Case study: PSImetals at ThyssenKrupp Electrical Steel

ThyssenKrupp Electrical Steel forges ahead with integrated PSI, IBM and SAP solution

ThyssenKrupp Electrical Steel (TKES) aimed to create a homogeneous set of global business processes and reporting standards. The ultimate goals were to optimize business and manufacturing operations using a standardized approach at all locations. This would require powerful, highly integrated ERP and shopfloor solutions running on a reliable, high-performance platform. Working with PSI, IBM and SAP, TKES extended its existing SAP and PSImetals landscape to four additional locations. Business processes were extensively re-engineered to enable greater harmonization of operational activities across the company. Combined IBM, SAP and PSI solution delivers cost savings of 25 to 30 percent over comparable solutions.

Standardization for efficiency

The TKES business has five manufacturing locations: at its German headquarters in Gelsenkirchen and in nearby Bochum, in India, in Italy, and in France. To ensure efficient production and effective coordination of its global activities, the company wanted to standardize operations and reporting across these different locations. Without a consistent, corporate-wide standard, the company recognized that it could not achieve its full profit potential.

The first step was to carry out a businessprocess re-engineering project with the existing SAP application landscape at headquarters – which included the upgrade of various legacy components and platforms to the latest standards. The company also developed a uniform interface to its manufacturing locations, ensuring that everything was in place for a rollout of SAP Advance Planning and Optimization across its Grain Oriented Electrical Steel business.

The Gelsenkirchen and Bochum locations were using PSImetals for manufacturing operations, automation and control, and physical process management, including the information exchange with the business applications. For example, on the shop floor PSImetals controls materials tracking, process control, measurements capturing, quality management and reporting. The PSImetals solution had gradually been extended, and implemented in four manufacturing locations.

"Our investment in a flexible solution from PSI, IBM, and SAP will continue to deliver benefits into the future, driving greater efficiency and speed in our manufacturing processes while continuing to push down costs in IT operations."

Michael Brüne
Head of Information Technology, ThyssenKrupp Electrical Steel

PSImetals’ standard functionality covers 70 percent of requirements, with about 20 percent of TKES-specific and about 10 percent location-specific customizations. Each manufacturing plant uses a separate database to manage production orders and amounts, time schedules, quantities, quality, measures and weights of intermediate and finished products.

Data exchange from the shop floor systems to core SAP software is managed by SAP NetWeaver Process Integration. During production, PSImetals collects, monitors and analyses materials data, and enables complete tracking of finished goods back to the raw materials used for hot rolled coil. PSImetals traces materials and product movements throughout the whole plant, and optimizes production processes to minimize wastage (known as ‘clippings’) and defects.

The integration between SAP and PSImetals is very tight, each software solution excels in its role. The difference is between the time horizons and level of granularity, and the solution can truly be considered as a joint setup, and not the one or the other.

Michael Brüne, Head of Information Technology at TKES, comments: “In our view, the main function of information technology is to support the central business processes in an optimized way. We have extremely demanding requirements regarding product quality and delivery times, and given the global nature of our business, this makes us absolutely reliant on the smooth operation of our information technology landscape.”

“We want to preserve a relatively small technical team, to keep operational costs low, and so our requirement from the outset was for technology that would enable self-healing, fully autonomic operation as far as possible. With this in mind, we selected three key strategic partners: SAP for cross-enterprise business processes, PSI for functional coverage on the shopfloor, and IBM as our comprehensive infrastructure supplier.”

Fully virtualized landscape

The new centralized SAP APO landscape runs in the main TKES data center, located in Gelsenkirchen, Germany. The IBM infrastructure is split across three separate buildings for added protection against disaster, with fiber-optic connections providing the required high-speed mirroring of data.

In the first building, the multiple SAP central instances and database servers for PSImetals run on an IBM Power 770 server with IBM POWER7 processors and an IBM Power 570 with IBM POWER6 processors, while the PSImetals application server instances run on IBM BladeCenter HS22 blades. Two IBM System Storage DS5300 arrays provide high-speed disk storage, fully virtualized for greater flexibility using IBM System Storage SAN Volume Controller. This entire system landscape is duplicated in the second building. The third building provides data backup and archive services.

In steel manufacture, production stoppages are costly, so TKES tries to keep its plants running around the clock. The high availability of the IBM infrastructure allows the company to have just one planned maintenance window each year of just two hours.

Scaling up to global challenges

“In parallel with the standardization of our business processes, we have achieved a standardization of the components of the IT infrastructure,” explains Carsten Kübler, who has overall responsibility for the IT infrastructure at TKES.

“The IBM technologies effectively give us a private cloud: a set of standard components that we can orchestrate to achieve whatever goals we have. Both the IBM hardware and the SAP software ensure that we never come up against any barriers when designing and executing our business processes.”

"The open architecture and the modularity of PSImetals make customer-specific customizations per location possible with special plug-ins using the same technology."

Robert Gieselmann
Manager PSI Shopfloor solutions, ThyssenKrupp Electrical Steel

Highly integrated solution

Competition is fierce, so TKES needs to minimize operational losses and costs by achieving extremely high efficiency throughout the supply chain.

By standardizing its business processes on SAP Business Suite applications, and tightly integrating them with the production processes managed using PSImetals, TKES has enabled fast and efficient production from order entry to delivery.

Moreover, the use of common business definitions and data standards enables accurate reporting in real time, allowing business managers to see and understand the status of manufacturing across all plants.

Tight integration of the central SAP system with the PSImetals instance in each manufacturing location enables all inventory data to be accessed at any time. During the production process, PSImetals collects, monitors and continuously analyzes all material data, enabling sophisticated tracking. For example, TKES can completely track each end-product back to the hot rolled coil from which it was made, ensuring complete traceability and supporting the highest quality standards in manufacture.

TKES customer orders define the specific type of steel needed. Starting with the hot-rolled coils, processes known as rolling, annealing, coating, side trimming, repairing and slitting provide the variations required by the customer. A key challenge is to maximize the material yield from each coil with minimum wastage, and to optimize the manufacturing operations for each coil.

Robert Gieselmann, responsible for PSI shopfloor solutions at TKES, comments: “The open architecture and the modularity of PSImetals make customer-specific customizations per location possible with special plug-ins using the same technology. That offers additional flexibility when business processes change.

PSImetals integrates extremely well with SAP applications; in fact, the solution is certified as ‘Powered by SAP NetWeaver’. The practical outcome is smooth exchange of data between our SAP system and the manufacturing plants.”

Proven cost savings

The early decision to establish a consistent and standardized system and application architecture throughout TKES is now paying significant dividends. Michael Brüne comments: “Standardization took time and effort, but it has already more than repaid our investment.

Today, TKES can operate efficiently with a small set of highly flexible and scalable resources. Our recent experience has proven that we can integrate entire new production locations into the common landscape quickly and without any productivity losses.”

Michael Brüne says, “Having participated in multiple benchmarks during the last years, we see a clear economic advantage. We estimate that our IBM, SAP and PSI landscape offers IT cost savings of 25 to 30 percent against comparable solutions. And the high degree of abstraction and virtualization in the solution means that we can easily benefit from ongoing technology refreshes to improve the performance of our systems, without requiring any changes to the logical architecture.”

He concludes, “Our investment in a flexible solution from IBM, SAP and PSI will continue to deliver benefits into the future, driving greater efficiency and speed in our manufacturing processes while continuing to push down costs in IT operations.”

Author: Goetz Buerkle, Strand Writing & Design, London, UK

This report is an extract with focus on the PSI part of the solution. Download complete article