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Ultimate guide to all professionals in manufacturing sector who has to undergo a touch process of selecting a steel supplier/ mill. This will enable to base your decision on some of the key factors that are important for a steel mill.
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How to Select a Steel Mill? ( A Micro level Approach)
By
Madhusoodhanan Sayeenathan
www.knowyoursteel.com
www.knowyoursteel.com
Contents
• Challenges of a Steel Buyer
• Production Facility
• Product Range
• Quality Control
• Accreditation / Certification
• Research & Development
• Distribution Model / Geographical Spread
• Sales Organization Structure
• Customer References
• Conclusion
www.knowyoursteel.com
Challenges of a Steel Buyer
• Ensuring smooth production.
• Right kind of material at right price and right time.
• Steel - a technical product - knowledge the product is a must.
• Steel Industry has evolved - increase in number of steel mills.
• Buyers have to identify & develop few sources out of the whole lot.
• Smart selection based on scientific decision making. • Developing a steel source is a time, energy, resource consuming process
and steel buyers have to invest in selecting and developing a source for a long-term.
www.knowyoursteel.com
Production Facilities
• In Steel Industry, the quality of a mill mainly depends on the route of steel making and the facilities they employ.
• There are different ways of producing steel. Following are mentioned in the order of preference / ranking from in terms of quality control.
Blast Furnace – Basic Oxygen Furnace
Corex –Energy Optimization Furnace
Sponge Iron ( Any kind of Sponge Iron making) – Electric Arc Furnace
Scrap – Electric Arc FurnaceScrap – Induction Furnace
www.knowyoursteel.com
Production Facilities
• Some of the common facilities to all the production routes can be,
Vacuum degassing – This can control the gas levels in steel. Ladle Refining furnace – Where required chemistry is achieved. Continuous casting / Ingot Casting Rolling Finishing Facilities
• To summarize, the mill with blast furnace and BOF will have better quality steel. It also depends on the application.
• For example for re-bars, even Induction furnace would do.
• It is important to consider the application while looking at the production facilities.
www.knowyoursteel.com
Product Range • The mill with a vast range of products stands to benefit as this can be a means of
diversifying that can serve the steel demand of various end user industries.
• If a mill has quite limited range of products aimed at only one industry, for example if a mill has only re-bars, then there is a risk if the construction industry performs bad.
• Ideally for a flat product mill it is better to have – Hot rolling mill, Cold Rolling mill, Metal coating mill, Plate mill.
• For a long product mill which is concentrating on commodities, it is better to have re-bars, angles, channels and beams.
• For an Alloy Steel long product mill – Bars – (Round, Square, Hexagon), Wire rods.
• Ideally many big steel plants have the combination of all, to ensure their presence in all major products.
www.knowyoursteel.com
Quality Control
• It is impractical to produce 100% good steel and it’s impossible to inspect 100% steel produced. This does not mean that Quality control is difficult.
• By opting for higher levels of automations and by complying with efficient quality systems like Six Sigma, TPM, Quality control can be achieved at a steel plant.
• Controlling the parameters at different stages of the production and ensuring that the production department follows this is one of the main roles.
• Defining the rules of sample inspection and method of production also takes care of the quality.
• The overall view should be that quality is not a role of quality control department and that it is a collective role of all the departments. This attitude will ensure reduction of defective steel products.
• It is important that the steel buyer audits the relevant records at different levels of production to ensure the effectiveness of the system being followed.
• The percentage of internal rejections & the number of customer complaints is a yardstick of how effective is the quality control.
www.knowyoursteel.com
Accreditation / Certification
• When a steel mill gets accredited to various renowned quality standards viz., ISO, and other private quality standards, it can be an indication that a system is in place.
• Today ISO certification has become a mandatory and basic requirement of every steel plant.
• Some steel plants servicing to automobile customers have also accredited with ISO/TS-16949, which calls for stringent system.
www.knowyoursteel.com
Research & Development
• The amount of investment a steel plant makes in research and development, new product development will encourage and bolster customer’s confidence in them.
• Keeping abreast of technological improvements is a must.
• Today many steel plants engage in early development of products with their customers’ right from the design stage.
• This has ensured that steel cannot be sold just as a commodity. This can be possible only with a strong R&D highly qualified team and modern testing facilities.
• Steel plants should position themselves as steel solution providers rather than steel makers and sellers.
www.knowyoursteel.com
Distribution Model / Geographical Spread
• “Go to Customer” is the mantra for any product and in today’s scenario; Steel Industry seems to have aligned itself to this.
• For any customer, they should feel that the steel plant is close to them. This is possible by means of service centres, stocking points.
• For a Steel buyer to depend on the steel mill, it is important to ensure that the steel mill is flexible enough in deliveries and quantities.
• There are service centres, stockiest, steel retail centres opened by many steel mills that take care of small and timely requirements of customers.
• A buyer has to look if the steel mill has a robust distribution system with presence in major industrial/ end user hubs.
www.knowyoursteel.com
Sales Organization Structure
• For a Steel buyer, accessing the sales personnel irrespective of any level is the most important aspect.
• The steeper and multi-level the sales organization structure, the difficulty level increases for a customer.
• A buyer has to check as how customer friendly the sales team is and how their orders are taken care of. The key account manager plays a major role.
• Also if there are Zonal managers, then the influence of Zonal manager over the top management plays an important role.
• In many steel plants, the facilities and product may be good, but due to poor people management and attitude towards customer, their market share will dwindle.
• A mutual understanding, developing a mutual trust and co-operation for the benefit of both the parties should be aimed at.
• The sales organization structure should define the roles of each level with clarity and without any overlap.
www.knowyoursteel.com
Existing customer base / References
• One of the easiest ways of judging a steel mill is based on their existing clientele. While this can be a good and simple way, but this does not indicate that all customers can be served by the mill.
• The needs of every customer are different and only few steel plants can serve to diversified clients.
www.knowyoursteel.com
Conclusion
• These are some of the important parameters that can be of relevance to all steel buyers.
• If you are looking for a metric or a ranking method based on micro and macro parameters and base your decision making on this scientific method, please feel free to contact me at [email protected]
Happy Steeling!!
www.knowyoursteel.com
www.knowyoursteel.com