Hyundai Steel's Ramp-up Strategy and the Learning Effect

Abstract

Once a company begins its development process, putting products into the market as quickly as possible to get a return on investment is the fundamental corporate activity. A product’s time to market can be categorized into the development time for the product and production processes and production ramp-up time. Existing studies have focused on reducing development time by primarily increasing efficiency. However, no matter how much a company shortens its development time, there may be a delay in the return on investment if production ramp-up takes too much time. This paper analyzes the processes of Hyundai Steel, a major Korean steel manufacturer. Moreover, it examines the process of its implementation of blast furnace technology through mass production. The company used a strategy that maximized the learning effect by implementing three blast furnaces with the same specifications in succession and without delay. They planned to implement the blast furnaces with no overlap in the implementation schedule, which enabled the same ramp-up team to start up production successively. Thus, the team was able to leverage the experience gained in ramping up one blast furnace for ramp-ups of subsequent blast furnaces. This learning effect enabled them to successfully reduce the ramp-up time linearly, as shown on a semilog graph.