Macsteel Service Centers USA outsources some of its manufacturing to processing vendors. It needs its IT system to support outsourced manufacturing by tracking purchase orders, material costs, inventory, and processing details for outsourced jobs. The system must allow referencing raw materials and finished goods, capturing multiple costs, and providing full visibility of outsourced production statuses and balances. It also requires flexibility to handle multiple items, conversions, transfers between vendors, and adding product item numbers.

1. T H E P A S S I O N R U NS D E E P
Stuart Patsos, CIO / Vice President of IT
Achieving Success with Mixed In-House and
Outsourced Manufacturing

2. Company Background (Cont.)
Macsteel Service Centers USA is one of the leading metals
processors and distributors in North America.
A division of Kloeckner & Co – the largest mill-independent
distributor of steel in the world
● 30+ locations throughout North America and Puerto Rico
● processes and distributes
► carbon ► aluminum
► stainless ► specialty metals
● Products include a full range of
► flat rolled ► pipe
► plate ► bar
► tubing ► structurals
● The company also supplies a full range of
► Coated ► steel building products
► prepainted metals
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3. Outside Processing
• Purchase Order Requirements
– A Purchase order may or may not be placed at the same time as
the material order or the transfer order.
– The Raw material is sent to the processor for storage and the
processing requirements are specified later.
• The PO for Outside Processing must support:
– Ability to reference Item to be processed and Item to be
consumed for Processing
– Multiple Units of Measure for produced of Pcs, Lbs, FT, CWT
– Multiple acquisition costs specified to vendor.
– Reference between documents PO and WO

4. Outside Processing
• Acquisition Costs (Landed Cost)
– PO Line item Acquisition costs supports positive and negative
values that may include processing charge, skids, packaging,
and other charges.
– Freight costs associated with transferring inventory from one
Warehouse to an Outside Processing Warehouse are reflected
in the inventory at the receiving location.

5. Outside Processing
• Material Movement
– Material dropped shipped from Vendor directly to the Outside
Processor.
– Material may be shipped from our Warehouse to the Outside
Processor for storage or processing
– Transportation costs treated as acquisition costs (LCM)

6. Outside Processing
• Material Costing & Traceability
– Product and Material Cost is Perpetual Average costing
– Material Conversion from Ingredient to Product rolls all costs of the
parent item plus associated processing costs.
– Traceability between parent and child
– Supports ‘Bought-For’ reference on Tag
– Use Processor’s tag number instead of Macsteel Tag Number
– Heat information associated with the parent tag is transferred to
the produced tag

7. Outside Processing
• Inventory Management
– Inventory received or produced into OSP Org will use the vendor
Lot Number instead of internal lot number.
– View allocation of raw material assigned to make product at OSP
vendor and the details of the scheduled receipts of product(s)
being made along with PO charges
– Inventory Inquiry: Purchase Orders placed to an Outside
Processor for a Product and Dimension should be viewable for
the item placed on the services purchase order.
– When a user queries an item to be processed on a services PO
the item can be seen as incoming material and the user can view
the PO item associated with the incoming quantity.

8. Outside Processing
• Full Visibility
– Full Visibility and status including qty processed, scheduled
receipts and completions or partial balances.
– Assigned lot numbers.
– All PO Charges and balances updated to reflect production
completions, shipments and remaining balances

9. Outside Processing
• More scalability and flexibility to work with
multiple items and multiple transactions
– One to many conversions of number of parts processed, for By-
products and Co-products
– Transfer from one processing vendor to multiple vendors and
drop ships at completions
– Addition of Product Item numbers to capture individual process
costs by product/item