Improving Profitability through Nature Inspired Design Thinking

At times business problems are really 'wicked'. So wicked that it can determine that extra vital edge for a company to be more competitive and more profitable. I shall tell this interesting story about the dramatic application of Design Thinking to solve such 'wicked' business problems that affected the bottom line of the company. But there is a small twist in this tale. The twist is that the designed solutions were inspired by Nature/Natural Principles.

The ContextThe Pain

The story is about a reputed Steel Plant in India that produces pig castings for the foundry market. It produces pig castings of around 9 to 10 Kgs weight. The foundries find such castings very convenient. Why? Because if the weight of the total casting is to be around 100 Kgs then all they have to do is to pick up 10 such pigs and melt them to produce the product. However the quality of their final products is highly dependent on the quality of the pigs

In this story both the supplier and the customers were facing problems, which are of course interdependent. However, understanding the process involved to produce the pig castings would help us to form a better idea of the problems faced by the company. Iron ore is first melted into liquid metal in a mini blast furnace. A typical charge takes around 45 minutes. The liquid metal is then poured into a ladle. The ladle is then tilted to pour the liquid metal into a continuous casting machine, which keeps rotating endlessly like a conveyor. The liquid metal from the ladle is poured into a number of molds having the right volume to produce the right weight of the individual pig castings. The molds travel a substantial distance. By the time they come to the end of the line the pig castings are sufficiently cooled and solidified and as the continuous casting machine turns at the end the 'bricks' or the pigs fall off onto waiting trucks and dumpers. The bricks are then transported to the storage site in the plant from where these are sorted for quality and shipped to customers by trucks. 

Problem 1: Loss of metal

The company recorded that the yield of the process was only 92%. This meant that 8% of the liquid metal that came off the mini blast furnace was wasted somewhere in the process (specially through spillages/overflows taking place in the continuous casting machine). The international benchmark of  97% yield was held by a steel company in Brazil. And it was estimated that this loss of 8% meant a minimum loss of 6% in profits. So it was natural for the company to think of boosting their yield to at least 97% if not better. None believed that it can be any better than 97% since none in the world could achieve anything better than 97% for the last 20 years. However, the company struggled to achieve the magic 97% by various ways and means for four years in a row without any success. The yield remained rigidly pegged at 92%. The loss continued in face of rising input costs. The company was desperate to break the 92% barrier to keep their heads above water.

Problem 2: Wide variation in weight

Ideally the weight of the 'pig bricks' should be within 9 to 11Kgs. This would enable the foundry men to achieve the required weight of the final casting just by picking the required number of bricks (since these would be in multiples of 10 kg, approximately). But the problem was that the weight varied between 7 to 14 Kgs. It meant that the customer lost money and the reputed company lost both its brand image and money. If things continue in this manner the company can no longer demand the premium price on their products. The product quality would be just the same as any other start up.

Problem 3: Quality problems

Added to this was the quality problems. The quality of the bricks affected the final output quality of the castings the foundries produced. There were six different types of quality problems (one of these was fondly named the 'elephant foot') and the bad bricks had to be sorted out and rejected at the company's storage yard before the good quality bricks were shipped out as per orders. Such bad quality bricks were called 'poor pigs' and the % of such poor pigs ran as high as 35% of the total pigs that were produced. Such high rejection of the final product  automatically lead to further erosion of company's profits.

Problem 4: Availability of the Continuous Pig Casting Machine

This continuous pig casting machine was the heart of the process. The availability of the machine determined the productivity of the process. On an average the availability of this machine stood at 95% which meant that the company lost 5% of its productive time.

So, what might be the impact of all these four problems on the productivity capacity of the company. We now have an elegant way to measure this. This measure is popularly known as Overall Plant Effectiveness (OPE), which provides a holistic way of gauging the capability and competence of a manufacturing unit.  In this case it could be calculated as: OPE = Yield (%) x Quality accepted (%) x Availability (%). When we substitute the figures in this formula we get the following: OPE = 0.92 x 0.65 x 0.95 = 0.5681 or in terms of % it is 56.81% (remember that the yield was 92%, Accepted quality was 65% and Availability was 95%).

The figure of 56.81% or 57% (rounded off) is significant. It gives us an idea of the overall health of the company. It tells us that the company is able to utilize only around 57% of it available productive capacity to make money. The balance of 43% is simply wasted. This is significant indeed. In other words 43% of the investment goes down the drain despite the investments.

The company was trying very hard to attack the four major problems independently but failed on all fronts.

This gave me a vital clue. To me it meant that in some way all the four problems were tied together and related to each other. So the solution has to be holistic in nature and not in parts as have been attempted so far. That meant a few solutions must work to eliminate or reduce the effect of all the problems.

When faced with such a situation we would start looking for ideas. And ideas come from keen observation of the ongoing phenomenon that goes on right under the nose of the Design Thinker. There is of course a small trick a Design Thinker usually does. Most observations are converted into some sort of visual image to convey the concept. These images then kick off imagination and the deep inquires into the problems and examined with critical discrimination. This is what I observed along with the visual images that came up and the associated natural or physical principles:

A)
Observation: Heavy sparks where the molten metal flowed into the continuously moving casting machine (Refer photo taken). 
Image: A man trying to jump into a moving bus or a train and slipping off (the two speeds don't match)
Phenomenon: Relative velocity

B)
Observation: Looking at the rather long continuous casting machine I observed liquid metal overflowing over the edges of the molds. 
Image: Flowing river
Phenomenon: with all rivers there is a particular ratio of the width of the river to the depth of the river. This is true for any river in the world. So a rapid river would have less depth and width. (refer the pictures I took of river Beas in northern India). When the river flows fast the width is narrow and when it slows down in the plains the width increases. I call this the W/d effect. This has to remain more or less same for any river flow, which is typically around 4. A river floods or silts to adjust this ratio. With more water both the W and the d increase to maintain the ratio resulting into floods. With less water the silting occurs to decrease the depth so that the ratio of W/d still remains constant. This was my grand inspiration from Nature. 

So, now I had two immediate solutions to be implemented, which were the following:

a) Adjust the speed of the machine to the flow of the metal from the ladle. This did not take much time. All I had to do was to train the operator to adjust the speed of the ladle pouring and the speed of the machine in such a manner so that there were no visible sparks at the point of pouring. The training worked.

b) Redesign the molds in such a way that the ratio of the Width/depth of the molds was exactly 4 to prevent overflow.

Did this work?

It not only worked but it worked like magic. What were the figures after implementation?

Yield: From the rigidly held 92% it went up to 99.97%. They get it in every shift for the last 6 years. Never missed it. Remember 97% was the mental barrier across the world. It now stands as the new International Benchmark across the world — yet to be broken by any similar steel company.

Quality: From 35% rejection level it went down to a mere 7% rejection level.

Availability: From 95% to 100%.

And the interesting thing is that all these figures went up simultaneously without any extra effort or tweaking. The holistic solution worked dramatically for the company. The new Overall Plant Effectiveness (OPE) was –> OPE = 0.9997 x 0.93 x 1 = 0.93 (approx), which translates into 93%. A steep jump from a mere 57% to 93% — a step jump of 36%.

So, with these figures the company not only set the new international benchmark (unchallenged till date) but also improved their yield to an unprecedented level of perfection (sustainable) and most importantly gained back the confidence of their customers and boosted their bottom line by over 10% that resulted in the net increase in profits by over 6% (audited).

Hence with Holistic Design Thinking:

a) we may solve multiple 'wicked' problems at the same time which could not be solved otherwise
b) the health of a company can be improved immediately with the minimum delay and minimum investment
c) people and companies need not lose heart when faced with problems however 'wicked' these might appear to be.
d) Nature provides the right inspiration at the right time provided our observation and visual imagery are both strong. 

This is what the company's Managing Director wrote in their house magazine:

"We broke new grounds in achieving high yield levels…. One thing which remains hidden is the manner in which the opportunities for improvement were addressed. Keen observation followed by out-of-the box thinking to arrive at creative solutions led to dramatic improvements … making positive changes irreversible and long lasting."
H.K. Jha, M.D. T.M in their in house journal — Metalogue, Vol 4, Number 2, Feb 2005

 

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