1. I N D U S T R I A L O P E R A T I O N S A T S A F T
–
A R E V I E W O F T H E Q U A L I T Y , L C C A N D L O G I S T I C A L
P R O C E S S E S
Course: 1SE001 – Introduction to industrial operations
Authors: Martin Skogmalm, Charlotte Håkansson, Petter Dahllöf Ek, Serkan Alan
Datum: 2012-10-11

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Abstract
Introduction to industrial operations, Linnaeus School of Mathematics and Engineering,
Course code: 1SE001, Fall 2012
AUTHORS: Martin Skogmalm, Charlotte Håkansson, Petter Dahllöf Ek, Serkan Alan
SUPERVISOR: Anders Ingwald and Åsa Gustafsson
TITLE: Industrial operations at SAFT – a review of the Quality, LCC and Logistical processes
KEYWORDS: Quality, LCC, Logistics, ERP, Maintenance, 5S, Lean production.

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Table of Contents
1
Introduction
.................................................................................................................
4
1.1
Background
................................................................................................................................................................
4
1.1.1
Production
process
..............................................................................................................................................
6
1.2
Problem
discussion
................................................................................................................................................
8
1.3
Research
questions
................................................................................................................................................
8
1.4
Purpose
........................................................................................................................................................................
8
1.5
Limitation
...................................................................................................................................................................
8
1.6
Definitions
..................................................................................................................................................................
9
1.7
Method
.......................................................................................................................................................................
10
2
Literature review
.......................................................................................................
11
2.1
Quality
........................................................................................................................................................................
11
2.1.1
Management's
role
............................................................................................................................................
11
2.1.2
Different
methods
in
order
to
increase
quality
work
.........................................................................
12
2.2
LCC
...............................................................................................................................................................................
13
2.3
Logistics
.....................................................................................................................................................................
15
2.4
ERP
..............................................................................................................................................................................
16
2.5
Maintenance
............................................................................................................................................................
16
3
Empirical
...................................................................................................................
19
3.1
Quality
........................................................................................................................................................................
19
3.1.1
Background
..........................................................................................................................................................
19
3.1.2
Quality
work
today
............................................................................................................................................
19
3.1.3
Leadership
.............................................................................................................................................................
20
3.1.4
Education
...............................................................................................................................................................
20
3.1.5
Results
.....................................................................................................................................................................
20
3.1.6
The
Future
.............................................................................................................................................................
20
3.2
LCC
...............................................................................................................................................................................
20
3.3
Logistics
.....................................................................................................................................................................
21
3.4
ERP
..............................................................................................................................................................................
21
3.5
Maintenance
............................................................................................................................................................
22
3.5.1
Suppliers
.................................................................................................................................................................
23
4
Analysis
.....................................................................................................................
24
4.1
Quality
........................................................................................................................................................................
24
4.2
LCC
...............................................................................................................................................................................
24
4.3
Logistics
.....................................................................................................................................................................
25
4.4
ERP
..............................................................................................................................................................................
25
4.5
Maintenance
............................................................................................................................................................
26
5
Conclusions
................................................................................................................
27
6
Works
Cited
................................................................................................................
29
Appendices
......................................................................................................................
31
Pictures
Picture
1:
The
turnover
for
the
21st
century…………………………………………………………………………..
5
Picture
2:
Own
created
production
process
picture……………………………………………………...………..
6
Picture
3
&
4:
The
production
process
from
SAFTs
factory………………………………..............................
7
Picture
5:
Bathtub
curve……………………………………………………………………................................................
17

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1 INTRODUCTION
In the introduction to this task a background is presented. The background together with the
problem discussion defines the purpose of this task. Limitation, definitions and method are
also presented here.
1.1 BACKGROUND
SAFT is a French-owned Swedish company that fabricates nickel-cadmium batteries. The
company was founded by a Swedish engineer named Waldemar Jungner in 1910, but back in
the day the batteries were based on nickel and iron. However, across the Atlantic Ocean, an
American scientist named Benjamin Franklin tried to create a similar battery but Waldemar
beat him to it and was first with the patent.1
When he got his patent for the batteries he could not imagine that new batteries would be
manufactured with the same principal over a hundred years later. One of the most important
characteristics with his batteries was the quality; a battery made in 1926 had 70% left of its
full capacity after 50 years.2
Throughout the history the company has had some name changes due to change of ownership
and battery mix. Originally the company was called Svenska Ackumulator AB Jungner and
1974 it was changed to NIFE Jungner AB and 1991 the company changed name to NIFE AB
due to the change of ownership to the French company SAFT Group S.A and is today it is
called SAFT AB.3
SAFT is currently the leading company in the manufacturing of nickel-cadmium batteries and
have business partners and customers all over the globe. The batteries are used in trains,
military defense, space projects, power backups etc. in fact it can be used wherever the need
of a reliable power source backup is needed. The batteries are capable of providing cities with
backup power for approximately 15 minutes with 27 MW, they have a long lifetime and a
warranty for 20 years and they can withstand extreme temperatures, +60 to -40 degrees
Celsius.4
The turnover for the 21st
century has been more than profitable so far.
1
(Toftrup, 2012)
2
(Engström & Toftrup, 2012:5)
3
(Engström & Toftrup, 2012:6)
4
(Engström & Toftrup, 2012:4--14)

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Picture 1. The turnover for the 21st
century5
The strategy of SAFT is “We are determined upon being a leading supplier of high quality Ni-
Cd industrial batteries for reserve power and energy storage to the entire world market ” –
SAFT AB.6
5
(Engström & Toftrup, 2012:12)
6
(Saftbatteries, 2009)
0
100
200
300
400
500
600
700
800
900
1000
1100
1200
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
MSEK
Sales
volume in
MSEK

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1.1.1 PRODUCTION
PROCESS
This is a general chart over the production process to show how products are produced in
theory.
Picture 2: Own created production process picture
The production process of the nickel-cadmium batteries is basically the following:
The first step is to make metal stripes that will be welded into a plate. Later those plates will
be mounted in side frames that will hold the plates in place in the complete battery. Then two
plates, complete with side frames, will be attached to each other. Now that they have a plate
group it’s time to weld the nickel one together with the cadmium and place a plastic grid
between them so the battery will work. The final step is to put down the nickel-cadmium
group into a plastic container and add water and you will have a battery cell.

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Picture
3:
The production process from
SAFTs
factory
Picture
4:
The production process from
SAFTs
factory

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1.2 PROBLEM DISCUSSION
In recent decades, the industry has increasingly begun to use commercial models in quality,
Life Cycle Cost (LCC) and the logistics that relate to mass production and economies of
scale. This demands higher efficiency and improved methods of working without jeopardizing
the quality of the product. However, an implementation of these methods and to constantly
renew oneself is not always problem-free. Staff can easily experience a threat to efficiency
improvements because it might result in cutbacks. This shows the importance that these
models are clearly rooted in the whole organization. It is therefore interesting to study how
these models work at SAFT?
Quality work, LCC and logistics are based on reducing lead times, how will this work in an
organization that places high demands on quality? Is it possible to engage staff to improve
access to the goods and reach the goals SAFT has set?
To succeed with the implementation of the models requires strong commitment from
management and that stable structures are created to deal with the changes that occur in the
organization. Implementation of the models also requires a more interdisciplinary work and
various professional groups must cooperate. It is therefore interesting to study the effects of
the implementation of the different models?
1.3 RESEARCH QUESTIONS
These questions are a summary of the above problem discussion, which concludes the
following three questions.
1. How do the models work at SAFT?
2. Is it possible to engage staff to improve access to the goods and reach the goals you
have set?
3. What effects have the implementation of the models given?
1.4 PURPOSE
The purpose of the study is to describe the practice and implementation of quality, LCC and
logistical processes at the company SAFT. Further, the purpose is to examine if the usage of
the models have engaged the personal in the access to the goods in order to reach the goals
and what effects the implementation of the models have had.
1.5 LIMITATION
Because of the delay in our study visits and the limited time of the course we were forced to
keep some parts of how the company really works very shallow. Our knowledge and
experience of SAFT is also something that has to be taken into concern. Another shortcoming
of our work is that although SAFT was incredibly helpful and courteous so were our contact
person employed by the Quality Department, which has resulted in that the most detailed
information is naturally focused on quality. We have therefore a smaller proportion of
relevant facts about the other elements that our report is based on.

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1.6 DEFINITIONS
Quality: Many companies define quality as the product/service to achieve and preferably
exceed customer expectations. Other companies see it more as a degree to which the product
is produced correctly. Many different techniques and concepts have evolved to improve
product or service quality in the business. One concept is TQM, which according to Bergman
and Klefsjö is defined as "A constant striving to meet, and preferably exceed customer needs
and expectations at the lowest cost through continuous improvement where everyone is
involved and has a focus on the organization's processes."7
Life Cycle Cost: Life Cycle Cost Analysis is a useful method to collect and treat all costs that
occur over the full life span or a specified period of services or goods. Aim of the Life Cycle
Cost Analysis method show possibilities of minimizing the costs and maximizing the
turnover. The Life Cycle Cost Analysis includes the entire life cycle regarding raw material
manufacture, distribution, transportation and maintenance. LCC also provides important
inputs in the decision making process.
The Life Cycle Cost Model is a method to calculate the Life Cycle Costs in a company. “Life
Cycle Costs are summations of cost estimates from inception to disposal for both equipment
and projects as determined by an analytical study and estimate of total costs experienced
during their life.”8
Logistics: The term logistics comes from the late 19th century: from French logistique,
from loger 'to lodge9
. Logistics can, quite humorously, be defined as: “Logistics is nothing
but having the right item in the right quantity at the right time at the right place for the right
price in right condition to the right customer”.10
All those, quite different aspects, play an important role if a factory has the possibility to
deliver a product within the criteria that is considered good service.
Maintenance: Maintenance is mostly all actions that are demanded to retain or restore
materiel to a specified condition. It requires all the supplies and reparations that are needed to
keep the device in such a condition that it is able to carry out its intended purpose.
Maintenance is not only important on devices, equipment and machines, but also on the entire
plant, structure, ground facility etcetera.11
ERP: A system that can transfer all kind of information electronically through the
organization is called Enterprise Resource Planning systems (ERP). ERP is a complete
information system that supports and reflects all of the company’s business models. An ERP
7
(Bergman & Klefsjö, 2001)
8
(Barringer & Weber, 1996)
9
(Oxford University Press, 2012)
10
(Aron, 2011)
11
(The American Heritage® Dictionary of the English Language, 2009)

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system is therefore intended to control all of the organization’s internal and external
information flows that are included in the business model.12
1.7 METHOD
We have, during a period of nine weeks, taken part of different seminaries, which has given
us the foundations of knowledge to write this report.
We have also made two study visits at our chosen company, where the first one provided us
with basic information and comprehension about what the company was producing.
We have, based on that, made a qualitative interview with one of the responsible employers
on the company. This gave us a deeper insight and we could thereby make use of the
knowledge we have gained to an analysis of the company. As a further aid, we have also been
using books regarding the subject, as well as discussions with our teachers.
12
(Olve & Samuelsson, 2008)

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2 LITERATURE REVIEW
2.1 QUALITY
Quality has evolved and expanded as a concept. According to Bergman and Klefsjö, the
quality of the development is generally said to have followed four phases13
:
1. Quality improvement - constant improvements before, during and after production
2. Quality security - before production
3. Quality management - under production
4. Quality control - after production
The development of quality basically means that quality work is increasingly implemented
earlier in the production process then before.
Today is quality used as a competitive mean, more so then before. Several studies have been
conducted to examine the quality of work impact on corporate competitiveness and
profitability. According Lakhal14
, who conducted a study of 74 different organizations,
quality improvements lead to increased competitiveness and profitability. His study shows
that the quality primarily generates competitive advantages for the company and the
competitive advantages in turn leads to increased profitability. Other studies indicate that
quality improvement does not always lead to increased profitability but rather the opposite.
Iaquinto15
believe that negative results may occur when companies become too focused on
their quality work. This may mean that other, critical for the company, activities and abilities
are set aside, which reduces firm value. In addition, it helps the bureaucratic approach that
quality work means that employees feel barriers to creativity and spontaneity - qualities that
are essential for business innovation. For getting quality work to function, it requires
management.
2.1.1 MANAGEMENT'S
ROLE
According to Nilsson16
it rests on the management board to decide how the organization
should be controlled and to ensure that operations are conducted in accordance with the
business idea. This means ensuring that all the company’s processes work and that they
support the company’s business. The processes include financial management, human
resource development, competitor monitoring, computer systems, information management
and more.
Management's role is according to Nilsson17
also to drive the business forward and ensure that
the company's activities and processes are controlled in a way that creates commitment
competitiveness that benefits that benefits customers and the organization. It also means that
13
(Bergman & Klefsjö, 2001:93)
14
(Lakhal, 2009)
15
(Iaquinto, 1999)
16
(Nilsson, Att integrera ledningssystem, 2000)
17
(Nilsson, Utveckla kvalite, 1994)

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is the management's task to develop the business so that it achieves the intended quality
thereby to contribute to customer satisfaction. This task also involves responsibility that
clearly states objectives for quality and to establish a quality policy.18
Nilsson19
suggests that what management says or otherwise formulate in words also must be
consistent with management's actions. He goes on to describe that the most effective way to
communicate the quality policy and approach to quality is to be an example to the rest of the
organization. In other words, management should take an active role in the development of
quality. Bergman and Klefsjö emphasizes that the management's understanding of and
participation in the process of quality development is a prerequisite for success. 20
According to Bergman and Klefsjö, it is generally accepted that a company must have a
highly decentralized organization to be able to adapt to customer requirements. This means
that the organization must be managed decentralized and the manager must act as a leader.
The role is thus not to sit at the top of the organizational pyramid since the operational
knowledge is needed at the level where the operations are performed. Management's role is to
decide on the whole and thus let middle managers a greater role.21
Sashkin and Kiser also describes that for the implementation to be sustainable over long
empowerment is required. It means giving employees the authority because it is the
employees who need to identify and solve problems and improve work processes. In order to
decentralize the organization training is required. In addition, the corporate culture may need
to be modified which include looking over the policies and practices to promote a certain type
of behavior from employees.22
2.1.2 DIFFERENT
METHODS
IN
ORDER
TO
INCREASE
QUALITY
WORK
There are today a mass amount of different methods to be used in order to increase quality
work, 5 S, Six, Sigma, A3-report, Kaizen, PDCA-cycle, Just-in-time, so on and so forth. One
thing that they all have in common is that they build on the concept of Lean.
Lean requires a process-oriented approach. A process can be defined as "a chain of activities
with a clear starting point and a clear end point, consisting of several steps, both scheduled
and repetitive and has clear objectives and expected results."23
Lean is about focusing on
value creation processes, as well as minimizing waste. It therefore means that you shouldn't
do anything that does not add customer value, or in a systematic and carefully planned way
can lead to reduced waste of resources within the organization and thus concentrate on the
clients.24
Lean is not just a toolbox, but also a philosophy that must permeate the entire
organization. It is a long-term project that is based on everyone's involvement.25
Lean is a
18
(Womack & Jones, 2003)
19
(Nilsson, Utveckla kvalite, 1994)
20
(Bergman & Klefsjö, 2001: 388)
21
(Bergman & Klefsjö, 2001: 388)
22
(Sashkin & Kiser, 1993)
23
(Aronsson, Abrahamsson, & Spens, 2011)
24
(Bergman & Klefsjö, 2001; (Meland & Meland, 2006)
25
(Liker, 2009)

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major change that requires dedication and motivation of everyone in the company for the
desired results to be achieved.
Lean philosophy is based on theory that if you over time implement small changes in the way
one works, this should provide a new and improved attitude among employees. The idea is
that an employee shall in addition to his daily routine always consider how the work they do
can be developed and better contribute to the organization as a whole. This trend in the daily
work, says Liker, can eliminate one of the wastages i.e. the employees’ untapped creativity,
which means that the organization does not take advantage of the expertise and ideas to the
full.26
According to Jones and Mitchell the philosophy leads to a more efficient organization
through small changes over time. Best results are obtained in a decentralized organization
where employees are allowed more responsibility, because employees feel that they have the
control and power to change their work environment. Taken into account should also be the
employees' self-esteem. No one should be singled out for dereliction when inefficiency is
detected. The errors lie in the system and no individual should be charged for this.27
One important aspect within lean is a standardized way of working. One method that aims to
standardize the way of working is 5S, which stands for sorting, straightening, systematic
cleaning, standardizing and sustaining 28
. A basis of continuous improvement is
standardization, which means that activities must be conducted in the same way every time.
This means that before any problems can be identified, the process must be constant and
stable. The standardized approach should provide examples of what works best right now.
Improvements in the organization shall be carried out in conjunction with the ones that carry
out the work process.29
A well-functioning organization that is based on safety and efficiency
require orderliness. The 5S method is a tool for a consistent way, with small and simple steps,
to create a safe and efficient workplace.30
In order to create safe and efficient workplace organizations should incorporate quality and
environmental standards. International Organization for Standardization (ISO) is an
international quality standard, which requires demands of an organizations quality system and
how it should be built. Johansson et al. (1993:9)31
defines a quality system as a tool to control
and improve the quality of an organization's activities. This includes everything from
practices and methods to list of responsibilities. There are several hundred different ISO
standards where 9000 deals with quality system and the ISO 14000 series cover the
environmental systems.
2.2 LCC
Life Cycle Cost is an economic model, which shows and summarizes all the costs for a
project, investment or a product. The LCC method is a useful method to analyze the total cost
26
(Liker, 2009)
27
(Jones & Mitchell, 2006)
28
(Liker, 2009; Westwood, Moore, & Cooke, 2007)
29
(Meland & Meland, 2006)
30
(Meland & Meland, 2006)
31
(Johansson, Lindgren, & Lissgärde, 1993)

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for a project and compare it against other projects. LCC is the summation of all costs and cost
estimations when considering the time value of money. A LCC analysis includes all the costs
that are recurring costs and none recurring costs about specific investment during products
whole life cycle. Some cost that are mentioned in the LCC model are; purchase price,
installation costs, operating costs, maintenance and upgrade costs and residual or salvage
value at the end of the useful life.32
Life Cycle Costs consist of recurring costs and non-recurring costs for operation and support
of a product until nothing remains. Life cycle cost analysis is needed to create cost breakdown
structure. When developing a cost breakdown structure, the entire cost type should be
considered. The cost breakdown structure consists of four types of costs. These are listed
below.
• Research and Development Costs (Cr)
• Production and Construction Costs (Cp)
• Operation and Maintenance Costs (Co)
• Retirement and Disposal Costs (Cd)
All these costs are a part of the total cost of a products and can be calculated by using the
C = Cr + Cp + Co + Cd formulation. In this way, the costs breakdown structure helps to see
the highest cost drivers.
Basic Process of LCC Analysis
There are a lot of different processes and ways to analyze the LCC. In Kawauchis’33
article,
he describes the main processes of LCC analysis. These are:
• Process 1: Problem definition: This first step of LCC analysis is very important part of
the analysis. In this phase whole assumptions should be defined very thoroughly.
Clarity of problems may affect the other steps.
• Process 2: Cost elements definition: In this step all cost elements should be defined
by using cost breakdown structures (CBS). According to an international standard of
LCC, developing a cost breakdown structure is mainly about creating a basis
definition of cost items.
• Process 3: System modeling: Relations between input parameters and the cost
elements should be appropriate chosen in order to have a good model. Models can be
useful to estimate the cost items. A system model can be developed considering many
viewpoints like availability, maintainability and logistics.
• Process 4: Data collection: Certainty of the LCC can improve input data.
Requirements of input data sources about LCC analysis should be identified.
• Process 5: Cost profile development: Affordability analysis is an important part of the
success of LCC analysis, it should be considered long term vise of a financial planning
32
(Kloepffe, 1996)
33
(Kawauchi & Rausand , 1999)

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system. During the process of making a financial planning, all the alternative cases
should be compared on a common basis.
• Process 6: Evaluation: The last step is choosing the best alternative and evaluate it.
Sensitivity analysis is a method in comparing current situations and other alternatives.
If the current situation does not meet the criteria needs, it should be modified.
2.3 LOGISTICS
Logistics, according to Taylor34
has some key features:
• Movement and storage of materials.
• Managing the information flows that underpin the flow of materials
• Achieving customer-service standards and doing so in a cost-effective manner.
This, in turn, can be explained as: Logistics can be defined as the management of the flow of
goods and the service, including planning, implementing, controlling, effective and efficient
flow of goods and services between the point of origin and the point of consumption in order
to meet the requirements of customers.35
Logistic management and supply chain management has many similarities, as it in the end
reaches for the same goals; approach to managing the flow of materials and information
across the whole supply chain, from raw materials sources to end-user consumption. This is
mainly based on customer service and logistic costs. Customer service, which has been highly
developed over the last fifty years, made companies realize that improvements in logistics can
improve service and reduce costs, and thereby give the firm a significant competitive
advantage. Logistic costs are, quite obviously, about minimizing the actual available costs.36
Logistics is a very widespread area, which includes several steps within a factory. Some of
them are:
- Equipment’s, as in various tools that help increase efficiency.
- Material, as in movement and storage of materials.
- Transportation, which ranges across the whole supply chain; from raw materials to
final consumption of finished products, which even includes food- and personnel-
logistics.
Logistics can also mean an abstract field, like information and communication, which has a
fundamental role in the logistic systems.
Logistic management and supply chain management are essentially synonymous terms37
. The
supply chain includes not limited to the manufacturer and suppliers, but also transporters,
warehouses, retailers, and even customers themselves. Within each organization, such as a
34
(Taylor, 1997)
35
(Aron, 2011 )
36
(Taylor, 1997)
37
(Taylor, 1997)

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manufacturer, the supply chain includes all functions involved in receiving and filling a
customer request38
.
2.4 ERP
To guide its activities, management can take the help of a management system. Nilsson39
explains that the management system is to provide a holistic approach that gives the ability to
monitor the company's processes and its activities and outcomes. The systems are used to
establish policies and link measurable goals to them. Furthermore, he explains that companies
can choose to have one or more management systems. Although, for todays businesses it is
vital and a prerequisite for an efficient material flow to have an information system. The
information system contains invaluable information about the existing and future demands;
based on sales data, forecast information and customer order information. Essential
information is developed into specific purchasing, merchandising and manufacturing actions.
This information initiates a value-added inventory flow. The information is generated both
internally in the company by sales forecasts, but also from customers in the form of customer
orders, sales, delivery schedules, setup times, production times, lead times and throughput
times, capacity, forecasts and more. Other information that is usually recorded in the
computer system are input and output from warehouses, bar codes, identification of goods
unloaded from a truck, etc. Information on suppliers' delivery performance is also recorded in
the information system. The information may consist of stock availability information, order
confirmations, shipment notifications, etc. The quality of information has a major impact on
the business performance. It is vital that the information is two-way communication, from
SAFT to suppliers/customers/intermediaries/non-linear suppliers and secondary customers
and back again, in order to get a value-added exchange of information. Information expedites
coordination of planning and control of day-to-day operations, as well as, informs about
changes in deliveries if delays occur. If the information is not accurate, the efforts might be
misdirected.40
Swedish Standards Institute41
explains that management systems for environment, quality and
work environment are advantageously integrated into a single management system. The
benefit of this is that the company will have a complete picture of the organization,
orderliness, and efficiency gains in order to make better decisions. However, explains
Nilsson42
some of the risks of an integrated management system is that it increases the
complexity and it is a large development project, which contributes to increased
documentation and bureaucracy.
2.5 MAINTENANCE
Maintenance is mostly about finding different causes and prevent that those doesn’t lead to
any failures, shutdowns or any deficiencies in the quality. This results in more resilient
38
(Chopra & Meindl, 2007)
39
(Nilsson, Att integrera ledningssystem, 2000)
40
(Jonsson & Mattsson, 2011)
41
(Bäckman & Nilsson, 2005:11--4)
42
(Nilsson, Att integrera ledningssystem, 2000)

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products regarding errors, and makes it easier to find the consequences of faulty products, and
if possible reduce or eliminate these.43
The two different ways of maintenance is therefore that you can try to reduce the causes of
the failures, or try to reduce the consequences of failures that have already happened. These
usually go hand in hand as parts of the products or machines that they must be maintained
differently. For example, one machine has parts that are possible to repair, while some parts
have to be bought new and replace the old and broken part, which means that they are non-
repairable. The purpose of maintenance is to retain or restore units so those can be used as
they are meant to do. The propensity for mistakes of a device or machine often varies with
time. At the beginning of each product manufacturing, or in the up-start running time of a
machine, there are often quite many errors due to material variations or measurement errors.
Once these problems have been improved fewer errors occurs and the different parts of the
machine or product last longer due to proper usage. Finally, after a period with little faults and
small effort in maintenance, due to wear and aging the propensity for mistakes increases
again.
This can easily be plotted in a graph and because of its particular appearance is called bathtub
curve.
Picture 5: Bathtub curve44
The meaning of maintenance is usually to reduce costs, and maintenance is important when a
production is being planned and managed. Maintenance is usually divided in two different
types:
• Preventive maintenance
• Corrective maintenance (failure based maintenance)
Preventive maintenance is used to reduce the probability of failures of units. These are often
regular or scheduled, and may involve very simple improvements and maintenance, like daily
43
(Bergman & Klefsjö, 2001:147)
44
(Bergman & Klefsjö, 2001:153--4)

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cleaning or protection methods like oiling. This is easily done by a scheme, which includes
different checkpoints. Corrective or failure based maintenance means, which the word
indicates, focuses on maintenance on the equipment when an error already has occurred.
Both methods have their pros and cons, mostly because the preventive maintenance can be
quite expensive and time demanding, but time and cost-saving if it is important equipment
that breaks. If not done in time this may cause shutdowns or even worse, increased risk of the
employers, which may result in serious injuries. Failure based maintenance is preferable when
you can tolerate an error during the repair period and the cost of this will be less than the
preventive maintenance.

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3 EMPIRICAL
3.1 QUALITY
3.1.1 BACKGROUND
• What does quality within SAFT stand for?
A: In general SAFT have defined quality as a level of tolerances and standards for
each step in the production. But nothing is really defined about quality, because it
depends on different costumers and their requirements, demands and specifications.
• What quality systems are you working with?
A: SAFT WORLD CLASS is a standard quality tool that is available at the company
from the head office in France. It contains a lot of different tools such as 5 S.
3.1.2 QUALITY
WORK
TODAY
• Can you describe SAFTs' quality and how it works today?
A: SAFT delivers batteries that exceed the customers’ expectations every time.
• What does SAFT do to ensure the quality of products?
A: They deliver more powerful batteries as a safety-management, but the customers
doesn´t know, and often they don´t notice.
• How and when did you update the system?
A: The system of quality tools is updated on a regular basis; it is impossible to say
exactly when and where. We try to be leaders in the market as much as possible.
• How is it used from a "practical" point of view?
o Does project work occur?
A: The projects in SAFT WORLD CLASS TEAM are managed by different
people on every project. If the company in Oskarshamn starts a new quality-
project, they have to give feed-back to the head quarter in France.
o Is there anyone who takes the initiative to develop the system?
A: Most of the initiative to new projects and tests are done in France and then
delegated to the different factories for testing.
o What support is available when you are starting a new assignment/project?
A: Since the management in France initiates the projects and tests there is
always sufficient support and if not one asks for more resources or time to
finish the tests.
o Where does one turn for support?
A: Depending on delegation but usually it goes through the chain of command
all the way up to management in France.
o How do you ensure that your suppliers are working/using the same quality-
standards as you do?
A:We are keeping our suppliers for a long time, and after a while they are too
involved in SAFT and our business. It is very rare that our suppliers deliver
faulty products, and if they do we will have a high level of feed-back so they
will now about the problem. Our suppliers are working due to the same

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standards as we do, and since our co-operation lasts for a long time, these
methods will be well entrenched in their approach.
• How is results and quality control communicated to the rest of the organization?
A: Depends on which result one asks for but daily, weekly, monthly etc. For example
the results of production quota are published on weekly basis in the factory.
3.1.3 LEADERSHIP
• What is the managements’ role in quality control?
A: Nowadays they run the show, before each factory was able to perform their own
tests and projects, but that is much more limited today.
3.1.4 EDUCATION
• Is training provided to employees in the quality control work?
o For whom? What kind of training?
A: New employers get a kind of training to be aware of the quality-rules.
When new rules/tools are implemented they require different training steps for
each new tool.
3.1.5 RESULTS
• What are the critical success factors to consider?
A: Centralized initiative of projects but decentralized system of carrying out the
projects.
• What has been the biggest challenge?
A: The greatest challenge in Oskarshamn is that it is an old factory with a lot of
history, meaning that it is more difficult to integrate new ways of working when the
employers has their own, old habits.
• What has been the biggest benefit of quality work?
A: Awareness of quality
• What outcomes/results of working with quality work had you expected?
A: Different quality goals that have been reached and other information regarding
quality are spread to their employers by tablets, both regarding the French main
company and the one in Oskarshamn.
3.1.6 THE
FUTURE
• How do you see the future development of quality work?
o What can be improved?
A: The processes of handling quality, as well as give even more empowerment
to the workers. And we need to pay less time checking the quality ALL the
time and trust the system.
3.2 LCC
• What is SAFTs’ market and their mainly cost type?

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A: SAFT are mainly focusing on two different markets where they are selling their
batteries. These markets are “specialty battery group” and “industrial battery group”.
“Specialty battery group” require batteries with high performance primary and
rechargeable lithium batteries for the electronics, defense and space industries.
Batteries that are produced with high performance may have higher life cycle costs
because they have to produce the batteries with higher quality. Producing high quality
batteries requires more research and development costs and more material costs. On
the other hand, these high quality batteries demand less maintenance costs, which, in
the long turn, may have a lower cost in total than other industrial batteries thanks to
their quality.
“Industrial battery group”-batteries are rechargeable nickel and lithium based batteries
for demanding industrial applications. These batteries are used in different works such
as metering and professional electronics, emergency lighting, rail and mass transit,
aviation and clean energy storage. Industrial batteries have a higher maintenance cost
than the specialty battery groups batteries.
• What are SAFTs’ batteries characteristics costs?
A: SAFTs’ batteries have good quality and a reliable operation. SAFTs’ batteries have
a long useful lifetime and survive between +60C - 40OC, which is quite extreme
temperatures. When the batteries are used, SAFT guarantees that there are no sudden
failures, which results in a low maintenance and LCC-cost, since there is low fixing
and repairing-costs. SAFT are selling their batteries to a lot of countries and have to
transport their batteries with none, or as few as possible, damaged batteries. Their
batteries survive long storage and transport periods, where the conditions can be pretty
rough.
Thus SAFT enables their batteries to avoid costs of damage during the storage
and transportation.
3.3 LOGISTICS
• Which logistics activities are you using?
A: SAFT are using all types of different transportation systems, and they are out-
sourcing their logistics to other companies that then transport the goods by boats,
lorries, railroad and airplanes. They started to build a logistics chain to transport the
cadmium back to SAFT as early as -88, but back then it wasn’t for the environment,
but rather a question of cost as they were such a major consumers of Cadmium.
• Which sort of logistics are you using within the company?
A: Line production is mainly used within the company. The products follow the flow
and are transported between the machines by truck. It is the production and not the
transportation between the machines that is time demanding.
3.4 ERP
• What kind of computer systems (ERP) does SAFT use in the organization?
A: Today we have one main system called Movex but this one is old and will be
replaced next year with a new system from Movex. Movex is complemented with
other systems such as Operator, Minitab, AAP, Quickview, Excel and some other

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systems. The new upgrade will integrate most of the “extra” systems into one, Movex.
• How and when did you update the system?
A: The old system is from 1986, the reasons why we have not updated it before is
money and the amount of time it takes to implement a new system. It is often
preferable to use one system but it is so complex and expensive to switch systems that
you usually have some more systems, which are able to handle the areas where Movex
is limited. Changing the ERP-system is like a complex heart-chirurgery, you are
changing the basics, the heart within the company. Even if we are changing into a
new system, it is rare that the new, modern systems will be able to handle all different
tasks within a company.
• Do you use any type of track and trace system?
A: All pallets are equipped with an RFID-chip and some transports are equipped with
other sensors in order to monitor vital data.
3.5 Maintenance
• What is maintenance to SAFT?
A: SAFT has 15 mechanicals and 10 electricians who all work with different kinds of
maintenance in the company. SAFT (in Oskarshamn) has 6000 machines, where 200-
300 is so-called “key machines”, which they are focusing on regarding maintenance.
SAFT has in total four persons who are available around the clock, whom can fix all
the emergency maintenance, two physically in the factory and two on jour.
• How are you using preventive and failure-based maintenance?
A: We try to use prevented maintenance. 5 years ago was 70 % of the maintenance
emergency-based, and 30% prevented, nowadays is 53% prevented, which is a
remarkable advance. Much of it is easy maintenance, like cleaning the machine after
you have used it. Some of the machines are not necessary to use prevented
maintenance on, mainly for the reason that they are very easy to fix. Some machines
are much worse, where you have to find spare parts from Germany. Other machines
demand much more maintenance and more continuously, mostly because they are
literally too small. For example SAFT are using a 60 ton press, but would have needed
an 80 ton press, but there is no actual room in the company for such a big machine.
• How do you keep track on all the 6000 machines?
A: All the machines have a number, which makes it a lot easier to keep track on every
particular machine – like how often it breaks and how much money we have to spend
on each machine.
• What kind of maintenance is required on the batteries once they are delivered?
A: The maintenance that is required on the batteries when they are installed on
different places around the world is outsourced. The mainly part of maintenance on
the batteries is to change the water. SAFT is nowadays working on a, kind of,
maintenance-free battery regarding the water changing. The batteries require other
maintenance in order to have as long life cycle as possible.
• Maintenance is much about retaining and restoring your equipment and machines. Do
you have any kind of security processes and standards to prevent injuries?

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A: All the employers have a meeting in the morning where they go through if
something unusual has happened. They also have a safety expert who can stop the
production if she thinks it is too risky or dangerous. All the employers have to leave a
blood sample where they measure the cadmium level. There is a EU standard how
high the cadmium level is allowed to be, and when the employers reach half of that
level they are transferred to a different department, where the handling of cadmium is
lower. Smokers have the highest cadmium level in their blood, and therefore are
SAFT planning to use a “quit smoking parliament” in becoming a smoke free plant.
3.5.1 SUPPLIERS
• Which department chooses the suppliers who are responsible for the maintenance?
A: It is the purchasing department who does the decisions about which company they
should choose – not necessary the cheapest.
• Are you changing your suppliers often?
A: SAFT are keeping the same suppliers for a long time; they have for example been
using the same inspection-company for about 10 years.
• Are the suppliers working due to the same standards as SAFT does?
A: SAFT are sending their standards to their suppliers, so they have the ability, or
rather the necessary tools they will need to follow, with the same standards as SAFT
are using. This is an easy “check-list”.

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4 ANALYSIS
This chapter examines the empirical material we have gathered around the company SAFT
against the previously presented theory.
4.1 QUALITY
Quality has evolved and expanded as a concept both theoretically and within the company
SAFT, nowadays their quality models/work consists of several books. The implementation of
quality work is done earlier in the production process than before and there is more projects
focusing on quality and the importance of it than before. The main reason for this is that the
organization wants to streamline its organization and shorten lead times and thereby become
more flexible so as to provide customers with better service. The better quality generated by
an organization primarily generates competitive advantages for the company and the
competitive advantages in turn leads to increased profitability. This is achieved by removing
the activities that are non-value adding in the organization, improve flows using various tools
and establish standards when it comes to practices when working. Theorists such as Womack
and Jones and Lakhal confirm these practices and policies.45, 46
SAFT also stresses the importance of a "top-down" control of quality with a clear strategic
direction that knows where you are going with the implementation of different projects. It is
the management that has taken the decision to implement quality into the organization, and it
is from the management that the change starts. Moreover, a critical success factor in the
implementation is that management brings along employees by demonstrating that it produces
results both regarding efficiency and financially. In a process of change, it is essential with
participation and involvement from employees for a project to be successful. When it comes
to quality, it is the employees who are the key players and those who manage and develop the
business. Since there is also a lot of support and understanding for quality work from
management, this further contributes to increase the willingness of change of all employees in
the organization. The continuous work to get better quality is done mainly through the
concept of lean production and its different tools, in this essay mainly focused on 5S.
4.2 LCC
SAFT LCC assessment mainly deals with the product’s full life span from raw material to
disposal. SAFTs’ batteries have a long useful lifetime, which is about twenty-five years. NiCd
batteries that are produced at SAFT are completely recyclable. SAFT recycles more than 1000
tons every year. In the Nordic region 100% of SAFTs’ batteries are recycled and they are
reusing the old cadmium for new manufacturing cells. About 1/3 of the cadmium used in
manufacturing comes from recycled batteries. This means that SAFT more or less fulfills their
environmental responsibility by recycling cadmium and are also decreasing their raw material
costs by using recycled cadmium.
45
(Womack & Jones, 2003)
46
(Lakhal, 2009)

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LCC can be useful in decision making by comparing different alternatives. For example,
SAFT has a 60-ton press that demand much more continuously maintenance because of it is
of a small size. The alternative is, in this case, buying an 80-ton press, which would be
needed. But the problem is that there is no room for such a big machine in the company.
Buying an 80-ton press would be suitable in the long term, especially if you compare the total
LCC-cost of a new machine and the maintenance cost of the current machine. However only
considering the costs of a new machine and the maintenance is not enough to make an
accurate decisions’. Production availability, machines efficiency, capacity and the
environmental effect should be other criteria’s in making these decisions.
4.3 LOGISTICS
Logistics is a costly and time-consuming part of the production of the products. It is
constantly being looked at and made more efficient. By outsourcing the transportation
between production site and customers to other companies specialist in transportation SAFT
adheres to an efficient flow of goods.
Logistics is a wide and complicated concept, since it involves a lot of different norms, laws
and rules, both national and international. Since SAFT exports a fair amount of their batteries
abroad, this implies some extra logistical difficulties. Different areas in the world have
different packaging-standards, and SAFT are solving this problem by outsourcing to a
specialized transport-company. Other difficulties that may occur is problems regarding
communication, different languages, technology and time-zones.
Since the batteries mainly are used as back-ups after power failures, some of the batteries are
transported to very remote areas. This is one of SAFTs’ key selling points that they can make
and deliver these specialist batteries to remote areas. It is therefore important to have a
specialist transport company that can deliver the products on time and in pristine condition.
The batteries have to endure rough transportations, storage and extreme weather conditions
and therefore it is crucial that the transport is made with the utmost quality and care.
4.4 ERP
The information flow that goes with the flow of goods is designed to provide all parties with
operational information needed on site to carry out handling, transport and storage activities.
This information includes proper handling of special goods such as hazardous products within
the batteries or packages. SAFT utilizes a track and trace system that monitors the flow of
goods and provides the information system with valuable data. By equipping the goods with
an RFID chip the information flows with the material flow and is there by up to date. Or a
special sensor can monitor and document the temperature of the shipment throughout the
transport. The measured data are available at each monitoring point, a feature that enables the
shipper, recipient and controller to continually check the condition of the product. This is
especially important when dealing with hazardous products such as toxins created at the
factory. The effectiveness of containing the hazardous products can be harmed by temperature
fluctuations outside the recommended range.

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4.5 MAINTENANCE
Maintenance at SAFT is mostly about reducing costs and preventing shutdowns. They have
had a remarkable progress in preventive maintenance, and are still focusing on further
progresses. Since they started numbered the different machines, they have a more over-all
control of their maintenance, and may, in this case, calculate and evaluate which machines
they should focus on. This is also an aid so they can calculate which machines require
prevented maintenance, and which machines that are more profitable if they only perform
emergency-based maintenance.
Since the plant is rather old, they have had their challenges to accommodate the machines
needed to get a smooth and efficient production. Therefore maintenance is even more
important since they do not have the space to expand to the required production quantity they
would like to.

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5 CONCLUSIONS
The reason why organizations’ choose to change their structure can be several. We have for
our study observed that the implementation of various concepts/models/tools not only have
had a strategic intent, but that it depends in many cases on the desire to illustrate to its
environment that they conducted a job that is future-oriented. The conclusion is thus that one
chooses to introduce various concepts/models/tools such as Lean and 5S mainly because it is
expected of one to do so! If you want to belong to the elite and implement cutting edge
concepts/models/tools, then it is expected of you to keep up with the styles and trends. The
introduction of concepts/models/tools is often because organizations want to solve problems
that the business has, but sometimes the choice of concepts/models/tools cannot be directly
linked to the business problem. But for a change process to be successful demands several
success factors and one of the most important is motivation among employees. Well-
motivated employees who feel that there is an incentive to work with change management.
Another success factor is leadership - committed projects managers is not the same thing as
successful leadership - especially not in an industry leading company where leaders are
expected to inspire confidence, be inspiring and futuristic.
SAFT batteries have generally a low life cycle cost as they are produced with high quality,
which costs more than for example lead based batteries, and require a lower, in fact close to
nothing, maintenance cost as they are produced to withstand extreme surroundings such as
high and low temperature, deserts and the arctic wastelands of Alaska. The somewhat higher
production cost and the low maintenance cost leads to an acceptable life cycle cost, which is
what most companies’ desire.
Another parameter to bring the total life cycle cost down is the recycling of the batteries. The
recycling of the batteries that remain in Scandinavia is in fact 100%. Even thought that it is a
fantastic number only the cadmium is reused in new batteries, the other parts like the plastic
and nickel is sold to other companies. You can almost say that they reuse what the gain on
reusing.
Since it is rather difficult to specialize on all different tasks in a company, outsourcing may be
an alternative. One positive effect by outsourcing is that you hire a specialized company
regarding that task. SAFT hires companies regarding both maintenance and logistics. During
the transportations is the supplier responsible for the quality and different warranties, laws
and standards. This entails in a lower cost for SAFT, and is also time-saving.
Since SAFT hires electricians and other maintenance-educated workers, they ensure that their
maintenance is done by someone who is legally certified. It is logical that they are focusing
on preventive maintenance, as the theory says is preferred, and even better that they are
calculating on every machine in order to see if it is profitable with preventive maintenance.
This ensures that they are focusing on the most important machines, keeping track on which
parts of the machines that is most likely to break, and maybe even order spare-parts in
advance.
Nowadays information is mainly transferred electronically all through the organization

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including suppliers and to and from end-users. Information can be sent by mail, telephone, fax
or other electronic data interchange (EDI:s)47
.
Because today there is an overflow of information and a lot of it is not relevant, the effort to
provide correct information is complicated. Therefore it is only logical that SAFT chooses to
have an ERP system because they are in need of an integrated information system that
communicates through all though the organization, including suppliers, intermediaries and
others not directly linked to the organization. For example once a customer has placed an
order, he receives an order confirmation from the manufacturer or retailer specifying the
scheduled delivery time. At the same time the system forwards the information about the
scheduled delivery to all other parties involved in the flow of goods. Consequently, these
parties have been granted the time to plan and schedule, which provides optimally settings for
accomplishing the flow of goods in terms of costs and services. The information that is
available only after the flow of goods has been completed is for example an invoice that the
recipient receives a few days after delivery. Information also flows in the opposite direction
as the flow of goods, for example a status report on the execution of an order. The status
report can include information from dispatching points about the time when the flow of goods
passed critical stations in the transport chain. These stations can include borders in
international shipments.
47
Electronic Data Interchange (EDI) is the electronic transfer of information. EDI makes it possible to ensure that the right information
reaches the receiver (Parfett, 1992)

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APPENDICES
Questions Quality
• What is quality to you? What does quality within SAFT stand for?
• What quality systems are you working with
o When were they introduced?
o By whom?
o How?
History
• How did the quality system look back then?
o Models, tools, standards and so on?
Quality work today
• Can you describe SAFT's quality and how it works today?
• What does SAFT do to ensure the quality of products?
• What processes are included?
• How and when did you update the system?
o Control?
• How is it used from a "practical" point of view?
o Does project work occur?
o Is there anyone who takes the initiative to develop the system?
o What support is available when starting new assignments / projects?
o Where does one turn for support?
• Quality tools / models
• Who uses them?
• How is results and quality control communicated to the rest of the organization?
Leadership
• What is the managements role in quality control?
Education
• Is training provided to employees in the quality control work?
o For whom?
o What kind of training?
Results
• What are the critical success factors to consider?
• What has been the biggest challenge?
• What has been the biggest benefit of quality work?
• What outcomes / results of working with quality work had you expected?

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The Future
• How do you see the future development of quality work?
o What can be improved?
ERP
• What kind of computer systems (ERP) does SAFT use in the organization?
Logistics
• Partners - how many companies are involved in the shipment to a specific customer?
o Users / are all included in the ERP?
• How does SAFT manage the material flow?
• What is your delivery pattern?
• How do you evaluate your suppliers?
• How has SAFT organized production resources?
• What kind of material planning method does SAFT have?
Maintenance
• How does SAFT work with maintenance?
o Do you do in-house or outsource repairs?
• How do you choose the 3rd party?
o Lead-time?
o Price?
o Quality?
§ What is most important?
• What methods are used for maintenance planning?
LCC
• Co-operation on the purchase of plastic + nickel?
• Graphic map?
• The manufacturing process of the battery - see blackboard Ca - Ni - Plastic sleeve – mm
• The time from decision to implementation?
• How does SAFT handle the LCC assessment?
• How many critical using for making decision about LCC?
o Costs,
o Useful life
o Income