World-Class, Lean Performance in the SMEs - Small and Medium Enterprises - by Carlo Scodanibbio, Industrial & Business Consultant - Lean Management Consultant

Carlo Scodanibbio
Industrial & Business Consultant
Lean Management Consultant


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World-Class, Lean Performance Tutorials and Case Studies - Tutorial 06
by Carlo Scodanibbio

The case
A large Chemical Complex supplies various products (mostly fertilisers) in 200 l. steel drums which are regularly returned by Clients because of their considerable cost.
The returned drums, after washing, are re-used - this, for several times. However sooner or later they become totally unusable: both due to corrosion (internal, caused by the product - and external, caused by exposure to all weather conditions), and to various damages (dents and scratches caused by handling and transport).

Already from long time many 200 l. drums had become damaged beyond possible re-use, so it was decided to scrap and sell them, after flattening, as scrap metal. Flattening had been considered because of the easier handling; of the much lower cost of transport to the scrap metal dealer; and also because of the higher price per kg. paid by the scrap metal dealer for flattened drums.

A small yard, next to the Fertiliser Plant, had therefore been arranged for the purpose.
A workmen, from time to time, moved all scrap drums to the yard, until the yard was full - then he flattened them one by one with a 150 Ton hydraulic press placed under a shed - and then he loaded a truck with the flattened drums, for onward transport to the scrap dealer.

The present state
Things have changed. Production of fertilisers has increased more than 400% compared to three years ago. The majority of drums, besides, are getting old.
The net result is that, presently, there are some 500 drums a week to be scrapped.

The scrapping operation is now organised as illustrated in the following sketches (plan and side views):

drums to be scrapped - present status - plan view

drums to be scrapped - present status - side view

Drivers collect returned drums from clients and offload them onto a conveyor
An inspector checks them for damages, one by one.
He positions good, reusable drums onto another conveyor for transportation to the washing plant.
Whereas he positions unusable drums on a concrete slab, for onward processing (flattening).

Two workmen are now assigned full-time to the flattening operation: they move manually (roll downhill) drums to the yard - flatten them with the press - and load the truck twice a week for delivery to the scrap dealer.

The yard is an eyesore, always full of drums waiting to be flattened, piled up very chaotically (which constitutes a hazard).
The Company's MD is furious because the chaos in that yard can be seen from the public road.
Many minor injuries occur rather often.
Furthermore, there are some doubts about the economics of the operation (in spite of the "black", un-taxable money collected from the scrap dealer).

The problem
It can be described as follows:
"The yard in which scrap drums are flattened is always in a messy condition: this is unacceptable. Many minor injuries occur. The cost of flattening and scrapping is suspiciously high".

Likely causes:
Lack of space - no room for dumping drums - lack of organisation and supervision - non-optimal flattening method - excessive handling.

Management wants to find a rational and possibly "lean" solution to the problem.
Targets: tidy site - increased safety - considerable costs reduction (at least 50%)

Constraints and Limitations:
- no new equipment to be bought
- only simple alterations to be done "in-house" are acceptable
- overall expenditure (of non-capital nature) = max. 1 year overall cost saving
- no more than two weeks to implement the proposed improvement

Additional information
- a fully equipped Civil Works Dept. is available in-house
- boilermaker and welding shops available in-house
- wood-working shop available in-house
- heavy handling equipment (cranes, fork-lifts, etc.) available in-house
- the complex's Transport Dept. is equipped with a large variety of transport vehicles: from simple pick-ups, to trucks, lorries, mechanical horses and trailers, etc.

What would you propose to improve and make "leaner" the present state?
Think for a while, before reading the actual solution, that you will find here

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