scl antwerp - fred jenninga, tata steel
TRANSCRIPT
Tata Steel Slide
Supply Chain Management in a complex chain
Fred Jenninga;
Director Sales & Operations Planning Tata Steel Europe
Together we make the difference
Tata Steel Slide
Agenda
2
1 Context: Tata steel organisation, Supply Chain and Status
2 Supply Chain Vision and direction
3 Order Fulfilment Strategies
4 Theory of constraints
5 our project approach
6 Take away
Tata Steel Slide
Agenda
3
1 Context: Tata steel organisation, Supply Chain and Status
2 Supply Chain Vision and direction
3 Order Fulfilment Strategies
4 Theory of constraints
5 our project approach
6 Take away
SlideTata Steel
4
Steel making operations
Distribution and downstream assets
Mining assets and projects
NML Canada(iron ore)North America
WesternEurope
Scandinavia
CIS
WesternAfrica
Ivory Coast(iron ore)
South Africa
Latin America Mozambique
(coal)
Turkey
CEE
ChinaJapan
Australia(coal)
INDIA
Jharkhand
Oman(limestone)
Hong Kong
New Zealand
Sales and commercial centres
SE Asia
Tata Steel is present in both mature anddeveloping markets worldwide
SlideTata Steel
SlideTata Steel
Our Operating Model: one integrated, customer-driven company
7
Operations hubs
Our customers and markets
Supply chain
Support F
unctions
Sales and Marketing (sector teams/customer services)
IndustryStrip
Construction Structures
Lif ting & Excavating
Energy & Power RailPackagingAutomotive
Long EUStrip MLE Strip UK Downstream
Building Envelope
Distribution MLE
Distribution UK&I
IndustryLongs
Journey to Commercial Excellence
750
643
550
446
350
294
266
88
150
30
5050
140
9334
40
170
18
106
20
70
25
5800 5400
3650
3400 kt
3150
2800 kt
2170
1900 kt
1520
1488
1412
1400 kt
1300
1256
1250 1200
1050
901
879
868
840
800
759
720
712
600
590
582
580572
557
550
550
535
533
510
510
500
500
474
450
430
408
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400
400400
398
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370
360
360
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298
288
277270
265 260
250
233
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206
21
168 104
200
150
85
194
80
154
66
175
170
180
150
17
145
140
55
146
182
30
75
150 80
200
110
200
130
109
128
192
10050
133
133
180
200
100
133
133
75
180
70
60
165
106
75
25
195
30
IJM BF6
IJM BOS2IJM HSM2
IJM PL12 (CPP)
IJM BB21
IJM BK22
IJM CM21
IJM DVL1
IJM DVL2
IJM DVL3
Segal
IJM WSN
IJM VL1
IJM VL2
IJM DSP
IJM GM21-22
IJM CM12
IJM CM11
IJM CL13/H2BA
IJM CA11
IJM CAPL12 IJM CAPL12 (TM)
IJM DR11 / TM48 IJM ETL1-3
IJM ETL4
Market: SLAB
225
Market: HR dry
1705
Market: HR pickled
1175
Market: CR
1150
IJM CM22
IJM BA
Market: HDG Auto
1633
Market: HDG Non-Auto
881
Market: OCS
943
Buy: Substrate electrical steel
0
Orb Annealing & Pickling
Sura Annealing & Pickling
Market: electrical steel
150
MLE Tubes Zwijndrecht
125MLE Tubes Oosterhout
125
SC BF Queen BessSC BOS
SC Caster Bloom 750
SC Caster Bloom 483
SC Caster 5
SC Billet caster
SC slab caster
Longs BBM
SC SRM (4 Strand Rod Mill)
Market Plate
772
SC SPM (Reversing Plate Mill)
Dalzell (Reversing Plate Mill)
ThryberghTCM (Bar Mill)
Brinsworth (Narrow Strip Mill)
Skinningrove (Special Profiles)
Sc SRSM (Sections and Rail)
Hayange (Sections and Rail)
Market Sections
409
Market Rail
469
Market Special profiles
246
Market Rod & Bar
1292
PT BF4
PT BOSPT Caster
PT HSM
LL HSM (Llanwern)
LL PL1
PT Link (pickling)
LL CM
TR PL (Trostre) TR CM Five Stand Mill
TR BA
TR CAPL
TR TM/DR (temper)
PT CAPL
PT BA
LL Zodiac
Shotton 5
Shotton 6
SH OCS 1
SH OCS 2
UK TAF
75
Myriad LigneA
Myriad Ligne2
Myriad CM (cold mill)
330
Myriad PL (Pickling)
350
UK Hartlepool 20"
180
UK Hartlepool 42"
150
UK Corby
300
TS TBM (Heavy Section Mill)
group slabs
Market Semis
18
Market Specialty Steels
235
Buy: External HR dry
0
Rotherham EAF T-Fce
328
RH SBC (Small Bloom Caster)
RH LBC (Large Bloom Caster)
RH IC (Ingot Caster)
Buy: External plate
Market: Tubes
880
Market: Tinplate
1153
TR ETL5-6 & ECCS4
Duffel Protact
hdg auto
1730
HDG non-auto
1410
CR soft
>>WSN150
PT Link (rolling)
>>IJM HRC
>> Tubes
80
>>IJM HSM2
>> Hartlepool420
>> LONG SPM
>> OCS
596
PT BF5
IJM BF7
LL PL2
Utilisation <80%
Utilisation > 90%
Product to Market
SC BF Queen Vic
SC BF Queen Anne
SC BF Queen Mary Closed
Mothballed
Stockbridge (Primary Mill)
Utilisation 80-90%
Clydebridge Quench
Trostre Protact
Sura AnnealingSura 4 high CM
Plate Dist EU
170
Plate Dist UK
70
Plate Other
532
HR dry DistE
350
HR dry DistUK
HR dry OTHER
1100
HR pickled DistUK
HRpickled OTHER
HRpickled DistE
OCS DistUK
20
OCS DistE
CR DistUK
130
CR OTHER
805
CR DistE
215
HDG auto DistUK
HDG auto OTHER
HDG auto DistE
HDG non-auto DistUK
HDG non-auto OTHER
HDG non-auto DistE
335
Tubes DistUK
50
Tubes OTHER
820
Tubes DistE
10
OCS OTHER
913
Rod & Bar Other
1142
Rod & Bar DistUK
60
Section DistUK
Sections OTHER
229
Rotherham EAF N-Fce
602
Legend
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280
960
700
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150
2500
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7650
3600
2900
6000 5700
1400
2550
1400
2000
5100 6000
3500
3200
1300
700
900
1350
1000
750
xx
410
550
550
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770
Flow Map V2.3
Date: 10-02-2013
Period: 2012
TSE Strategy
While our supply chain is not suited for small, non repeating volumes, delivered in a small time window.
20-40 tInfrequent
1 wk window
325 ton1 quality
1200 toncasts
Limited widths
Chance On rejects &
Unplanned repair
Impossible to become reliable (>95%) with starting from SteelplantImplies different orderfullfillment Strategies, product rationalisation
And integrated Supply Chain Management9
10
Performance Hub MLE, 2013-1013YTD
Today our supply performance is POOR..
80
70
100
90
0
95
85
75
65
60
ROTIF – P (%)
Sep-13
Jul-13
Apr-13
Jan-13
Oct-12
Jul-12
Apr-12
Jan-12
95
Agenda
11
1 Context: Tata steel organisation, Supply Chain and Status
2 Supply Chain Vision and direction
3 Order Fulfilment Strategies
4 Theory of constraints
5 our project approach
6 Take away
The three Goals in Supply Chain
12
Service
Cost Inventory
Improved service and reliability to our customers is an important driver of our growth strategy: right service for the right market segment
Increase margin by lower cost-to-serve, lower inventory holding cost, lowest cost routes
Our business has been tasked to lower its working capital to 920kt of inventory (2014)
Our current challenge
vsvs
vs
we want to improve on all three!Improving business transformation
SlideTata SteelSupply Chain Masterclass
Targets & Measures
Supply Chain Management Strategy Delivery
Our number 1 goal is to stop harming peopleMinimise employee absence
Optimise TSE inventory levels
Satisfy the market requirement for reliable service at the required levels
Reduce logistics costs and leverage as a competitive advantage. Enable value creation
opportunities.
Optimise functional costs, ensure a motivated and developed workforce, deploy integrated business
processes
Zero Lost Time Injuries.Less than 2% employee absence.
2.1 Million Tonnes.
60- 70% volume under MTA with availability >95%30-20% volume under MTO with >85% ROTIF
10% volume to be used as market buffer
Reduce logistics costs by 5%. Create commercial opportunities through logistics cost advantage.
Strategic SCM Goals
Run a functional excellence programme; deploy a supply chain operating model, underpinned by a robust QMS and capability platform via the SCM Academy.
Develop a Programme Management capability to drive supply chain and cross-functional projects .
Deploy SCT business processes and technology.
13
Tata Steel Slide
Goal of the business organisation
14DMWL_Kick off
Throughput - Operating Expenses
InvestmentROI
Focus on maximising throughput as it has no limit against minimising costs with a limit of zero
Throughput Price – Truly Variable costs
Profit Throughput – Operating Expenses
Time
Goa
l uni
ts
ThroughputOperating ExpensesInvestment0 0
∞
Tata Steel Slide
Selection of Decisive competitive edge
Decisive competitive edge
Cost based Service based Technology basedX X
• A competitive edge that is not based on low prices enables a company to build preferred supplier status.
• Technology is a qualifier – a supplier is either in or out.
• A significant need is to assist the customers in maximizing their throughput. More throughput for customer is a much bigger plus than just a cost reduction.
• Therefore TSE needs to build decisive competitive edge, which is service based, for its focussed market segments while enjoying (almost) full utilization.
15Supply Chain Masterclass
Tata Steel Slide
Agenda
16
1 Context: Tata steel organisation, Supply Chain and Status
2 Supply Chain Vision and direction
3 Order Fulfilment Strategies
4 Theory of constraints & our project approach
5 Tata Steel Outbound
6 Take away
Tata Steel Slide
Supply side Demand side
Dealing with dependency
19
What if we had a collapsing point for the waves of disturbance?Collapsing point
SlideTata Steel
Agenda
22
1 Context: Tata steel organisation, Supply Chain and Status
2 Supply Chain Vision and direction
3 Order Fulfilment Strategies
4 Theory of constraints
5 our project approach
6 Take away
SlideTata Steel 23
True or False
An organization in which all employees are working 100% of the time, is an efficient organization.
If you are not active as an employee, you are inefficient.
Time management per working unit is better than maximizing output per working unit.
SlideTata Steel 25
Theory
600/day
90
A B C D
How many tons are produced?
How much WIP is created?
Capacity (T)
% Availability
500/day
80
550/day
85
900/day
70
400 T/day
140 T/day
SlideTata Steel 26
Conclusions from Example
Improvement in all working units does not necessarily lead to overall improvement
Focusing on the weakest unit (bottleneck) leads to the biggest improvement
Other units need to maintain performance
Maximize through whole chain
SlideTata Steel
Agenda
27
1 Context: Tata steel organisation, Supply Chain and Status
2 Supply Chain Vision and direction
3 Order Fulfilment Strategies
4 Theory of constraints
5 our project approach
6 Take away
Tata Steel Slide
L1 Project Objective
L2 Project Objective
Do More With Less is…….28Do more with less
Do More With Less – Enhance Service levels (Availability > 95% for MTA and DOTIF-P > 90% for MTO)
65-70% Decoupling (MTA / MTA+FTO / Consignment ) supported by market
buffer and product/order book rationalisation
Optimise Inventory dealing with Non-Value Adding Inventory
What?
1. Identification and validation of Non-Value Adding inventory
2. Develop action plans to reduce non value adding inventory
3. Develop mechanisms to predict and correct aged stocks pro-actively
NB: 2,3,4,& 5 in parallel
1. Implement market buffer to deal with variability in supply and demand
2. Identify decoupling potential for Runners and Repeaters
3. Decouple at HRC stage to level identified in 2 (S-UK 63%, S-MLE 43%)
4. Launch Product Rationalisation / Order Rationalisation to increase decoupling potential
5. For remaining (MTO) order book implement time buffer management to improve reliability
Tata Steel Slide
Agenda
29
1 Context: Tata steel organisation, Supply Chain and Status
2 Supply Chain Vision and direction
3 Order Fulfilment Strategies
4 Theory of constraints
5 our project approach
6 Take away
SlideTata Steel 30
Current delivery performance not sustainable with present methods and working capital
Optimise/change management on precision, order fulfilment methods and buffer management (capacity and market). Different way of thinking
A lot of interdepencies and cross-functional working (e.g. rationalisation/order/product, homologation, order policies, market buffer)
Take aways
Introduction to Supply Chain Management