August 13, 2015 | Written by: Abhishek Kaul
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Metals industry is experiencing considerable volatility and challenges. Recovery seems very slow and unpredictable. Meager growth rate, combined with increased global supply of raw materials, is causing pricing to remain weak. Moderate demand for metals come from construction, infrastructure followed by automotive, oil and gas sectors.
To remain profitable, metal manufacturers are focusing on operational efficiency in order to reduce operating costs, delivery time and improve quality.
Raw material, energy, logistics, and maintenance cost are the major cost drivers for metals industry.
To improve operational efficiency, metal companies are taking the following initiatives:
- Reducing procurement cost: As metal content in raw material is reducing, and volatility in commodity markets is increasing, there is an increased drive to use lower grade raw materials and integrate commodity management into purchasing, pricing, and logistics decision.
- Reducing production cost: As margins for metal manufactures are under pressure, there is an increased drive to reduce energy cost as it contributes to 15% – 30% of total cost of operations and increase asset efficiency.
- Creating a flexible supply chain: With global manufacturing units and customers, the ability for supply chains to lower inventory, increase service level and reduce risk becomes critical. Some companies are differentiating themselves by offering smaller lot sizes, shorter lead times, extending supply chain to end consumer (retail , online) markets, and even branding steel products.
- Implementing enterprise performance management: With growing complexity in business operations, many steel companies are working towards redesigning their performance measures and moving from static to action oriented leading performance measures. They are also developing analytical models for linking operational and financial metrics.
- Innovating new materials, applications, and technology: Metal manufactures are committed to innovate for new materials, new applications of metal and latest technologies for example, specific properties of steel grades, use of steel in aeroplanes, using thin slab casters, and so on.
- Integrating real time data from manufacturing: Using Industry 4.0 concepts (IOT platform), metals manufactures are integrating across value networks, manufacturing systems, warehousing systems, engineering value chain and people to realize smarter factories.
Our vision for integrated operations is to deliver improvement in resource and cost efficiency through smarter applications built on the principles of instrumentation, integration, and intelligent solutions. Leveraging on Integrated Operations philosophy, metals companies are constantly creating new sources of value and are becoming successful.
For more information about our metals and mining solutions, technology and consulting, visit our website.