Operations Management: Term ProjectBlair Atkins, Matt Petosa, Joey Gallo, Curtis Costantino

IntroductionBackgroundAleris, Inc. is a producer of rolled and extruded aluminum products. The company formed in 2004, when Commonwealth Industries, Inc. and IMCO Recycling, Inc merged. They are a Fortune 500 company and are traded on the New York Stock exchange. One of the largest private companies in the United States, they are a multinational corporation with 40 facilities all over the world. Their headquarters is in Beachwood, Ohio, which is suburb of Cleveland.

The specific Aleris facility that will be examined is located in Clayton, New Jersey, at 838 North Delsea Drive (08312). This plant was founded in 1970 and primarily manufactured foil and food containers. The machinery at this plant is unique, in that they are able to use light-gauge coating to create products with colors, prints, and performance characteristics. As a result, they have evolved into a re-rolling and finishing site. They are ISO 9001:2008 compliant, which is a very specific set of quality rules that make sure customers get quality products and great customer service. The plant operates 24 hours a day, 7 days a week.

ProductsAleris has a variety of product types that it delivers:

Direct-Chill and Continuous-Cast Coil – used in heat dissipation

Plate – can be manipulated to serve a variety of purposes and

industries

Extrusions – geometrically structured beams

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Foil – for food service and pharmaceutical industry

Tread – diamond patterned panels

Building Products – used in construction products

Clayton’s products differ slightly due to their specific set of machinery:

Semi-rigid Formed Container Stock – aluminum foil containers for

food service

HVAC Standard and Automotive Fin Stock – heating and cooling

pipes

Pharmaceutical Closure Stock – used to ensure quality and

longevity in containers

Spiral Duct Stock – piping and duct material for construction

Distribution

Coating line operates at 100% capacity – application of

colors/coats to products

CustomersAleris has a variety of loyal customers, but their three main customers are:

HFA (Handi Foil) – Manufacturer of disposable aluminum and plastic food packaging. They are the largest producer of semi-rigid aluminum foil containers with an annual demand of 63 million pounds. Aleris provides about 20% of HFA’s requirements. They are also the only foil manufacturer marketing a 100% recycled product. They are based out of Wheeling, Illinois.

Chart Heat Exchangers – Long-term light gauge account. Customer is a public company (symbol – GTLS). They

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manufacture brazed aluminum heat exchangers for major LNB projects and large chemical and industrial plants. They have no competition in the United States and has the largest brazing furnace. Aleris is its largest supplier.

West Pharmaceutical Services- a leader in developing delivery systems for the administration of pharmaceutical products. West has been a customer to the Clayton plant for nearly 40 years. Their Clearwater facility processes over 80% of the aluminum seal demand in the western hemisphere. Their corporate office is in Lionvill, Pennsylvania but they have facilities all over the world.

Staff Lauren Zientek – Finance Coordinator Jeff Raines – Safety Leader Dave Williams – Reroll Crane Operator Kelly Barb – Quality Engineer Al Clopsic – Director of Technical Services and Sales Dave Kannapel – Operations Manager

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SafetyThe Clayton facility values safety above all other priorities. This is achieved through strict safety policies and equipment. All employees and visitors must go through a safety orientation outlining various rules and practices. Employees and visitors wear various kinds of protective gear at all times while in the facility:

Orange reflective vests – it is vital that individuals are as visible as possible since there are cranes, forklifts, and other dangerous equipment everywhere.

Steel Toed boots with rubber soles – in order to offer protection from accidents involving heavy items. Floor is constantly covered in oil and cleaning agent so rubber soles are needed to ensure proper traction. Safe walking areas are outlined in yellow to show workers the safest route around the factory floor.

Protective eyewear – eye protection is mandatory for every individual at all times. There can often be chemicals or shards produced by machinery that is dangerous for your eyes.

Ear plugs – the factory floor is extremely loud and ear plugs are necessary to prevent hearing loss. Machinery emits loud alarms many times to alert those on the floor to their location so they can avoid its path.

Helmets – the site is a hardhat area and there are three colors. White for employees who have worked their longer then 90 days. Green for probationary workers who have worked at the facility less then 90 days. Yellow for visitors to the facility.

As a result of these policies, the facility was awarded special safety recognitions in 2011, 2012, and 2013 with over 1100 days with no accidents. They are currently about 130 days with no recordable accidents.

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Phase 1: Define

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Project CharterBusiness CaseAleris International, Inc. is a company that processes large rolls of aluminum into different

thicknesses, widths, and colors for their customers. The products are large, rerolled sheets of

aluminum, and they are looking to improve their current storage process in a way that helps to:

Reduce time spent moving rolls

Reduce the costs associated with moving/storing rolls

Improve product quality by minimizing defects associated with excessive movement

If these improvements are made, it could reduce their product cycle, increase production, and reduce costs for the company.

Problem Statement

Aleris has a large amount of customers and is constantly outputting a large amount of rerolled

aluminum. In an effort to store all the outputted products in its facility, they have moved a sizable

amount of reroll to a previously unused section of the factory. Used for a process that is no longer

necessary at the facility, the area where overflow products are stored is a far distance away from

where it is being tracked and shipped. This requires the employees to travel farther distances to

document and move the reroll, which translates to added time in the facility’s processes. Also,

increased time spent moving the reroll farther distances escalates the possibility of acquired defects.

Project ScopeThis project will limit itself to the immediate decrease in time needed by this singular facility to move

and interact with the finished rerolled aluminum. The original site of storage will be most closely

examined in order to determine how its space can be used more efficiently. Current processes

concerned with interacting with the finished aluminum will be examined as well. Anything that

directly affects the staff overseeing the movement of the reroll will be also be analyzed and

discussed.

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Goal StatementThe goal of this project is to reduce the time Aleris uses moving reroll on the factory floor. This may be achieved through a variety of means such as increasing how many rolls can be stored in the original location as well as improving the efficiency of the process employees use to interact with the reroll.

Role of Team MembersBlair Atkins – Team Leader

Joey Gallo – Non-Capital Solutions/Data ProcessingMatt Petosa – Capital Solutions/Technology AssessmentCurtis Costantino – Quality Issues

Milestones and DeliverablesMilestones:

1. Week 1 – November 19th, 11:00am-1:00pm.a. Take safety orientationb. Tour plantc. Speak with staffd. Define probleme. Assign roles

2. Week 2 – November 24th, 11:00am-1:00pm.a. Describe process flowb. Discuss issues with storage and qualityc. Examine various excel spreadsheetsd. Describe revised process flows

3. Week 3 – December 3rd, 11:00am-1:00pm.a. Take second plant tourb. Identify capital solutionsc. Speak with additional staff

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d. Examine plant diagram from engineering4. Week 4 – December 10th, 11:30am-1:30pm.

a. Examine predictable long-term benefitsb. Discuss presentation roles and paper structurec. Wrap up presentation and term paper information

5. Week 4 - December 11th, 3:30pm: Presentation to Dr. Roh’s Operations

Management class and Aleris staff.

Deliverables will include an improved storage process plan, presentation, and case study outlining the project’s purpose, progression, and possible effectiveness. These will be presented to Aleris staff as well as Dr. Roh.

Resources Required Staff – with the ability to outline and affect various processes

Office space – to collaborate with staff and team members Data - including layout of facility, process outline, flow of

materials, and material types/levels Equipment – used to move and interact with the reroll

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Phase 2: Measure

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BasicsAlloys

Coils weigh about 20,000 lbs. and cost about $1.40 a pound.

Aleris has four-digit designations for the four types of aluminum alloys it processes:

o 1100o 3003 – most common type of alloyo 3004o 3105

The widest coil is 50.375” and 68* in coil height.

The alloys are divided between those that are for pharmaceutical use and those that are not. They require different processes to produce.

VendorsAleris utilizes two main suppliers for its aluminum reroll needs:

1. Alcoa – the third largest supplier of aluminum products in the world. They are a multinational corporation operationally based in Pittsburgh, Pennsylvania. Orders from this supplier require a minimum 3-month supply purchase.

2. Aleris plant in Lewisport, Kentucky – another plant in the Aleris family that supplies the Clayton plant with reroll. Ships at 10% SOTIF (shipped on time in full) so extra must be ordered in order to make sure enough is available for production at all times.

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Process Flow The current process flow involves a number of steps from which reroll enters the facility and is used in production for a customer’s order, see Figure 2 (below):

1. The reroll is ordered by the Purchasing/Planning department. The lead time for an order is generally 3-6 weeks.

2. A flatbed truck arrives about 8 times a day with 2-3 rolls of aluminum of varying alloys and widths. These rolls weigh about 20,000lbs. The truck entrance (Figure 3) is located at the bottom of the diagram in Figure 1 (below).

3. A large crane above the loading entrance uses a large hook to raise the roll up off of the truck and onto the shipping area, which is directly adjacent. The crane is represented by the large square mass at the approximate center of Figure 1.

4. The crane operator places each of the coils in a row from left to right, which is at the center of the diagram.

5. The BOL information on the roll is entered into the computer and a unique identifier called the Reroll ID Number is generated.

6. The Reroll ID Number, Alloy, and Width are spray painted onto the side of the reroll (Figure 4) to identify the reroll for crane and forklift operators.

7. After 48 hours the material is unwrapped (Figure 5). This time is necessary to avoid staining on the rolls as their surface temperature must equalize with the temperature in the facility.

8. When a certain alloy is required for use in a customer order, the Reroll Crane Operator receives a “Pull List” from the scheduler. This determines what coils need to be pulled for Breakdown.

9. The material on the list has the location of the coil in the pull, which is designated RR, FLR, or UF. Excess inventory is generally

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placed in the UF, or up front area, which is an all-purpose area currently being used for overflow. It is much farther from the machines then Reroll or Receiving/Shipping floor.

10. The coils are transferred to open space near the machines or furnaces (Figure 6).

11. The recently moved coils are then taken by the Stacker Crane Operator and loaded onto racks or into the machine for processing (rear racks in Figure 6).

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Shipping/Receiving Area (fig. 1)

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Current Process Flow (fig. 2)

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Receiving Area (fig. 3)

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Reroll coil off of truck (fig. 4)

Unwrapping Reroll before it is placed on racks (fig. 5)

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Reroll in storage awaiting machinery (fig. 6)

Phase 3: Analyze

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IssuesMovement of ProductThe process of moving the rerolled aluminum coils through their storage and production phases is expending a considerable amount of time and expense. Since there is such a large amount of inventory, the UF (Up Front) area is necessary to absorb the overflow. This means that retrieving certain alloy orders will take longer then others. The coils are randomly displaced all over the three storage areas based on the convenience of their location at the time the Crane Operator was placing it. This means aluminum alloys with different demand will be spread all over the facility, often requiring many movements of unrelated rolls to get to the location of the required roll. Aluminum is sensitive to physical contact and more movement means a greater opportunity for mishandling of the reroll in ways that damage it.

Quality ControlDue to the ways the aluminum is stored and moved, damage can occur to the reroll:

Water Stain (Figure 7) – permanent staining on the surface of the aluminum that impairs it cosmetically but not physically. It generally occurs when the dew level of the facility is too low and the discrepancy between the temperature of the aluminum and the facility causes water-marks on the aluminum that cannot be removed. Unwrapping a reroll coil too early can cause these marks.

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Mill Marks – physical defects caused when grit and debris collects on the outside of the roll. With each sequential rolling pass on the machine, the possibility for holes, dents, and tears accumulates. This debris builds up on the rolls due to it being stored directly on the floor after being unwrapped.

Cinching (Figure 8) – occurs when the welding holding a roll together weakens. It is caused by vibrating the roll while moving it. This causes loose wraps, which do not perform as well in the machines.

Dents and Dings – when rolls are moved, the possibility of accidentally damaging the roll surface multiplies. Occurs when the rolls come into contact with other objects. Dings and dents damage the aluminum cosmetically and physically. These can lead to continued problems during processing.

When physical deformities occur, the aluminum will often need to be scrapped. The scraps are compressed into cubes, which are then sold for reprocessing. If the aluminum has already reached the customer and they discover it, they will send it back to Aleris for a refund.

InventoryIn the attached file, Aleris Inventory.xls, Microsoft Excel was used to figure out how off Aleris’ inventory really was. We extracted the columns pertaining to the specific alloy ID, the type of alloy, and the weekly demand for that alloy in pounds. Since coils come in weights from around 14 thousand pounds and 20 thousand pounds, we took the weekly demand in pounds and divided it by those numbers to see about how much of each coil are demanded a week. When you divide by 14 thousand then add up the sum of each coil demanded the

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demand is 217 coils and when you divide the total demanded by 20 thousand the demand is 152 coils. Therefore the weekly demand of total coils is between 152 and 217 coils a week. Then we took these numbers and divided by 7 to say that there is between about 22 and 31 coils demanded per day. Next we took the Target Inventory levels and found the difference between that and the current inventory levels to see how far off the inventory.

For example, D0006 is 327,910 pounds off of where the target inventory is which is between about 16 and 23 coils. This case is specifically bad because for this specific alloy they have too many and there is only a demand for 75 thousand a week which means it will take about 5 weeks to get them back to their desired inventory for that alloy. We also figured out how much each coil was off which can be seen in our excel sheet. Next, we added all of these together to see the total that entire inventory was away from the respective target inventory for that alloy and found that they are off by between 169 and 238 coils off. Each coil costs around 30 thousand dollars and when you multiply that with the amount of coils off you can see that they were between $5 million and $7 million off from their target inventory.

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Example of Water Stain (fig. 7)

Example of Cinching (fig. 8)

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Phase 4: Improve

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ImprovementsNon-Capital ImprovementsThese changes to the process flow require very little to no capital. They are process improvements that save the company time and money in the future if applied:

Organize coils in rows based on most demanded alloy – coils are currently placed where ever is most convenient to the Crane Operator. If they are organized right-to-left by most common alloy, there will be fewer movements necessary by crane and forklift operators, as orders are fulfilled.

Apply FIFO (First In First Out) inventory management – to ensure that older rolls are used first in new orders, a first-in-first-out inventory management strategy would lower the accumulated risk that age and movement pose to a coil.

Place coils in pyramid pattern (Figure 11) – Coils are currently placed in individual rows, lightly touching one another, in the order they are pulled off of the truck. Pyramids effectively double the amount of space a given area can hold, and when combined with an organization system that embraces actual and forecasted demand, can be quite effective in maximizing a storage area.

Non-Capital Revised Process FlowAfter the above improvements are applied, the process flow is as follows (Figure 9):

1. The reroll is ordered by the Purchasing/Planning department. The lead time for an order is generally 3-6 weeks.

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2. A flatbed truck arrives about 8 times a day with 2-3 rolls of aluminum of varying alloys and widths. These rolls weigh about 20,000lbs. The truck entrance (Figure 3) is located at the bottom of the diagram in Figure 1.

3. A large crane above the loading entrance uses a large hook to raise the roll up off of the truck and onto the shipping area, which is directly adjacent. The crane is represented by the large square mass at the approximate center of Figure 1. The reroll is placed in rows according to alloys. The rows are turned into pyramids when necessary (Figure 11).

4. The BOL information on the roll is entered into the computer and a unique identifier called the Reroll ID Number is generated.

5. The Reroll ID Number, Alloy, and Width are spray painted onto the side of the reroll (Figure 4) to identify the reroll for crane and forklift operators.

6. When a certain alloy is required for use in a customer order, the Reroll Crane Operator receives a “Run List” from the scheduler. This determines what coils need to be pulled for Breakdown.

a. It is determined which matching coil in the area is oldest.7. The material on the list has the location of the coil in the pull,

which is designated RR, FLR, or UF. Excess inventory is generally placed in the UF, or up front area, which is an all-purpose area currently being used for overflow.

8. The coils are transferred to a designated area near the compactor, where they will be unwrapped.

9. The recently moved coils are then taken by the Stacker Crane Operator and loaded onto racks or into the machine for processing (rear racks in Figure 6).

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Revised Process Flow (fig. 9)

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Capital ImprovementsThese changes to the process flow require significant capital. Although many of these suggestions can cost many thousands of dollars, they can potentially speed up the process significantly:

Laser grid system for warehouse floor (Figure 13) – using a grid system will ensure that when rolls are taken off the truck by the Crane Operator, they can be quickly put into an area with other similar alloys. It also ensures that the rolls are spaced properly on the floor. Since the floor cannot be reliably painted due to oils and constant scrubbing, a laser system is both highly visible and low-cost. Cost for the system is estimated at between $500-1000.

KLP RollStop System (Figure 12) – this is a simple rack system which is situated on tracks that travel along the ground. Chocks can be inserted on the tracks to accommodate different reroll thicknesses and widths. This system maximizes its given space, keeps pyramids from collapsing, and elevates the coil from the floor, minimizing the possibility of defects. They can stack three rolls high and do not absorb oil. The system costs a starting price of about $25,000 but could cost upwards of $53,000.

Tablets for warehouse employees – tablets would be carried by machine operators, forklift drivers, and managers. They would run an application (or series of applications) which assists in coil movement, identification, lists, etc. Their information would be updated in real-time based on the data in the company’s in=house database. Time would be saved finding requests rolls and the racks would be better organized. Depending on the platform of tablets that are used, the cost could be anywhere

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from approximately $2,500-10,000. (A demo of the application interface can be found in the attached PowerPoint Presentation)

Install Visual 8 – Aleris already plans to use this software in the near future. It is a highly sophisticated forecasting and planning program that helps aid predictability.

Capital Revised Process FlowIf the above equipment is applied to the revised process flow, the changes to the original process flow become more significant (Figure 10):

1. The reroll is ordered by the Purchasing/Planning department based on the projections from the Visual 8 Planning Software.

2. A flatbed truck arrives about 8 times a day with 2-3 rolls of aluminum of varying alloys and widths. These rolls weigh about 20,000lbs. The truck entrance (Figure 3) is located at the bottom of the diagram in Figure 1.

3. A large crane above the loading entrance uses a large hook to raise the roll up off of the truck and onto the shipping area, which is directly adjacent. The crane is represented by the large square mass at the approximate center of Figure 1. The reroll is placed in rows on the KLP Racks according to alloys. The racks are turned into pyramids when necessary (Figure 9).

4. The BOL information on the roll is entered into the computer and a unique identifier called the Reroll ID Number is generated.

5. The Reroll ID Number, Alloy, and Width are spray painted onto the side of the reroll (Figure 4) to identify the reroll for crane and forklift operators.

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6. The location of the coil within its pyramid is entered into the tablet user interface and then updated in the facility-wide database.

7. Visual 8 generates a “Run List” for the coils that need to be run next.

8. The tablet can be used to search for a specific alloy, width, and coil age. This will determine which coil should be pulled first.

9. The coil is unwrapped in the designated area near the compactor.

10. The coil is then placed on the transfer rack.11. Stacker Crane operator brings coil forward on transfer rack

and picks it up to put it in a place on the 3-story storage rack (Figure 6).

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Revise Process Flow with Capital (fig. 10)

Reroll stored in a Pyramid formation (fig. 11)

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Professional pyramiding system (fig. 12)

Laser grid system simulation (fig. 13)

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Phase 5: Control

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ConclusionGoing ForwardWhile a large amount of information has been gathered and processed in order to make the suggestions in this presentation, there is still a lot of work to do. Studying time and financial based information could help better describe the viability of making certain changes:

A time-study should be performed when any organizational changes have been made in the shipping area to examine how much time is actually being saved by having rolls organized by age, alloy, and width.

A study examining the frequency of physical deformities to rolls before and after the implementation of the changes could be helpful and further fine these process changes.

A financial study examining whether spending money on the capital suggestions saves the company a significant enough amount of money in the long run.

These are merely suggestions based on the data we would have liked to seen in the future, and we believe are integral to crafting a perfect combination of capital and non-capital solutions.

Training

In order for implementation to go smoothly, each layer of management will have to be well versed in the intricacies of the changes and their benefits. When the new information disseminates to the employees on the floor, it is vital that they are able to find solutions to their issues as soon as possible. A training program will be necessary to explain:

how the process has changed

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why it has changed how they are personally affected by it

Further training for those who will be using tablets and utilizing the racking system will also be necessary. This training process should take place electronically, with paper versions on hand. The safety guidelines and course will need to be altered to address the use of new devices and processes. When addressing employee concerns, explaining how each change benefits each worker will help to ensure that the new policies are carried out.

ImplementationThey will need the full loyalty and flexibility of their staff in order to make sure the process changes are integrated smoothly. When certain aspects of the changes do not function as intended, then it will be up to the staff to communicate with the management so appropriate alterations can be made. Increasing the frequency of staff meetings may be necessary for an extended period in order to improve communication between the floor staff and the management. This helps to quickly identify and resolve issues as quickly as possibly.

Accountability

Paying close attention to metrics will be a key component of the implementation phase, and it will be crucial that every employee is playing their part in the change process. If certain metrics experience detrimental trends, having employee accountability will allow management to help pinpoint issues and communicate them to the person most directly influencing the issue. If every employee is championing their individual process, the implementation process will be much smoother and produce a much better and long-lasting result.

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A Big Thanks to, Lauren Zientek – Finance Coordinator Jeff Raines – Safety Leader Dave Williams – Reroll Crane Operator Kelly Barb – Quality Engineer Al Clopsic – Director of Technical Services and Sales Dave Kannapel – Operations Manager Dr. Roh – Operations Management Professor, Rowan University

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