What role does enterprise resource planning (ERP) play in helping steel companies weather the current storm of market volatility, low commodity prices and global economic uncertainty?
Simply put, I think that steel companies need to understand how ERP and related business applications can help them succeed in a world where the storm never abates. It is quite apparent that the “good old days” of five percent annual growth in global steel demand are gone forever. Now the industry must learn to work and thrive in an environment of approximately one to two percent growth at best, driven primarily by factors like global domestic product (GDP) growth.
To succeed in the storm, companies need to become truly efficient, leveraging technology to the maximum to streamline processes, create visibility and make better informed decisions. This is where ERP applications play a key role. In addition, steel companies need to invest in differentiating innovation in areas such as supply chain management and manufacturing process automation.
On the ERP side, the advent of technologies like in-memory computing and the release of the new SAP S/4HANA business suite are going to have a significant impact on many steel companies. It is critical for them to understand what it means in terms of simplification, as well as how to exploit new capabilities and drive additional process efficiencies.
Accenture talks about “high velocity” ERP. What exactly does that mean and why should steel companies be interested?
In essence, “high velocity” means tying together ERP, modern technologies and digital capabilities to create improved, faster, more streamlined processes. Done correctly, becoming a high velocity enterprise will help a steel company become, or remain, a leading player in uncertain markets. It will help them to better adjust commercial models, pricing and supply chain strategies more quickly than their competitors, while aggressively managing costs to maximize profitability.
Digital is the hot topic of conversation across most industries these days. What does digital transformation look like for the steel industry?
There are some excellent examples of steel companies using digital—from deploying radio frequency identification (RFID) material tracking to reduce logistics costs, to embracing e-commerce channels to enable Amazon-like experiences for business-to-business (B2B) customers. However, there are many more potential opportunities that can be explored.
Companies should start by building a clear strategy and roadmap to understand where the value opportunities are for using digital to improve innovation in business processes. This can be in areas like product quality improvement, manufacturing, warehouse management, commercial pricing, equipment maintenance and so on.
It is also important to look at the full integrated picture. So, for example, steel companies should consider how data from the plant can be used in conjunction with analytics and models to not only increase process visibility and quality, but also tie back into planning and other ERP-level business functions. This, in turn, drives continuous improvement in the underlying master data that control processes. Such an approach provides agility and can enable the fine-tuning of processes and decision making.
As one source of inspiration, steel companies can look at examples of digital innovation in other industries like mining and chemicals. Seeing which applications of digital they have looked at, perhaps in a different context, and then considering how to apply the same to their own specific situation can yield many benefits. Some of these digital approaches are directly transferable—such as contractor tracking and predictive maintenance—enabling the potential for multimillion-dollar benefits.
Clearly such a roadmap cannot be implemented overnight; there may be concrete issues to address along the way. For example, many steel companies have to deal with old and outdated manufacturing execution systems in their mills, which may initially limit access to data. Incorporating these types of issues into the roadmap will help the company to identify strategically where investments should be targeted and also where quick wins can be achieved with low investment and high returns on investment.
What sparked your interest in the steel industry?
I actually started out as a theoretical semiconductor physicist, a field where I could not even see what I was modelling in materials that are only a fraction of a millimeter in size. Joining British Steel in the 1980s brought me face-to-face with 300t ladles full of liquid steel at 1680°C—something that was much more exciting to watch! Having spent many hours in steel plants, I never cease to be amazed by the scale and energy involved in operations.
Tell us about your dedication to weight lifting outside of work.
I enjoy spending time in the gym lifting weights, an activity I started only a few years ago. Given my age, I am quite proud of the fact that I have “deadlifted” 185 kilograms (kg) and “benched” 140kg. Lifting weights is a great way to build mental discipline and focus, and requires a real commitment to achieve the goals that I set. Since most weights are produced from steel, it brings things full-circle for me, too.