Steel companies struggle to catch up to IT solutions

Jan 31, 2012 | 07:00 PM | Gregory DL Morris

Tags  steel technology, information technology, John Lichtenstein, Gregory DL Morris,

By all accounts, the global steel industry has lagged behind in the adoption of enterprise-wide information technology (IT) not just compared with the service sector or discrete manufacturing, but even when compared with other metals, oil and chemicals, too.

To be sure, there are islands of automation, and some facilities even whole companies have made significant advances in such areas as business intelligence and reporting, data-quality analysis, sustainable cost-reduction, consolidation of critical systems and e-commerce.

But overall, analysts and vendors concur, the industry has far to go. And silence renders consent: AMM contacted a half dozen steelmakers of all sizes, as well as industry organizations, and none was willing to discuss the topic on the record, although a few were willing to talk on background. What is clear is that while some industries are born tech-savvy, others have technology thrust upon them and that’s what is starting to happen in steel on at least two fronts.

First, the increasing connectedness of the supply chain means that order and inventory management, as well as logistics, are increasingly automated from the final customer back up the chain. Second, steel prices are becoming more volatile as contract lengths are shortened at the behest of larger customers. With comfortable and familiar multiyear contracts giving way to quarterly and even monthly arrangements, the industry must address the need for hedging, which requires a minimum level of automation and sophistication; spreadsheets just don’t cut it anymore.

“The global steel industry is definitely a follower in adopting IT, and not even a fast follower,” said John Lichtenstein, managing director of the global metals practice for Accenture. While based in Beijing, in early January he participated in the installation of an enterprise resource planning (ERP) system at a major mill in India. He sees that project as another indication that the global steel sector is coming to terms with IT, albeit slowly and reluctantly. ....

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