Broner Metals Solutions

Planning and scheduling solutions designed specifically for metals industry have enabled Cosipa to improve the tracking of steel, giving shorter delivery times and better on-time delivery

Companhia Siderúrgica Paulista (Cosipa), part of the Usiminas group, has recently completed a US$1.1billion investment programme which has seen an extensive restructuring of production facilities, including a new steel converter and continuous caster, enabling the plant to reach its new nominal capacity of 4.5 million tons of liquid steel per year by September 2002. Hand-in hand with the new plant, a corresponding investment in IT infrastructure has led to improvements in supply chain management, planning and scheduling that enable Cosipa to market their products more effectively into a highly competitive and ever more demanding market, and will be an essential requirement as Cosipa moves ahead with plans to introduce high technology steels with high added value.

Companhia Siderúrgica Paulista Plant

Cosipa is an integrated steel mill occupying a 12 million square metre site in Cubatao near Sao Paulo, Brazil. The mill is dedicated to the production of uncoated flat steel products including slabs, heavy plates, hot-rolled and cold-rolled steel for both local and export markets. The domestic market accounts for 60% of volume, but exports have grown from 13% (2001) to 40% of sales volume during 2002, representing 33% of revenue. Cosipa has become a regular supplier of slabs to the export market, shipping nearly 1 million tons, largely to steel mills in North America and Asia.

One of the objectives of the recent investment was to improve both product quality and the quality of supply. The new plant will allow Cosipa to expand in the market for IF (interstitial-free or ultra low carbon) products used in the automobile industry and to resume the supply of API (American Petroleum Institute) quality heavy plates for the production of large diameter pipes for the petroleum industry. Quality of supply is fundamental to all product lines and this has been improved through the implementation of new systems combining company-wide ERP capabilities with planning and scheduling solutions designed specifically for the metals industry.

Background to the New System

The requirements for the new systems were put in place in 1997 and were designed to take account of the changing dynamics of the metals markets and to position Cosipa with the flexibility and control that would be needed for the future. Increasing globalization has led to greater competition, with new competitors, while customers have also become more demanding. New trends also call for the focus of manufacturing to change from measuring performance by ‘unit’ to measurement by ‘process’. The result of all these influences, is that the whole organisation has to become more sales oriented with the prime requirement to focus on the customer.

In order to become customer –focused it was necessary to put in place an ERP system that would bring together all of the administration, commercial, production, distribution and financial operations to give a single view of all data across the company, and incorporating advanced planning and scheduling systems to improve plant operations and customer service. This was not just a case of rolling in a new software product. Cosipa looked at the whole company and carried out a complete review of their business processes, organizational structure and technology before making changes in all areas. In fact, this is a continuous process, which continues today as new functionality is progressively implemented and opportunities for further improving business process and organizational structure are presented.

The Solution

The strategic requirements for the new solution were to provide flexibility, agility, integration, e-commerce, customer satisfaction and cost reduction. In searching for a solution to meet these demanding requirements, Cosipa realized that ‘one size does not fit all’, and choose a combination of technology from two suppliers. Broner Metals Solutions supplied specialised solutions in the area of sales, planning, scheduling and logistics and these are integrated with SAP R/3, covering areas of finance, accounting, procurement and projects.

Armando Fernandes, the Project Manager said, “There are such a large number of constraints and bottlenecks throughout the whole lengthy process of manufacture, that it was essential to select a specialist supplier for the planning and scheduling solution. We were particularly looking for expertise in metals production which would provide solutions tailored to our industry and allow for a more effective implementation.”

Each component in the planning and scheduling process inter-relates with other components, several of which cover similar areas of operation but operate differently because they are specialised depending on functional needs with respect to process, plant function or timeframe. The process flow diagram (right) shows how each component of the IT solution inter-relates.

Sales forecasting is managed by the Broner Demand Modeller (DM), Business Optimizer (BOP) and Order Negotiator Availability-To-Promise (ON-ATP) products, which receive sales information from SAP R/3 with details of sales orders that have been taken. These products use sophisticated techniques to build models of production plans in 10 day and quarterly time periods taking into account the constraints on the production of particular products, plant constraints, and customer priorities, with the ability to model ever more demanding scenarios. The Business Optimizer provides a wide range of what-if capabilities, for example, the ability to model the impact on profit of introducing a new product line or determining the best time for blast furnace maintenance etc. The forecasting software results in information that provides better visibility of plant capacity for different types of product over the coming months, allowing Cosipa to be more responsive to customer requirements.

Cold Rolling Mill

In the Planning phase, the Broner Production Planner (PP) controls the loading of the plant and allocates sales orders into 10-day work periods according to each resource’s constraints and the customer due date. This gives a complete view of the order book and expected on-time status. The Material Planner (MP) then allocates the required materials for each stage of the process and the Production Planner will then ensure that it builds intermediate stocks to take account of any expected ‘down-time’ event. This allows the plant to fit the best order to the best in-process material leading to major stock reductions. Plate Combination (PC) provides an optimized plan for the cutting pattern for plates, leading to reductions in scrap, improved output and better deliveries.

Outputs from Planning components feed into the Scheduling phase where the broad ‘plan’ is scheduled on to individual mills and plant equipment taking into account the capability, rules and availability of each plant item at every instant in time.

The Production Scheduler (PS) uses a combination of simulation and optimization techniques to synchronize the scheduling of all machines to achieve the optimum balance of operational constraints with commercial priorities.

The Caster Scheduler (CS) and Hot Mill Scheduler (HS) work together to provide detailed scheduling for the caster plant and the hot mills, leading to reduced costs, increased productivity through longer heat and tundish sequences and increased hot-charge ratio, and better customer service through balancing liquid steel making with casting, rolling and finishing.

The Planning and Scheduling phases are closely integrated to the manufacturing process through interfaces to process control systems. The On-Line Co-ordinator (OLC) takes process data in real-time from the caster and other production equipment so that this can be fed back into the scheduler and make on-the-fly adjustments to reflect what is actually happening in the production process. The OLC can resolve conflicts by re-scheduling liquid steel production to ensure continuous caster operation. It provides a continuing display of ongoing and planned production, with visibility of developing bottlenecks.

The final phase is Logistics where the Broner Despatch Scheduler (DS) manages the dispatch process taking into account the outputs from the production line and warehouses, type and availability of transportation dependent on product, destinations and delivery times. The Despatch Scheduler exchanges data with the SAP R/3 system which is responsible for raising transport orders, issuing tax receipts, and managing the execution of the delivery process to the customer.

Implementation of the systems started in 1999, beginning with SAP/R3 and the Planning components during 1999. Scheduling was implemented in 2000/01 and was followed in 2002 by Sales Forecasting and Logistics. The project is being completed in 2003 with the implementation of the final components of the Planning (PC) and Scheduling (CS and HS) phases of the supply chain.

Results

Since completion of the majority of this project in 2002, there has been a transformation in the results that Cosipa has been able to achieve. Taking the primary goal of becoming more customer focused, the results have been dramatic.

Delivery lead times for hot-rolled products, and for plates and blooms has decreased by 25% since 1999 to 30 days, while for cold-rolled products there has been a 42% reduction in delivery times to 35 days.

On-time delivery has improved significantly. Compared with 1999, the on-time delivery for export orders has increased from 71% to 98.8% in 2002. For ‘priority’ customers, Cosipa’s on-time delivery has increased to 95.7% compared with 87.5% in 1999.

There has been a double benefit to Cosipa in implementing the new supply chain planning and scheduling system. Not only have there been improvements in satisfying customer needs but at the same time, Cosipa have benefited from cost reductions through the elimination of unnecessary stock holding. In 1999 there were 390k tons of stock each month for sales of 193k tons of product, equivalent to an annual stock turn of 6. In 2002 the monthly stock figure had decreased to 290k tons to match exactly, the increased monthly sales figure, giving a stock turn of 12. A further benefit is the reduced movement of materials within the plant which reduces delays and provides better utilization of plant vehicles.

The result is an agile, flexible organization that is able to meet the challenges of an evermore demanding world market. Armando Fernandes said, "We now have the systems in place that give us the detailed control of the order book and effectively balance the complexity of production restrictions with the required product flow."

Cosipa has become a more analytical and integrated organisation, that is able to make rapid decisions based on full information on available capacities and existing orders and their status within the production process. The result is better on-time delivery and a more responsive customer approach.