Client: The client for this project was a steel company shareholder. This shareholder was concerned about the profitability of the steel business, which was showing a poor return on investment. The shareholder had little technical or technological understanding in steelmaking - and so turned to MCI for an independent appraisal of the performance improvement options.
Issue: MCI were asked to identify performance issues, as compared to typical industry norms. We were specifically asked to identify the improvement opportunities that represented 'low-hanging fruit'.
Objective: The client's primary objective was to reduce energy costs, as these had been identified as a high cost item. A related issue was that the shareholder was unwilling to spend additional funds on plant modernisation. The main short-term goal for the steel business unit was to attain break-even; with a 5% RoE being the financial target in approx 12 months.
Focus: MCI established typical KPI data for steelmaking, casting and rolling operations and compared the performance of the client's steelmaking operation against these measures. This process identified the anomalous steelmaking steps. Through further investigation, observation and discussion, remedial measures [including new operating practices as well as commercial changes] were then put into place to correct the sub-optimal performance, with involvement of middle management.
Deliverables: The main consulting deliverable comprised a short written report comparing the KPI data of the steelmaking, casting and rolling operations with industry norms. Help in arranging visits to other plant around the world was also instrumental in convincing middle management about the feasibility and financial benefits of adopting new work practices.
Contract: MCI typically undertake a project such as this based on a written proposal which is sent to the client prior to project commencement.
The proposal describes the client's objectives, the project scope, the project team [with CVs], the professional fees, the level of expenses (for hotel costs, flights, etc where appropriate), the project timing, the form of deliverable(s) and payment terms. The proposal is an important document therefore which provides much clarity concerning what the consultants plan to do, as well as how the work will be done, when and for what cost.
Often, the proposal also lists our expectations of the client. Typically these can include assistance with matters such as hotel reservations but often also involve guidance concerning tax or interest rate assumptions, manpower costs etc.
Experience: We have undertaken such projects in special steel flat product plants, in several carbon steel long product plants [melting and rolling], and also with specific emphasis on blast furnace performance [use of PCI ].
Other: It is usual as part of such an evaluation to quantify (even if only approximately) the benefits of various performance improvement measures. Discussions about implementation of the various measures with middle management are also important, especially to secure agreement and buy-in. If required, MCI can also define responsibilities and milestones for an agreed set of next steps, and visit after some months to check on progress and / or amend improvement targets.