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 companys 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 (
amm.com, 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 Gerdaus 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 companys
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
Customers confirmed that most of
the shipping obstacles related to the SAP system had been
resolved, although some reported a few lingering technical
"Theyve got a few
problems, but theyve 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.
Gerdaus Beaumont, Texas, mill, for example, which was
part of the companys 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 Gerdaus 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 its been
awhile but its 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
"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
dont 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
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
Frank Haflich, Los Angeles,
contributed to this story.