BWP SFS Metal and Steel

8/9/2019 BWP SFS Metal and Steel

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SAP FOR MILL PRODUCTS IN THEPRIMARY METAL AND STEEL INDUSTRY

STRATEGIES FOR SUCCESS


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CHALLENGES ABOUND


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AND SO DO OP PORTUNIT IES

FACING CHANGE, FINDING OPPORTUNITY

The global economy is improving, but it still faces uncertainty. World markets for

mill products, particularly primary metals and steel, are growing but so is global

competition. Primary metals and steel producers are dealing mainly with commodity

products, but opportunities for adding value are still plentiful. Mill products suppliers

need to continue to pay close attention to the bottom line, but they also want to

find new ways to differentiate against ever-increasing competition.

To do this, mill products companies are looking beyond standard practices for new

business strategies that promise results. But what strategies and practices are right for

your company? How can you thrive amidst the pressures of a commodity market?

How can you innovate new services? And what are the best solutions for facilitating

your corporate strategies? To answer these questions, mill products companies can

benefit from strategic insight and practical advice from thought leaders within the mill

products industry.

STRATEGIES FOR SUCCESS

To relay what industry experts are thinking, SAP Strategies for Success explores the

most recent strategies, solutions, and best practices for each of the more than 25 major

industries served by SAP.

Each brochure in this series reflects the views of independent analysts, industry experts,

and corporate executives on a specif ic industry. Take a closer look at these strategies,

practices, and tools in the pages ahead, and consider how they can help your business

achieve profitable growth.


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HIGHLY TARGETED SOLUTI ONS . . .

SAP SOLUTIONS FOR THEMILL PRODUCTS INDUSTRY

SAP for Mill Products solutions are de-

signed to help mill products companies

master business processes along the en-

tire asset-centric and customer-centric

value chain. SAP for Mill Products

provides a number of tools to help you

optimize these processes. One tool

is the solution map shown on thenext page.

Built using input from customers and

industry analysts, plus the technical

expertise SAP has acquired through

extensive business experience and

research, SAP solution maps are multi-

level blueprints of processes defined

for a particular industry. They help

you visualize, plan, and implement a

coherent, integrated, and comprehen-

sive information technology solution.

They also show how various processes

are covered, including the processes

that SAP and its partners support. With

solution maps, you quickly understand

business solutions and the businessvalue they can bring. The solution

map for the mill products industry is

available at:

www.sap.com/millproducts/

businessmaps.epx

Our Masteel implementation team has high technical

and management expertise, and when the team

searched for a suitable model for our enterprise

structure, it found SAP to have a very good enterprise

management solution.

Gao Hai Jian, Executive Director and Rolling Line IT Project Leader,

Maanshan Iron and Steel (Masteel)

Global economics

have changed the

industry. No longer

is the supply chain

the only global issue

now, with new con-

sumption in countries

such as China, global

economics are critical,

as well.

Dan Miklovic, Vice President and

Research Director, Gartner G2


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WITH THE TOOLS TO SUPPORT THEM

MILL PRODUCTS PRIMARY METALS SOLUTION MAP

Time to Market

New Product Development & Introduction

Life-Cycle Data Management

Supply Chain Planning

Demand & Supply Planning

Transportation Management

Procurement

Strategic/Global Sourcing

Operational Procurement

Enterprise Management & Support

Analytics

Financials

Human Capital Management

Corporate Services

Operations Support

Order Management & Execution

Enterprise Asset Management

Warehouse Management

Sales Order Management

Manufacturing Scheduling and Execution

Suppliers &

Partners

Product Design Marketing &

Sales

Planning Order

Management

Distribution Customer &

Channels

Procurement Manufacturing

Customer Service

Customer Interaction

Complaint/Claim Management

The challenge today is how to differentiate companies

and products in what are essentially commodity

markets. In commodity markets, the basis of competition

shifts from product characteristics to service differentia-

tion, which forces companies to adapt their methods of

doing business. Steel and other mill products companies

must take better advantage of information in order to

thrive or even survive in todays markets.

Dwight Klappich, Vice President, META Group

Strategic Enterprise Management Financial Analytics Operations Analytics Workforce Analytics

Financial Supply Chain Management Financial Accounting Management Accounting Corporate Governance

Talent Management Workforce Process Management HCM Service Delivery Workforce Deployment

Travel Management Environment, Health, and SafetyIncentive and Commission

ManagementReal Estate Management

Project Portfolio Management Quality Management Indirect Procurement Global Trade Management


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STRATEGIES FOR CONTROLLING COSTS

COMPLY AND THRIVE

Bring Visibility to the

Supply and Demand Chain

Regardless of where you stand in the

supply chain, you are challenged more

today than ever to respond quickly

to changes in orders. An end-user

customer may change an order in a

minute, but it might take you muchlonger to reconfigure your machinery

to support that change. The sooner you

know about that change and the faster

you can respond, the less you will have

to pay in terms of retooling, workforce

overtime, or other additional costs.

What Analysts Recommend

Introduce real-time visibility to your

supply and demand chain. One way

to accomplish this is to integrate

enterprise resource planning (ERP)

systems with your own shop-floor and

manufacturing planning systems, and

with the systems of your customersand suppliers. This will help to make

the connection and improve the

transparency between the sales and

production functions.

What SAP Offers

SAP solutions integrate end-to-end

business processes, and so enable

enterprise-wide visibility for better

decision making in critical business

areas. This leads to better operational

efficiency and greater innovation

throughout the value chain.

A STRATEGIC FOUNDATION

Develop a Business

Integration Strategy

In todays globally dynamic business

environments, mergers and acqui-

sitions are becoming more and more

prevalent. For most companies, the key

to success lies in how quickly IT can

integrate various computer systems

and achieve the ultimate goal: shop-

floor-to-top-floor systems integration

and synchronization.


Whats needed, more than point

software, is an IT integration strategy

and a strategic foundation based on

integration technology. Today, such a

foundation should include a portal for

integrating people with information,

as well as cross-application brokers for

performing lower-level integration.

What SAP Offers

SAP solutions include capabilities for

integrating people, information, and

processes across different technologies

and organizations. With SAP software,

a primary metal and steel company can

implement an enterprise portal that

will serve internal users as well as

suppliers with real-time information

from multiple, multivendor informa-

tion systems.


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ATTENTION TO T HE BOTTOM LINE

LINKS TO PLANNING SYSTEMS

Stabilize Plant Workload

Your capital equipment and your

workforce are expensive resources, so

the more you run the mill at full capa-

city, the better you control costs. The

problem is that workload can differ

greatly from week to week or month

to month. The reason: inadequate

forecasting and, frequently, inadequatesupplies of stock. Companies tend to

err on the side of stock oversupply, and

this can add to wasted costs.


Leading companies are creating IT links

to their customers planning systems as

a means of forecasting stock needs and

planning for equipment maintenance.

Taken further, this can even lead to

vendor-managed inventory, both for

stock and for work in process.

What SAP Offers

SAP solutions link demand and supply

planning processes to suppliers and cus-

tomers, delivering fast, accurate fore-

casting to manufacturing management.


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STRATEGIES FOR STREAMLINING MANAGEMENT PROCESSES

In 2005, the preponderance of IT investments will be

focused on foundational and cost-saving-focused

technologies, such as security, enterprise resource planning,

supply chain management, and regulatory compliance

solutions. However, manufacturers are already investing incustomer-focused and innovation-oriented solutions to

prepare for growth.

Gartner Research, Business IT Spending Increases Despite Challenging Economy,

Forecast Analysis, Gartner Perspective, February 8, 2005

A BUSINESS INTELLIGENCE INFRASTRUCTURE

Optimize Reporting Visibility

For reasons that range from financial

accountability to risk management,

executives and managers are learning

that information transparency can be

a vital competitive differentiator. But in

todays world of fast-moving informa-

tion, transparency also implies speed:reporting must be accurate, and it must

be fast.


Leading companies build business intel-

ligence infrastructures that can deliver

cash-to-sales, process-monitoring, and

other reports, and can issue real-time

alerts when events cross critical

thresholds.

What SAP Offers

SAP solutions include powerful

business intelligence functions that can

analyze and report on short- and long-

term trends, and can send real-time

alarms via e-mail, workflow, or pagers

when conditions reach predetermined

thresholds. Also, SAP business intelli-gence can present information in a va-

riety of forms, including executive

dashboards and performance monitors.


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KNOW THE VALUE OF YOUR ASSETS

TRACKING PERFORMANCE

Build Meaningful KPIs

Every primary metal and steel com-

pany knows that the order-to-cash key

performance indicator (KPI) is one of

the most critical indicators of business

performance. But to be able to take fast

corrective action when order-to-cash

performance changes, companies mustalso track the KPIs of its supporting

processes. That way, management can

determine more accurately the cause of

the anomaly, whether poor sales

performance, delinquent customer

payments, or insuff icient inventory.


Primary metal and steel companies

should build their KPIs with a full

understanding of underlying processes.

You should f ind ways to track those

processes and look for related business

processes as well. For instance, vendor

payments are closely related toorder-to-cash processes, so integrating

these into the same reporting presen-

tation would be an effective KPI

strategy.

What SAP Offers

SAP solutions make it easy to build

best-practice business processes and to

create meaningful KPIs that accurately

represent all related or underlying

processes.

TAILORED MAINTENANCE

Implement Condition-Based

Asset Monitoring

For a plant to thrive, it is vital that

capital equipment run at top perfor-

mance. It is also vital that scheduled

maintenance be performed as needed,

to reduce the risk of expensive and

disruptive ad hoc repairs. Ideally,

companies should also be able to fore-

cast equipment needs based on produc-

tion plans: if a big order is coming in

next week, for example, it might be

better to schedule routine maintenance

this week.


Condition-based monitoring is a way

of tailoring maintenance to the exact

requirements of the equipment, and

thus deriving maximum utility from

your mill. This requires applications

that can measure equipment

conditions in real time and can predict

what the results might be of condi-

tional changes. Condition-based moni-

toring can help you relate production

schedules with plant maintenance

planning.

What SAP Offers

SAP solutions help primary metal

and steel companies take a strategic

approach to managing assets through-

out the equipment life cycle. They

integrate information and processes

from financials, investment planning,

procurement, and plant and network

maintenance and then connect project

and work management capabilities

with best-of-breed solutions for outage

management and construction

planning applications.


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STRATEGIES FOR BUILDING REVENUES

FOCUS ON CUSTOMERS

Innovate with

Customer Service

In todays steel industries, prices are

high but competition is strengthen-

ing. Steel suppliers must f ind new ways

to compete. One effective way to grow

market share is to initiate innovative

customer services.


Leading companies are offering

customer services such as real-time or-

der confirmation and are building

links, whether at the portal level or the

application level, between their manu-

facturing systems and their customers

inventory planning functions. Thisway, their customers can see the status

of their own stock, even when its resi-

dent at the suppliers manufacturing

site.

What SAP Offers

SAP solutions help you create targeted

and personalized services by using cus-

tomer behavior to tailor new service of-

ferings. Sales and marketing are tightly

integrated with service, billing, and fi-

nancials to support complete service

processing and accounting.

IMPROVING COLLABORATION

Link Sales to Production

Too often, steel mill salespeople have

to rely on phone calls and faxes to

determine what products which

grades, quality levels, and so on are in

stock or are in production planning.

This can slow customer responses and

works against the concept of mutual

forecasting.


Analysts urge companies to integrate

their IT systems for production and

sales and marketing, either at the portal

level or at deeper levels of data inter-

change. This will foster better collabo-

ration within the mill, leading to

real-time information access and more

successful replenishment forecasting

with customers and suppliers.

What SAP Offers

SAP solutions support integration at

all levels of the IT infrastructure, from

high-level user portals to deeper data

and process integration. SAPs vision

for the service-enabled infrastructure,

called Enterprise Services Architecture,

supports a service approach to instanta-

neous process integration.

The goals of the project are to consolidate resources,

advance product technology, expand market share

through information technology, and accelerate ourrealization as a modern, digitized enterprise structure.

Yan Shengke, Chairman, Shigang


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With SAP software we

have total integration.

We now have greater

insight into available

materials and capacity,enabling us to effec-

tively plan and coordi-

nate activities across

our three facilities.

Wilfried Hausmann, CIO, Ispat

Germany (Division of Mittal Steel)

INTEGRATE INFORMATION SYSTEMS

BETTER PRODUCT DOCUMENTATION

Maximize Delivery Reliability

Mill products customers expect high

delivery-service levels, with goods

delivered on time and on spec. At the

same time, customers are becomingmore demanding, with many wanting

to see complete product life-cycle

documentation from their suppliers.


Industry-leading suppliers are doing

more than simply upgrading their IT

systems. Theyre integrating quality

management and product-data

management processes with their

business systems to produce auditabledocumentation for their primary

and semifinished materials.

What SAP Offers

SAP solutions take advantage of SAPs

deep expertise and experience in the

primary metal and steel industry. They

support the full range of capabilitiesnecessary to ensure that products

are on spec, regardless of how complex

their manufacturing and testing

procedures may be.


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ARE YOU READY?

STRATEGIES AT A GLANCE

Strategies for

Controlling Costs

Bring visibility to the supply and de-mand chain by integrating enterprise

resource planning with shop-floor

and manufacturing systems

Develop a business integration strate-gy that works at all levels, beginning

with integrating people and informa-

tion and including application

brokering

Stabilize plant workload by linking tocustomers planning systems

Strategies for Streamlining

Management Processes

Optimize reporting visibility throughfast and accurate analysis

Build meaningful KPIs by focusing onkey business processes

Implement condition-based assetmonitoring by measuring equipment

conditions in real time and predicting

the effects of conditional changes

Strategies for Building

Revenues

Innovate with customer servicethrough functions such as real-time

order confirmation and real-time

stock visibility

Link sales to production by integrat-ing production systems with sales

and marketing systems

Maximize delivery reliability by inte-grating quality management and

product-data management processes

with core business information

systems


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A LIGHT AT THE END OF THE TUNNEL

INDUSTRY-STANDARD PRACTICESVERSUS INDUSTRY-LEADING PRACTICES

Trends show that many organizations are moving away from traditional practices

and adopting forward-thinking leading practices to support profitable growth

in key areas.

INDUSTRY-STANDARD PRACTICE INDUSTRY-LEADING PRACTICE

VISIBILITY IN THE SUPPLYAND DEMAND CHAIN

Reduced ability to respond quickly to marketdynamics due to lack of visibility into the

supply chain

Integrate ERP systems with shop-floor andmanufacturing planning systems and with

systems of customers and suppliers

STABILIZED PLANTWORKLOAD

Inadequate forecasting leading tofrequent stock oversupply

Create IT links to customers planningsystems to improve forecasting stock needs

MEANINGFUL KPIs Incomplete KPIs that fail to considerrelated or underlying business processes

Track KPIs in the context of relatedbusiness processes

CONDITION-BASEDASSET MONITORING

Reactive response to service needs as requestedwithout an understanding of customer patterns

Measure equipment conditions in real timeand predict probable results of conditionalchanges

THE ROAD TO PROGRESS

The business processes and information

systems throughout your company

were developed over decades, and many

of them are undoubtedly considered

entrenched. Reengineering them to

take advantage of industry-leading

practices wont happen overnight and

requires a strong commitment at thehighest levels. This is especially true

when it comes to integrating processes

across departments and divisions.

The good news is that organizations

that take a proactive approach can

expect the following rewards:

Enterprise-wide visibility to manageinnovation, risk, and costs

Effective plant and asset management

Greatly improved customer relations

Better differentiation in a commoditymarket


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THE FUTURE LO OKS DIFFEREN T . . .

EMERGING TECHNOLOGY AND TRENDS

Collaborative Technologies

Collaboration is critical to the mill

products supply chain. New collabora-

tive technologies based on Web services

and composite applications will make it

easier for vendors and customers to

perform mutual forecasting. This

promises to optimize the usage of plant

machinery, helping plants run at full

capacity and within balanced schedules.

Mobile Technologies

Handheld devices and distributed

databases make it possible for sales and

service professionals to collect and

exchange data from the field. This helps

integrate customer needs with produc-

tion scheduling and maximizes

customer responsiveness.

Adaptive Manufacturing

Companies and their production

personnel can run manufacturing at

the speed of business and drive superior

performance through improved

business visibility and responsiveness.

EMERGING INDUSTRY TRENDS

Recycling Raw Materials

To control costs, mill product manu-

facturers are continuing to find new

methods of recycling raw materials.

Expanding Global

Partnerships

Mill products supply chains now

extend around the world, so thechallenges of communications, collab-

oration, forecasting, and management

are growing greater by the day.


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WHEN YOU CHOOSE THE RIGHT PARTNER

The Best-Run Mill Products

Companies Run SAP

Six out of 10 of the worlds largest

steel-producing companies are SAP

customers.

Bhler-Uddeholm AG, Austria

Comalco Aluminium Limited,Australia

Umicore SA, Belgium Belgo Bekaert Arames S.A., Brazil Cia. Siderrgica Belgo Mineira, Brazil Gerdau Aominas S.A., Brazil Alcan Aluminium Valais SA,

Switzerland

Metalor Technologies SA, Switzerland Wuxi Turbine Blade Works, China

AL INVEST Bridlicna a.s.,

Czech Republic

GESIS, Germany Hydro Aluminium, Germany Rasselstein GmbH, Germany Robert Zapp Service-GmbH, Germany ThyssenKrupp Nirosta GmbH,

Germany

Asturiana de Zinc S.A., Spain Societe Alsacienne dAluminium,

France

Tata Iron & Steel Company Limited,India

Corporativo Grupo IMSA, Mexico Corus Staal B.V., Netherlands Corus Tubes B.V., Netherlands Cambridge Lee Industries Inc.,

United States

Heat and Control Inc., United States Mar Mac Wire Inc., United States Northwest Aluminum Company,

United States

Northwest Pipe Company,United States

Titanium Metals Corporation,United States

For additional information on how

SAP solutions can help your company

operate more efficiently and profitably,

please visit:

www.sap.com/millproducts

A COMPLETE SET OFMILL PRODUCTS INDUSTRY SOLUTIONS

SAP continually interviews industry

thought leaders to identify the biggest

challenges and trends facing primary

metal and steel companies. This knowl-

edge, combined with our customer ex-

perience worldwide, has led to a set of

solutions for the mill products industry

that can support organizations of anysize, in virtually any market segment.

For example, the robust SAP NetWeaver

platform easily integrates SAP and

non-SAP applications for a lower

total cost of ownership. The mySAP

Business Suite family of business

solutions built on the SAP NetWeaver

platform offers powerful, adaptive

business solutions with best-of-breed

functionality, industry-specific capabili-

ties, and support for collaboration over

the Web. And the SAP xApps portfolio

of packaged composite applications de-

livers business-ready scenarios that en-

able continuous innovation.

SAP also offers affordable, scalable

solutions developed expressly for small

and midsize mill products companies.

And we back all our solutions with

ongoing support and services to help

you achieve your business objectives

and maximize your return on

investment.


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50 074 364 (05/05)

2005 by SAP AG. All rights reserved. SAP, R/3, mySAP, mySAP.com, xApps, xApp, SAP NetWeaver, and other SAP products and services mentioned herein as well as their respective logos are trademarks or registeredtrademarks of SAP AG in Germany and in several other countries all over the world. All other product and service names mentioned are the trademarks of their respective companies. Data contained in this document servesinformational purposes only. National product specifications may vary. Printed on environmentally friendly paper.

These materials are subject to change without notice. These materials are provided by SAP AG and its affiliated companies (SAP Group) for informational purposes only, without representation or warranty ofany kind, and SAP Group shall not be liable for errors or omissions with respect to the materials. The only warranties for SAP Group products and services are those that are set forth in the express warranty statementsaccompanying such products and ser vices if any Nothing herein should be construed as constituting an additional warranty

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