The Question of Quality
- July 28, 2017
Lean manufacturing drives quality and process improvements at Exchanger Industries
Exchanger Industries Ltd. of Calgary, AB, has occupied a unique market niche since it was founded in 1961. Exchanger designs and manufactures heat transfer equipment for the oil and natural gas, petrochemical, LNG and power generating industries. The company is one of a few manufacturers with decades of experience in fabricating three major heat exchanger related product lines: air cooled heat exchangers, shell and tube exchangers and waste heat boilers.
Exchanger Industries’ main manufacturing facility and head office is in Calgary. The plant is a little over 7,400 sq m (80,000 sq ft) in size. Due to the highly customized and labour-intensive content of the products it manufactures, Exchanger’s workforce fluctuates, but generally remains between 120 and 160, operating on two shifts in the manufacturing plant.
The heat transfer systems that Exchanger manufactures are complex and large, and the work is highly demanding. This complexity acts to limit the number of competitors across its full product line and in turn helps Exchanger maintain its position as a valued supplier to its global customer base.
“One of the things that Exchanger Industries has excelled in–and that others tend to shy away from–is the waste heat boilers,” says director of operations Gavin Exon, who joined Exchanger five years ago after a career in the automotive industry. “They tend to be extremely large units, in excess of 24’ x 10’ and 100,000 lb, that take a lot of work to produce–two to three times longer than a standard shell and tube exchanger.”
Exchanger has also responded to customer demand by branching out beyond carbon steel into high alloy work, where its deep welding expertise is an advantage. “It tends to be more difficult to weld. In some cases it requires very high interpass and preheat temperatures to be maintained. Alloys like chrome-moly or nine-chrome are sensitive to that, and are prone to defects and rework.”
Exchanger didn’t specifically target this kind of work, but found that customer demand, and a shortage of companies that offered this service, simply pushed it in this direction. Exchanger now views alloy welding as a core competence and is making strategic investments in a centre of excellence training program to ensure this capability is nothing short of world class.
Relatively recent equipment purchases to support this kind of large and complex work include automatic orbital welding and a unique CNC hole cutter–which Exon believes is one of only two in the whole country. In addition, the company has acquired a floor-mounted Peinemann 45T 2000 Bundle Extractor for inserting and extracting tube bundles. The unit has a 9 m bundle length capacity and 80 ton weight capacity.
“The hole cutter was installed to improve our nozzle welding,” Exon says. “It’s able to do from eight inches in diameter up to about 118, which covers 90 to 95 per cent of the vessels that we see in the shop.”
The unit has automated and sped up the hole cutting process, producing a cleaner cut, improving accuracy when fitting nozzles and also improving the welding efficiency and quality. In fact the unit is so efficient that Exchanger has found that once staff were cross-trained to operate it, it only needs to be run on a single shift.
Exon was part of the senior management team that led Exchanger Industries through a lean manufacturing transformation that has yielded impressive results. The company calls the program “Operational Effectiveness” because in addition to lean principles such as 5S, it has borrowed elements of other methodologies, such as integrated manufacturing orders and worker productivity improvements. Exon’s automotive background gave him direct experience with advanced business optimization frameworks.
The manufacturing system for heat exchangers has to be highly flexible and customizable and yet based within a frame of reference that was stable and standardized enough to ensure a high degree of repeatability.
“This promoted the use of indented bills of materials,” Exon says, “which in turn drove better communication across the organization as to how exactly to structure the supply chain and how to put an assembly together.” When these parameters were incorporated into Exchanger’s recently deployed Enterprise Resource Planning (ERP) system, it became a full manufacturing and purchasing tool rather than a simple financial system.
Activity-based estimating has enabled activity-based manufacturing orders, which are now precisely targeted to the work required on every job. And because all that data is integrated into the same management system as finance, Exchanger can now do activity-based costing.
“So whether it’s our materials, whether it’s our direct labour hours, or whether it’s additional purchased services, it’s all integrated into one place where we’re able to really understand what our business is doing and optimize our processes around that.”
Improving worker productivity was largely a matter of setting expectations, Exon says. “When projects are estimated at a high level, where you have a big bucket of hours for the entire project, it’s pretty tough to pinpoint where productivity gains and losses are occurring, which just drives variability and unpredictability, which makes it harder to be profitable.”
The activity-based approach means that manufacturing orders are based on detailed data such as the number of holes to be drilled, the depth, the specific material, etc., or the linear inches of weld and amount of weld deposit. With these kinds of factors taken into account, a highly ‘targeted’ manufacturing order can be generated for each component, complete with a detailed timeline for the work.
Exon estimates that overall costs have been reduced by about 30 per cent over the last year, while over the same period direct labour utilization rates have gone up by six per cent–18 per cent in the last five years.
But nothing is ever truly ‘finished’ when it comes to business optimization. Exchanger’s Operational Effectiveness program continues to be a work in progress.
“Business continues to evolve,” Exon says. “We want to make sure that we’re flexible so we evolve our systems along with the way the market is changing, and what our customers’ needs are.” SMT