Working with IBM and SAP, ThyssenKrupp Electrical Steel (TKES) extended its existing SAP and PSImetals landscape to four additional locations, and implemented SAP Advance Planning and Optimization. Combined IBM, SAP and PSI solution delivers cost savings of 25 to 30 percent over comparable solutions. SAP Advance Planning and Optimization allows TKES to extract the maximum usable material amount from each coil, reducing waste and increasing profitability.

1. ThyssenKrupp Electrical Steel Overview
forges ahead with integrated IBM,
Challenge
SAP and PSI solution ThyssenKrupp Electrical
Steel (TKES) aimed to create
ThyssenKrupp Electrical Steel (TKES) headquarters in Gelsenkirchen and in a homogeneous set of global
is part of the Materials division of the nearby Bochum, in India, in Italy, and in business processes and reporting
major industrial firm ThyssenKrupp AG, France. To ensure efficient production standards. The ultimate goals
which generated sales of €42.6 billion and effective coordination of its global were to optimize business and
in the 2009/2010 fiscal year, and which activities, the company wanted to manufacturing operations using
has approximately 177,000 employees standardize operations and reporting a standardized approach at all
in more than 80 countries. across these different locations. locations.
Without a consistent, corporate-wide
TKES is a leading global manufacturer standard, the company recognized Solution
of grain-oriented and non-oriented that it could not achieve its full profit Working with IBM and SAP,
high-tech electrical steel. This core potential. TKES extended its existing SAP
material is used throughout the and PSImetals landscape to
entire value chain of the electrical The first step was to carry out a four additional locations, and
energy components industry, from business-process re-engineering implemented SAP Advance
power generation, transmission and project with the existing SAP Planning and Optimization.
distribution to electric motors and application landscape at headquarters
appliances. With its innovative, high- — which included the upgrade of Key benefits
quality products, TKES also plays a various legacy components and Combined IBM, SAP and PSI
valuable role in meeting the increasing platforms to the latest standards. solution delivers cost savings of
environmental requirements governing 25 to 30 percent over comparable
the use of steel in the manufacture of The company also developed a uniform solutions. SAP Advance Planning
electrical components. interface to its manufacturing locations, and Optimization allows TKES
ensuring that everything was in place to extract the maximum usable
Standardization for efficiency for a rollout of SAP Advance Planning material amount from each coil,
The TKES business has five and Optimization across its Grain reducing waste and increasing
manufacturing locations: at its German Oriented Electrical Steel business. profitability.
Case study

2. The Gelsenkirchen and Bochum
locations were using a solution from
PSI for manufacturing operations, “The combination of
automation and control, and physical IBM Power Systems
process management, including and BladeCenter
Business Challenge
the information exchange with the with SAN Volume
business applications. For example, Controller provided
To meet the demands of its
on the shop floor PSImetals controls the end-to-end
growing international business in
materials tracking, process control, virtualization we
an efficient and cost-effective way,
measurements capturing, quality wanted across both
ThyssenKrupp Electrical Steel
management and reporting. The servers and storage.”
PSImetals solution had gradually been
(TKES) needed to standardize its Michael Brüne
extended, and implemented in four
production, business control and Head of Information Technology
manufacturing locations.
financial systems. TKES
PSImetals’ standard functionality
The company aimed to create a
covers 70 percent of requirements, with
homogeneous set of global business
about 20 percent of TKES-specific and product movements throughout the
processes and reporting standards,
and about 10 percent location-specific whole plant, and optimizes production
backed by a common solution
customizations. Each manufacturing processes to minimize wastage (known
architecture and IT infrastructure.
plant uses a separate database as ‘clippings’) and defects.
to manage production orders and
The ultimate goals were to be
amounts, time schedules, quantities, The integration between SAP and
able to optimize business and
quality, measures and weights of PSImetals is very tight, each software
manufacturing operations using
intermediate and finished products. solution excels in its role. The difference
a standardized approach at all
is between the time horizons and level
locations, and to provide consistent
Data exchange from the shop floor of granularity, and the solution can truly
reporting on production and finance
systems to core SAP software is be considered as a joint setup, and not
– regardless of location. This would
managed by SAP NetWeaver Process the one or the other.
require powerful, highly integrated
Integration. During production,
ERP and shopfloor solutions running
PSImetals collects, monitors and Michael Brüne, Head of Information
on a reliable, high-performance
analyses materials data, and enables Technology at TKES, comments:
platform.
complete tracking of finished goods “In our view, the main function of
back to the raw materials used for hot information technology is to support
rolled coil. PSImetals traces materials the central business processes in an
2

3. optimized way. We have extremely processors and an IBM Power 570 with
demanding requirements regarding IBM POWER6 processors, while the
product quality and delivery times, and PSImetals application server instances
given the global nature of our business, run on IBM BladeCenter HS22 blades.
this makes us absolutely reliant on the Two IBM System Storage DS5300
smooth operation of our information arrays provide high-speed disk storage,
Solution
technology landscape. fully virtualized for greater flexibility
using IBM System Storage SAN Volume
Working with IBM and SAP,
“We want to preserve a relatively small Controller.
TKES extended its existing SAP
technical team, to keep operational
and PSImetals landscape to
costs low, and so our requirement This entire system landscape is
four additional locations, and
from the outset was for technology duplicated in the second building,
implemented SAP Advance Planning
that would enable self-healing, fully with the exception that there is a
and Optimization.
autonomic operation as far as possible. single DS5300 rather than two. The
With this in mind, we selected three third building provides data backup
Business processes were extensively
key strategic partners: SAP for cross- and archive services, using two IBM
re-engineered to enable greater
enterprise business processes, PSI for System Storage TS3310 Tape Libraries
harmonization of operational
functional coverage on the shopfloor, connected to the storage area network.
activities across the company.
and IBM as our comprehensive
TKES runs its SAP Business Suite
infrastructure supplier.” This fully virtualized landscape
applications on IBM Power 770, IBM
combines high performance for SAP
Power 570 and IBM BladeCenter
Fully virtualized landscape applications with extreme flexibility and
HS22 servers, with IBM System
The new centralized SAP APO superb availability. Using IBM PowerVM
Storage DS5300 disk storage and
landscape runs in the main TKES virtualization technology on its Power
IBM System Storage TS3310 Tape
data center, located in Gelsenkirchen, servers, TKES can easily and rapidly
Library for backup and archive.
Germany. The IBM infrastructure is create new virtual SAP environments
split across three separate buildings for to increase capacity, and to create test
This landscape runs in the
added protection against disaster, with and development servers.
company's Gelsenkirchen
fiber-optic connections providing the
data center, while the separate
required high-speed mirroring of data. The use of a mirrored SAN enables SAP
PSI shopfloor control solution
production and shop floor databases to
– PSImetals – runs on IBM
In the first building, the multiple SAP be seamlessly moved from the Power
BladeCenter servers in four of the
central instances and database servers in the primary building to the
five manufacturing locations.
servers for PSImetals run on an IBM backup location, providing business
Power 770 server with IBM POWER7 continuity in the event of planned or
3

4. unplanned downtime. The PSImetals
application servers running on IBM
BladeCenter are also protected in the “The IBM technologies
same way, providing very high resilience effectively give us
for the complete application landscape. a private cloud:
Key Solution Components a set of standard
In steel manufacture, production components that
Industry
stoppages are costly, so TKES tries we can orchestrate
Industrial Products
to keep its plants running around the to achieve whatever
clock. The high availability of the IBM goals we have. Both
Applications
infrastructure allows the company to the IBM hardware
SAP® Business Suite applications,
have just one planned maintenance and the SAP software
SAP NetWeaver®, SAP Supply Chain
window each year of just two hours. ensure that we
Management and SAP Advance never come up
Planning and Optimization, PSImetals
“The combination of IBM Power against any barriers
Systems and BladeCenter with SAN when designing
Hardware
Volume Controller provided the end- and executing our
IBM® Power® 770, IBM Power 570,
to-end virtualization we wanted across business processes.”
both servers and storage,” says
IBM BladeCenter® H, IBM System
Michael Brüne. “In practical terms, the
Storage® DS5300, IBM System Carsten Kübler
separation of the logical architecture
Storage TS3310 Tape Library Head of Infrastructure
from the physical infrastructure makes
TKES
it much easier to protect against the
Software
failure of any individual components
IBM AIX®, IBM System Storage SAN
— because the environment can
Volume Controller
automatically recover the workload (scale-out) scalability. For the Power
on an identical component in the Systems servers, TKES can use IBM
second location. The IBM virtualization PowerVM to allocate and reallocate the
technologies enable great speed and processing resources flexibly across
flexibility, in addition to making it easy to an extremely large number of virtual
expand the SAP landscape.” servers.
Scaling up to global challenges The company can also add further
The IBM infrastructure offers both POWER7 and POWER6 processors
vertical (scale-up) and horizontal to the shared pools if its business
4

5. requirements grow significantly. Equally, quality steels at the right price and
it can easily and rapidly slot new HS22 within the timescales specified by its
blades into the BladeCenter systems as industrial customers.
application workload grows.
Competition is fierce, so TKES needs to
“In parallel with the standardization minimize operational losses and costs
Business Benefits
of our business processes, we have by achieving extremely high efficiency
achieved a standardization of the throughout the supply chain.
With standardized business
components of the IT infrastructure,”
processes and user interfaces,
explains Carsten Kübler, who has By standardizing its business
the SAP solutions enable highly
overall responsibility for the IT processes on SAP Business Suite
efficient and responsive control
infrastructure at TKES. applications, and tightly integrating
over operations, with all reporting
them with the production processes
from a single version of the truth.
“The IBM technologies effectively give managed using PSImetals, TKES has
The flexible and highly scalable IBM
us a private cloud: a set of standard enabled fast and efficient production
infrastructure offers extremely high
components that we can orchestrate from order entry to delivery.
availability to support round-the-
to achieve whatever goals we have.
clock manufacturing operations.
Both the IBM hardware and the Moreover, the use of common business
TKES estimates that the combined
SAP software ensure that we never definitions and data standards enables
IBM, SAP and PSI solution delivers
come up against any barriers when accurate reporting in real time, allowing
cost savings of 25 to 30 percent
designing and executing our business business managers to see and
over comparable solutions, thanks
processes.” understand the status of manufacturing
to its efficiency, consistency and
across all plants.
reliability. SAP Advance Planning and
TKES also deployed mirrored IBM
Optimization allows TKES to extract
BladeCenter servers to run its TKES uses the SAP APO application
the maximum usable material
PSImetals shopfloor solution in four to book customer orders, plan and
amount from each coil, reducing
production plants. In practical terms, allocate production orders, report on
waste and increasing profitability. On
standardizing on BladeCenter reduces finished materials and their status, plan
the shopfloor, PSImetals supports
the total number of technical skill sets shipping, issue invoices, and manage all
the fulfillment of TKES’ business and
the company needs to maintain, and related administrative processes.
manufacturing processes at each
enables more efficient IT procurement.
location by optimizing production
Through a standardized interface, the
processes and minimizing defects.
Highly integrated solution SAP applications exchange information
Business success at TKES hinges on on intermediate and finished products
the company's ability to supply high- with the plant systems.
5

6. There are approximately 1,000
registered users of the SAP
applications, of which 290 on average “Our investment in a
work concurrently. The powerful flexible solution from
IBM infrastructure helps deliver IBM, SAP and PSI will
excellent response times, and all five continue to deliver
manufacturing locations use the same benefits into the
single SAP central instance. future, driving greater
efficiency and speed
Karlheinz Boländer, responsible for in our manufacturing
SAP projects at TKES, emphasizes processes while
the importance of a corporate-wide continuing to push
standardized application landscape: down costs in IT
“The integration of all locations in one operations.”
single SAP environment enables the
efficient administration of all users
Michael Brüne
under a single common standard.
Head of Information Technology
Equally, identical algorithms and
TKES
databases ensure a ‘single source of
truth’ for reporting.”
“The high degree of integration in this
solution supports governance and PSImetals collects, monitors and
compliance initiatives, and gives us continuously analyzes all material data,
a corporate template for operations. enabling sophisticated tracking. For
This template will mean substantially example, TKES can completely track
reduced effort and cost to absorb any each end-product back to the hot rolled
future moves the company may make.” coil from which it was made, ensuring
complete traceability and supporting
Tight integration of the central SAP the highest quality standards in
system with the PSImetals instance in manufacture.
each manufacturing location enables
all inventory data to be accessed at any TKES customer orders define the
time. During the production process, specific type of steel needed. Starting
6

7. with the hot-rolled coils, processes
known as rolling, annealing, coating,
side trimming, repairing and slitting
provide the variations required by
the customer. A key challenge is to
maximize the material yield from each
coil with minimum wastage, and to
optimize the manufacturing operations
for each coil.
Robert Gieselmann, responsible for
PSI shopfloor solutions at TKES,
comments: “The open architecture
and the modularity of PSImetals make
Hardware infrastructure at the TKES datacenter
customer-specific customizations per
location possible with special plug-ins
using the same technology. That offers similar steels to a single production run,
additional flexibility when business maximizing efficiency, reducing delivery
processes change. times and reducing manufacturing
costs in a way that was not previously
PSImetals integrates extremely well possible.
with SAP applications; in fact, the
solution is certified as ‘Powered by SAP Proven cost savings
NetWeaver’. The practical outcome is The early decision to establish a
smooth exchange of data between our consistent and standardized system
SAP system and the manufacturing and application architecture throughout
plants.” TKES is now paying significant
dividends. Michael Brüne comments:
TKES deploys SAP Advance Planning “Standardization took time and effort,
and Optimization, which allows the but it has already more than repaid our
company to plan the allocation of investment.
customer orders and processes across
multiple business units. This makes Today, TKES can operate efficiently
it possible to consolidate orders for with a small set of highly flexible
7

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In practical terms, having an integrated abstraction and virtualization in the This case study illustrates how one IBM customer
uses IBM and/or IBM Business Partner
IBM environment, with applications solution means that we can easily
technologies/services. Many factors have
and services on the best IT platform benefit from ongoing technology contributed to the results and benefits described.
IBM does not guarantee comparable results. All
for the task keeps IT operational costs refreshes to improve the performance information contained herein was provided by the
featured customer and/or IBM Business Partner.
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examples cited represent how some customers
upgrade the underlying components. changes to the logical architecture.” have used IBM products and the results they may
have achieved. Actual environmental costs and
This means that TKES can easily
performance characteristics will vary depending
benefit from continuous improvements He concludes, “Our investment in a on individual customer configurations and
conditions.
in the price-performance ratio of the flexible solution from IBM, SAP and PSI
This publication is for general guidance only.
latest hardware and software, and runs will continue to deliver benefits into the Photographs may show design models.
© Copyright IBM Corp. 2011. All rights reserved.
a fully optimized IT environment. future, driving greater efficiency and
speed in our manufacturing processes
Michael Brüne says, “Having while continuing to push down costs in
participated in multiple benchmarks IT operations.”
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