In 2010 the building industry was hit by a major recession, sales declined, in some case by up to 75%. A major player in the building materials industry decided that in order to survive, changes had to take place in his quarry operations. Rather than just cutting costs, they decided to introduce modern management techniques that would generate operational savings.
1. Review of the “As Is” Situation
The project started with a structured review of the quarry management system and processes. Rather than focusing on inefficiencies and bottlenecks alone, the team decided to look at the operations from the perspectives of:
- cost adding activities
- value enhancing activities
- waste, bottlenecks and their root causes
- performance requirements
The result was a selection of problems and a network of cause and effects for these.
One of the first things that the team noticed was that the performance targets and requirements were in no way based on the actual market requirement. In fact, it turned out that the operational performance of the quarry was always the same, regardless of the market needs. In other words the quarries did not reduce their output in line with the decrease in market demand. This meant that operational cost remained at the same level as before while the sales have dramatically decreased.
At the same time the internal process elements were unbalanced. Some elements were over efficient, delivering more than the bottleneck activities could take and thus generating wastage while other elements were under dimensioned for the task they were supposed to perform.
Quarry operations were also lacking daily weekly operational planning. There was no real understanding of what, how, where and when will be done. This meant frequent equipment over use by up to 30% and major avoidable fuel costs. As there was no plan there was also no active management in place to control operational performance.
2. Designing New Management Systems and Processes
The issues and root causes defined in the first stage of the project meant that a complete redesign of quarry management had to take place. The first step was to develop a new operational planning structure. The new operational plan was to be done daily and would define all aspects of quarry operations. It would be a rolling 7 day operational plan that included: prospecting, drill & blast, hauling, crushing, fraction production requirements. On top of this, the plan would include a headcount requirement together with operational performance targets based on actual standard times for the different process steps. This allowed for spotting any deviation from the plan and dealing with on the day rather than as a nasty surprise at the end of the month. Moreover, the new planning process was to be based on actual sales levels and forecasts rather than a static volume. The new process also included a new meeting structure.
As the new process development was taking place, the team was also developing tools to aid the managers with the new mode of working. These included volume and time calculators, performance standards, planning templates and operational KPIs to be tracked throughout the day.
The final part of the development dealt with preparing the organisation and specifically the supervisory and managerial levels for a new way of running quarry operations. What had to take place was a change in behaviours and attitudes that have been ingrained in the organisation for the past 15-20 years. This was done though a number of training sessions with practical examples, and one on one coaching delivered during the implementation phase. At the end, the results would only materialise if the supervisors and managers followed the new processes so getting them on board was a key success factor.
The implementation started with a communication meeting to all staff within every affected quarry. The new quarry management process was described and people were informed about the changes that would take place.
As a second step all managers and supervisors were trained in the new process and all the steps involved. In many case, one on one coaching was required to get over the hurdle, especially when it had to do with active management of staff, setting performance targets and following up on these. The challenge for the supervisors was that they were unaccustomed with setting expectations for operational staff and even more unaccustomed with controlling the performance throughout the day. Till now they always made sure that there was more than enough resources to fill the process bottlenecks. However, now the resources were balanced with the bottlenecks meaning that any non-performance would lead to decreased production. The upside was that if this was controlled, then the cost of operations would decrease significantly.
As all were becoming more familiar with the tools and process concepts first tools were set live. Equipment requirement calculators (based on performance targets and standard times) were the first tool introduced together with detailed daily planning. Once the organisation got used to these the next step was introduced, communicating the targets and following up on these. After this the new operational meetings were introduced together with daily operational KPIs.
The whole implementation phase was around 8 weeks per location and included all coaching and training. As the implementation was progressing a number of technical issues were surfacing that have till now been left alone. These were analysed and further dealt with delivering additional, unexpected, benefits. The implementation ended with a development of Management Manual defining all aspects of “world class” quarry management process. This would later be rolled out to quarries not participating in the pilot.
The program resulted in an average decrease in operating costs of around 17%, taking into account decreased sales levels. Had the sales decrease not been taken into account, the average saving would have been a lot higher.
Majority of the savings came from rightsizing the fleet thus a decrease in fuel consumption and reducing shift operating costs.
- Supervisors not willing to decrease HME equipment usage – Some supervisors argued that the extra equipment, even though it might be waiting at times, is necessary to deliver to the crusher. In some cases they even went as far as far as allowing it to run to prove the point that the machine was needed. The team dealt with this by asking the supervisor to sit and observe the whole processes together with the team.
- Supervisor telling the staff to be extra slow as they are being observed – One of the supervisors unaware that the team had a set of radios told everyone to slow down during observations “slow down or they will sack you all”. This was not the aim of the project and unfortunately disciplinary action had to take place.
- Fear of setting performance expectation and following up on this – Most of the supervisors were scared of asking their people to do something on time and then following up on that. To deal with this the team made sure that someone from the team was always present at assignment and then during the shift to coach and aid the supervisor.
- “We are too small for this and do not need it” – was a comment frequently heard in smaller quarries excavating from one spot only. Using the tools together with the local management showed however that there indeed was a point in going through the motions.
- We need to keep producing as “the market can turn against you” – this was a comment often used in the first day of implementation. Even more interesting was when the comment was made while all stocks were used up and there were no client coming due to the recession. In these cases top management had to intervene.
6. How Can Excelr8 Help?
Our approach to quarry optimisation is based on a long term operational sustainability with the help of the local employees. We work with your people, not against them. Please Contact us to find out more.