Among supply chain practitioners, it is generally accepted that intensifying the cooperation between production sites and their sales and distribution organizations is key to improving service and reducing costs. Yet, in the metal manufacturing sector, realizing this vision has not always been that easy. At Eramet Alloys, Sales & Operations Planning software has been deployed as the linchpin to dramatically improve collaboration across their extended production and sales network. “Over time, confidence in the system has grown steadily and today, all of us find it unthinkable to run the business without an integrated S&OP process.”
Eramet Alloys was formed in the late 20th century with the merger of several companies, including specialty steel maker Aubert & Duval and tooling manufacturer Erasteel. The group is now a world leader in alloying metals and high-quality metallurgy as well as recycling. Pooled resources and the exploitation of operational synergies are key elements in group strategy to keep pace with, and anticipate, the high demands made by their multiple markets, which include power production, aerospace, automotive (electric vehicles), and construction.
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Historically, the metals sector has had a hard time providing good service. Considering the complexity of the production process, it is hardly surprising that steel companies give priority to gaining control over their internal operations. Yet, in recent years, the markets have increasingly expressed concerns about reliability of service.
Stéphane Roux, Chief Information Officer at Eramet
“Our customers typically operate in very competitive environments,” explains Eramet Alloys Chief Information Officer Stéphane Roux. “Look at the competitive battles going on in the aeronautics industry, where no jetliner deal will ever be closed without the manufacturer providing proof they can deliver on time.
Naturally, this puts pressure on suppliers upstream such as Eramet who, in turn, must guarantee delivery times. Stocks have to be ready to go, and the manufacturing processes have to keep up with the pace of the airplane makers. The dynamics are somewhat different in other industries, such as power generation and automotive, but we’re always being urged to up our service levels even more.”
For these reasons, efforts have been made at Eramet Alloys since 2009 to transform the vintage Silo Organization into a more dynamic cluster of collaborative entities.
But morphing into a supply-chain driven organization has been quite a challenge. “There are several reasons for this,” elaborates Eramet Supply Chain and Business Reporting Engineer, Grégoire Castagna. “It’s a complex production environment. Most of the products are unique, manufacture lead times are long, and changes to the production footprint need a lot of time, making it difficult to react quickly to changing market conditions. As a result, internal competition for resources can be hard at times, especially in periods of growing demand. Demand has been evolving too over the past few years. Conditions are tough in high-speed steel, and markets such as powder metallurgy and metals recovery offer opportunities for future growth and are claiming our attention and resources. Bear in mind also that, by nature, our sector is rather conservative. Under the circumstances, I think we did very well.”
A crucial element in the successful transformation of Eramet’s supply chain has been the implementation of OMP as a comprehensive S&OP system.
“Five years ago, S&OP was not yet an established practice everywhere at Eramet Alloys,” explains Roux. “The implementation of OMP in 2012 meant we could see clearly why it’s essential to reserve capacity for sales that haven’t taken place yet, and how a constrained forecast can help reduce the risk of not being able to deliver on time. After that, our service level increased significantly. Likewise, the system greatly helped to unleash the synergy potential between Aubert & Duval and Erasteel two years later. Both S&OP Plans have been integrated, allowing us to tune and optimize the planning of production sites for the benefit of both branches.”
Grégoire Castagna, Supply Chain and Business Reporting Engineer at Eramet
The system also helped to increase the level of trust in the organization. “People have learned to deal with uncertainties successfully,” says Castagna. “While forecasting was previously deemed unreliable and therefore resisted, our teams now increasingly understand the assumptions they’re based on. Forecasts are validated and their degree of uncertainty is qualified and clearly communicated across the organization. Managers therefore increasingly appreciate and trust the data coming out of the system. This greatly helps to improve communication between the various teams at Aubert & Duval and Erasteel. The system has made a substantial contribution to breaking down barriers between our different sales, distribution and production entities.”
Eramet’s manufacturing, distribution and sales departments have learned to rely on the S&OP system to consolidate their planning. From very early on, OMP has been used to prepare financial budgets by valorizing forecasting but, according to Stéphane Roux, this is not the end of the story.
“In my view, we should go one step further and use OMP to support financial planning too. I think this will be one of the main challenges for S&OP in the coming years.”
Supply Chain and Business Reporting Engineer, Grégoire Castagna is a business user of OMP and he greatly appreciates having full access to the OMP database.
“I may be IT-savvy, but in my business, I also need to fully understand the data I am working with. So, it’s a big advantage getting hold of the data model behind the system, and not being frustrated by some black box I wouldn’t understand. Of course, the data model is quite complex, and it took us a while to really grasp it. But OMP fully supported us in that. This is especially important in reporting. For example, we’re currently developing and fine-tuning reporting that will allow us to cross-check data from different sources, including accounting, supply history, S&OP, and economic trending analyses.”
OMP helps companies facing complex planning challenges to excel, grow and thrive by offering the best digitized supply chain planning solution on the market.
Its Unison PlanningTM concept has a unique approach. It handles all supply chain planning challenges in a unified way, synchronizing all planning stages, horizons, functions and roles. From source to deliver. From strategic to operational planning. From leadership teams to schedulers.
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