|Steel and Fabrication|
|Today's Steel industry is marked by intense global competition, cyclical markets, changing demand patterns, and the commoditization of products. While this environment is very challenging, it also offers tremendous opportunities to companies that are able to:
Steel producers and processors that master these key operational capabilities position themselves to increase market share, revenues and profits.
Real World Issues
Leading Steel companies are recognizing that these goals can only be achieved by integrating management of the entire business around a common base of information and streamlined business processes. That is what enterprise resource management systems are designed to do. But there are fundamental product and process issues that make the Steel industry unique, and that must be effectively addressed by such a system in order to be successful. Some of these real world issues are:
Actual quality varies from heat to heat
Many of the unique aspects of the Steel industry stem from the fact that every heat or lot of a given metallurgical grade is different. Each heat has somewhat different actual quality - i.e. chemical and physical properties - that must be taken into consideration when they are used to make end products.
All material is defined by its attributes and characteristics
Because all material has the chemical and physical properties of the heat or lot from which it is made, and also has additional mechanical and dimensional properties coming from how it is processed, it cannot be fully identified by just a part number or material code. The attributes required to identify material are different for different types of items (e.g. length, height and width for a billet vs. OD, wall and length for a tube). The actual values (characteristics) of the appropriate attributes must be known for each item through all levels of production from heat to finished product.
Inventory is tracked at the tag level
Because of the variations described above, inventory is tracked at the tag level (i.e. slab #, billet #, coil ID, spool #, bundle #, etc.). Quantity, properties, dimensions, and inventory location can be different for each tag #.
Material application is a function of actual quality
Again, because of the variations described above, material is applied to orders based on actual properties. Applicators must identify and reserve available material with the right combination of properties to conform to the specifications for each order (e.g. the chemical and physical properties of the rod used to make wire must match the customer's specifications for that product).
Material is often reapplied to other orders
Material can be reapplied from in-process orders and Q.C. hold status to other in-process orders with different specifications. The chain of property contribution must be maintained to provide product quality certification and conformance to specifications.
A given product can be produced in multiple ways
The process/practice can be altered to produce a desired product based on the material that is applied. Alternate starting sizes can be used with additional operations (e.g. roll pass, mill, draw, etc.). Certain properties can be adjusted by additional process steps (e.g. heat treatment or annealing).
Quality control & tracking is critical
Material must be tested at various stages throughout the production process and certified test results are often required by customers. Process and environmental data must also be continuously collected for process control and process improvement. Traceability must be maintained from the original heat and casting to the end product shipped to the customer.
Units of measure are variable
A given item may be sold or purchased in any one of several units of measure (e.g. lbs or kg, feet or meters, sqft or sqm). Production, however, may be scheduled and reported in a different unit of measure, so the various order quantities need to be converted for production's use and then converted back for shipment.
Inexact quantities are a way of life
In purchasing, manufacturing and selling, exact planned order quantities are virtually never realized. Shipment or receipt of a quantity that is slightly more or less than the order quantity is a normal practice. Customers often specify quantity tolerances that are acceptable to them.
Effective scheduling is important to mill productivity
All Steel companies are capital intensive and must effectively utilize their capital equipment in order to be profitable. Because of this, mill scheduling is driven by numerous factors in addition to customer request dates. In order to minimize downtime due to setups, most mills sequence production by either the attributes of the material being produced (e.g. grade, shape, thickness, diameter, etc.), and/or by the attributes of the material it is being produced from (e.g. starting thickness vs. ending thickness). Many mills also schedule around their biggest bottleneck (e.g. melt shop, rolling mill, annealing furnace, etc). In some cases, a standard production cycle of related products is scheduled in advance and customer orders are booked against that schedule. This is often called a cycle schedule, rolling schedule, or campaign.
Shipping/receiving logistics are a key aspect of operations
Because the material being shipped or received is typically of considerable size and/or weight: loading/unloading capacity is limited, freight costs are significant, and shipping mistakes can be costly. Efficient carrier scheduling and proper loading are crucial to both customer service and overall profitability.
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