STEELPRO CASE STUDY

INTRODUCTION

For this exercise, you will assume the role of a recently

joining planning engineer at SteelPro Company.

Although in a real life situation, you would have access to

other sources of information and would be able to consult
your colleagues, in this exercise you are limited to the
information contained in the exercise document. You are,
however, allowed to make logical assumptions where
information is missing or incomplete. This document is a
report compiled by the planning manager. It describes the
situation in SteelPro including Production Planning
situation, production Process, and Communication with
major stakeholders

ASSIGNMENT

You were informed by your manager that he would like

you to present your findings and recommendations to the
manufacturing director along with other manufacturing
managers next week. The manufacturing director would
like to see a suggested solutions that will increase
performance, improve delivery time and customer
satisfaction. You may, as well, need to suggest some ABSTRACT
decisions concerning process development and
organizational development. The total available budget is This is a fictitious document only produced for the
2.5m EGP for this improvement project. purpose of this exercise. All references to existing
states, international organizations, private companies,
Your presentation should include, but not be limited to, departments, their representatives etc. should be
the answer of the following questions: considered as mere examples. They do not represent
 What are the key issues observed? any position of these bodies or persons.
 Which potential solutions do you see to resolve
the key problems in the team?
 What would be your recommendations for the
longer term, taking into account the different
parties involved?

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Production Planning;
The goal of SteelPro production planning department is simply to maintain flow. The team in charge of production
planning adjusts the workforce and process flow to obtain a regular use of company resources with minimal downtime,
minimal bottlenecks and a level of output consistent with all the resources being put into the process. This being done
using a master production schedule and all resources should be organized according to the schedule specified.

SteelPro production planning is affected by the nature of demand and production process (this makes the production
department and the sales department are the major stakeholders for production planning team). Sales contracts are
usually between hundreds of tons and several thousands of tons. Each contract has a specific steel density, width,
thickness, and type of processing.

The production planning team at SteelPro consists of 5 experienced engineers who are located at the administrative
building located 20 minutes from the production plant. The planning engineers are working during the day time for five
days a week. During the last 12 years they have developed, excel based information system that helps them in issuing
new production and processing orders, and in contract tracking.

Due to software limitations, but especially the intense work required by the "Production Planning team", schedules do
not include every aspect of production, but only key elements that have proven their control effectively, such as
forecast demand, production costs, inventory costs, lead time, working hours, capacity, inventory levels, available
storage, and parts supply.

The production planning team pay limited site visits to the plant due to the large work load however they conduct some
audits which allowed them to discover many problems and to find many points for improvement. In some cases,
planning engineers found that production team did not follow their orders for a one reason or another, and then the
planning engineers tried to include that in their monthly reports of the top management.

The production planning team philosophy is “producing as much as you can with minimum cost” thus they are trying
to minimize the cost of production by producing large batches of the same product. Push production is being applied
by production planning team, which means that any type of product will be produced from the mill with any quantity
based on production planning team decision. This makes the decision always in the favor of cost reduction over the
delivery schedule. Production planning decisions are strictly centralized, which means coils cannot be moved to the
next process until production planning engineer issues an order for the next process. Exhibits 2 and 3

Although the production planning team was improving from one year to another, the team decided to make changes
based on other department’s feedback and criticism that was directed to them at the last management meeting. Some of
the department’s feedback is as follows;

Department Feedback
Finance  We think that the planning team is doing well keeping the minimum cost of the
continues process but the problem is with the cost of the waiting time that follows.
Sales & Marketing  We are receiving an increasing rate of customer complaints regarding delivery time and
product quality.
 We do not think that the planning team is cooperative, some time they do not even
answer our calls.
Maintenance  We are fine….we have more than enough time to work on downstream processes
equipment.
Production  large batches of the same product route this led to huge quantities waiting for processing
at different stages
 Uneven production load at the downstream processes.
Quality  We are always under a lot of pressure, as we have to make our last quality check right
before shipping. In many cases, we cannot do our job properly due to sales request to
ship the products right away.

Production Process:

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SteelPro continuous process consists of one Electric Arc Furnace (EAF), One Caster, and One Hot Strip Mill (HSM).
If any trouble occurs in one of those steps, it will affect other steps as well. The raw material are melted in the electric
arc furnace, and then the molten steel is cast in the caster into slabs with the required width and a thickness of 52 mm,
and finally the slabs are rolled to reduce the thickness into the required thickness (1.2 mm to 12.7 mm). The final product
of the mill is coils with the required width, thickness, grade and weight.

The continuous process (sequence) lasts for more than 10 production patches then the caster has to stop to get prepared
for the next sequence. Electric arc furnace, caster and hot strip mill plants are working 24X7 except during planned
maintenance or troubles, which resulted in large batch of production.

Machine EAF Caster HSM

Capacity 160 t 160 t 160 t

The flat steel is produced in the form of Hot Rolled Coils (HRC) at a high temperature (around 600 oC) and then left
for few days to cool down naturally. it is important to process the coil as soon as it reaches the processing temperature
(less than 40° C). The coils’ temperatures were never tracked, however, everyone in the plant has a belief that
atmosphere, thickness, width or grade affects the cooling time.

More than 60% of the coils will need further processing after the cooling period. There are several downstream plants:
Skin Pass (SKP), Pickling (PKL), Slitting (SLT), Light Cut To Length (LCTL), and Heavy Cut to Length (HCTL). The
coil will take one route or another through those different plants based on the customer demand.

Machine SKP PKL SLT LCTL HCTL

Capacity 100 t 150 t 80 t 90 t 90 t

Communication with major stakeholders;

According to the production planning feedback, communication tasks with sales is described as the longest task and, as
described, it is one of the most disturbing tasks. After a farther observations and discussions with the team, two main
stations can lead to communication chaos

Selling from existing inventory: Some of the contracts for flat steel are based on buying the existing inventory which
is called traders contracts. Whenever a trader contract is issued, the sales representative sends an e-mail with a list of
certain coils to be assigned to that contract, then the production planning engineer will try to assign those coils to that
contract. The production planning engineer will have to type each coil number and may refuse to assign some coils
because they are needed for another contract. A series of e-mails and phone calls between sales and planning will be
going back and forth until the task is done.

When sales asks for schedule change: Large quantities of work in process result in chaos because sales managers would
always ask to accelerate the processing of specific coils. That means several phone calls and e-mails from sales to
planning asking for expediting the processing of specific coils, then several phone calls from planning to production
plants asking for processing specific coils first. On the delivery time, some of those coils may still not being processed
because of any reason. Then a second wave of calls among sales, production, and plants occurs asking why those coils
were not processed. This is a repeated situation, which makes production planning team act as a call center.

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EXHIBITS AND REFERENCES:
Exhibit 1: Shows the possible routes a coil can take through the different downstream plants based on the customer
demand.

Exhibit 1: Products routes through downstream plants

Exhibit 2 describes the current planning concept which produces large quantities of pickled products, skin passed
products, and slitting products in the first, second and third day respectively. This will lead to two or three days of
waiting time at each of those plants.

Exhibits 2: Current production planning by large batches

Exhibit 3 Shows the long waiting time before processing. The waiting time used to be much longer than the processing
time and thus the coil may take 5 or 6 days in average to get processed after the cooling period.

Exhibits 3: Waiting time before processing