Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Greater decision making confidence with end-to-end supply chain visibility

1,419 views

Published on

Vivek Kamra, CEO of NatSteel, explains how business leaders can gain greater decision making confidence with end-to-end visibility of their supply chain, at the Quintiq World Tour Singapore.

Published in: Technology, Business
  • Be the first to comment

Greater decision making confidence with end-to-end supply chain visibility

  1. 1. with end-to-end supply chain visibility GREATER DECISION MAKING CONFIDENCE Quintiq World Tour
  2. 2. Thought Leadership In Supply Chain Gain Greater Decision Making Confidence with End-to- end Visibility of your Supply Chain 23 June 2014 Vivek Kamra President & Chief Executive Officer, NatSteel Holdings Pte Ltd 2
  3. 3. Steel Plant (EAF) Rolling Mill Downstream Fabrication Services Australia 2nd largest in Australia • Downstream: 150,000 MTPA • Market Share: 15% NatSteel Holdings Pte Ltd Singapore Market leader in Singapore • Metal recycling: 500,000 MTPA • Billets: 800,000 MTPA • Bars & Rods: 800,000 MTPA • Downstream: 600,000 MTPA • Market Share: 40% Fujian, China (NSX) A top brand in Fujian • Bars & Rods: 2,000,000 MTPA • Downstream: 50,000 MTPA • Market Share: 15% Rayong, Thailand (SIW) Market leader in Thailand • Wires: 200,000 MTPA • Market Share: 40% North Vietnam (NSV) • Bars & Rods: 200,000 MTPA • Market Share: 6% Johor, Malaysia (ESM) • Downstream: 40,000 MTPA • Market Share: 1% NatSteel is part of Tata Steel, a top global steel company with an annual crude steel capacity of over 29 million tonnes per annum and the world's second-most geographically-diversified steel producer With operations spanning across the Asia Pacific region, Natsteel Group has an annual steel production capacity of approximately 3 million tonnes. We produce rebars, wire rods and value added steel construction products. Strong presence in Asia Pacific, delivering premium reinforcement steel products and solutions for the construction industry Jakarta, Indonesia • To start operations in FY15 • Downstream: 50,000 MTPA 3
  4. 4. NatSteel Holdings Pte Ltd operates a state of the art modernised Integrated Steel making Operations from Scrap to Advanced Steel Solutions World’s largest single fabrication facility for higher productivity for the construction industry. 600,000 tonnes p.a. capacity Reinforcement steel fabrication using state-of-the-art technology to meet customers’ orders within 1 to 5 days: a. Cut-And-Bend to fabricate bars b. Mesh to weld and bend welded fabric reinforcement from wire rods c. Caging assembles reinforcement bars and mesh into 3-D cages 4 Radiation detection and sorting of metal scrap 1 Rolling mill benchmarked against global standards 3 Steel production using world’s most energy efficient Electric Arc Furnace 2 NatSteel has spearheaded breakthrough technologies such as:  Modern Scrap Processing Capability  Energy Saving Shaft Furnace for Scrap Preheating  Integrated Billet Hot Charging  State of the Art Cut-and-Bend Integrated Lines  Integrated Caging Centre  Advanced Logistics Systems Sidelifter & Flat Rack Integrated System 4
  5. 5. NatSteel Holdings Pte Ltd Productive Construction Solutions 5  NatSteel has been driving the adoption of Offsite–Fabricated Reinforcement Solutions in the Construction Industry in Singapore, giving the following benefits:  Reduced construction cycle time  Reduced material wastage (from 7-12% to 2%)  Reduced inventory-holding costs  Improved on-site safety  In addition, on-site manpower required is reduced as offsite fabrication is 4 times more productive than on-site 341 364 421 500 512 720 FY10 FY11 FY12 FY13 FY14 FY19 target SingaporeDownstreamSales 111% 50% 806 834 792 908 928 856 FY10 FY11 FY12 FY13 FY14 FY19 target Downstream Headcount 15% 6%  Achieving Quantum Leap in Downstream Manpower Productivity and Land Productivity:  Our sales of value-added products in Singapore increased 50% over 4 years with just an increase of 15% in production headcount  We are targeting a 111% increase in Sales by FY19 with a minimal increase in headcount over FY10
  6. 6. With raw material being 75% of our billet cost, and Billet being over 90% of Finished Goods Costs , NatSteel faces Multiple levels of Volatility Volatility of inputs Steel making commodity prices are highly volatile and near historical high levels Risk Exposure • Raw material is purchased at spot price or with contracts less than 3 month duration, and imports are subjected to forex variability. • Construction has long project lead time, thus customers prefer longer contract terms fixed price. Cash flow is usually tight, and sensitive to frequent price change. 6 Local Scrap - Fixed (varying duration , mainly 0 - 3 mths) Import Scrap (Spot Price) Import Bar (Spot Price) Purchase Local Sales - Fixed (varying duration) Local Sales - BCA (Price Adjustment 2 mths later) Export Sales (Spot Price) Sales USD / Ton. Source: SBB 0 100 200 300 Jul-09 Apr-12 Dec-14 Price(USD) Iron Ore Prices 0 200 400 600 Jul-09 Apr-12 Dec-14 Price(USD) Scrap Prices
  7. 7. These challenges are addressed through having lean SCM, processes to manage volatility, and changing the focus from steel production to customer driven service business Lean SCM • Maintain optimal inventory level through Sales & Operations Planning • Manage exports through weekly Australia inventory replenishment & shipment arrangement Manage volatility & track profit • Match buying of raw materials & inventory levels with committed sales to establish material profit • Purchase energy with fixed rate contracts • Hedge net foreign currency exposure • Track scrap rebar gap, energy price vs profit, supported by profit forecast & KPI reviews • Integrated Margin Management – Maximizing profit contributions to the firm through optimal pricing decisions for demand, domestic/imported scrap, and imported bars Move from an Operations focus to Being customer driven Going down the Value Chain • Promotion of downstream application which is value driven rather than cost driven • Keep shifting to higher grade superior quality products through product and market development • Project Passion – Redefining work processes and structures to create a more customer-centric approach in daily tasks 7
  8. 8. Profit & Resource planning Sales and Operations Planning Scheduling Source Make or Buy Forecast Plan Fulfil Delivery Challenges  Maintain Low Stocks while Maintaining high Availability  Integrated But Quick Decision Making  Mismatch in Buy vs Sell Contract Duration  Highly Volatile Input Prices  Imports have a high Lead Time  Input Costs – High %  High Variability at Construction Sites  Rising Labour Costs  SKU Proliferation  Urgent and Last minute Order Modifications  Multiple Hand Offs  High Uncertainty on Project Start Dates  Capacity Estimation highly dependent on Design and Bar Sizes  Low Standardisation  Early Involvement  Strong Knowledge Management  Seamless, Transparent Data and Order Communication  Real Time Order and Site Tracking  Automated Transaction Systems Mitigation Strategies NatSteel End To End Supply Chain Strategy 8
  9. 9. Integrated Margin Management is to maximize the profit contribution of the firm based on optimal pricing decisions. Others Exchange Rate Yield Adjustment Production Production Capacity (Mthly) Upstream Variable Cost (Mthly) Inventory Inventory coverage Value-in-use (VIU) Value Gap between scrap grades IMM Model 9
  10. 10. Scrap Melt Shop Machines and Material Optimization to maximize throughput and reduce yield loss. Buy BAR Coil Sales Contract Sales Forecast Cut & Bend Mesh Borepile Precaging Source Make or Buy Forecast Plan Fulfil Delivery NatSteel End To End Supply Chain Strategy Upstream Downstream Profit & Resource planning Sales and Operations Planning Scheduling 10
  11. 11. Super- Structure Work NatSteel plays a critical supplier role in key construction projects. Close knowledge of the project is required to support the timely execution of construction. Tender Award Architectural Works Sub- Structure Work Mechanical & Electrical Works Complet- ion & Handover NatSteel signs contract with construction company NatSteel receives multiple orders from customer to deliver parts of structure’s reinforcement as scheduled Reinforced concrete structural works 11
  12. 12. Our team helps to translate orders into products & services to serve reinforced concrete structures of multiple projects monthly, customised to each project’s needs, ready for use on site. Sub-structure Super-structure Saves sites cost, time, manpower & space 12
  13. 13. Long Contract to Order Cycle Sales Contract Purchase Order Confirmation Of Drawings Technical Detailing PlanningProduction Logistics Fulfillment Demand Creation 0-7 days 3 to 6 Months 3 to 6 Months 0 to 14 Days 0-1 days NatSteel End To End Supply Chain Strategy 13
  14. 14. Scrap Melt Shop Macro Planner 3 to 6 Months Machines and Material Optimization to maximize throughput and reduce yield loss. Buy BAR Coil Sales Contract Sales Forecast Cut & Bend Mesh Borepile Precaging Up to 14 Days Company Planner 1 Day Scheduler 1 Day Logistics Planner Source Make or Buy Forecast Plan Fulfil Delivery Upstream Downstream Profit & Resource planning Sales and Operations Planning Scheduling NatSteel End To End Supply Chain Strategy 14
  15. 15. Macro Planner 3 to 6 Months 1 DayUp to 14 Days 1 Day Company Planner Scheduler Logistics Planner Current Visibility Of Orders Macro Planner •Sales Forecast •Sales Contract •Resource loading Company Planner •Resource Booking •Logistics Requirements Scheduler •Optimized plan •DIFOT •Minimize yield loss Logistics Planner •Load Planning •DIFOT in delivery Market Share/Profit / Forecast Accuracy Capacity Utilisation / Lead Time / Inventory Throughput/Material Yield and DIFOT NatSteel End To End Supply Chain Strategy 15
  16. 16. Macro Planner Current Visibility Of Orders  Product Mix Optimization  Demand Planning  Supply Chain Scenarios  Long Term Material Planning  Long Term Capacity Planning NatSteel End To End Supply Chain Strategy 16
  17. 17. Company Planner Current Visibility Of Orders  Order Promising  Plan Orders On time  Material Planning  Synchronizing Material Flow Through The Factory  Campaign Planning NatSteel End To End Supply Chain Strategy 17
  18. 18. Scheduler Current Visibility Of Orders  Loading Plan  Delivery Wave  Detailed Scheduling  Batching  Slitting Optimization NatSteel End To End Supply Chain Strategy 18
  19. 19. Logistics Planner Current Visibility Of Orders  Delivery planning  Real-time Scheduling & Alerting  Real-time (re)-optimization NatSteel End To End Supply Chain Strategy 19
  20. 20. Generate sequence of activities Trigger demand for customers according to progress at sites Projection of demand for customer The Next Stage – Automated Predictive Ordering Next Level – 3D Block Charts Detailing Detailed Production Delivered Source Make or Buy Forecast Plan Fulfil Delivery 20 WBS - Work Breakdown Structure
  21. 21. Achieving Seamless Interactions Across Systems ERPSite Tracking & Visibility Planning and Scheduling Sales / Contract Information Technical Detailing System 21
  22. 22. Create a Borderless Organisation- Zero Handovers 2nd Stage – Demand Push SalesForce.com •Sales Forecast •Firmed Sales 0 5 10 15 20 25 Jan Feb Mar Apr CAB2 Mesh Caging Macro Planner Company Planner Scheduler Logistics Planner 22 Forecast Demand Capacity Booking Site Delivery NatSteel Detailing System (NDS) Work Breakdown Structure (WBS) Schedule Orders Orders

×