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Gerdau SAP installation causing delays: buyers

Keywords: Tags  Gerdau Long Steel North America, SAP software system, shipment delays, rebar, wire rod, merchant products, Samuel Frizell

NEW YORK — A new software system at Gerdau Long Steel North America intended to streamline shipping and improve efficiency has temporarily had the opposite effect, sources familiar with the situation told AMM, reportedly causing short-term delays and order complications at a number of the company’s steel mills across North America.

The new software from German company SAP AG was installed at 11 mills in February with a goal of making shipping and processing easier and allowing the steelmaker to communicate more effectively with customers (, Jan. 17). Shipping from the facilities was intentionally suspended for four days in early February while the company transitioned to the new system, a spokesman said at the time.

But according to a number of customers, shipping delays have persisted in the weeks since the software implementation, with at least one customer reporting delays of up to a month.

"They took all of their March orders and shoved them back into April," a wire fabricator said about Gerdau’s Beaumont, Texas, mill, a major wire rod vendor for the South and Northeast.

A Midwest rebar fabricator reported similar delays from Gerdau’s mill in Joliet, Ill., near Chicago. "(The software implementation) really delayed a shipment in here," he said. "I wanted an order out of Chicago. It delayed their shipment two weeks."

A spokesman for the Tampa, Fla.-based steelmaker, a subsidiary of Brazil’s Gerdau SA, acknowledged that some customers had reported issues, but said most of the start-up pains now appear to be behind the company.

"Globally, the goal of the Gerdau Template SAP project is to integrate all of our acquisitions into one common system to better manage our integrated network of locations and serve our customers," he said in an e-mail. "Since 2011, we have successfully implemented our SAP platform at Gerdau operations in six countries. At Gerdau Long Steel North America, we have successfully concluded two phases and are currently in the stabilization stage of our third and largest phase."

He said production at Gerdau’s mills is at normal levels. "While some customers may indicate they have delays, we are near normal shipment levels. For any issues that do exist, we have a dedicated team of individuals both in the field and at our Tampa office to provide best-in-class customer service," he said.

Some customers said the apparent ramp-up problems were not surprising for a new product and that the company would benefit from the new software system in the long run.

"Has it been a struggle for them? Yeah, but they’re in phase three of this," a source at a southern service center said. "I think phase two learned a lot from phase one, and phase three is learning a lot from phase two."

"It’s not really affecting production, it’s just affecting shipments. In the long run, it’s going to be looking really good," a source at a rebar distributor said. "In the interim (though), it absolutely screws up shipping."

The Gerdau spokesman said the company stands behind its decision to upgrade, noting the long-term benefits will be significant. "We appreciate the feedback from all of our stakeholders. We remain confident that once the implementation is concluded, it will improve our customer service, delivery of products and responsiveness," he said, declining to comment further on specific customer complaints voiced to AMM.

Gerdau is not the first company to report issues after installing the SAP software system. "There is a long list of North American mills that have converted to SAP, that if you talk to their commercial group, every one of them shakes their head," a rebar fabricator source said.

But Walldorf, Germany-based SAP said it had not heard significant criticism from U.S. mills. "Projects are long and complicated and sometimes it goes perfect and sometimes it goes less well than expected," Stefan Koch, senior director of SAP’s metals business unit, told AMM.

Koch said he was not aware of shipping problems at Gerdau mills. "At the end, most of the users are happy with it."

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  • Mar 07, 2013

    I am sure that the new SAP system will benefit both Gerdau and customers in the long run. As a Gerdau customer, I am experiencing delays in shipments, missed rollings, and material not rolled to requirements. All of these are causing significant delays and loss of production time we need to ship finished product on-time to our customers.

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