A PROJECT WORK IN AN ALUMINIUM A PROJECT WORK IN AN ALUMINIUM PROJECT IN IKEA PROJECT IN IKEA

-- A PROJECT OF ALUMINIUM CATEGORY IN BA03

Presenter: Presenter: Ma Qiang

PROJECT OWNER:PROJECT OWNER:Joakim HammarKent Larsson

THANKS TO

All trading offices:CN, TW, TK, SL, SE

Colleagues in BA 03, Managers of the Project

KTH professors and classmates

AGENDAAGENDA Introduction Time plan & TBS PART I:

Value Chain Mapping PART II:

Quality BenchmarkingResults & Implications

Process & methodology Conclusion

Appendix

INTRODUCTIONINTRODUCTION

BA03 & I.Comp; KTH, Industrial Economy Faculty

Reason: New metal, new field, growing business opportunities Insufficient knowledge & strategy Small player in big market Cost conscious of IKEA

Expectation Aluminum raw material (including scraps market)market

condition; global quality benchmark; Environment impact; value chain mapping

INTRODUCTIONINTRODUCTION

Aluminium commodities, characteristics Future metal, infinite recycling loop Big varieties of alloy and functions; wide industrial

applications Raw material characteristics, An active scraps and recycling market

Research focus & assumptions Sliding doors & front doors (78% business) 20-80% rules Upper-stream part of the value chain part

TASKS & TBS (Task breakdown structure)TASKS & TBS (Task breakdown structure)

TIME PLANTIME PLAN

PART I

VALUE CHAIN MAPPING:VALUE CHAIN MAPPING:

By exploiting the upstream try to create new business models, or in other ways create improvements in its value system.

EG. Getting closer to the suppliers, or let suppliers closer to sub-suppliers; creating new models

PART I & III: FINDINGSPART I & III: FINDINGS

Countable world leading suppliers for raw material Possible to use recycled 6063, but few suppliers and

fewer examples so far in the market, like HYDRO Due to the same/similar cost between pure alloy and

scraps of good quality

Company Estimated market share

Alcoa 19.3%

UC Rusal 8.6%

BHP Billiton 7.3%

Rio Tinto [Confidential: 5% - 10%]

Alcan [Confidential: 5% - 10%]

Major competitors and estimated market shares: Bauxite market

Raw material Markets and big players

Alumina MarketAlumina Market

Company Estimated market share

Alcoa 20.3%

UC Rusal 15.4%

Chalcoa 13%

Alcan [Confidential: 5% - 10%]

Rio Tinto [Confidential: 3% - 9%]

Company Market Purity share: Standard Market share: High Purity

Alcoa 11.0% 13.4%

Rio Tinto [Confidential: 2% - 5%] [Confidential: 15% - 20%]

Dubal 2.3% 12.9%

Alcan [Confidential: 10% - 15%] [Confidential: 4% - 8%]

UC Rusal 11.6% 2.8%

Primary Aluminium MarketPrimary Aluminium Market

WORLD BAUXITEWORLD BAUXITE

Australia 38.2%, Guinea 12.25%, Brazil 9.32%, Jamaica 9.28%, India 5.59%, China 5.59%,

Venezuela 3.68%, Russia 3.18% and Kazakhstan 0.30%

WORLD ALUMINIUM

CHINA BAUXITE

PRODUCTION COST STRUCTURE Critical part

Part I & III: SUGGESTIONSPart I & III: SUGGESTIONS

China & Russia are the only exceptions who do not follow the LME index;

Usually slightly lower in China, follows SHNMPI Non-exportation restriction but might open next year Controllable Cost saving VS non-controllables

energy + transportation + material + labour Opportunities:

Factories closer to cheaper labour + Mine + rich Power Supply,SHANXI is of the most potential, Henan as well.

Risky to buy raw material by I-Comp (financial analysis, future market forecast, brief discussion in report)

PART II

PROCESS FLOW & METHODSPROCESS FLOW & METHODS

Future State with EHS Icon & Material Line

*Reference: Qualitative Research Methods, (Yin, 2003)

Study Purpose ResearchQuestion

ResearchStrategy

concerningData Collection

Procedures

Phase I

EXPLORATORY:

to investigate little-understood phenomena

to identify/discoverimportant

to generatehypotheses forfurther research

What is happening inthis social program

What are the salientthemes, patterns, &categories in participants’meaning structures?

How are these patternslinked with one another (toprovide the broaderexplanations for what I'mtrying tounderstand)?

Case study Field study

Participantobservation

In-depthinterviewing

Eliteinterviewing

Phase II

EXPLANATORY:

to explain the forcescausing thephenomenon inquestion to identifyplausiblecausal networksshaping thisphenomenon

What events, beliefsattitudes, & polices areshaping this phenomenon?How do these forcesinteract to result in thisphenomenon?

Field study Case study Ethonograph

y

Participantobservation

In-depthinterviewing

Documentanalysis

Unobstrusivemeasures

Survey

Phase III

PREDICTIVE:

to predict theoutcome of thephenomenon

to forecast the events& behaviors resultingfrom the phenomenon

What will occur as aresult of this phenomenon?

Who will be affected(individuals, groups)?

In what ways?

Experiment Quasi-

experiment

Survey (largesample)

Kinesics/proxemics

Contentanalysis

Questionnaire Questionnaire DesigningDesigning

Define Question Aims

Identify population and samples

Decide how to collect Replies

Design Questionnaire

Run a Pilot Survey

Carry out the main Survey

Analyze the Data

Population of

IKEA Alu

Sliding Door

Front Door

suppliers

West Europe

East Europe

Taiwan

China

East China

South China

SAPA

EMMI

FOUNDER

Jingcheng

Lishida

Huilong

worldtop

Pool of SamplesPool of Samples

RESULTSRESULTSQuality Survey of Alloy Billet 6063

Error

        CN   TW EU E.EU CN (avrg) INTL avg  

Question     lishida worldtop jingcheng Founder SAPA EMMI     EDI

concerning index general 5 4 4 5 5 4 4.3 4.50 5

chemical component 4 4 5 5 5 4 4.3 4.50 5

machinability 5 5 4 5 5 4 4.7 4.67 5

Percentage of recycled Al 4 1 4 4 5 3 3.0 3.50 5

anti-crossion performance 2 3 3 4 5 4 2.7 3.50 5

being 6063 or not? 3 5 4 4 5 4 4.0 4.17 5

T-value of process 2 3 4 5 3 4 3.0 3.50 5

Profile Tolerance Index Survey

        CN   TW EU E.EU CN Avrg Intl Avg ERROR

      lishida worldtop jingcheng Founder SAPA EMMI     EDI

wall thickness 4 1 5 3 5 4 3.3 3.67 5

cross-sectional dimensions 4 1 5 4 5 4 3.3 3.83 5

fixed length 2 1 3 3 5 3 2.0 2.83 5

straightnes 4 4 4 3 5 3 4.0 3.83 5

convexity & concavity 4 4 4 3 5 3 4.0 3.83 5

contour 4 4 4 3 5 3 4.0 3.83 5

twist 3 4 4 4 5 3 3.7 3.83 5

angularity 3 3 4 3 5 3 3.3 3.50 5

“corner & fillet radii 3 3 3 3 4 3 3.0 3.17 5

tensibility 5 4 3 3 1 3 4.0 3.17 5

tensile strength 5 4 3 4 5 4 4.0 4.17 5

HB/HV - hardness Vickers, approx. 5 4 5 3 5 3 4.7 4.17 5

anodizing layer thickness & tech 5 4 5 5 5 3 4.7 4.50 5

sealing techniques   5 4 5 5 5 2 4.7 4.33 5

Worl dtop

4

4

513

5

3

concerni ng i ndex general chemi cal componentmachi nabi l i ty Percentage of recycl ed Alanti - crossi on performance bei ng 6063 or not?T-val ue of process

Lishida

5

4

54

2

32

Jingcheng

4

5

443

4

4

National Quality Performance Average

Regional Quality Performance Average

Quality Benchmark Part B

Process technique specification Benchmark of Aluminium Alloy Profile (regional) survey result

CN average

6%6%

4%

8%

8%

8%

7%6%6%

8%

8%

8%

8%

9%

TW - Founder

8%8%

8%

6%

8%

6%8%8%

6%

6%

8%

6%

8%6%

EU - SAPA

7%7%

7%

7%

7%

7%7%7%

7%

7%

8%

7%

8%7%

E. EU - EMMI

5%9%

7%

9%

7%

5%7%9%

7%

5%

5%

7%

9%

9%

RESULTS AND DISCUSSIONRESULTS AND DISCUSSION

Significance of the result New attempt in a new material field and a new domain for

IKEA A demonstration of global performance, also regional’s Clear comparison both in a national and regional level,

obvious difference in all levels Relevant reference regarding regional complains in the

future Better targeting the problems or weakness from each

supplier or each region A good sum of global perspective, good for over-all

improvement

RESULTS AND DISCUSSIONRESULTS AND DISCUSSION

Why not using weighted average based upon the business volume by each regional supplier?

Technique Analysis 1. When using weighted average (average * % of business), the

results reprents the average quality performance in the global market; it only shows the current quality level on the market

2. When just using average, results reprents the average awareness of the techniques, the attitudes from quality managers, the decision by strategy makers, which gaves us better insights of the individual status, as well as the global performance average.

RESULTS AND DISCUSSIONRESULTS AND DISCUSSION

Validation of the results To reduce subjectivity, suppliers interviewed &

surveyed including: current suppliers Former suppliers Future suppliers

Peer check (since all suppliers are independent to each other)

Expertise check

RESEARCH STRATEGYRESEARCH STRATEGY

Qualitative research strategy• the characteristic of the project• the available resources• the target of the project• exploratory, explanatory, descriptive

Multimethod design• qualitative procedures combined with quantitative procedures• combination of different sampling methods and,• different validation methods

Qualitative sampling methods• maximum-variation sampling• criterion sampling• convenience sampling

METHODOLOGY METHODOLOGY

Literature review Books, journals, EAA, website, publications, brochure etc.

Interview method In-depth interviewing Document studies Using questionnaire Limitation

Subjectivity of the data acquired; (by avoid interest-concerning questions) “wish TO BE” VS “what really IS” in the answer Language barrier (interviewees included: Slovenia, China, Taiwan,

Sweden, Turkey etc.) A new tempt; no-experienced; needs adding expertise and experiences

Strength of interviewing Pro & cons of in-depth interviewing The nature of the population, sampling methods

argument How to make a good questionnaire

• Meeting objectives• Easy to understand & be answered• Precise information• Use open-ended questions to improve

Piloting the questionnaire (pre-testing before sending out)

METHOD ANALYSISMETHOD ANALYSIS

PART IV ENVIRONMENTAL IMPACT

Impact categories  Unit  Methodology

Depletion of Abiotic Resources (ADP) 

[kg Sb-Equiv.]  CML2001 

Acidification Potential (AP)  [kg SO2-Equiv.]  CML2001

Eutrophication Potential (EP) [kg Phosphate-Equiv.]

CML2001 

Greenhouse Gas emission (GWP 100 years) 

[kg CO2-Equiv.]  CML2001

Ozone Layer Depletion Potential (ODP, steady state) 

[kg R11-Equiv.]  CML2001 

Photo-oxidant Creation Potential (POCP) 

[kg Ethene-Equiv.] 

CML2001 

Primary energy from renewable raw materials 

[MJ]  net cal. value

Primary energy from non-renewable resources 

[MJ]  net cal. value

Pre-defined set of environmental imp

act categories

ENVIRONEMT METHODS

Objective Methods

Phase I Get to know the business;

Value chain mapping; forming big picture

Meeting people of different

roles (trading, i-component,

Istras, TQE etc.)

Phase II Know more about the business details &

design methodology, sampling, survey

questions

Interviewing, literature review,

documents study, reference to

professors;

Phase III Validation; analysis; findings and its

application and prediction

Survey analysis; quantitative

method; statistic tool;

Efficiency Tool:

Project Management Tool: Setting Objective, TBS (Task Breakdown Structure), planning, effcient Meeting, project control etc.

PHASE I EXAMPLE: Questions during Interview

Meeting Objective:

Purpose of initiating these questions is mostly to promote sharing relevant information, to improve

market reach, perfect environmental promises, quality benchmarking etc.

1. Visiting the production site of SAPA, get insight of IKEA aluminium product value

stream/chain maps (current and future map) and its implementation of lean manufacturing.

2. Insights of Aluminium Scraps (including both production scraps and directly purchased scraps)

purchasing strategy, cost influence, environmental impact.

3. Insights of environmental issue and its implementation in production and purchasing.

4. Insights of Production Quality standard adopted to IKEA products (families);

Insights of global aluminium markets, key suppliers, sub-suppliers for SAPA and the estimated

trend. (share this part of information with IKEA for better market reach)

Regarding Quality Standards, concerning aluminium parts and its raw material

1. What is the consideration of quality when selecting scraps or virgin raw material as ingot?

Quality and Price, how to position them and balance?

2. What is the benchmark for selecting right ingot from scraps? Are there documents or rules

following?

3. What are the methods used to control quality of ingot from recycled material? Examples;

techniques; methods; regulations; documents etc.

Regarding Environme ntal Issues:

1. What is the national emission limitation? Standardized? Some data? How to inspect? What’s

the difference between CN, NA and EU policies?

2. Measurement in production? How to inspect and control pollutions?

Regarding ways of trading:

1. What is the benchmark for choosing recycled alu for ingot? How much percent of recycled

materials are used? How to balance the recycled alu %? Major cost part in production and

where the competitive cost reduction lie? How is the competition in the market?

2. How to decide % of recycled alu?

3. What method used to set ingot price with sub-sup?

4. How to guarantee quality of ingots for extrusion and surface treatment?

5. How and where to practice environmental awareness with suppliers?

6. How to compare and eventually decide suppliers?

Questions during Meeting with supplier in Shanghai

Questions to supplier, quality, sales and operation managers or the person who take charge:

Regarding ingot (for extrusion) market conditions:

1. Who (region and the company) are the main suppliers of ingot for extrusion in the market? How much difference between the

ingots made of virgin raw Alu and recycled Alu? What are the differences in Price? What factors may change the price (like

volume, global non-ferreous metal price, agreed conditions on contract etc.)

2. Which suppliers have been considered for supplying ingots? What are the selection criteria? How much percentage of recycled

Alu is considered and why is that?

3. What are the methods used to inspect and guarantee the quality of the ingots?

4. What are the capacity differences between companies and regions? What are the strategies used for choosing the right capacity

supplier?

5. Who are the major ingot suppliers (globally and) in China in different regions? Import and export? Who are the key players

(remelter like Hydro) who make extrusion ingot out of recycled material in the market? Do they export and import too?

6. What are the available laws, regulations and customs policy regarding trading virgin material, scraps?

Regarding Quality Standards, concerning aluminium parts and its raw material

1. What is the consideration of quality when selecting scraps or virgin raw material as ingot? Quality and Price, how to position

them and balance?

2. What is the benchmark for selecting right ingot from scraps? Are there documents or rules following?

3. What are the methods used to control quality of ingot from recycled material? Examples; techniques; methods; regulations;

documents etc.

Meeting Objectives:

Most of the topics will be concentrated on the former part of the supply chain, before production.

More strategy and technique-orientated questions; any supporting data and documents during and

after the meeting will be very much appreciated!

1. To get a clear picture of the market condition of the ingot supplier, virgin raw materials and

recycled material

2. How the suppliers are trading ingot today in terms of quality, costs and way of trading

(purchasing strategies, methods, rules and environmental awareness etc.)

3. To get a clear idea of how the suppliers select ingot-suppliers based upon the quality standard.

4. How much environmental issue are considered and taken into production?

PHASE II EG.

PROCESS & ACTIVITIESPROCESS & ACTIVITIES

ACTIVITIES & COUNTRY Project I Project II A

Macro

P II B

Quality micro

Total

Document studies Yes yes yes

Site visit (E.U.) 3 3 3 3

Site visit (C.N., TW) 5 8 5 8

Face2face interview (SE, CN) 20 28 28 28

Telephone interview

(SE, CN, TK, SL, TW, US etc)

5 8 2 8

Indepth interview (SE, CN, TW) 4 8 8 10

Survey revision n/a 6 8 10

Pilotting Survey (CN, TW) n/a 3 3 3

Data External validity n/a 2 4 4

The sampling statistics:Validation

Suvery Sent Survey Collected

maximum-variation sampling 6 (CN:2 + Rest) 6

criterion sampling 10 7

convenience sampling 7 5

TOTAL 10 7 (1 potential + 1 former)

Population {CN: 5; W. EU. 1; E. EU. 2; TW: 1} Total: 9

SAMPLING STATISTICSSAMPLING STATISTICS

ValidationValidation

Survey Sent Survey Collected

Former supplier1 1

Current suppliers7 7 (1 abandoned)

Potential suppliers2 1

Peer supplier check3 2

CONCLUSIONCONCLUSION

Value chain mapping as a tool (business strategy and technique)

Important communication skills Difference in theory and reality, ideal situation can only get

closer.. Qualitative methods for carrying out exploratory and

explanatory research Quality benchmarking model designing attempt in a global

context Quantified methods combining qualitative study can help to

achieve objectivity

AppendixAppendix

Questions during Meeting with supplier in Shanghai

Regarding Quality Standards, concerning aluminium parts and its raw material

1. What is the consideration of quality when selecting scraps or virgin raw material as ingot?

Quality and Price, how to position them and balance?

2. What is the benchmark for selecting right ingot from scraps? Are there documents or rules

following?

3. What are the methods used to control quality of ingot from recycled material? Examples;

techniques; methods; regulations; documents etc.

Regarding Environme ntal Issues:

1. What is the national emission limitation? Standardized? Some data? How to inspect? What’s

the difference between CN, NA and EU policies?

2. Measurement in production? How to inspect and control pollutions?

Regarding ways of trading:

1. What is the benchmark for choosing recycled alu for ingot? How much percent of recycled

materials are used? How to balance the recycled alu %? Major cost part in production and

where the competitive cost reduction lie? How is the competition in the market?

2. How to decide % of recycled alu?

3. What method used to set ingot price with sub-sup?

4. How to guarantee quality of ingots for extrusion and surface treatment?

5. How and where to practice environmental awareness with suppliers?

6. How to compare and eventually decide suppliers?

Meeting Objectives:

Most of the topics will be concentrated on the former part of the supply chain, before production.

More strategy and technique-orientated questions; any supporting data and documents during and

after the meeting will be very much appreciated!

1. To get a clear picture of the market condition of the ingot supplier, virgin raw materials and

recycled material

2. How the suppliers are trading ingot today in terms of quality, costs and way of trading

(purchasing strategies, methods, rules and environmental awareness etc.)

3. To get a clear idea of how the suppliers select ingot-suppliers based upon the quality standard.

4. How much environmental issue are considered and taken into production?

INTERVIEW QUESTION

Objective:

Being the investigator from purchasing department, insight knowledge in quality, market

condition, environmental impact, regarding virgin raw aluminium material (before ingot) against

recycled materials is carried out.

Issue Target Question Focus

Quality standards (only concerning virgin raw material and Alu scraps)

Virgin raw material VS Scraps Purchasing manager

Quality manager

What is the consideration of quality when

selecting scraps or virgin raw material as ingot?

Quality and Price, how to position them and

balance?

What is the benchmark for

selecting right ingot from scraps?

Purchasing manager

Quality manager

Are there documents or rules following?

What are the methods used to

control quality of ingot from

recycled material?

Purchasing manager

Quality manager

Examples; techniques; methods; regulations;

documents etc.

Environmental Issues (only concerning virgin raw material and Alu scraps)

Environmental consideration Operation Mng.

Technician; Sales;

Purchasing Mng.

排放标准；数据；审核办法；审核结果；排放欧洲标准，国际标准等Policy, rule

Environment awareness practice Operation Mng.

Technician; Sales;

Purchasing Mng.

排放标准；生产监控方式；数据；措施In production, design, rule

Environment improvement Operation Mng.

Technician; Sales;

Purchasing Mng.

审核办法；审核结果；排放欧洲标准，国际标准等Data, comparison etc

Ways of trading

What and how to buy regarding

quality?

Purchasing Mng.

Quality Mng.

What is the benchmark for choosing recycled alu

for ingot? How much percent of recycled

materials are used?

What and how to buy regarding

costs?

Purchasing Mng

Operation Mng

How to balance the recycled alu %? Major cost

part in production and where the competitive cost

reduction lie? How is the competition in the

market?

What is the ways of trading by

suppliers?

Purchasing manager

Quality manager

How to decide % of recycled alu?

What method used to set ingot price with sub-sup?

How to guarantee quality of ingots for extrusion

and surface treatment?

How and where to practice environmental

awareness with suppliers?

How to compare and eventually decide suppliers?

INDEPTH INTERVIEW QUESTIONSTERVIEWQUESTIONS

Questions?