• PSImetals Planning tool implemented in a flat steel plant

    Optimized Allocation of Stock Slabs at ArcelorMittal Tubarão

ArcelorMittal Brasil and PSI Metals have been working together since 1998 and have implemented numerous successful systems in the area of production scheduling. In 2020, the partner companies teamed up again to work on objectives such as improving delivery performance and material yield, as well as reducing both stocks of slabs and internal logistics costs through the allocation of spare material in stock. PSImetals Material Allocator, one of the several PSImetals Planning tools, provided the perfect solution and has already given excellent results with significant benefits.

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.

Automatic and Interactive Material Allocation

PSImetals Material Order Allocator

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.

Increased Service Level & Reduced Lead-Time

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.

Reduced Stock Holding Costs

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.

Reduced downgrading and scraping costs

Rule creation for the planning repository management (PRM)

To avoid the continuous stock costs described above, steel producers usually carry out the following actions:

 

  1. After a few days of aging, the unallocated slabs are offered on the market at lower prices (downgrade).
  2.  

  3. After further days of aging, recycle the ‘unfit’ orphaned slabs by converting them into scrap so that they can return to the production chain during the steel making process. This is a final resource measure – highly undesirable but often necessary.

Since the system implementation at AMT:

 

  • 243 slabs were “saved” from the downgrading process and could be sold as prime material at regular prices,
  •  

  • 54 slabs were “saved” from the scrapping process and could be used to satisfy actual demands of customers, also as prime material (at regular prices) which means the cost of producing them was not lost.

Improved Quality Assurance and Team Efficiency

ArcelorMittal and PSI Metals Project Team

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
IT/PA Manager


“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
results”

Mr. Gladstone de Souza Guerra
Metallurgy Manager



“In an increasingly competitive market
scenario, the development of
customized products to increase
the competitiveness of our
customers is a path of no return”

 

 

Next Steps

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.

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Images: ArcelorMittal Tubarão/PSI Metals