The price of copper has increased steadily over the past 30 years, with the price per pound now more than $3, from under a dollar in 1995. Meanwhile, in the 1970s, a 1,500 square-foot house contained about 280 pounds of copper, while today's 2,200 square-foot house has about 450 pounds. About 35 pounds of copper went into an automobile in the 1970s, compared to the 50-to-80 pounds used in today's production.
A Boeing 727 airplane uses 9,000 pounds of copper.These increases can pose problems for copper manufacturing facilities that must control production costs while dealing with the higher price of commodities.
Luvata Buffalo Inc., Buffalo, N.Y., a brass and copper sheet mill operation, has a wide customer base that services varied market segments including the appliance industry, telecommunications, ordinance, connectors, and rolled products.
Their sister plant in Kentucky, called Luvata Franklin, uses copper strip from the Buffalo facility to make copper tubing for the air conditioning industry. In late 2005, the Luvata Corporate Group issued a directive for all production facilities to collaborate and reduce total working capital across all facilities. The objective for Luvata Franklin and Buffalo was to reduce the total inventory held by both plants.According to Jeffrey Ball, Luvata's value engineering and information services manager, “This presented a unique challenge for both plants. The two plants had separate planning, inventory and scheduling systems, and in order to ensure that the weld lines at Franklin never ran out of raw material, there was always a large amount of inventory 'in the pipeline.'
"In order to prevent stock outs of a specific part number, a great deal of time was required by both the Buffalo and Franklin scheduling teams to avert disaster. It seemed as though, whichever parts were made, they were not the parts that were needed today at Franklin. Expediting of individual part numbers was the norm.”
What Luvata needed was a system that could integrate both the Buffalo and Franklin shop floor control systems and provide a visual, easy-to-understand, and real-time representation of the total supply chain.
The Buffalo and Franklin scheduling groups formed a team to address the need to reduce the amount of working capital tied up in the supply chain and improve the reliability of deliveries.
“There was plenty of candid conversation within the team that moved the two plants from a win/lose mentality, to a group focused on developing a win/win result,” Ball said.
The Franklin plant found a solution in a new tool called digital kanban (also known as eKanban) from Datacraft Solutions, Durham, N.C., a demand-driven supply chain technology provider. Based upon the initial success of the digital kanban system at Franklin, the Buffalo facility installed the same system in their plant. Now both plants have a common supply chain management system that was easily, quickly, and affordably implemented.
The Buffalo/Franklin team worked closely with Datacraft to define the project costs, benefits and time schedules. The primary objectives of reduced working capital (25 percent inventory reduction), improved delivery reliability (avoid stockouts), easy-to-use scheduling modules, and quick implementation time fell well within Luvata's budget and timeframe.
“The team is also highly confident that the large amount of time currently devoted to expediting material will be virtually eliminated from their daily routines,” Ball said.
Thomas R. Cutler is a manufacturing writer and author, and is the lead spokesperson for the ETO Institute (www.etoinstitute.org). He can be contacted at [email protected]