ArcelorMittal Tubarão (AMT) is a plant of ArcelorMittal Brasil belonging to the Flat Steel segment, producing slabs and hot rolled coils, with a maximum capacity of 7.5 million tons of products per year.
In March 2021, PSI Metals and AMT implemented an automatic material allocation process and an interactive material allocation system at the plant in the sunny state of Espírito Santo in southeastern Brazil. Automatic material allocation runs in batch mode or on demand, taking into account the rules and filters defined in the algorithm configuration. Using the interactive system, product engineers and planning team members can handle exceptions by manually deciding on specific allocation conditions. This is assisted by the system that checks potential matches, displays alerts, or prohibits certain allocations. The project was initially implemented for unallocated slabs only, which is the material with higher potential for order allocation given its early stage of production and relative lower level of customization.
One of the project goals achieved is increased service level through reduced lead time and a more reliable delivery performance. Accurate order allocation reduces lead time with fewer production processes, allowing more orders to be fulfilled on time and freeing up machine capacity for other requirements. In the approximately 3 months since system implementation, 852 orders have benefited from stock allocation with reduced lead time and increased On Time In Full (OTIF) delivery rates.
The total cost of keeping unnecessary stock has various components: The operational costs (for example, warehousing, transportation and handling) and the financial costs of having a blocked asset (for example, interest rate and insurance). In the 3 months since the implementation, the new allocation process reduced the total stock of unallocated slabs by an average of 26%, with 10% of this stock consisting of slabs with quality deviations.
To avoid the continuous stock costs described above, steel producers usually carry out the following actions:
Since the system implementation at AMT:
Another advantage of the system implementation is the certainty that human errors – which could result from a manual, i.e. non-system oriented, allocation process – are virtually eliminated!
This means that adequate slabs are always selected for a given customer demand, both in terms of quality and quantity. And the quality and planning teams can focus more on defining rules and analyzing results, leaving the repetitive and massive work to the system.
ArcelorMittal’s management commented on the project results:
Mr. Ivo Novaes Abrahão
“The project is aligned with the most recent company strategic guidelines, mainly with our commitment to the production of carbon neutral steel, and also reducing inventory, working capital and increasing customer service. The team worked with the most modern metallurgical, process, optimization and digital technologies”
Mr. Antonio Carlos Ferreira
Planning and Scheduling Manager
“The automatic reallocation
allowed for better inventory
management, reallocation of
products in line with
our customers’ demands,
as well as optimization
of processes, loss reduction
and improvement of our
Mr. Gladstone de Souza Guerra
“In an increasingly competitive market
scenario, the development of
customized products to increase
the competitiveness of our
customers is a path of no return”
The plan is to extend it also to ArcelorMittal in Vega do Sul and its products, including pickled, cold rolled, annealed and galvanized coils. Therefore, in the near future all operations and products from AM Flat Carbon LATAM will be covered by the PSI Metals’ Material Allocator solution.