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Process Management Approach Reduces Scrap, Saves AlcoaMillions

As Alcoa Power and Propulsion sought to minimize manufacturingprocess waste, inefficiency, and related expenses, two key findingscaught the attention of the business unit’s executive leadershipteam. Customer satisfaction surveys revealed 60 percent ofrespondents held an unfavorable or neutral opinion of the unit,while at the same time, internal quality measures revealed thebusiness unit recorded the highest levels of scrap in theorganization for the year. The findings represented a significantopportunity, but improvement would require rapid deployment in amethodical, deliberate, and sustainable manner.

About Alcoa Power and Propulsion

Alcoa Power and Propulsion (APP), a unit of New York City-basedAlcoa Inc., is divided into three segments: structural castings andspecial products, industrial gas turbine airfoils, and aerospaceairfoils. This business unit serves the defense, energy, aerospace,and industrial markets, where its products are used in military andcommercial aircraft engines as well as power-generation turbines.Additional products and services include molds, hot isostaticpressings, specialty coatings and tools, as well as machinery. APPoperates 25 production facilities around the world, employing morethan 9,000 people.

Working to Improve Processes

The APP leadership team discovered scrap and rework issues wereresulting in high customer claims and delivery issues, thereforethey sought solutions for significant reductions to scrap levels toimprove delivery, rework, and customer satisfaction. In the past,substantial scrap level decreases were thought to be unattainablebecause casting is a particularly complex process (see the sidebar,The Investment Casting Process, for more details) with many sourcesof variation. In late 2011, APP’s quality focus shifted towardsustainable and continuous process improvement,

particularly at nine of the unit’s super alloy foundries (fivein the United States, three in Western

Europe, and one in Japan). While these foundries were thestarting point for the initiative because

they recorded the highest levels of scrap, the ultimate goal forAPP was to create a sustainable solution for deployment at theplant level by mid-2012. The right solution would need to captureand communicate tribal knowledge as well as monitor capableprocesses. Creating a new approach could directly impact financialperformance by reducing scrap, rework, and returns.

Identifying Stakeholders and Building theTeam

One of the first steps in forming a project improvement team wasto identify stakeholder groups from which team members would beselected. The following stakeholders were included:

• Internal groups: engineering process owners, business unit andsite managers, Operations personnel, and members of the qualitystaff.

• External groups: Alcoa and the business unit’s customers.

Once these groups were determined and the required knowledge andskills for each group identified, skill and knowledge gaps wereidentified. For example, the engineering process owners neededtraining on the DMAIC method, while the quality group requiredadditional training on the audit process. Corporate quality staffprovided introductory training on the organization’s processmanagement methodology, and APP created a Six Sigma training classfor its engineers.

It made sense to build upon already-existing team structures andworking relationships at APP where there are business unit processowners and corresponding plant process owners. The improvementproject’s deployment team included members from these process ownergroups. The project goal was to develop a sustainable methodologyto reduce the APP scrap rate by 10 percent year over year by June2012, as depicted in Figure 1. The team was to developmanufacturing process models for key areas, validate themethodology at pilot locations, and then prepare a fullimplementation plan.

Analyzing the Opportunity

When analyzing the improvement opportunity at hand, the teamquickly realized the part-focused scrap reduction methodology,which had been used for years, reached the point of diminishingreturns. To achieve the additional scrap reductions required tomeet the stated goal, process stability became the new focus. Sincethe investment casting process includes several complex steps, theteam created process maps to identify, understand, and analyze eachstep for its savings potential. Pareto charts helped illustrate thecontribution of each step to the overall scrap rate. Brainstorming,scrap rates, and defect data were used to identify potentialimprovement opportunities within the process. In addition, the teamutilized scrap rates at each APP location to search for potentialsavings.

Scrap by point-of-cause data was analyzed within each processarea to determine which processes held the greatest savingspotential. In addition to pinpointing specific processes forimprovement, quality tools such as Pareto analysis were also usefulin determining which plants to target for early implementation.

At the outset, the project scope was quite broad—global businessunit scrap reduction—a hefty challenge. After reviewing the dataand securing buy-in from leadership, the improvement team narrowedthe scope to focus on the greatest opportunities—the wax, shell,and cast manufacturing operations of nine selected locations.Although the scope was now more narrowly focused, the challenge wasstill immense, requiring the engagement of the entire operation. Atthis point, team membership grew to include additional processowners, engineers, quality staff, operations, and leadershippersonnel from plants involved in the project.

Developing Solutions

Because the nine APP locations for this improvement initiativewere located around the world, it was imperative to create acohesive language that could tie all the foundry processestogether. This common language was necessary for not only deployingthe methods and tools, but also identifying the key operations andsub-processes at various plants for comparative and benchmarkingpurposes. Process-mapping exercises, shop-floor interviews,brainstorming sessions, and benchmarking studies generated data tohelp develop potential solutions. The data was first used forcomparing Alcoa plants with similar processes and improvementrequirements. The company saved $20 million at seven Alcoa plantsthat had implemented process management initiatives. These resultsinspired the improvement team to pursue a similar approach withinAPP.

The left portion of Figure 2 depicts a typical plant-basedapproach to process improvement where efforts are confined. Incontrast, the right side of Figure 2 shows how an integratedapproach involving plants throughout the BU enables the sharing ofapproaches with common templates and coordinated plant projects.The new approach would leverage one plant’s independent ideas bysharing its solutions across the entire business unit to spurglobal improvement. This business-unit approach also enabledprocess owners to transfer technical details through a commonlanguage that was lacking in the past, and to build a collaborativeculture.

The team developed a three-stage plan to implement its processmanagement approach. The first stage involved pilot plants; thesecond fast-follower plants; before finally, implementation to abroad business-unit approach. This three-stage rollout provideddata that team members used to validate the efficiency and speed ofthe shared and integrated approaches.

The key to incorporating solutions throughout the business unitwas a structured, common process model, which incorporates thetools recognized as the best-suited means to get processes incontrol, and to identify key operations and sub-processes atmultiple plant locations. Utilizing this process managementapproach, as illustrated in Figure 3, would increase sustainabilitythrough management review, quality audits, rigorous control plans,and a focus on the correct variables.

The process management solution was validated through the pilotand fast-follower stages. For example, one of the pilot-stageplants deployed a new casting/mold wrap process and demonstrated a30 percent reduction in related scrap in just three months. Then afast-follower plant used the same new process as the pilot plantand achieved similar scrap reduction results, but this time withinjust 30 days. This demonstrated that lessons learned at one plantadvance the process management efforts at other locations whensimilar process improvements are implemented.

Overcoming Resistance

During the team’s initial analysis members discovered a fewareas of resistance, including:

• Concerns regarding the availability of resources, particularlythe ability for employees to handle the new initiative while stillmeeting production goals.

• Stakeholders at various levels lacked a sense of urgency andshowed some hesitancy about making changes.

• Because the process management approach was a nontraditionalmethod for reducing scrap, a change in culture would be essentialto inspire employees to embrace the new process-focused method.

The team understood providing information and education wasvital to achieve positive change, so the process management modelincludes routine communication such as holding team-buildingmeetings and sharing monthly process audit databases. Resistancewas also mitigated by engaging the entire workforce in the newprocess management approach. Examples included employees who helpedby defining improvement opportunities, planning and prioritizationactivities, participating in kaizen events, as well as establishingand executing control plans.

Exceeding Goals and Realizing Additional Benefits

Once the pilot and fast-follower stages were completed, APPimplemented the process management model throughout the businessunit. While the initial project goal was to reduce scrap by 10percent year over year, those expectations were exceeded by morethan $20 million in improvements from the three key areas: wax,shell, and cast. Tyrus Hansen, APP team lead, said reductions inscrap and other costs of poor quality continue year over year, ashighlighted in APP’s

Quality Index, shown in Figure 4.

Specific examples of dramatic cost savings include:

• A 77 percent improvement in wax expenses in one department atone plant, which resulted in a $38,000 annual savings.

• A sub-process involving shell weight control to reducematerial costs at one production facility resulted in a 21 percentimprovement and an annual savings of $400,000.

• A sub-process of the cast/wrap step reduced scrap and reworkexpenses by more than 30 percent, approximately $750,000, at onelocation.

Not only did the new approach lower scrap rates, but it alsoreduced rework activities and customer returns, leading to moreon-time delivery and higher levels of customer satisfaction. At theoutset of this project, all nine plants involved in the pilot wererated in the poor performance category, but since that time, all ofthe manufacturing locations have fully integrated the processmanagement approach. An unexpected benefit of the work was animproved workforce development. Many team members completedtraining and then gained valuable experience with basicproblem-solving tools—new skills that enabled employees to operatein a more proactive, process-focused manner. Members of theimprovement team learned valuable lessons throughout the project,but Hansen said the biggest lesson centered on discipline as teammembers realized, “If we maintain the discipline, quality willimprove,” he said. “The proactive work minimizes the time spentmanaging problems and fighting fires.”

Sustaining the Momentum

The APP process management models for the wax, shell, and castoperations were revised to reflect the new approach. These modelswere deployed through the process owner group at each APP location.Results are measured and reported at the process and sub-processlevels with metrics directly linked to each location’s businesscase. Reports and feedback soon became more proactive andprocess-focused rather than reactive and problem-focused as was thecase before this improvement initiative.

To ensure the new process management approach remainssustainable and continues to perform to expectations, APPimplemented a number of controls, including:

• The business case must drive all activities associated withthis approach and the activities are measured for impact.

• A reporting structure was created to communicate specificdetails on a regular basis.

• All efforts are recorded and included in the business unitmanuals and audit tools.

As APP continued to implement the process management approach,the business unit realized further benefits, such as:

• By emphasizing control of the entire process, additionaloperators and supervisors are engaged in more proactive roles.

• The workforce is more satisfied and engaged due to greaterstability, education, and structure.

• With fewer daily “firefighting” activities, time to focus onkey process metrics for employees increases, triggering reactionsbefore issues become scrap problems.

Sharing the Team’s Story

The team has devoted a great deal of time in sharing its successstory with others. Within Alcoa, the model used in this project nowserves as the corporate standard and is being applied at variouslocations and business units around the globe with similar results.The team’s effort was also highlighted at the 2014 Alcoa CorporateProcess Management Network Conference and was a candidate in the2013 Alcoa Corporate Impact Award Competition.

At the prompting of Alcoa’s corporate quality department, theteam entered its project into the ASQ 2015 International TeamExcellence Award (ITEA) competition. The project was named afinalist, and this recognition enabled members of the team to shareAPP’s proven process management approach during the WorldConference on Quality and Improvement.

Now please write in your own words as below format:

1. Write a Problem

2. Solution ( given, needed, assumption, analysis,rewrite)

3. Summary and conclusion.

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