Steel manufacturers have an opportunity to transform their operational model in more ways than one by adopting the fourth industrial revolution and digitising aspects of their business, allowing them to improve operational efficiency, customer services and inventory levels.

The era of digitisation in the steel and metal industries has arrived. The cost of data acquisition, storage and analysis has dropped dramatically in the past five years. Consequently, multiple digital solutions are available today and it is relatively inexpensive to implement enabling hardware technologies.

Macsteel Logistics and Warehousing executive, Vojta Svoboda says, “Companies that recognise the opportunity and take action will have a competitive edge, which will continue into the future. The most important factor to take into account is how we evaluate the current situation and invest in the right projects strategically.”

People talk about automation, he notes. But what is the fourth industrial revolution?  It means different things to different people.  The Fourth Industrial Revolution can be described as the dawn of “cyber-physical systems” involving entirely new capabilities for people and machines, representing entirely new ways in which technology becomes embedded within societies.

Most would think it’s just about automation in a factory or warehouse however Macsteel’s approach is of a more tactical nature where we are using information more specifically, statistical data analyses to better manage our business and streamline the effectiveness of our operations.  While we understand it’s a bit of a nebulous concept you want to be using this statistical data to be making informed decisions from across the wider supply chain, making use of that information as effectively and efficiently as possible.

Addressing challenges

“So, Macsteel’s journey of digitisation is to try and improve how we use systems for making key management information available to manage exceptions, so identifying and addressing challenges in the process rather than focusing on the areas that are operating seamlessly,” says Svoboda.

“Systems should be designed to provide management information and assist the business in making key decisions.  They need to create transparency and visibility of information to all key decision makers regarding sales, logistics warehousing, production, procurement and finance and then merging all of it.”

The journey of digitisation is not a sprint, so companies can launch on a smaller-scale, focusing on a specific area of the business or geographic market. This approach can help to prove the value of the digitisation and establish internal confidence and alignment. This approach puts the business needs ahead of the technology, rather than the other way around.

In digitisation, predictive analytics has already demonstrated its potential to revolutionise the operational model, in terms of speed, cost, and ease of implementation. It uses advanced, self-learning systems to sift through large volumes of data generating insights and identifying patterns.  “However, in order for these systems to work it requires the right information input.  So, how should we be using information within our organisation, and are we dedicating the time to using the information well?”

Svoboda says, “It’s all about taking it to the next level.  It’s about implementing processes that make provision for your teams to be doing what they need to, ensuring that they source the right suppliers with products of meticulous quality and negotiate competitive pricing and efficient service delivery.

“Our scale also creates a benefit to achieving the desired outcome, as we have an enormous amount of data at our disposal that helps in modelling and arriving at the best outcomes for the business and ultimately our customers.”

Complementing this should be a specialist planning team utilising an improved technology that is more modern and easier to use.  This team should be using the sales input and the supplier data to understand how efficient we are at managing our working capital and ultimately our service levels.

This ensures that we understand the lay of the land and by using key data we have a bird’s eye view of how smoothly our business is operating or where we need to regroup and refocus our efforts. It puts us in the advantageous position of knowing where the challenges are and where we need to be focusing attention.

Whether this is done together with the sales team, using systematic methods or together with the customer or a combination of all three, we are now primed to be using collective analytics to improve on the business situation and make key inventory decisions.

Significant potential for productivity

“There is significant potential to better the efficiency and productivity and reduce product mishandling and the downtime that is part of the normal daily routine.  These are pain points that can be eliminated through digitisation, delivering a significant rise in efficiency by merely eliminating bottlenecks and issues in material handling. We have a number of strategies to address the operational bottlenecks and to be able to respond to market demands”, says Svoboda.

Digitisation is a key focus for Macsteel as it enables the business to have information at its fingertips as well as develop operational scenarios to make informed decisions, for example if the business makes a supply decision what is the impact on demand or if something happens to demand how does the business react from a supply perspective.

Digitisation is one of the significant areas where Macsteel is focusing their efforts to not only evolve their business but to ensure the streamlining and long-term sustainability of their business.

“For Macsteel, it’s about selecting the parts of digitisation that we want and that we know will have an impact and that make good business sense. Selecting the right type of digitisation for the business and at what stage it’s required is how Macsteel is approaching digitisation”, concludes Svoboda.

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