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Tata Steel Slide Supply Chain Management in a complex chain Fred Jenninga; Director Sales & Operations Planning Tata Steel Europe Together we make the difference
Transcript

Tata Steel Slide

Supply Chain Management in a complex chain

Fred Jenninga;

Director Sales & Operations Planning Tata Steel Europe

Together we make the difference

Tata Steel Slide

Agenda

2

1 Context: Tata steel organisation, Supply Chain and Status

2 Supply Chain Vision and direction

3 Order Fulfilment Strategies

4 Theory of constraints

5 our project approach

6 Take away

Tata Steel Slide

Agenda

3

1 Context: Tata steel organisation, Supply Chain and Status

2 Supply Chain Vision and direction

3 Order Fulfilment Strategies

4 Theory of constraints

5 our project approach

6 Take away

SlideTata Steel

4

Steel making operations

Distribution and downstream assets

Mining assets and projects

NML Canada(iron ore)North America

WesternEurope

Scandinavia

CIS

WesternAfrica

Ivory Coast(iron ore)

South Africa

Latin America Mozambique

(coal)

Turkey

CEE

ChinaJapan

Australia(coal)

INDIA

Jharkhand

Oman(limestone)

Hong Kong

New Zealand

Sales and commercial centres

SE Asia

Tata Steel is present in both mature anddeveloping markets worldwide

SlideTata SteelSupply Chain Masterclass

Context: Tata Steel in EuropePre-New Operating Model.

5

SlideTata Steel

SlideTata Steel

Our Operating Model: one integrated, customer-driven company

7

Operations hubs

Our customers and markets

Supply chain

Support F

unctions

Sales and Marketing (sector teams/customer services)

IndustryStrip

Construction Structures

Lif ting & Excavating

Energy & Power RailPackagingAutomotive

Long EUStrip MLE Strip UK Downstream

Building Envelope

Distribution MLE

Distribution UK&I

IndustryLongs

Journey to Commercial Excellence

750

643

550

446

350

294

266

88

150

30

5050

140

9334

40

170

18

106

20

70

25

5800 5400

3650

3400 kt

3150

2800 kt

2170

1900 kt

1520

1488

1412

1400 kt

1300

1256

1250 1200

1050

901

879

868

840

800

759

720

712

600

590

582

580572

557

550

550

535

533

510

510

500

500

474

450

430

408

401

400

400400

398

380

375

370

360

360

350

350

340

330

310

304

298

288

277270

265 260

250

233

230

220

220

218

206

21

168 104

200

150

85

194

80

154

66

175

170

180

150

17

145

140

55

146

182

30

75

150 80

200

110

200

130

109

128

192

10050

133

133

180

200

100

133

133

75

180

70

60

165

106

75

25

195

30

IJM BF6

IJM BOS2IJM HSM2

IJM PL12 (CPP)

IJM BB21

IJM BK22

IJM CM21

IJM DVL1

IJM DVL2

IJM DVL3

Segal

IJM WSN

IJM VL1

IJM VL2

IJM DSP

IJM GM21-22

IJM CM12

IJM CM11

IJM CL13/H2BA

IJM CA11

IJM CAPL12 IJM CAPL12 (TM)

IJM DR11 / TM48 IJM ETL1-3

IJM ETL4

Market: SLAB

225

Market: HR dry

1705

Market: HR pickled

1175

Market: CR

1150

IJM CM22

IJM BA

Market: HDG Auto

1633

Market: HDG Non-Auto

881

Market: OCS

943

Buy: Substrate electrical steel

0

Orb Annealing & Pickling

Sura Annealing & Pickling

Market: electrical steel

150

MLE Tubes Zwijndrecht

125MLE Tubes Oosterhout

125

SC BF Queen BessSC BOS

SC Caster Bloom 750

SC Caster Bloom 483

SC Caster 5

SC Billet caster

SC slab caster

Longs BBM

SC SRM (4 Strand Rod Mill)

Market Plate

772

SC SPM (Reversing Plate Mill)

Dalzell (Reversing Plate Mill)

ThryberghTCM (Bar Mill)

Brinsworth (Narrow Strip Mill)

Skinningrove (Special Profiles)

Sc SRSM (Sections and Rail)

Hayange (Sections and Rail)

Market Sections

409

Market Rail

469

Market Special profiles

246

Market Rod & Bar

1292

PT BF4

PT BOSPT Caster

PT HSM

LL HSM (Llanwern)

LL PL1

PT Link (pickling)

LL CM

TR PL (Trostre) TR CM Five Stand Mill

TR BA

TR CAPL

TR TM/DR (temper)

PT CAPL

PT BA

LL Zodiac

Shotton 5

Shotton 6

SH OCS 1

SH OCS 2

UK TAF

75

Myriad LigneA

Myriad Ligne2

Myriad CM (cold mill)

330

Myriad PL (Pickling)

350

UK Hartlepool 20"

180

UK Hartlepool 42"

150

UK Corby

300

TS TBM (Heavy Section Mill)

group slabs

Market Semis

18

Market Specialty Steels

235

Buy: External HR dry

0

Rotherham EAF T-Fce

328

RH SBC (Small Bloom Caster)

RH LBC (Large Bloom Caster)

RH IC (Ingot Caster)

Buy: External plate

Market: Tubes

880

Market: Tinplate

1153

TR ETL5-6 & ECCS4

Duffel Protact

hdg auto

1730

HDG non-auto

1410

CR soft

>>WSN150

PT Link (rolling)

>>IJM HRC

>> Tubes

80

>>IJM HSM2

>> Hartlepool420

>> LONG SPM

>> OCS

596

PT BF5

IJM BF7

LL PL2

Utilisation <80%

Utilisation > 90%

Product to Market

SC BF Queen Vic

SC BF Queen Anne

SC BF Queen Mary Closed

Mothballed

Stockbridge (Primary Mill)

Utilisation 80-90%

Clydebridge Quench

Trostre Protact

Sura AnnealingSura 4 high CM

Plate Dist EU

170

Plate Dist UK

70

Plate Other

532

HR dry DistE

350

HR dry DistUK

HR dry OTHER

1100

HR pickled DistUK

HRpickled OTHER

HRpickled DistE

OCS DistUK

20

OCS DistE

CR DistUK

130

CR OTHER

805

CR DistE

215

HDG auto DistUK

HDG auto OTHER

HDG auto DistE

HDG non-auto DistUK

HDG non-auto OTHER

HDG non-auto DistE

335

Tubes DistUK

50

Tubes OTHER

820

Tubes DistE

10

OCS OTHER

913

Rod & Bar Other

1142

Rod & Bar DistUK

60

Section DistUK

Sections OTHER

229

Rotherham EAF N-Fce

602

Legend

1330

1330

5000

1500

1250

800

1200

1200 800

650

350

850

700

370

280

960

700

350

150

2500

2000

7650

3600

2900

6000 5700

1400

2550

1400

2000

5100 6000

3500

3200

1300

700

900

1350

1000

750

xx

410

550

550

400

400

400

400

150

200

200

200

200

200

240

100

130

250

140 135

500

900

170

900

450

770

Flow Map V2.3

Date: 10-02-2013

Period: 2012

TSE Strategy

While our supply chain is not suited for small, non repeating volumes, delivered in a small time window.

20-40 tInfrequent

1 wk window

325 ton1 quality

1200 toncasts

Limited widths

Chance On rejects &

Unplanned repair

Impossible to become reliable (>95%) with starting from SteelplantImplies different orderfullfillment Strategies, product rationalisation

And integrated Supply Chain Management9

10

Performance Hub MLE, 2013-1013YTD

Today our supply performance is POOR..

80

70

100

90

0

95

85

75

65

60

ROTIF – P (%)

Sep-13

Jul-13

Apr-13

Jan-13

Oct-12

Jul-12

Apr-12

Jan-12

95

Agenda

11

1 Context: Tata steel organisation, Supply Chain and Status

2 Supply Chain Vision and direction

3 Order Fulfilment Strategies

4 Theory of constraints

5 our project approach

6 Take away

The three Goals in Supply Chain

12

Service

Cost Inventory

Improved service and reliability to our customers is an important driver of our growth strategy: right service for the right market segment

Increase margin by lower cost-to-serve, lower inventory holding cost, lowest cost routes

Our business has been tasked to lower its working capital to 920kt of inventory (2014)

Our current challenge

vsvs

vs

we want to improve on all three!Improving business transformation

SlideTata SteelSupply Chain Masterclass

Targets & Measures

Supply Chain Management Strategy Delivery

Our number 1 goal is to stop harming peopleMinimise employee absence

Optimise TSE inventory levels

Satisfy the market requirement for reliable service at the required levels

Reduce logistics costs and leverage as a competitive advantage. Enable value creation

opportunities.

Optimise functional costs, ensure a motivated and developed workforce, deploy integrated business

processes

Zero Lost Time Injuries.Less than 2% employee absence.

2.1 Million Tonnes.

60- 70% volume under MTA with availability >95%30-20% volume under MTO with >85% ROTIF

10% volume to be used as market buffer

Reduce logistics costs by 5%. Create commercial opportunities through logistics cost advantage.

Strategic SCM Goals

Run a functional excellence programme; deploy a supply chain operating model, underpinned by a robust QMS and capability platform via the SCM Academy.

Develop a Programme Management capability to drive supply chain and cross-functional projects .

Deploy SCT business processes and technology.

13

Tata Steel Slide

Goal of the business organisation

14DMWL_Kick off

Throughput - Operating Expenses

InvestmentROI

Focus on maximising throughput as it has no limit against minimising costs with a limit of zero

Throughput Price – Truly Variable costs

Profit Throughput – Operating Expenses

Time

Goa

l uni

ts

ThroughputOperating ExpensesInvestment0 0

Tata Steel Slide

Selection of Decisive competitive edge

Decisive competitive edge

Cost based Service based Technology basedX X

• A competitive edge that is not based on low prices enables a company to build preferred supplier status.

• Technology is a qualifier – a supplier is either in or out.

• A significant need is to assist the customers in maximizing their throughput. More throughput for customer is a much bigger plus than just a cost reduction.

• Therefore TSE needs to build decisive competitive edge, which is service based, for its focussed market segments while enjoying (almost) full utilization.

15Supply Chain Masterclass

Tata Steel Slide

Agenda

16

1 Context: Tata steel organisation, Supply Chain and Status

2 Supply Chain Vision and direction

3 Order Fulfilment Strategies

4 Theory of constraints & our project approach

5 Tata Steel Outbound

6 Take away

SlideTata Steel 17

SlideTata Steel 18

What are the service needs of our customers

Tata Steel Slide

Supply side Demand side

Dealing with dependency

19

What if we had a collapsing point for the waves of disturbance?Collapsing point

SlideTata Steel 20

SlideTata Steel 21

SlideTata Steel

Agenda

22

1 Context: Tata steel organisation, Supply Chain and Status

2 Supply Chain Vision and direction

3 Order Fulfilment Strategies

4 Theory of constraints

5 our project approach

6 Take away

SlideTata Steel 24

SlideTata Steel 25

Theory

600/day

90

A B C D

How many tons are produced?

How much WIP is created?

Capacity (T)

% Availability

500/day

80

550/day

85

900/day

70

400 T/day

140 T/day

SlideTata Steel 26

Conclusions from Example

Improvement in all working units does not necessarily lead to overall improvement

Focusing on the weakest unit (bottleneck) leads to the biggest improvement

Other units need to maintain performance

Maximize through whole chain

SlideTata Steel

Agenda

27

1 Context: Tata steel organisation, Supply Chain and Status

2 Supply Chain Vision and direction

3 Order Fulfilment Strategies

4 Theory of constraints

5 our project approach

6 Take away

Tata Steel Slide

L1 Project Objective

L2 Project Objective

Do More With Less is…….28Do more with less

Do More With Less – Enhance Service levels (Availability > 95% for MTA and DOTIF-P > 90% for MTO)

65-70% Decoupling (MTA / MTA+FTO / Consignment ) supported by market

buffer and product/order book rationalisation

Optimise Inventory dealing with Non-Value Adding Inventory

What?

1. Identification and validation of Non-Value Adding inventory

2. Develop action plans to reduce non value adding inventory

3. Develop mechanisms to predict and correct aged stocks pro-actively

NB: 2,3,4,& 5 in parallel

1. Implement market buffer to deal with variability in supply and demand

2. Identify decoupling potential for Runners and Repeaters

3. Decouple at HRC stage to level identified in 2 (S-UK 63%, S-MLE 43%)

4. Launch Product Rationalisation / Order Rationalisation to increase decoupling potential

5. For remaining (MTO) order book implement time buffer management to improve reliability

Tata Steel Slide

Agenda

29

1 Context: Tata steel organisation, Supply Chain and Status

2 Supply Chain Vision and direction

3 Order Fulfilment Strategies

4 Theory of constraints

5 our project approach

6 Take away

SlideTata Steel 30

Current delivery performance not sustainable with present methods and working capital

Optimise/change management on precision, order fulfilment methods and buffer management (capacity and market). Different way of thinking

A lot of interdepencies and cross-functional working (e.g. rationalisation/order/product, homologation, order policies, market buffer)

Take aways

Introduction to Supply Chain Management


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