How To Improve DIFOT
Orrcon Steel Case Study


How to improve DIFOT: a real life example of Orrcon Steel.
DIFOT lifted from 60% to more than 90% in less than 3 months.

The Business Challenge

Orrcon Steel is a leading Australian manufacturer and distributor of steel, tube, and pipe. The company has been tackling a key challenge: how to improve DIFOT (Delivery In Full, On Time). Owned by BlueScope Steel, the business employs around 600 people across manufacturing plants in Queensland and South Australia. Not to mention the distribution centres nationwide. Central to its Victorian distribution plant is a 13-year-old automated steel bar picking machine with four individual operating stations. Since taking over this machine in March 2016, Orrcon identified bottlenecks and inefficiencies. These issues were impacting DIFOT, with next-day deliveries frequently delayed.

The Approach on How To Improve DIFOT

Rather than a traditional ‘watch and observe’ approach, OE Partners took a data-driven path to improving DIFOT. By analysing data that hadn’t previously been accessed because of a lack of onsite expertise. The causes of bottlenecks were identified, and methods of operation changed to ensure next-day delivery of steel.

The Results

Orrcon now achieves DIFOT (delivery in full on time) for just over 90% of orders, compared to 60% previously. Orrcon has significantly improved customer satisfaction, optimised machine replenishment systems, streamlined maintenance, and reduced labour needs by about 20%.

Data Analysis: The Key to Operational Transformation

When Peter Whelan joined Orrcon Steel as Operations Manager in May 2016, he found something concerning. He found high levels of tension in the company’s distribution plant in Victoria. Orders were sometimes days behind, sales staff were frustrated, and customers were unhappy. To the point that some were looking to alternative sources of supply.

Peter recognised that the automated steel bar picking machine—a critical operational asset—contributed to these issues and called in OE Partners to explore how to improve DIFOT

“What I found interesting about OE Partners was that they didn’t go about it in what I would call the traditional method of watching and observing,” Peter Whelan says.

“Initially I was a bit sceptical about the approach on how to improve DIFOT, as he spent a lot of time delving into the brains of the equipment and analysing data. We hadn’t been able to do this previously because we didn’t have the onsite expertise.”

The 6-storey-high picking machine is extremely complex. It has four separate operating stations that pick, restock and handle delivery orders, and 1600 cassettes for different product types.

OE Partners quickly realised that the machine was under-utilised, and was often idle despite a large number of orders backing up. However, the optimal operational process was not clearly apparent, and accurate measures were not easily accessible.

“We were able to build up a really accurate 12-month data model which revealed issues including a slow picking process, incorrect stock levels and the removal of operators to perform other tasks.”

Damien Lacey, Director, OE Partners

They engaged closely with the European manufacturers of the equipment, collecting data, interrogating it and running a series of tests. An end-to-end Value Stream Map of the whole operation was completed, and workshops were conducted with key staff to uncover the overall process, pain points and potential errors.

how to imrpove difot
(Whole of Operation Value Stream Map - highlighting process constraints and waste)

“There was a mountain of unused process data residing in the operating system, and it provided an accurate understanding of what had been happening, right to the very second,” Damien Lacey says. “We were able to build up a 12-month data model which revealed issues including a slow picking process, incorrect stock levels and the removal of operators to perform other tasks.”

Maintenance and machine setting issues were also hampering performance, with the result that next-day delivery of orders was sometimes dragging out another two or three days.

Once the problems were identified, Orrcon changed and refined methods of operation, improved replenishment systems and addressed key maintenance issues.

The Outcomes: How to Improve DIFOT Effectively

Within three months, DIFOT lifted from 60% to more than 90%, and labour requirements dropped from around 55 staff to around 45.

Sales volumes have picked up again, customers are happy, and a sense of calm has replaced the previous tensions in the plant.

“OE Partners’ approach to our problems was completely different from what I had expected. The data they produced regarding the unused capacity of the machine really surprised us.

In just three months OE Partners’ work has assisted us to improve DIFOT from around 60% to more than 90%, sales volumes have increased, and we have reduced manpower by 20%. The business is now running very smoothly, and we are extremely pleased with the overall outcomes.”

Peter Whelan, Operations Manager, Orrcon Steel