SECTION 1 COMPANY OVERVIEW

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1 problems Selection of the problem 29 Section 4: Problem Formulation Cognitive Map of the problem 34 Theoretical Framework 35 Second Cognitive Map of the problem 45 Diagnostic formulation 46 Section 5: Suggested Solutions to the problem Project Implementation 48 Work Plan & Solutions Implementations 50 Analysis of the results 67 Conclusion & recommendations 70 Bibliography 71 SECTION 1 COMPANY OVERVIEW

2 WHAT IS A FASTENER? Before introducing the Fastener Industry and Industrias AUGE we have to define what a fastener is. A Fastener is a mechanical device designed specifically to hold, join, couple, assemble, or maintain equilibrium of single or multiple components. Fastening is the act or process by which single or multiple components are held, joined, coupled, assembled or maintained in equilibrium. Illustration 1.1 Fastener Source: FASTENER INDUSTRY OVERVIEW Global sales of industrial fasteners are expected to grow 5.2 percent per year to $82.9 billion in 2016, accelerating from the rate of market expansion. In 2011, motor vehicle original equipment manufacturing was the largest market for industrial fasteners, and this market will post the biggest gains through 2016 in monetary terms. In addition, acceleration in manufacturing output and fixed investment spending will lead to increased demand for fasteners used in machinery. The Asia/Pacific region will record the strongest demand gains from 2011 to 2016, averaging 7.4 percent per year. This expansion will be driven primarily by the strong Chinese market, which will continue to advance at a rapid pace. Rising demand in the smaller Indian market will complement these gains. Additionally, sales of fasteners in other developing areas of the world will advance at a healthy pace. Knowing this, INDUSTRIAS AUGE has opened a distribution center in Singapore on December 2012 and a manufacturing site in Malaysia is foreseen for third quarter

3 In the Fastener Industry SAFETY and QUALITY are the most valued factors and they are critical in the selection of a fastener supplier because the failures presented in this type of product can result in: 1. Accidents 2. Permanently damaged reputation 3. Project down time 4. Costly law suits One of the most recent examples occurred in Brazil back in 2009 where a fastener failure in subsea installations offshore Brazil resulted in remediation costs in excess of $150 million USD. Failure was due to improperly processed raw material steel. Petrobras did not specify which company manufactured the bolt. The well operation was closed until replacement was completed. The reason for the initial failure was found to be that a set of bolts for the initial riser installation did not comply with the original specifications or certification requirements. This resulted in their failure due to cracking by hydrogen embrittlement (loss of ductility of a material). The same fault was also present on one other recently installed riser requiring similar modifications. Because of this event, major OEM equipment suppliers and end-users are revising specifications and requirements for commodity fasteners used in these applications. The American Petroleum Institute is standardizing the norms for bolts and INDUSTRIAS AUGE is currently seeking the API 20-E certification. 6

4 COMPANY OVERVIEW Industrias AUGE is a privately held North American manufacturer of specified fasteners, multiple types of steel components and fastening systems for the Oil & Gas, Energy, Equipment Manufacturing, Construction and Wind Power Industries. It is an ISO 9001 certified company. As a global company, AUGE manufactures and distributes Pipelines, Valves, Metal Plates, Fasteners, Fittings, Flanges, Pumps, Hoses and Gaskets. It strives to provide their customers with high quality products, competitive pricing, and outstanding service by incorporating new solutions for domestic and international markets through the commitment, teamwork and proactive attitude of their personnel. With about 250 employees, AUGE has a global distribution in more than 20 countries and a global presence in México, United States, China, and Singapore. In the near future, Malaysia and France will have headquarters branches too. Illustration 1.2 AUGE s REACH 7

5 Industrias AUGE is structured in 4 revenue generating divisions: Illustration 1.3 AUGE s revenues 8

6 AUGE s STRATEGIC VISION At AUGE we relentlessly strive to meet the needs of our customers and work diligently to transform our business relationships to partnerships. We are not interested in quick or transactional associations, we seek long-term endeavors that promote and maintain our mutual leadership in the market and generate profitability for our partners. We achieve this by being a global leader in the manufacturing of our products and stepping up to the challenges set forth by our current and potential clients. Through commitment, teamwork, positive attitude, and cooperation of all personnel, we will be the undisputed leader in our sectors; recognized for setting the technical and performance standards in all of our businesses and for creating customer success, not just satisfaction. AUGE s VALUES SAFETY The most important value, undervalued AUGE s product knowledge & manufacturing capability ensure that it can meet any specification required. Through this, it can manufacture the right part for the right application preventing potential failures. Moreover, the company takes responsibility for preventing injuries by identifying near misses to protect safety and health of employees, visitors and communities where we operate. AUGE is actively pursuing ISO Certification. QUALITY The core of our product and AUGE mindset The Global Engineering Team review all the products and customer specific documentations. AUGE develops implements and maintains Zero-Defect capable processes using statistics. In fact, it controls all of its processes so that both AUGE and its customers have full confidence in the product. COLLABORATION 9

7 We want partners! AUGE is continually in contact with its potential partners in order to share experience and achieve common goals. The company communicates clear direction and structured feedback to encourage interaction and teamwork. INNOVATION We believe the best is yet to be invented! Using Global Service Based Initiatives, AUGE pursues creativity with practicality and value for all its stakeholders. Continuous Improvement Team is being developed, focused on product innovation, lean manufacturing and process stabilization. ORGANIZATION CHART Illustration 1.4 AUGE s organization chart CEO Sales Development Director CFO Operation Director Sales Director Quality Director Global Account Manager (GAM) Source: Personal data The Finance department contains a Controller and a Finance Manager. 10

8 The Operation Department is constituted by a Supply Chain Manager, a Production Manager and a Production Engineering Manager. And the Quality Department is also represented by a Quality Assistant Manager and a Quality Control Manager. AUGE s PRODUCT Illustration 1.5 AUGE s Core Product *CNC Machines: Computer Numerical Control Machines All the products are complaint with ASTM, ASME, AWHEM, DIN, JIS, ISO, ANSI and NACE standards. 11

9 AUGE s MANUFACTURING CAPABILITIES Industrias AUGE manufactures and supplies on time a high quality product that meets all Customer and Industry requirements: Illustration 1.6 Manufacturing Process One of the biggest assets of Industrias AUGE is the in house heat treatment of steel bars. AUGE performs Heat Treatment in a High-Tech furnace that gives homogenous hardness and excellent straightness in all the steel bars, meeting international standards and with no surface decarburization of the finished products. Its Heat- Treatment is environment friendly by using water as a quenching medium. Illustration 1.7 Heat Treatment 12

10 What is a Heat Treatment? Heat Treatment is a process utilized to change certain characteristics of metals and alloys in order to make them more suitable for a particular kind of application. In general, heat treatment is the term for any process employed which changes the physical properties of a metal by either heating or cooling. Heat Treating can greatly influence mechanical properties such as: Strength Hardness Ductility Toughness Wear Resistance AUGE applies heat treatment process to steel (carbon steel and stainless steel), metals (cooper and aluminum), and alloys (brass) Plating & Coating Approximately 90% of all carbon steel fasteners are plated, coated, or furnished with some other type of supplementary finish. Plating is the deposition of an adherent metal onto the surface of a base metal. The principal reasons are to: Protect against corrosion Enhance appearance Control installation torque-tension relationships Minimize thread seizing Assist product identification Illustration 1.8 Coating process Source: AUGE s photo 13

11 AUGE QUALITY AUGE is currently in American Petroleum Institute certification process and following International Organization for Standardization certifications. American Petroleum Institute (API) Certifications: This API standard specifies requirements for the qualification, production and documentation of alloy and carbon steel bolting used in the petroleum and natural gas industries when referenced by an applicable API equipment standard or otherwise specified as a requirement for compliance. This API Standard establishes requirements for three bolting specification levels (BSL). These three BSL designations define different levels of technical, quality and qualification requirements, BSL-1, BSL-2 and BSL-3. The BSLs are numbered in increasing levels of severity in order to reflect increasing technical, quality and qualification criteria. International Organization for Standardization (ISO) Certification: ISO is the world s largest developer of voluntary International Standards. International Standards give state of the art specifications for products, services and good practice, helping to make industry more efficient and effective. Developed through global consensus, it helps to break down barriers to international trade. In addition, to ensure that our product is compliant with its Illustration 1.9 Testing AUGE s photo customers and the industry requirements, AUGE performs multiple tests in its laboratories. TOP CUSTOMERS 14

12 Illustration 1.10 AUGE s Customers Approvals - Information about AUGE s suppliers and competitors are confidential - GLOBAL REACH 15

13 Illustration 1.11 AUGE s Expansion 16