Operational Performance Parameters Benchmarks- How to enhance and improve these parameters in Indian Steel Industry?

To remain globally competitive, Indian Steel Industry needs to better its operational performance parameters. An attempt has been made to compare the Blast Furnace related operational parameters – productivity, coke rate & pulverized coal injection rate and environmental related parameters – specific energy consumption, carbon dioxide emissions & water consumption of the four Indian Steel Companies and some of the renowned international steel plants. However, for maintaining the confidentiality, the Indian Steel Companies have been identified as Company A, Company B, Company C and Company D. Each Steel Company has number of Blast furnaces. For maintaining the confidentiality of the operational parameters of the renowned international steel plants, range of productivity, coke rate & pulverized coal injection rate of the Blast Furnaces in these steel plants has been considered. For the specific energy consumption, carbon dioxide emissions & water consumption, the best value achieved in renowned international steel plants has been considered. The operational performance parameters are summarized in the above TABLE:

The productivity of Blast Furnaces of the renowned international steel plants whose performance has been reviewed is within the range of 2.5 to 3,5 t/m3/day. The productivities in case of Steel Company-A and Steel Company-B are very low when compared to these international benchmarks. The productivities in case of Company-C is generally lower than international benchmarks except for one Blast Furnace which is at par with the lowest of international benchmark of 2.5 t/m3/day.   The productivities in case of Company-D are generally at par with the lowest of international benchmark of 2.5 t/m3/day.

Pulverized Coal Injection helps in reducing specific coke consumption in Blast Furnace Operations, generally replacing coke by equal amount of pulverized coal injected, thus reducing specific coke requirement thereby reducing environmentally unfriendly coke making process in steel plants. It is also economically preferred to replace coke by pulverized coal injection in the Blast Furnace Operations. No Indian Steel Company matches the best international benchmark of 225 kg injection of pulverized coal per ton of hot metal.

The best international benchmark for specific coke consumption is 275 kg per ton of hot metal. Coke rate alone is not comparable; both coke rate and pulverized coal injection rate together should be compared. But their  consumption rates, unless linked with the quality of pulverized coal and coke, may lead to wrong conclusions.

The productivity of Blast Furnace depends up on several factors such as (i) its design & technical features, (ii) quality of raw materials-iron ore, sinter, pallets, coke, lime stone, etc and (iii) operating practices. Just comparing the productivity achieved in various Blast Furnaces without comparing the quality of inputs – raw materials, design & technical features and operating practices, may lead to wrong conclusions. 

The best international bench mark achieved for specific energy consumption is 4.50 Gaga Cal/ton of crude steel. The specific energy consumption in Indian Steel Companies is 1.28 - 1.48 times higher than the best value internationally achieved. Similarly, the best international bench mark for specific water Consumption is 200 m3/ton of crude steel. The specific water Consumption in Indian Steel Companies is 1.40-2,34 times higher than the best value internationally achieved. Regarding, Carbon Dioxide Emissions, best value internationally achieved is 1.80 ton/ton of crude steel. The Carbon Dioxide Emissions in Indian Steel Companies is 1.25-1.55 higher than the best value internationally achieved. These higher values when compared to the best internationally values achieved are undesirable from economic and environmental protection point of views.

Often in the performance reviews, the Chief Executive of the Steel Company asks his managers and engineers to improve up on their operational performance parameters. Sometimes the Chief Executive refers to the productivity levels, coke rates & pulverized coal injection rates achieved elsewhere either in other Indian Steel Plants or in the renowned international steel plants and tells them to target achieving these operational performance parameters. But apartment from identifying the performance gaps, studies are hardly conducted in Indian Steel Industry to determine why such performance gaps exists & how such performance gaps can be reduced or eliminated. Often, just identifying the performance gaps of a steel plant/company with respect to the operational performance parameter benchmarks achieved by various steel plants/companies is termed as Benchmarking. Whereas Benchmarking is the process of identifying, understanding, and adapting outstanding practices and processes from organizations anywhere in the world to help the organization improve its performance. Benchmarking is not simply what we want to achieve; the benchmarks (i.e. metrics) of best performance, but also how these are achieved, the processes that are used.

Which Operational Performance Parameter to be benchmarked:

For a steel plant which has performance gaps in most of its operational performance parameters, it is important that we should prioritize what operational parameters would help the steel plant in increasing its operational efficiency, quality and profitability. We should identify those parameters which show the greatest room for improvements and are easier to fix. We should start the improvement process with such identified operational performance parameters. The past experiences have showed that those companies which have started benchmarking process on too many fronts simultaneously have not been successful in their efforts.

Selecting the Benchmarking Partner:

After identifying which operational performance parameters are to be benchmarked, the concerned steel plant should approach the renowned international steel plants to become their benchmarking partner who would study their concerned processes & practices and compare these with their own processes & practices, identify the performance gaps in terms of how much the gap is? and where the gap is? and formulate the action plan indicating how to close the gap? 

However, if difficulties are being faced in locating the willing benchmarking partners, help of the management consulting firms may be sought.

For carrying out the benchmarking exercise and implementation of the recommended action plan, benchmarking team comprising the concerned experts of the benchmarking partner and the concerned personnel of the steel plant carry out the entire work right from the start till successful achievement of the targeted operational performance parameters. However, strong management commitment to the entire benchmarking exercise, effective organization communication and effective employee participation are essential to achieve the superior performance in the steel plant.

What if there is no willing benchmarking Partner:

In case, the steel plant does not find any willing benchmarking partners, the steel plant may start with internal benchmarking exercise with the help of benchmarking consulting firms. From the above-mentioned TABLE, it may be seen that Blast Furnace Productivity in Company -A in their Blast Furnaces is in the range of 1.15- 1.68 t/m3/day. Company-A has the lowest productivity of 1,15 t/m3/day in its one of the Blast Furnace and the highest productivity of 1,68 t/m3/day in its another Blast Furnace. Company-A can do internal benchmarking exercise to determine what is the different practice or process or technology in the two Blast Furnaces which has lead to superior performance of 1.68 t/m3/day. The internal benchmarking for the steel companies in India is strongly recommended.

What is Benchmarking:

Benchmarking is the search for industry best practices that lead to superior performance [Camp, 1989]. According to Dr. Carla O'Dell, President of the International Benchmarking Clearinghouse, “Benchmarking is an alliance between partners to share information on processes and measures that will stimulate innovative practices and improve performance. Benchmarking is not only competitive analysis or number crunching, nor is it spying, espionage, or stealing. It is truly a process of organizational learning.” Best practice is high performance in a  process/practice, indicated by optimal use of resources and customer satisfaction, and validated by comparative assessment. [Anne Evans, Benchmarking Link-Up Australia]. Benchmarking is, therefore, not simply what we want to achieve; the benchmarks or the measurements (i.e. metrics) of best performance, but also how they are achieved, the processes that are used.

I have authored a book “Benchmarking -A Tool for Competitive Advantage” published by Bloomsbury Publishing India Pvt.  Ltd, New Delhi, London, Oxford, New York , Sydney. For details on how to conduct benchmarking, this book may be referred.

Conclusions:

Benchmarking is the process of identifying, understanding, and adapting outstanding practices and processes from organizations anywhere in the world to help the organization improve its performance. Benchmarking is not simply what we want to achieve; the benchmarks (i.e. metrics) of best performance, but also how these are achieved, the processes that are used. Benchmarking in Indian Steel Plants is strongly recommended to better their operational performance parameters.