metals industry solutions mark crouse director, metals industry
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Metals Industry Solutions
Mark CrouseDirector, Metals Industry
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The following is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions.The development, release, and timing of any features or functionality described for Oracle’s products remains at the sole discretion of Oracle.
Safe Harbor Statement
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The Challenges We’re Hearing
Long-Term Planning:How can I create a strategic plan dealing with depreciating assets, uncertain commodity prices and escalating costs?
“The traditional approach to strategy requires precise predictions and thus often leads executives to underestimate uncertainty. This can be downright dangerous… .”
– The McKinsey Quarterly Dec 2008*
!
Industry Consolidation:How can I improve my M&A processes, from rationalizing my business to driving better acquisitions, increasing the speed of assimilation and leveraging what we acquire?
“The global nature of the markets served and the advantages of scale mean that consolidation around a set of industry behemoths is inevitable.”
!
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The Challenges We’re Hearing
Complex Global Supply Chains:How can I manage complex supply and distribution networks to take advantage of sourcing opportunities and new markets?
“Three inescapable forces in a world of demanding customers – severe cost pressures, attractive new markets, and accelerating new product introductions – have substantially increased the complexity of manufacturers’ supply chains.”
!
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• Executives are looking for strategies to improve operational performance during times when margins are under pressure
• Top ranking strategic actions include:
- Continuous improvement
- Optimize asset utilization
- Increase visibility to operations
Implement Continuous Improvement and Operations Visibility!
A Closer Look…
Source: Aberdeen Group, January, 2008.
6 © 2007 AMR Research, Inc. | Page 6
Transformation: Supply Chain to Value Chain Transformation: Supply Chain to Value Chain
The Supply Chain • The traditional set of enterprise functions, systems, and processes
dealing with the inside-out planning, making, storing, logistics, and product distribution processes through to the customers own distribution operations.
The Value Chain • The set of extended business functions, systems, and processes that
sense and adaptively translate outside-in actual demand at the customer, into trade offs that profitably fulfill perfect orders to meet customer demand.
• The value translation and shaping of actual demand through innovation, product development, supplier, supply, and external partner operations and processes is the immediate goal.
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Streamline Operations
Requirement Oracle Capability The Oracle Difference
Drive costs out of the global supply chain
Demand Planning, Supply Chain & Transportation Optimization
Only enterprise software provider with a completeset of holistic planning and optimization tools
Increase operations effectiveness and efficiency through intelligent operations
Real-Time Intelligent Operations
Real-time data monitoring and analysis with predictive analytics
Manage operations execution
Process Manufacturing, Quality, Inventory
Process manufacturing solution specifically designed for process industries
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Trading Partners
IntegratedPlanningFunctions
Products
Platform
Best-in-classBusinessProcesses
NetworkDesign Demand Sensing
and Shaping PostponementOptimization Holistic
Supply Planning
Promise,Distribute, and
Replenish Execute-to-plan
E1 EBS …Legacy
ERP*
WFL Common planning data model
Connectors
StrategicNetwork
Optimization
InventoryOptimization
Real-TimeSales &
OperationsPlanning
DemandManagement& AdvancedForecasting
PredictiveTrade
Planning &Optimization
AdvancedSupply Chain
Planning
ProductionScheduling
GlobalOrder
Promising
CollaborativePlanning
SAP
Operational Excellence
Real-Time S&OP
Demand-DrivenAdaptive Planning
Multi-EnterpriseCollaboration
Supply ChainRisk Mgmt
Best-in-Class Planning Process Platform Holistic Planning Covering the Entire Metals Value Chain
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Metals Solutions (Japan)
John OtsukiCenter of Excellence JapanOracle Japan
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Innovation Driving Change
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Agenda
• Steel Industry in Japan• Oracle Planning Solution (Japan)• JFE Solution Overview
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Steel Industry in Japan
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Steel Industry in JapanPosition
• Traditional Companies– 100+ years of history
• 2 of the top 5 WW steel makers are in Japan – 2nd in volume (APS, World Steel Association, May 2010)
• China (1): 56 million tones• Japan (2): 9.7 million tones• US (4): 7.2 million tones
– Production basically in Japan • Starting overseas operations
• Players– Nippon Steel, JFE Steel, Sumitomo Metals Industries, Kobe Steel,
Japan Steel Works, Mitsui &Co, Nisshin, etc.
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Steel Industry in JapanCharacteristics
• Producers of high grade/specialized steel– Hiten, seamless pipes, silicon steel, etc..
• Competitors– Overseas producers– New materials (plastics, composites, other metals, etc.)
• Key customers– Automotive industry, Consumer electronics, Plants, shipyards, etc.
• Business mostly through trading companies• IT
– Strong in-house development culture (have own IT company) • Strong legacy presence
– Very high level of security features expectation (multi layer)from customer facing apps
– Long term investment culture
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Steel Industry in JapanJFE Steel
• JFE Steel Ranking (volume)– 2nd in Japan (WSA, 2009)
– 5th in WW (WSA, 2009)
• JFE Steel Revenue– 2,280 billion Yen ($25 billion) 2009 JFE Investors Meeting Report
• JFE Holdings (2,844 billion Yen) 2009 JFE Investors Meeting Report
– JFE Steel Corporation (2,280 billion Yen)– JFE Engineering Corporation– Universal Shipbuilding Corporation– Kawasaki Microelectronics
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Planning Solutions (Japan)
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Oracle Planning SolutionBasic Planning Processes (Planning Hierarchy)Oracle Modules Mapping
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• Optimum product mix plan
CastingCasting Hot1Hot1 Cold1Cold1 Galv1Galv1
castingcasting Hot2Hot2 Cold2Cold2 Galv2Galv2Optimum product mix plan
Planning
Production, physical
distribution
capabilities
Demand Optimum prod. mix
cost price
2 3
4
1
5
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5
•
CastingCasting HotHot ColdCold Galv.Galv.
A B C D
A
BCD
BCD
CD D
Allocated capacity
Capacity Mix Optimization
$
Quantity
Oracle Planning SolutionE-S&OP : Product Mix
Product Mix Optimization Cross Production Optimization
Revenue max.
Cost min.
Throughput max. …
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Oracle Planning SolutionS&OP Process Image
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• Collaboration with customers and internal sales
Demand
ATP
Internet
Securityand SSO
Single source of truth
(demand/supply)
Po
rjA
Po
rjB
…P
rojD
Project Demand(Big deals)
50t
30t
20t
見込A見込 B見込 B見込 C見込 C見込D
Sales
Customer
Demand
ATP
Oracle Demantra
Oracle Siebel
.
.
.
Oracle Planning SolutionDemand Collaboration Solution: Simantra
Demantra
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Demand Mgmt Collaboration Forecasting Validation
Sales Mgmt Inquiry Negotiation Estimate Order
Production Mgmt Capacity Constrain Material Constrain
Design ChainSiebel(Accuracy, priority)
Demantra (Precison)
Plan
Do
Check
Act
• Simantra : Aligning sales and demand management
Oracle Planning SolutionDemand Collaboration Solution: Simantra
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Oracle Planning SolutionDemand Collaboration Solution: Simantra
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JFE Solution OverviewJ Flessa
JFE Steel Overview
• JFE Steel Corporation ( Tokyo, Japan)
• Ranking– 5th in volume WW (WSA, 2009)
• Revenue– 25 billion USD (2009 Annual Report, $1 : \90,)
• Works (Blast Furnaces) – Chiba
– Keihin
– Kurashiki
– Fukuyama
– Chita (Pipe Mill)
Copyright © 2010 – JFE Steel Corporation
JFE Steel OverviewBrief history of JFE Steel
• Consolidation of Kawasaki Steel and NKK ( 2002, Sept)• Kawasaki Steel: estab. 1950
• NKK: estab. 1912
• Employees– 42,842 (as of Mar.31, 2010)
• Corporate Vision– JFE Group—contributing to society with the world’s most
innovative technology
• Corporate Values– A Challenging Spirit, Flexibility, Sincerity
Copyright © 2010 – JFE Steel Corporation
J-Flessa 1 OverviewProject Goals
• To create a planning process that can respond effectively to demand fluctuation
• Consolidation of siloed management and planning information spread among organizations for speedy business integration
Copyright © 2010 – JFE Steel Corporation
J-Flessa 1 Overview
JFE Flexible Efficient Speedy Sales and operation management system
Flexible• Generation of optimal sales and production plan aligned with demand fluctuation
Efficient• Business process speed up and overall optimization, by centralizing, sharing plans and
management information among different organizations
Speedy• Business process innovation enabling significant reduction of business cycle time
– Demand Sensing
– Supply Chain Planning
– Operations Management
Sales and Operation• Integrated / unified sales and operation planning
Copyright © 2010 – JFE Steel Corporation
J-Flessa 1 OverviewPress Release (2010, Feb 2nd)
• Big Coverage from Japanese media– JFE innovates in steel industry with J-Flessa-1
Copyright © 2010 – JFE Steel Corporation
J-Flessa 1 OverviewProject Timeline and Schema
• Project time line– Project: Jan 2009 ~ Nov 2009– Announcement to media on Feb 2010
• Implementation Schema– Owner: JFE Steel Coporation
• Mr. Hiroshi Nishikawa , Information Technology Fellow IT Innovation Leading Dept
– Primary : JFE Systems – Support: exa Corporation, Oracle Japan
Copyright © 2010 – JFE Steel Corporation
Sales
Distribution
Production
SuperPlannerSuper
Planner
Accounting
System
Accounting
System
Plan
nin
g / E
xecu
tion
system
s (Wo
rks, SC
)P
lann
ing
/ Ex
ecutio
n sys
tems (W
orks, S
C)
WorksWorks
DistributionDistribution
データ連携ツール
Production,Shipment,Inventory
Capacity,
Inbound,Outbound,
Inventory
Dem
and
data
(repeat)
Dem
and
data
(spo
t)
●
●
Demandcollaboration
Demandcollaboration
SalesSales
Spot deal management
Spot deal management
Cost
Velocity Optimization
●
●
Capacity PlanCapacity PlanSales/RevenueManagement
Sales/RevenueManagement
Service Bus
J-SmileJ-Smile
Cost
●
Revenue
●●
Revenue
●
CustomerCustomer
Demand Sensing
Demantra
Siebel
J-Flessa 1 Overview
Copyright © 2010 – JFE Steel Corporation
J-Flessa 1 OverviewAchievements
• Higher flexibility in dealing with customer requirements by strengthening of sales and operation organizations
• Reduction/ speed up of management cycle• Collaboration cycle reduced by half and streamlined
• Establishment of single source of truth for demand
• 1000+ users collaborating
• Plan based on latest information– Improvement of overall plan accuracy
Copyright © 2010 – JFE Steel Corporation
J-Flessa 1 OverviewKey Project Challenges
• First Demantra implementation in Japan– Mission critical process
• Heterogeneous environment at trading partners– Different JRE versions at trading partners– Large number of trading partners
• 1000 + users
Copyright © 2010 – JFE Steel Corporation
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SOLUTIONS• Determines allocation to produce most profitable
product mix within existing constraints
• Demand Planning
• Advanced Supply Chain Planning
• Strategic Network Optimization
• Supports the S&OP Process
CHALLENGES / OPPORTUNITIES• Spreadsheets, not integrated with legacy
system, nor with execution systems
• Manual forecast smoothing
• No system supported sales and operations planning
• Monthly planning cycle, insufficient accuracy in order promise dates
CUSTOMER PERSPECTIVE“We're augmenting our sales and finance applications with customer, product, and market information so we can segment our markets and better understand product and customer profitability… With the analytical tools & our Oracle applications, we believe we can achieve significant value on increasing product profitability.”
Kevin Horner, Global Program Director
RESULTS• Reduced planning cycle time
• Integrated sales & operations planning process resulting in one consensus forecast number
• Determines allocation to produce most profitable product mix within existing constraints
• Allow Alcoa to offset the risks from commodity price fluctuations
• Increased profitability of products produced in smelters
• Reduction in the total transport and energy cost and impact (environmental etc.)
COMPANY OVERVIEW• World's leading producer of aluminum
• Sales over $30B
• Operations in 43 countries
Alcoa Worldwide Planning
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SOLUTIONS• Oracle E-Business Suite
CHALLENGES / OPPORTUNITIES• Raise business efficiency and maximize
corporate value
• Eliminate redundancies while building a new, flexible, digital backbone
• Standardize business processes and improve efficiencies
CUSTOMER PERSPECTIVE
"The success of the POSCO project is definitely attributable to the flexibility of the Oracle E-Business Suite."
Kyeong Ryul Ryoo, CIO
RESULTS
• New product development reduced: 4 years to 1.5
• Integrated sales and production plan reduction: 60 days to 15
• Delivery hit ratio improvement: 82.7 % to 95%
• Delivery dates reduction: 20-30 days to 7
• Capital investment project duration: 450 days to 220
• Inventory turnover (raw materials): 8.7 times to 12
• Standardized item codes reducing them from 193,000 to 43,500 and reducing total item classifications by 50%
COMPANY OVERVIEW• One of the world’s leading steel producers
• Annual revenues over $19B
• Serves customers and has forged strategic alliances with companies in Asia, the Americas, and Europe
POSCO Drives Operational Excellence With Oracle EBS
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Session # S318231 - Value Chain Execution: Customer Case Studies Featuring AM Castle -- Moscone West L3 - Room 3008 – Tuesday @ 12:30pm
Session # S318153 - Case Study: Alcoa Reduces Costs with Oracle Production Scheduling -- Moscone West L3 – Thursday @ 10:30am
Other Metals Industry Value Chain Sessions
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