Sulzer Metco/Sulzer Eldim Division Sulzer Eldim Is

Sulzer Metco/Sulzer Eldim Division Sulzer Eldim is a division of Sulzer Metco, a company under the Sulzer Metaplas umbrella. The company is a leader in the aerospace and industrial gas turbine industries, having developed long-term relationships with OEM manufacturers. Their technological, financial, and human resources have facilitated a long history of success. Recently, they have implemented a cellular manufacturing strategy, with a Zero Defects policy, which has greatly increased efficiency. They are now looking to implement a similar strategy across other departments.

Their concerns regarding reduced efficiencies for low-volume orders are invalid. In addition, the concerns regarding reduced autonomy within divisions, will simply be transferred autonomy to core groups, as the semiautonomous manufacturing cells currently experience. A timeline for implementation of this strategy is provided. Introduction For several decades, Sulzer Metaplas GmbH has been a leader in the coating services and thin film equipment industry. Sulzer Metaplas was founded under the corporate umbrella of the Sulzer group, which begain in 1834, in Winterhur, Switzerland.

Today, this global leader has multiple divisions that pave the way for groundbreaking technologies in each of their respective markets. The Sulzer Metco division specifically focuses on the surface coating and refining market. ("About us," 2010). Within Sulzer Metco, Sulzer Eldim specializes in the non-traditional manufacturing and machining of gas turbine parts, including -- turbine seals, blades, turbine compressor stators and stator assemblies, vanes, fuel nozzle guides, and inserts ("Sulzer," n.d.).

Recently, Sulzer Eldim has implemented a cellular manufacturing strategy and intend on deploying it throughout all departments, to benefit the entire division. With this new strategy, Sulzer Eldim must determine how best to deal with the increased costs of low volume individual orders, which cannot be calculated with a business case/cell concept, while also determining and preparing for the challenges they are likely to experience as they further implement the cellular strategy across other departments.

Sulzer Eldim Operations Overview In 1909, Max Ulrich Schoop invented the process of "spraying lead and zinc metals for protective coatings. His second patent incorporated an electric arc as a heat source" ("History," 2010) and with it invented the process of Thermal Spraying. In 1933, Rea Axline founded Metco in 1933, in New Jersey. With five employees, Metco developed innovative spray guns for the Thermal Spraying process, along with material improvements.

This early success led to expansion into Europe, and in the 1970s, the company would develop a joint venture with Plasma Technik AG, of Switzerland. In 1985, Sulzer acquired Plasma Technik, and nine years later, Sulzer Metco was formed. Today, Sulzer Metco provides surface solutions to their customers to "improve the value and service performance of the components (their customers) produce or require for their own operations" ("History," 2010). One division within Sulzer Metco is Sulzer Eldim.

Sulzer Eldim's comprehensive portfolio of manufacturing processes allows Sulzer Eldim to develop and manufacture critical engine components as a "one stop shop." Thus, we can easily adopt manufacturing processes to meet changing customer requirements, including challenges that call for modification to the original component design The various components are processed in a state-of-the-art, cellular manufacturing environment with a focus on customer requirements and supported by lean manufacturing methods. This has translated itself into our company achieving high on-time delivery and quality performance ("Products and services," 2011).

In addition, Sulzer Eldim has added selective in-house production processes, as a means of providing a select number of specialized components, for their customers. Much of Sulzer Eldim success has hinged on their successful supply chain management, and their business process integration that has involved collaboration between the company and their customers. The various business processes embedded in Sulzer Eldim's supply chain process include: procurement, product development, manufacturing management, distribution, performance measurement, distribution management, and customer service management (Lambert, 2008).

Customers rely on Sulzer Eldim to provide non-traditional manufacturing and machining of gas turbine parts, including -- turbine seals, blades, turbine compressor stators and stator assemblies, vanes, fuel nozzle guides, and inserts Current Resources and Competencies at Sulzer Metco Sulzer Eldim has a variety of resources and competencies at their disposal to continue their history of strong growth. In an era of troubling economic times globally, the parent company of Sulzer Eldim, Sulzer Metco, realized strong growth in 2010. Order intake increased 17.9%. Sales grew 12.1% from 2009 figures, in 2010.

Additionally, operating income climbed 178.5% in 2010 ("Key figures," 2011). Some of this growth is due to strong gains in the machinery consumption market, and 2011 looks to be another year of growth. In the United States alone, "manufacturing technology consumption rose nearly 100% in March 2011 compared to the same time a year earlier, according to the American Machine Tool Distributors Association (AMTDA) and the Association for Manufacturing Technology (AMT) ("Machinery manufacturing," 2011).

Sulzer Eldim, specifically, has seen strong growth due to their preferential partnerships with all of the major OEMs in the design, development and manufacture of industrial gas turbines and aerospace industries. Sulzer Eldim has established long-term, high quality relationships that have resulted in continuous improvement in their products and added value for their customers. The company offers their partners -- high-tech manufacturing, continuous innovation, state-of-the-art facilities, and technical expertise. This allows Sulzer Eldim to take projects from the concept stage through successful production ("Successful Long-Term," 2011).

Since the division was established, Sulzer Eldim has built a business that is customer centric. They are proactive in their involvement of product production, from the earliest phases of concept development that allows for improved manufacturability of key engine components. Sulzer Eldim's expertise allows them to meet their OEM customer's challenging goals, often exceeding their customer's expectations. They use their production and engineering experience to continuously improve their internal processes. This benefits their clients through reduced manufacturing costs and improved repeatability of parts.

These resources, combined with Sulzer Eldim's production capacity to produce not only their customer's required volumes, but also quality, is why the company has become a trusted partner of the OEMs ("Successful Long-Term," 2011). Sulzer Eldim has the financial resources available to them to fully take advantage of the opportunities globally. Their parent company's overall return on sales in 2010 for the division was 9.2%. ("Sulzer annual," 2010). Additionally, Sulzer Eldim has the human resources to continue their history of growth.

Their parent company's executive team is lead by Cesar Montenegro, who has a "proven track record in leading and growing complex businesses, energizing people and increasing performance" ("Cesar Montenegro," 2011). Additionally, Sulzer Eldim's technological resources are a significant asset at the company's disposal. Sulzer Eldim offers non-conventional machining and manufacture of gas turbine components - in particular blades, vanes, turbine seals, turbine compressor stator vanes & stator vane assemblies, inserts and fuel nozzle guides.

Founded in 1970, Eldim was the first Dutch company, and one of the first in Europe, to apply advanced machining technologies in the gas turbine field. One of Eldim's core activities is the machining of cooling holes in turbine components, by means of spark erosion (EDM), elecro-chemical drilling (ECD) and laser drilling. These methods of machining allow Eldim to meet the critical tolerances and the high standards required by the gas turbine industry ("Sulzer," n.d.).

Continuous technological improvements, through a well-supported research and development division and customer collaboration, has kept Sulzer Eldim and it's parent company, Sulzer Metco, an industry leader for decades. According to the Sulzer Annual Report 2010, We have kept our investment level in research and development high, which allows us to continually seize new business opportunities. A systematic process is used to identify and expedite those projects with the greatest market potential.

As a result, the number of new products launched in 2010 increased and the number of solutions in the prelaunch phase is higher than in the last ten years (p. 5). Research expenses are approximately 2% of annual sales ("Sulzer annual," 2010). The organization's competencies lie in their lean manufacturing processes and their commitment to improving their quality of their process outputs, with their Six Sigma projects. Through minimizing the variability in their manufacturing processes, Sulzer Eldim has not only increased their turbine products quality, but also reduced costs and increased profits.

The company relies on the DMADV methodology of Six Sigma. Improvement projects involve first defining goals that not only meet customer demands, but also the mission of Sulzer Eldim. The company's vision "is to be "The Leading Global Surface Solution Company" by providing innovative and high quality products and services to our customers" ("Vision," 2011). Once goals are defined, Sulzer Eldim measures the Critical to Quality characteristics, as well as their capabilities for their production processes. They then analyze these results to improve their design processes.

Running tests, Sulzer Eldim then works out the design details. They then verify the design and perform pilot runs of the new processes, before fully implementing the newly improved process. Through cellular manufacturing, Sulzer Eldim uses common processing and standardization. As an example, (Sulzer Eldim) process families of components using semiautonomous teams. The focus of these teams is to operate as efficiently and effectively as possible to provide a competitive offering. Each team is supported by in-cell manufacturing engineers driving continuous process improvement.

In-cell key performance indicators provide each team with continuous feedback on their performance. This approach allows (Sulzer Eldim) to maximize the use of our internal resources ("Cellular," 2011). One of the critical components of Sulzer Eldim's cellular strategy success is their Zero Defect policy. The Zero Defects policy was developed to reduce the cost of quality, while maintaining their delivery performance. The company has a Material Review Board, which consists of production team leaders, cell engineers, and quality engineers.

Their objective is to decrease the amount of production scrap, while also increasing their 'first time right' production. Cell engineers also support the company's production operators, by giving root cause analysis that is used to structurally improve their internal processes. Lastly, Sulzer Eldim continues to offer recurring process training, with experienced in-house trainers, to increase the working knowledge of their production operators ("Cellular," 2011). This cellular strategy allows the use of internal resources to be maximized. However, this set up is most efficient with batch manufacturing.

Now that Selzur Metco has successfully implemented this cellular strategy in their manufacturing process, they intend on deploying it throughout the other departments, to benefit the entire division. Effect-Cause-Effect Analysis Problem Realization Sulzer Eldim's problem centers on how best to deal with the increased costs of low volume individual orders, which cannot be calculated with a business case/cell concept, while also determining and preparing for the challenges they are likely to experience as they further implement the cellular strategy across other departments.

Although implementing the cellular method in the manufacturing department has resulted in improved efficiencies for Suzler Eldim, they cannot assume that this will continue to be true for other departments. Problem Definition The trade-off for this problem is that the increased efficiencies that Sulzer Eldim enjoys for high volume orders with cellular manufacturing results in reduced efficiencies for low volume individual orders. Additionally, by implementing a cellular strategy to other departments, sections of departments will be forced to relocate and reorganize, which could result in reduced autonomy, as a trade-off.

Starting Trade-off Assumptions The underlying assumptions in the starting trade-offs are that there will be reduced efficiencies in low volume orders. It is also assumed that there will be increased efficiencies in high volume orders. Lastly, it is assumed that implementing the cellular strategy division-wide, will result in challenges due to reduced autonomy. Problem Resolution The last step in the effect-cause-effect analysis is to look away from the avenues of compromise. Instead, one should critically examine the system foundations.

This can be accomplished by one of two ways -- either through inventing solutions or invalidating assumptions (Gill, 2008). Sulzer Eldim can invalidate the assumption that there is a reduced efficiencies for low volume orders. Although the efficiencies aren't as high as running a high volume batch order, with the cellular strategy in place, the efficiencies are slightly increased over the past non-cellular strategy. As such, there isn't really a trade-off in this situation that is valid, which negates this portion of the problem.

However, for the second phase of the problem, the exchange of autonomy in the now disparate duplicate departments that will be combined with the implementation of a cellular strategy, for increased efficiencies in these departments division-wide, this requires the invention of a solution. The most minor change that could be affected would be simply the physical relocation of members in similar departments to one another.

Product managers from different units, such as the vanes and turbine seals units, should be physically located one another, as opposed to separated, so they can share resources, such as a shared conference room. Additionally, administrative departments should be located in a single cell, including human resources, business development and finance, again to maximize the use of resources; however, they should each retain their autonomy within each department. Appropriate Competitive Strategy Measures Porter (1980) developed three basic generic competitive strategies -- overall cost leadership, differentiation and market niche focus.

Other areas of competitive strategy include quality leadership, innovation, and technological advancement. To determine if a strategy is effective, an organization must measure either the process or the functional performance. For Sulzer Metco, the sequence of priorities in these competitive strategies should be -- technological advancement, innovation, quality, market niche focus, differentiation, and then cost leadership. Measurement of the company's technological competitive strategy is meant for functional performance, as is their innovation strategy, market niche and differentiation strategies. Quality and cost leadership strategies are meant for measurement of process performance.

Although cost is often a factor in a customer's purchasing decision, for Sulzer Eldim, their competitive advantage lies more heavily in their technological leadership and innovation, especially in their target niche markets. These market niches include: aerospace and gas turbine markets. Measurements for these primary competitive strategies are meant to analyze the functional performance of these strategies. Capacity Management Capacity management is a critical element of the Sulzer Eldim supply chain. Both supplier and production capacity can facilitate growth or impede competitiveness.

Suzler Eldim must ensure that their capacity is great enough to meet the peak demand periods of their customers. Due to the nature of their business, inventory building is not as viable of an alternative as other manufacturers, which makes capacity management an even greater concern. Cost is the least of Sulzer Eldim's concerns in the discussion of capacity management.

The company has positioned itself as a global technological leader in the gas turbine industry, through their long-term OEM partnerships; for this reason, cost is not a primary factor in their customer's purchasing decision. It is far more important that Sulzer Eldim's capacity meets the technological requirements for their customer's needs as well as the timeliness of delivery. For this reason, Sulzer Eldim must have the flexibility to meet the every-changing demands of their niche markets.

To manage the capacity better, and meet this flexibility need, Sulzer Eldim needs to ensure that their production floors are equipped with the correct mixture of the various production equipment. Additionally, further expansion into high-growth potential areas, such as the Middle East, will increase flexibility and timeliness of delivery to these geographic regions. Inventory Management Inventory management is an important facet of Sulzer Eldim's success. The types of inventories the organization utilizes depends on the final product.

To ensure the most effective and efficient inventory management, Sulzer Eldim should reduce the time it takes for the delivery of the production materials to the manufacturing floor, as well as the customer input, by physically locating materials closer to the production floor. By minimizing this transport time, Sulzer Eldim will be able to reduce production time, and increase production capacity. The quantitative trade-offs of this action would be the increased cost of designing a production facility to accommodate relocating the materials.

Supplier Relationship Management Supplier relationship management (SRM) involves the development of a mutually rewarding relationship between Sulzer Eldim and its strategic suppliers, much the same as their strategic partnerships they've developed with their OEM customers. Through this relationship, the company will be able to continue to lead the gas turbine industry in innovation and maintain their competitive advantage, more effectively than if they hadn't fostered this relationship.

The steps Sulzer Eldim can take to sustain and improve their SRM includes ensuring that the executive team and senior management fully support the SRM program and that.