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How to select a steel Mill (A micro level approach)


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Ultimate guide to all professionals in manufacturing sector who has to undergo a touch process of selecting a steel supplier/ mill.

This will enable to base your decision on some of the key factors that are important for a steel mill.

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How to select a steel Mill (A micro level approach)

  1. 1. How to Select a Steel Mill? ( A Micro level Approach) By Madhusoodhanan Sayeenathan
  2. 2. Contents • • • • • • • • • • Challenges of a Steel Buyer Production Facility Product Range Quality Control Accreditation / Certification Research & Development Distribution Model / Geographical Spread Sales Organization Structure Customer References Conclusion
  3. 3. Challenges of a Steel Buyer • Ensuring smooth production. • Right kind of material at right price and right time. • Steel - a technical product - knowledge the product is a must. • Steel Industry has evolved - increase in number of steel mills. • Buyers have to identify & develop few sources out of the whole lot. • Smart selection based on scientific decision making. • Developing a steel source is a time, energy, resource consuming process and steel buyers have to invest in selecting and developing a source for a long-term.
  4. 4. Production Facilities • In Steel Industry, the quality of a mill mainly depends on the route of steel making and the facilities they employ. • There are different ways of producing steel. Following are mentioned in the order of preference / ranking from in terms of quality control.     Blast Furnace – Basic Oxygen Furnace Corex –Energy Optimization Furnace Sponge Iron ( Any kind of Sponge Iron making) – Electric Arc Furnace Scrap – Electric Arc FurnaceScrap – Induction Furnace
  5. 5. Production Facilities • Some of the common facilities to all the production routes can be,      Vacuum degassing – This can control the gas levels in steel. Ladle Refining furnace – Where required chemistry is achieved. Continuous casting / Ingot Casting Rolling Finishing Facilities • To summarize, the mill with blast furnace and BOF will have better quality steel. It also depends on the application. • For example for re-bars, even Induction furnace would do. • It is important to consider the application while looking at the production facilities.
  6. 6. Product Range • The mill with a vast range of products stands to benefit as this can be a means of diversifying that can serve the steel demand of various end user industries. • If a mill has quite limited range of products aimed at only one industry, for example if a mill has only re-bars, then there is a risk if the construction industry performs bad. • Ideally for a flat product mill it is better to have – Hot rolling mill, Cold Rolling mill, Metal coating mill, Plate mill. • For a long product mill which is concentrating on commodities, it is better to have rebars, angles, channels and beams. • For an Alloy Steel long product mill – Bars – (Round, Square, Hexagon), Wire rods. • Ideally many big steel plants have the combination of all, to ensure their presence in all major products.
  7. 7. Quality Control • It is impractical to produce 100% good steel and it’s impossible to inspect 100% steel produced. This does not mean that Quality control is difficult. • By opting for higher levels of automations and by complying with efficient quality systems like Six Sigma, TPM, Quality control can be achieved at a steel plant. • Controlling the parameters at different stages of the production and ensuring that the production department follows this is one of the main roles. • Defining the rules of sample inspection and method of production also takes care of the quality. • The overall view should be that quality is not a role of quality control department and that it is a collective role of all the departments. This attitude will ensure reduction of defective steel products. • It is important that the steel buyer audits the relevant records at different levels of production to ensure the effectiveness of the system being followed. • The percentage of internal rejections & the number of customer complaints is a yardstick of how effective is the quality control.
  8. 8. Accreditation / Certification • When a steel mill gets accredited to various renowned quality standards viz., ISO, and other private quality standards, it can be an indication that a system is in place. • Today ISO certification has become a mandatory and basic requirement of every steel plant. • Some steel plants servicing to automobile customers have also accredited with ISO/TS-16949, which calls for stringent system.
  9. 9. Research & Development • The amount of investment a steel plant makes in research and development, new product development will encourage and bolster customer’s confidence in them. • Keeping abreast of technological improvements is a must. • Today many steel plants engage in early development of products with their customers’ right from the design stage. • This has ensured that steel cannot be sold just as a commodity. This can be possible only with a strong R&D highly qualified team and modern testing facilities. • Steel plants should position themselves as steel solution providers rather than steel makers and sellers.
  10. 10. Distribution Model / Geographical Spread • “Go to Customer” is the mantra for any product and in today’s scenario; Steel Industry seems to have aligned itself to this. • For any customer, they should feel that the steel plant is close to them. This is possible by means of service centres, stocking points. • For a Steel buyer to depend on the steel mill, it is important to ensure that the steel mill is flexible enough in deliveries and quantities. • There are service centres, stockiest, steel retail centres opened by many steel mills that take care of small and timely requirements of customers. • A buyer has to look if the steel mill has a robust distribution system with presence in major industrial/ end user hubs.
  11. 11. Sales Organization Structure • For a Steel buyer, accessing the sales personnel irrespective of any level is the most important aspect. • The steeper and multi-level the sales organization structure, the difficulty level increases for a customer. • A buyer has to check as how customer friendly the sales team is and how their orders are taken care of. The key account manager plays a major role. • Also if there are Zonal managers, then the influence of Zonal manager over the top management plays an important role. • In many steel plants, the facilities and product may be good, but due to poor people management and attitude towards customer, their market share will dwindle. • A mutual understanding, developing a mutual trust and co-operation for the benefit of both the parties should be aimed at. • The sales organization structure should define the roles of each level with clarity and without any overlap.
  12. 12. Existing customer base / References • One of the easiest ways of judging a steel mill is based on their existing clientele. While this can be a good and simple way, but this does not indicate that all customers can be served by the mill. • The needs of every customer are different and only few steel plants can serve to diversified clients.
  13. 13. Conclusion • These are some of the important parameters that can be of relevance to all steel buyers. • If you are looking for a metric or a ranking method based on micro and macro parameters and base your decision making on this scientific method, please feel free to contact me at Happy Steeling!!
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