • Waiting for a meeting which is starting late

  • Waiting for upstream operations such as drilling and blasting

  • Waiting for break downs to be repaired before doing work

  • Trucks waiting at a dump site, queuing or standing empty;

  • Operators may sit idle waiting for material or do nothing while their machines are processing

  • Waiting for information, decisions, clarification of instructions, replies from engineering, management, head office

  • Excavators waiting for haul trucks to return

  • Waiting for people or contractors to show up

  • Anything that stops, slows or hinders production.

Causes

Unclear direction / instruction / manuals. Unlevel workloads or schedules. Supply chain delays. Lack of planning. Lack of preventative maintenance; unplanned maintenance or quality events. Not having the right tools or equipment. Cone liners & wear parts not changed once worn, trying to ‘get a bit more’ out them causing catastrophic failure & downtime.

 

3.     TRANSPORTATION / CONVEYANCE

What is it? Conveyance itself is waste because it creates no value. Created by conveying, transferring, picking up/setting down, piling up, and otherwise moving unnecessary items. Also created by problems concerning conveyance distances, conveyance flow, and conveyance utilization rate. Obviously parts & product must be transported, but any movement beyond absolute minimum is waste. - Any inefficient or avoidable transit/conveyance of material, information, equipment or people.

Quarry / Mine Examples:

  • Moving processed product from one location to another before it can be further processed

  • Collecting items from various locations for an assembly/repair (as opposed to having them all kitted one place)

  • Long travel distance caused by process-oriented layouts

  • Moving supplies into and out of a storage area

  • Moving equipment for processing in/out of locations

  • Moving individual files from one location to another

  • Moving parts and products unnecessarily

  • Driving

  • Hauling material further than necessary

  • Transporting rock, work-in-process and finished product around the site

  • Back haul trip of empty trucks

Causes

Poor layout. Using haul trucks instead of conveyors (in most cases). Availability of customer-specific material. Lack of flow planning. Fuel transportation. Crushing too far from blast site. Sub-optimal pile placement.

4.     WASTE OF PROCESSING ITSELF (OVER PROCESSING)

What is it? Unnecessary processes and operations traditionally accepted as necessary; & incorrect processing. Actions that add no customer value.

Quarry / Mine Examples:

  • Extra of anything - multiple screenings of same aggregate, excessive conveyance, etc.

  • Performing incoming inspections when supplier processes already guarantee defect free products

  • Continuing to train employees in tasks/skills which are no longer needed

  • Overwatering roads

  • Performing steps that have become unnecessary because of design or process changes

  • Making ‘tidy’ piles

  • Processing steps that are not technically justified

  • Hard copies of reports available online

  • Redundant capture of information (ex. writing by hand, when directly inputting to a word processor follows)

  • Multiple recordings & logging of same data

  • Unnecessary data collection

  • Excessive greasing (can also blow seals or generate friction/heat)

  • Achieving a tighter specs than the customer requests, can make use of or benefit from; higher grade than customer is willing to pay

  • Drilling more holes than necessary

Causes

Inefficient equipment/components. Outdated technology. Not maintaining/updating standard operations, training, etc. Narrow focus on specific parts of the operation instead of looking at the entire system. Handing off notes for input instead of direct input. Unclear requirements or specifications.

 

5.     STOCK ON HAND / INVENTORY

What is it? Inventory waste is when anything – materials, parts, assembly part – is retained for any length of time. This includes not only warehouse stock, but also items on site that are retained at or between processes. A buildup of material or information that is not being used; the direct result of overproduction; keeping unnecessary raw materials, parts, WIP & finished goods. Having more than the minimum stock required for a precisely controlled pull system. 

Quarry / Mine Examples:

  • Finished products for which there are no orders

  • Making more than is required by the next process

  • Making it earlier or faster than needed; underproduction or overproduction

  • Items that can be ordered on a JIT basis

  • Excessive spare parts; parts sitting in storage facilities

  • Paperwork/email to be processed

  • Unutilized equipment

  • Excessive ‘safety’ stocks

  • Stock queues before machines

  • Any material or supply in excess

Causes

Large volume shots. Batching. Supplier ‘minimum order quantities’ or buying extra ‘because it’s a good deal’. Equipment breakdowns. Weather (preventing processing). Inaccurate forecasting. Ordering more than needed ‘in case,’ or items that ‘might’ be needed. Quality or yield problems. Inconsistent rock supply.

6.     MOVEMENT

What is it? Unnecessary movement, movement that does not add value, movement that is too slow or too fast. Operators making movements that are creating no value. We can also identify waste in the motion of machines & equipment.

Quarry / Mine Examples:

  • Excessive walking - between work stations, to look at online information, to get a tool or materials

  • Moving to catch up with production

  • Driving to job locations or to get supplies/raw materials

  • Awkward loading patterns

  • Searching for tools, parts, papers which should be clearly labeled with a location

  • Changing locations for meetings

  • Operators walking long ways for meal breaks or hand off

  • Lifting

  • Reaching for things

  • Haul trucks navigating suboptimal roads

Causes

Poorly located tools; disorganized tool boxes. Feed conditions causing uneven screen load; unused screen area. Ordering more inventory than needed, maintaining & marshalling it. Lack of ergonomic design & placement. Loss of material (poor fitting skirts, holes, flashing; transfer points). Unclear locations for parts; disorganization. Failure to review mine/quarry layout & adapt as material stripping proceeds. Trickle feeding/failing to choke cone. Road conditions, surfaces & obstacles.

7.     MAKING DEFECTIVE PRODUCTS

What is it? Waste related to costs for inspection of defects in materials and processes, customer complaints, scrap and rework/repairs. Anything that does not meet customer specifications or requirements of form, fit, function, or timing/delivery. Results in inspection to catch quality problems or fixing an error already made (inspection, rework, and scrap). 

Quarry / Mine Examples:

  • Product does not meet customer specifications:

  • Oversize/fines

  • Hardness/durability

  • Cubicity

  • Late delivery

  • Recirculation - material through the crusher more than once

  • Costs of processing complaints

  • Making large lots of bad product instead of catching a problem after one or two units

  • Fixing errors made in documents

  • Dealing with complaints about service and/or repeating the service

  • Making incorrect documents

  • Repairing trucks/equipment after oil overfills; replacing seals after over greasing

  • Using defective raw material or parts

  • Repeating an equipment repair done incorrectly or with wrong/failed part

Causes

Variance in: raw material, processing methods, equipment maintenance or setup, employee training/experience, customer communication. Stockpile segregation. Wrong cone liner configuration or closed side settings; wrong screen cloth. Using work arounds instead of addressing root cause. Poor drill patterns. Poor quality or defective parts.

Which do you have in your operation?

What’s missing from these examples?

 

*adapted from previous article to include all 7 wastes & more examples