Integrated Supply Chain

All PSImetals Planning functionalities are successfully being used in daily business since fall 2011. The solution integrates Erdemir’s entire supply chain, establishing clear interactions between the different business processes from strategic to operational level. Furthermore it harmonized the demand and sales planning process, bringing increased profits and increased synergy between the two plants. Each plant can now be operated in a more automated, transparent and efficient way, providing increased visibility on upcoming events and leaving more time to the planning department for performing simulations and analyzing results. Human bottlenecks have been reduced as the technical knowhow was transferred into PSImetals available to all users. And finally Erdemir significantly increased its planning and scheduling KPIs, such as customer service, stock levels and schedules quality with the use of PSImetals.


Zafer Uysal & Ahmet Gümüs, Production Planning Department EREĞLİ DEMİR ve ÇELİK FABRİKALARI T.A.Ş. Kdz.Ereğli/Zonguldak, Turkey 
Nazmi Sarikaya, İsdemir Production Scheduling Chief İskenderun Iron & Steel Co. İskenderun/ HATAY, Turkey 
Robert Jäger & Mehmet Kaya, PSI Metals

High-Quality Line Schedules

To generate optimal detailed schedules at piece level for each production line for the next shift or days PSImetals considers all the technical constraints such as grade transitions, width jumps, etc., and tries to respect the target order production dates received from the Order Schedule. In practice, the schedules automatically produced by PSImetalsalgorithms are very close to being sent to production, only some manual edition is sometimes needed to tackle very specific scenarios. Line schedules can then directly be sent to production people for execution.

Due to the high automation level of generating line schedules with PSImetals the time required to build a schedule was reduced. In emergency situations a feasible schedule can be very quickly built to prevent a stop of the line. New schedulers can be trained very easily as all rules sets are standardized and in case of a rule’s violation, graphical and textual warnings help to understand and fix the problem.

Reliable Production Dates

Out of the daily product flow on each production line the PSImetals Order Scheduling generates 4 to 6 weeks rough schedules at piece level for each line, synchronized throughout the plant. High level technical constraints that can generate due date dispersion for periods larger than a few days (e.g. backup roll campaigns at hot strip mills) are also taken into account. The order scheduling provides a realistic projection of delivery dates for the complete orderbook, as well as reliable production dates for orders as input to the Line Scheduling.

As PSImetals incorporates special process constraints of bottleneck lines, heavy processes or specific campaigns (e.g. casters and mills) the visibility on the HSM coffin sequence and on the moulds and tundishes sequences was increased. Furthermore the hot charging ratio was increased by identifying hot charge opportunities early and setting them as targets for the detailed scheduling. Finally the order follow-up process with the customer was improved.

Improved On-Time Delivery

Considering the committed orders demand of each plant, PSImetalsgenerates a 1-2 month daily master plan by product family which optimises the load balancing of each plant/site separately, considering delivery performance, stock levels and lines throughput requirements. Other inputs are WIP inventories, frozen running production flows, product family routings, production specific constraints (end of month volume targets, shipment restrictions, etc.) as well as campaign calculations for specific lines. The resulting daily product flows on each production line are given as input to the Order Scheduling.

Due to a better balance of available capacity on all production units and avoiding the creation of bottleneck situations lead times were reduced and on time delivery were improved. Monitoring several KPIs upcoming problems can be detected earlier as for example inventory overload, capacity problems or due date problems for certain orders. As a result of better controlled stock levels for intermediate and final products the number of unplanned delays resulting from a lack of material or space was decreased.

Ensured Slab Supply

To utilize Erdemir’s full HRM capacity additional slabs need to be bought from external suppliers. Before buying additional slabs all existing slabs need to be fully assigned to orders before. The inventory optimisation in PSImetals covers this slab yard stock allocation and provides optimal slabs to orders assignments. On a daily basis the resulting assignments are given as input to the Master Planning, Order Scheduling and Line Scheduling processes.

Using PSImetals steel is now allocated where it is needed and improvements for efficiency, transparency and due date performance could be achieved. The assignment/reassignment process was fastened and improved in its quality. Also non-assigned slabs in stock were reduced and the order fulfillment therefore amended. 

Most Profitable Production Selection

Based on forecast orders, accepted orders and order inquiries, the Sales & Operations Planning determines the most profitable capacity allocation plan for both plants, Erdemir and Isdemir. PSImetals balances capacities and costs against selling prices, decides on order selection and generates a 6 month weekly materials flow or capacity plan at a product family level.

Modeling Erdemir’s supply chain with PSImetals while taking into account lead-times and available capacities on all production units the on time delivery was improved and delivery dates are now more reliable. By optimising the capacity allocation considering production routing alternatives, different order/line production costs and selling prices and finally rejecting non-profitable orders the overall profit was increased.

Well-Calculated Future Demands

In order to obtain reliable quantitative forecasts, the PSImetals Demand Forecasting module generates collaborative forecasts based on input as contract ordering information coming from past and current orders, including customer, industry sector and product group information. Using forecasting trees and an advanced forecast aggregation/ disaggregation the future demand volumes are distributed into monthly forecasts for the upcoming 6 months. These forecast orders consist in weekly demand volumes per families of product.

Erdemir obtained an improved visibility over upcoming demands at different aggregation levels using PSImetals. Reliable forecast quotas form an improved input for the Sales & Operations Planning. The web-based application allows a simultaneous usage by many users while each key account manager being responsible for its own customers.

Main Project Challenges

The main challenges to tackle with PSImetals within the project scope were:

Sales & Operations Planning: At Erdemir site the hot mills total daily capacity exceeds the casters total capacity by 50 percent. To utilize the full HRM capacity additional slabs need to be supplied whether from the Isdemir site or from external suppliers. PSImetals shall determine the weekly slabs supply needs considering the dynamic demand needs and continuous casting capacities.
Master Planning: The daily material mix for each site need to be balanced according customer and production requirements and their impact on the material flow at upstream/downstream lines. For example backup campaigns at the hot strip mill at Erdemir site are created over a 15 day’s period and the global width profile of coffins within should be decreasing. Very narrow material can therefore only be produced at the end of this campaign while ensuring related delivery dates at the same time. At Isdemir site additional diameter campaigns need to be calculated at the wire rod mill as they have a direct impact on the billet casters schedules.
Order Scheduling: To increase the hot charging ratio at Isdemir site a high degree of synchronization between hot mill schedules and caster schedules is needed. A pull-push scheduling strategy ensures that within a first hot mill scheduling hot charge coffin opportunities are identified and their dates are propagated up to the casters (“pull”). Generated caster schedules respect those hot coffins dates. Finally, hot mill schedules are re-calculated based on WIP and forecasted material from resulting casters sequences (“push”).

Overview of business processes and information flows at Erdemir covered by PSImetals.
Quelle: Erdemir

The implemented PSImetals solution consist of configurable planning modules covering above mentioned business processes and aiming at optimising the different planning and scheduling processes of Erdemir’s supply chain.

As an integrated steel manufacturer of flat and long steel products Erdemir operates at two production sites which are separated by 665 km. Products can be produced in both plants. To achieve a seamless integration for the planning and scheduling processes of the two sites the following business processes need to be covered by an overall solution. This include Demand Forecasting to generate order forecasts based on historical data and customer requests; Sales & Operations Planning to find the most profitable order allocation plan while considering costs, capacities and slabs supply needs; Master Planning to deal with capacity and campaign optimisation; Order Scheduling to handle schedule synchronization and net order calculation as well as Line Scheduling to optimise operational scheduling involving campaign configurations and complex sequencing rules.

Optimised and integrated supply chain management processes from strategic production planning down to operational level are a major challenge for integrated steel plants. The problem complexity is further increased when the production of several sites has to be balanced. The main business objectives are to improve customer delivery performance, while also reducing lead-times and stock levels, optimising the utilization of lines and maintaining competitive selling prices at minimum production and supply costs. Using PSImetals for all planning levels from strategic to operational level, significant improvements of these KPIs could be achieved at Erdemir, Turkey.

Integrated planning processes at Erdemir

PSImetals Planning from strategic to operational level