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Gerdau’s SAP system begins to find footing

Keywords: Tags  Gerdau Long Steel North America, SAP, software system, wire rod, rebar, merchant bar, shipping delays, logistics frank haflich

NEW YORK — Gerdau Long Steel North America has solved most of the shipping delays caused by the first-quarter installation of its new SAP software, although buyers maintain some minor teething pains persist with the new inventory tracking system.

Tampa, Fla.-based Gerdau installed the software system from German company SAP AG in February in order to better track its inventory, but while the system was intended to streamline shipping, it temporarily had the opposite effect, buyers said at the time. In early March, nearly a dozen of the company’s customers told AMM that confusion over the system had caused shipment delays of about a month, depending on region, mill and material, with one customer reporting delays of his orders of as long as eight weeks (, March 6).

A company spokeswoman confirmed the earlier issues but said the problems had since been resolved, adding that the steelmaker remains "confident in the long-term success of the project."

"The controlled startup of the system in February and March, along with severe winter weather in some parts of the country in which we operate, contributed to lower-than-anticipated shipping levels during the quarter," she told AMM. "However, given Gerdau’s focus on efficiency and well-defined processes, we planned for the issues that were within our control and are working diligently to provide superior customer service through the transition. We are happy to report that Gerdau mills are now experiencing both normal shipping levels and healthy inventory levels."

Ultimately, the SAP implementation is intended to integrate the company’s operations into one common system, leading to faster response times and better customer service, she said. "Meanwhile, we will be working hard to ensure that any customer issues that may arise during the transition are addressed appropriately."

Customers confirmed that most of the shipping obstacles related to the SAP system had been resolved, although some reported a few lingering technical issues.

"They’ve got a few problems, but they’ve got a lot of the kinks worked out," a rebar distributor said. "In about a year nobody will remember it, but the initial part was horrible."

Shipping delays were significant for some buyers earlier in the year, AMM understands. Gerdau’s Beaumont, Texas, mill, for example, which was part of the company’s wave of SAP installations in February, was said to have pushed its orders back as a result, with at least one customer saying his March orders out of Beaumont were delayed until April. Sources said that Gerdau also was forced to cover the cost of shipping some rod from Beaumont by truck and rail because SAP obfuscated barge shipping too much for it to be practicable.

Meanwhile, Gerdau mills that had already installed the system in a different wave did not experience delays, with a number of merchant bar and larger structural sections buyers in particular reporting little or no issue, unlike their counterparts in the wire rod and rebar sectors. They attributed the difference to what they said is the year or so experience that Gerdau’s large structural mills in Midlothian, Texas, and Petersburg, Va., have already had using the system.

Beaumont has since started shipping steadily again, according to sources, and Gerdau employees now have access to comprehensive reports tracking material en route to customers.

"It seems like it’s been awhile but it’s only been three months, and each month (there is) some improvement," one source said.

However, while the majority of issues have been resolved, some customers have reported some persistent issues, especially when ordering customized products that require new SKU numbers, or custom identification numbers.

"There are still delays," one customer said. "I will call (the mill) and I need to get beams off the floor ... and I say I need the product cut. If they don’t have an SKU for (the length I want), the process could take as long as two weeks."

Those lingering delays are causing him headaches, he said. "Where your margins are tighter you need to make sure you have all your ducks in a row. I think the people who were willing to work the way through with Gerdau have become tired with not being able to see any resolution."

Customers have said, however, that from a buyer standpoint the majority of issues have been resolved over the past month.

The company spokeswoman said that Gerdau ultimately will benefit by having greater control over its product delivery. "We anticipate continued benefits for our company, business partners and customers as we move forward with the implementation of a project that will have a broad positive impact once it is successfully completed," she said.

Frank Haflich, Los Angeles, contributed to this story.

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