metals industry solutions mark crouse director, metals industry

<Insert Picture Here>

Metals Industry Solutions

Mark CrouseDirector, Metals Industry

2

The following is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions.The development, release, and timing of any features or functionality described for Oracle’s products remains at the sole discretion of Oracle.

Safe Harbor Statement

3

The Challenges We’re Hearing

Long-Term Planning:How can I create a strategic plan dealing with depreciating assets, uncertain commodity prices and escalating costs?

“The traditional approach to strategy requires precise predictions and thus often leads executives to underestimate uncertainty. This can be downright dangerous… .”

– The McKinsey Quarterly Dec 2008*

!

Industry Consolidation:How can I improve my M&A processes, from rationalizing my business to driving better acquisitions, increasing the speed of assimilation and leveraging what we acquire?

“The global nature of the markets served and the advantages of scale mean that consolidation around a set of industry behemoths is inevitable.”

!

4

The Challenges We’re Hearing

Complex Global Supply Chains:How can I manage complex supply and distribution networks to take advantage of sourcing opportunities and new markets?

“Three inescapable forces in a world of demanding customers – severe cost pressures, attractive new markets, and accelerating new product introductions – have substantially increased the complexity of manufacturers’ supply chains.”

!

5

• Executives are looking for strategies to improve operational performance during times when margins are under pressure

• Top ranking strategic actions include:

- Continuous improvement

- Optimize asset utilization

- Increase visibility to operations

Implement Continuous Improvement and Operations Visibility!

A Closer Look…

Source: Aberdeen Group, January, 2008.

6 © 2007 AMR Research, Inc. | Page 6

Transformation: Supply Chain to Value Chain Transformation: Supply Chain to Value Chain

The Supply Chain • The traditional set of enterprise functions, systems, and processes

dealing with the inside-out planning, making, storing, logistics, and product distribution processes through to the customers own distribution operations.

The Value Chain • The set of extended business functions, systems, and processes that

sense and adaptively translate outside-in actual demand at the customer, into trade offs that profitably fulfill perfect orders to meet customer demand.

• The value translation and shaping of actual demand through innovation, product development, supplier, supply, and external partner operations and processes is the immediate goal.

7

Streamline Operations

Requirement Oracle Capability The Oracle Difference

Drive costs out of the global supply chain

Demand Planning, Supply Chain & Transportation Optimization

Only enterprise software provider with a completeset of holistic planning and optimization tools

Increase operations effectiveness and efficiency through intelligent operations

Real-Time Intelligent Operations

Real-time data monitoring and analysis with predictive analytics

Manage operations execution

Process Manufacturing, Quality, Inventory

Process manufacturing solution specifically designed for process industries

8

Trading Partners

IntegratedPlanningFunctions

Products

Platform

Best-in-classBusinessProcesses

NetworkDesign Demand Sensing

and Shaping PostponementOptimization Holistic

Supply Planning

Promise,Distribute, and

Replenish Execute-to-plan

E1 EBS …Legacy

ERP*

WFL Common planning data model

Connectors

StrategicNetwork

Optimization

InventoryOptimization

Real-TimeSales &

OperationsPlanning

DemandManagement& AdvancedForecasting

PredictiveTrade

Planning &Optimization

AdvancedSupply Chain

Planning

ProductionScheduling

GlobalOrder

Promising

CollaborativePlanning

SAP

Operational Excellence

Real-Time S&OP

Demand-DrivenAdaptive Planning

Multi-EnterpriseCollaboration

Supply ChainRisk Mgmt

Best-in-Class Planning Process Platform Holistic Planning Covering the Entire Metals Value Chain

<Insert Picture Here>

Metals Solutions (Japan)

John OtsukiCenter of Excellence JapanOracle Japan

10

Innovation Driving Change

11

<Insert Picture Here>

Agenda

• Steel Industry in Japan• Oracle Planning Solution (Japan)• JFE Solution Overview

12

Steel Industry in Japan

13

Steel Industry in JapanPosition

• Traditional Companies– 100+ years of history

• 2 of the top 5 WW steel makers are in Japan – 2nd in volume (APS, World Steel Association, May 2010)

• China (1): 56 million tones• Japan (2): 9.7 million tones• US (4): 7.2 million tones

– Production basically in Japan • Starting overseas operations

• Players– Nippon Steel, JFE Steel, Sumitomo Metals Industries, Kobe Steel,

Japan Steel Works, Mitsui &Co, Nisshin, etc.

14

Steel Industry in JapanCharacteristics

• Producers of high grade/specialized steel– Hiten, seamless pipes, silicon steel, etc..

• Competitors– Overseas producers– New materials (plastics, composites, other metals, etc.)

• Key customers– Automotive industry, Consumer electronics, Plants, shipyards, etc.

• Business mostly through trading companies• IT

– Strong in-house development culture (have own IT company) • Strong legacy presence

– Very high level of security features expectation (multi layer)from customer facing apps

– Long term investment culture

15

Steel Industry in JapanJFE Steel

• JFE Steel Ranking (volume)– 2nd in Japan (WSA, 2009)

– 5th in WW (WSA, 2009)

• JFE Steel Revenue– 2,280 billion Yen ($25 billion) 2009 JFE Investors Meeting Report

• JFE Holdings (2,844 billion Yen) 2009 JFE Investors Meeting Report

– JFE Steel Corporation (2,280 billion Yen)– JFE Engineering Corporation– Universal Shipbuilding Corporation– Kawasaki Microelectronics

16

Planning Solutions (Japan)

17

Oracle Planning SolutionBasic Planning Processes (Planning Hierarchy)Oracle Modules Mapping

1818

• Optimum product mix plan

CastingCasting Hot1Hot1 Cold1Cold1 Galv1Galv1

castingcasting Hot2Hot2 Cold2Cold2 Galv2Galv2Optimum product mix plan

Planning

Production, physical

distribution

capabilities

Demand Optimum prod. mix

cost price

2 3

4

1

5

34

5

•

CastingCasting HotHot ColdCold Galv.Galv.

A B C D

A

BCD

BCD

CD D

Allocated capacity

Capacity Mix Optimization

$

Quantity

Oracle Planning SolutionE-S&OP : Product Mix

Product Mix Optimization Cross Production Optimization

Revenue max.

Cost min.

Throughput max. …

19

Oracle Planning SolutionS&OP Process Image

20

• Collaboration with customers and internal sales

Demand

ATP

Internet

Securityand SSO

Single source of truth

(demand/supply)

Po

rjＡ

Po

rjＢ

…P

rojＤ

Project Demand(Big deals)

50t

30t

20t

見込A見込 B見込 B見込 C見込 C見込D

Sales

Customer

Demand

ATP

Oracle Demantra

Oracle Siebel

.

.

.

Oracle Planning SolutionDemand Collaboration Solution: Simantra

Demantra

21

　Demand Mgmt　 Collaboration　 Forecasting Validation

Sales Mgmt Inquiry Negotiation Estimate Order

Production Mgmt Capacity Constrain Material Constrain

Design ChainSiebel(Accuracy, priority)

Demantra (Precison)

Plan

Do

Check

Act

• Simantra : Aligning sales and demand management

Oracle Planning SolutionDemand Collaboration Solution: Simantra

22

Oracle Planning SolutionDemand Collaboration Solution: Simantra

23

JFE Solution OverviewJ Flessa

JFE Steel Overview

• JFE Steel Corporation ( Tokyo, Japan)

• Ranking– 5th in volume WW (WSA, 2009)

• Revenue– 25 billion USD (2009 Annual Report, $1 : \90,)

• Works (Blast Furnaces) – Chiba

– Keihin

– Kurashiki

– Fukuyama

– Chita (Pipe Mill)

Copyright © 2010 – JFE Steel Corporation

JFE Steel OverviewBrief history of JFE Steel

• Consolidation of Kawasaki Steel and NKK ( 2002, Sept)• Kawasaki Steel: estab. 1950

• NKK: estab. 1912

• Employees– 42,842 (as of Mar.31, 2010)

• Corporate Vision– JFE Group—contributing to society with the world’s most

innovative technology

• Corporate Values– A Challenging Spirit, Flexibility, Sincerity

Copyright © 2010 – JFE Steel Corporation

J-Flessa 1 OverviewProject Goals

• To create a planning process that can respond effectively to demand fluctuation

• Consolidation of siloed management and planning information spread among organizations for speedy business integration

Copyright © 2010 – JFE Steel Corporation

J-Flessa 1 Overview

JFE Flexible Efficient Speedy Sales and operation management system

Flexible• Generation of optimal sales and production plan aligned with demand fluctuation

Efficient• Business process speed up and overall optimization, by centralizing, sharing plans and

management information among different organizations

Speedy• Business process innovation enabling significant reduction of business cycle time

– Demand Sensing

– Supply Chain Planning

– Operations Management

Sales and Operation• Integrated / unified sales and operation planning

Copyright © 2010 – JFE Steel Corporation

J-Flessa 1 OverviewPress Release (2010, Feb 2nd)

• Big Coverage from Japanese media– JFE innovates in steel industry with J-Flessa-1

Copyright © 2010 – JFE Steel Corporation

J-Flessa 1 OverviewProject Timeline and Schema

• Project time line– Project: Jan 2009 ~ Nov 2009– Announcement to media on Feb 2010

• Implementation Schema– Owner: JFE Steel Coporation

• Mr. Hiroshi Nishikawa , Information Technology Fellow IT Innovation Leading Dept

– Primary : JFE Systems – Support: exa Corporation, Oracle Japan

Copyright © 2010 – JFE Steel Corporation

Sales

Distribution

Production

SuperPlannerSuper

Planner

Accounting

System

Accounting

System

Plan

nin

g / E

xecu

tion

system

s (Wo

rks, SC

)P

lann

ing

/ Ex

ecutio

n sys

tems (W

orks, S

C)

WorksWorks

DistributionDistribution

データ連携ツール

Production,Shipment,Inventory

Capacity,

Inbound,Outbound,

Inventory

Dem

and

data

(repeat)

Dem

and

data

(spo

t)

●

●

Demandcollaboration

Demandcollaboration

SalesSales

Spot deal management

Spot deal management

Cost

Velocity Optimization

●

●

Capacity PlanCapacity PlanSales/RevenueManagement

Sales/RevenueManagement

Service　Bus

J-SmileJ-Smile

Cost

●

Revenue

●●

Revenue

●

CustomerCustomer

Demand Sensing

Demantra

Siebel

J-Flessa 1 Overview

Copyright © 2010 – JFE Steel Corporation

J-Flessa 1 OverviewAchievements

• Higher flexibility in dealing with customer requirements by strengthening of sales and operation organizations

• Reduction/ speed up of management cycle• Collaboration cycle reduced by half and streamlined

• Establishment of single source of truth for demand

• 1000+ users collaborating

• Plan based on latest information– Improvement of overall plan accuracy

Copyright © 2010 – JFE Steel Corporation

J-Flessa 1 OverviewKey Project Challenges

• First Demantra implementation in Japan– Mission critical process

• Heterogeneous environment at trading partners– Different JRE versions at trading partners– Large number of trading partners

• 1000 + users

Copyright © 2010 – JFE Steel Corporation

33

34

SOLUTIONS• Determines allocation to produce most profitable

product mix within existing constraints

• Demand Planning

• Advanced Supply Chain Planning

• Strategic Network Optimization

• Supports the S&OP Process

CHALLENGES / OPPORTUNITIES• Spreadsheets, not integrated with legacy

system, nor with execution systems

• Manual forecast smoothing

• No system supported sales and operations planning

• Monthly planning cycle, insufficient accuracy in order promise dates

CUSTOMER PERSPECTIVE“We're augmenting our sales and finance applications with customer, product, and market information so we can segment our markets and better understand product and customer profitability… With the analytical tools & our Oracle applications, we believe we can achieve significant value on increasing product profitability.”

Kevin Horner, Global Program Director

RESULTS• Reduced planning cycle time

• Integrated sales & operations planning process resulting in one consensus forecast number

• Determines allocation to produce most profitable product mix within existing constraints

• Allow Alcoa to offset the risks from commodity price fluctuations

• Increased profitability of products produced in smelters

• Reduction in the total transport and energy cost and impact (environmental etc.)

COMPANY OVERVIEW• World's leading producer of aluminum

• Sales over $30B

• Operations in 43 countries

Alcoa Worldwide Planning

35

SOLUTIONS• Oracle E-Business Suite

CHALLENGES / OPPORTUNITIES• Raise business efficiency and maximize

corporate value

• Eliminate redundancies while building a new, flexible, digital backbone

• Standardize business processes and improve efficiencies

CUSTOMER PERSPECTIVE

"The success of the POSCO project is definitely attributable to the flexibility of the Oracle E-Business Suite."

Kyeong Ryul Ryoo, CIO

RESULTS

• New product development reduced: 4 years to 1.5

• Integrated sales and production plan reduction: 60 days to 15

• Delivery hit ratio improvement: 82.7 % to 95%

• Delivery dates reduction: 20-30 days to 7

• Capital investment project duration: 450 days to 220

• Inventory turnover (raw materials): 8.7 times to 12

• Standardized item codes reducing them from 193,000 to 43,500 and reducing total item classifications by 50%

COMPANY OVERVIEW• One of the world’s leading steel producers

• Annual revenues over $19B

• Serves customers and has forged strategic alliances with companies in Asia, the Americas, and Europe

POSCO Drives Operational Excellence With Oracle EBS

36

Session # S318231 - Value Chain Execution: Customer Case Studies Featuring AM Castle -- Moscone West L3 - Room 3008 – Tuesday @ 12:30pm

Session # S318153 - Case Study: Alcoa Reduces Costs with Oracle Production Scheduling -- Moscone West L3 – Thursday @ 10:30am

Other Metals Industry Value Chain Sessions

37