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© 2002 i2 Technologies, Inc. CONFIDENTIAL © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business dated by Jose Favilla Oct/02 Michael Hilbrich Michael Hilbrich Vice President Vice President i2 Technologies i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

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Page 1: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL© 2002 i2 Technologies, Inc. CONFIDENTIAL

Optimizing the Steel Business

Optimizing the Steel Business

Updated by Jose Favilla Oct/02

Michael HilbrichMichael HilbrichVice PresidentVice President

i2 Technologiesi2 Technologies

Michael HilbrichMichael HilbrichVice PresidentVice President

i2 Technologiesi2 Technologies

Page 2: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL2

i2 in Metals i2 in Metals

In metals since 1988, first i2 Customer – Timken Steel

60 + Customers in all segments

Eight of the top ten steel producers worldwide are i2 customers Presence in all geographies - Americas, EMEA, APAC, Japan

Dedicated Metals team Over 300 years of combined metals experience

i2 and Metals Customers have documented hundreds of millions dollars in recurring annual savings

More than 200 million tons/year are planned using i2 software

Page 3: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL3

Some i2 Customers in MetalsSome i2 Customers in Metals

Integrated Steel Producers Non-Integrated Steel Producers

Aluminum Producers Pipe Mfg & other Fabricators

Arcelor* JFE*/** POSCO*/** Nippon* Thyssen Krupp* LNM (Inland)* Corus USS* ISG (Bethlehem-

LTV) National Weirton CSN

Sweden Steel BHP Iscor Rautarrukki Kobe Mannesmann Vitkovice a.s. Nova Hut, a.s. AHMSA Lucchini AvestaPolarit Salzgitter

Alcan Logan Kaiser Pechiney-Rhenalu

VAW Elval RusAl

Timken Nucor Carpenter ACME Walsin Lihwa Timken-Latrobe Vaccumschmelze Worthington Galvak APM Lusosider

Edelstahl Witten-Krefeld (EWK)

J & L Specialty Thyssen-Mexinox Republic

Technologies Gerdau MRM Integris Metals MacSteel Wheeling-Pitt

Sharon Tube V&M Star Copperweld Timken Tubing MacSteel Timken Bearings Southwire

RMI Titanium Hitchnier Mfg Phifer Wire Roberts Industries CSS Industries AngloGold Hanna

*Top 10 Steel Producers WW** Ken Sharma Award Winner

Page 4: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL4

i2 Metals Solution Suitei2 Metals Solution Suite

SpendSpendOptimizationOptimization

Order & Material Order & Material OptimizationOptimization

Order Fulfillment OptimizationOrder Fulfillment Optimization

Revenue Revenue & Profit& Profit

OptimizationOptimization

Logistics OptimizationLogistics Optimization

Cu

stom

ersC

usto

mersS

up

pli

ers

Su

pp

lier

s

MaintenanceMaintenanceOptimizationOptimization

Mill OptimizationMill Optimization

Distribution Network Optimization Distribution Network Optimization

Supply Chain Operating ServicesSupply Chain Operating Services

ERP/legacy systemsERP/legacy systemsERPERP ERPERP

Page 5: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL5

Key ConceptsKey Concepts

Synchronizing demand and supply

Within the metals enterprise

Across the value chain

Demand

Supply

Demand

Supply

MetalsProducer

AutoManufacturer

Raw Materials &Parts Suppliers

ServiceCenters

Fabricators(stamping, etc.)

Page 6: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL6

Key Concepts Key Concepts

MetalsProducer

AutoManufacturer

Raw Materials &Parts Suppliers

ServiceCenters

Fabricators(stamping, etc.)

Monitoring Monitor orders, inventories and

shipments against plans

Monitoring Monitor orders, inventories and

shipments against plans

Integration Integrate planning and execution

Integration Integrate planning and execution

Collaboration Collaborate between the players of the

value chain to synchronize supply and demand

Collaboration Collaborate between the players of the

value chain to synchronize supply and demand

Optimization Best in class business processes Optimize business goals under

constraints

Optimization Best in class business processes Optimize business goals under

constraints

How can this synchronization be enabled?

Page 7: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL7

Key ConceptsKey Concepts

time

PRESENT

ERP / Legacy:

Captures what is going-on at presentmoment and keep history

Does not provide any forward visibilityinto future

SCM:

Provides forward visibility into the future

Supports decision-making processes that can influence the future

past future

Why ERP doesn’t solve the Supply Chain problem…

Page 8: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL8

i2 solutions: mature and proven technologyi2 solutions: mature and proven technology

14 years of investment in R&D and software development Over $1 Billion in Intellectual Property

Largest number of optimization experts working on real business optimization problems of any other software company

LP, MIP, Genetic Algorithms, Simulated Annealing, A-teams Framework, Advanced search techniques, Specialized Heuristics, Network Optimization, Hill Climbing

Proven in the Metals Industry

Flexible: allows detailed modeling of YOUR business requirement

Allows focus on the business problem not on the technology – shortest time to value

Page 9: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL9

i2 Metals Solution Suitei2 Metals Solution Suite

SpendSpendOptimizationOptimization

Order & Material Order & Material OptimizationOptimization

Order Fulfillment OptimizationOrder Fulfillment Optimization

Revenue Revenue & Profit& Profit

OptimizationOptimization

Logistics OptimizationLogistics Optimization

Cu

stom

ersC

usto

mersS

up

pli

ers

Su

pp

lier

s

MaintenanceMaintenanceOptimizationOptimization

Mill OptimizationMill Optimization

Distribution Network Optimization Distribution Network Optimization

Supply Chain Operating ServicesSupply Chain Operating Services

ERP/legacy systemsERP/legacy systemsERPERP ERPERP

Page 10: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL10

Revenue and Profit Optimization Revenue and Profit Optimization

How to determine with accuracy market demand

How to create a unified sales and production plan that maximizes the total profitability for the company

What is the best product mix? What is the right level and positioning of steel inventories?

How to guarantee that the supply is synchronized with demand

How to control the booking of orders to the sales plan

How to adjust the plan rapidly based on changes in plant operations or the market

Business Problem

Page 11: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL11

Revenue and Profit OptimizationRevenue and Profit Optimization

Demand Planning

Master PlanningProfit Optimization

Allocation Planning

Collaboration Planner

Metals Supplier

Customer

Web Browser

Customer Forecast (1)

Consensus Forcast (3)

Customer Allocation (6)

Customer Forecast (2)

Customer Allocation (5)

i2 Solution

Consensus Forecast (3)

SupplyPlan (4)

Page 12: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL12

Exception driven workflows with visual classification of problems

Collaboration support across the sales and order forecasting process

Collaboration ExampleCollaboration Example

Page 13: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL13

Page 14: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL14

Profit Optimizer: “Practical Margin Optimization”Profit Optimizer: “Practical Margin Optimization”

Page 15: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL15

Revenue and Profit OptimizationRevenue and Profit Optimization

Allocation PlanningAllocation Planning

Hot Roll

Cold Roll

Galvanize

Plate

Billet

Shape1 2 3 4 5 6

Customer A

Customer B

Order receiptsare monitoredto assure compliance toallocation.

Time Periods (weeks)

Customer B

i2 Solution

time

product

seller

Page 16: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL16

Revenue and Profit Optimization Revenue and Profit Optimization

Higher synchronization of supply and demand thru an unified market-sales-production plan

Improved profitability due to superior product mix decisions

Considering margin andproductivity simultaneously

Position the enterprise to the “best business” – eliminating first come first served.

Some Key Performance Indicators

Forecast Accuracy

Asset Utilization

Profit margin

Planned vs Actual Mix

Planned vs Actual Inventory Levels

Planning Cycle Time

Benefits

Page 17: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL17

i2 Metals Solution Suitei2 Metals Solution Suite

SpendSpendOptimizationOptimization

Order & Material Order & Material OptimizationOptimization

Order Fulfillment OptimizationOrder Fulfillment Optimization

Revenue Revenue & Profit& Profit

OptimizationOptimization

Logistics OptimizationLogistics Optimization

Cu

stom

ersC

usto

mersS

up

pli

ers

Su

pp

lier

s

MaintenanceMaintenanceOptimizationOptimization

Mill OptimizationMill Optimization

Distribution Network Optimization Distribution Network Optimization

Supply Chain Operating ServicesSupply Chain Operating Services

ERP/legacy systemsERP/legacy systemsERPERP ERPERP

Page 18: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL18

Order Fulfillment Optimization Order Fulfillment Optimization

Inaccurate and slow order capturing, processing and quoting – slow response to customers – missing sales opportunities

Long lead times for inquiry validation and quality design

Inaccurate delivery promise

Order acceptance outside of sales plan

Business Problem

Page 19: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL19

Customer View Internal View

Customer Order 1

Purchase Order 1

Purchase Order 2

Purchase Order n

Line Item 1

Line Item mLine Item m

Line Item 2

- Date p- Quantity …- Ship to …

- Date 2- Quantity …- Ship to …

Buyer’s Order Specification- Item id (if in a catalog)- Product (galvanized sheet)- Shipment date (dd/mm/yy)- Quantity (x tons)- Ship to (address1) - Buyers spec number (TOT123)- End Use (automotive)- Buyers Process (stamping)- Dimensions (40” x 58” x 0.2”)- Standard1 JIS1234 (but Carbon = [0.3 0.45] - Standard2 JIS5678

Criteria:- Product- Date- Quantity- Ship from- Ship to

(one seller and one buyers only)

Seller’s Order Specification- Internal Spec (TOT123-01)- Customer (Toyota)- Product (galvanized sheet)- End Use (automotive)- Dimensions (40” x 58” x 0.2“)- Standard1 (version 3) C=[0.3 0.45] Mn=[0.2 0.4], etc…- Standard2 (version 2) surface quality: A1 width tolerance [-0.2 +0.4] length tolerance [-0.2 +0.4] hardness = max 770HB- etc. etc.

Routing 1- operations- attributes at each route step

Routing 2

Routing r

Seller’s Order Spec 2

Seller’s Order Spec 2

(the specification canto be done at a BU or

plant level)

ABOC: Enables an effective

order capturing, embedding the intelligence from

metallurgists on what is feasible

ABOC: Enables an effective

order capturing, embedding the intelligence from

metallurgists on what is feasible

Quality Design: Translates customer

spec into manufacturing spec, generates

multiple production routings and calculates

manufacturing cost

Quality Design: Translates customer

spec into manufacturing spec, generates

multiple production routings and calculates

manufacturing cost

Order Fulfillment OptimizationOrder Fulfillment Optimization

Order Capturing and ProcessingOrder Capturing and Processing

Page 20: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL20

Standards

Order Fulfillment OptimizationOrder Fulfillment Optimization

Specific Customer Agreements

Context Sensitive Defaults

Technical Restrictions

Equipment Restrictions

Process Rules

Process Parameters (yields, costs, etc)

Customer Order: 982034Customer: Acme Co.End-use: Home AppliancesCustomer Process: Stamping

Product: Galvanized SheetDimensions: 40”x 58” x 0.2”Standard: ASTM XXXXC = [0.3 , 0.45]

Internal Spec: 982034-01Customer: Acme Co.

Product: Galvanized SheetDimensions: 40”x 58” x 0.2”Standard: ASTM XXXX - Jul/97

Surface Quality: A1C = [0.3 , 0.45]Mn = [0.2 , 0.34]width tolerance = [-0.2 , +0.4]length tolerance = [-0.2 , +0.6]max pile weight = 3 ton

Routing: 982034-01-01Customer: Acme Co.

Product: Galvanized SheetDimensions: 40”x 58” x 0.2”Standard: ASTM XXXX - Jul/97

Op1: Melt - grade 948Op2: HotRoll - min gauge = 2.5”Op3: Pickle - Pickler 2Op4: Thermal Treat - cycle T-3Op5: Pack - packing class B2

Quality Design Quality Design

Page 21: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL21

Hot Roll

Cold Roll

Galvanize

Plate

Billet

Tin1 2 3 4 5 6

Customer A

Customer BMasterPlanning setsATP by product.

Orders and Inquiressearch dynamicallyFor booking space.

Time Periods

Allocated Available to Promise

Order Promising: “Real time delivery quote”Order Promising: “Real time delivery quote”

AllocationPlanning reservesbookingspace.

Sales

Domestic Export

Cust1 Cust2 Regions

Page 22: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL22

Hierarchies and AdjustmentsHierarchies and Adjustments

Simple Price Rule is Adjustment to base price. Adjustment are rules between the nodes of multidimensional hierarchies of customer, product and user.

If the customer is in Europe and the product is a laptop computer, the max discount is $100

Marketing Hierarchy

Europe

Customer XXX

USA

Products

Laptops

Lap 2000

Desktops

The Customer to whom we are quoting

The Product that we are quoting

Max discount = $100

Page 23: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL23

Order Fulfillment Optimization Order Fulfillment Optimization

Increased revenues due to improved customer service level

Single face Accurate delivery date

promises Accurate pricing Visibility into order status Faster order response times

Reduced cost of order fulfillment Lower error rates Reduced order cycle times

Execution to planned product mix / sales allocation

Some Key Performance Indicators

Order Promising Time

Order Capturing Accuracy

Order to Cash Cycle

Customer Satisfaction

Benefits

Page 24: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL24

i2 Metals Solution Suitei2 Metals Solution Suite

SpendSpendOptimizationOptimization

Order & Material Order & Material OptimizationOptimization

Order Fulfillment OptimizationOrder Fulfillment Optimization

Revenue Revenue & Profit& Profit

OptimizationOptimization

Logistics OptimizationLogistics Optimization

Cu

stom

ersC

usto

mersS

up

pli

ers

Su

pp

lier

s

MaintenanceMaintenanceOptimizationOptimization

Mill OptimizationMill Optimization

Distribution Network Optimization Distribution Network Optimization

Supply Chain Operating ServicesSupply Chain Operating Services

ERP/legacy systemsERP/legacy systemsERPERP ERPERP

Page 25: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL25

Order and Material Optimization Order and Material Optimization

Poor due date performance, unhappy customers

Long lead-times

High level of work in process and finished good inventories

Lack of visibility to potential future problems

Inability to quickly react to unexpected events, such as equipment breakdowns

Difficult in exploiting available inventories across the mill to fulfill order needs to due complexity of attribute-based matching

Business Problem

Page 26: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL26

Order and Material OptimizationOrder and Material Optimization

DueDate

S

S

EPST

M

EPST

M

EPSTM

S

Material Required

Material Available

LPST

TEMPER MILL

COATING

COLD MILL

PICKLE

HOT MILL

EPST

LPST

LPST

LPST

EPST

M

LPST

TimeTime

HOT MILL

PICKLE

COLD MILL

TEMPER MILL

COATING

Compute the criticality for all over utilized resources.

Select the most critical resource.

Find over utilized resources.

Balance anchor resource.

Propagate and post constraints to other

resources.

Reconcile PSTs to constraints based on

parameters.

Time

HOT MILL

PICKLE

COLD MILL

TEMPER MILL

COATING

Factory PlanningFactory Planning

Page 27: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL27

Mill OptimizationMill Optimization

O 1

O 2

O 3

O 4

O n

S 1

S 2

S 3S 4

S 5

S 6

S m

Some factors considered during matching

• Order due date

• Rush Order

• Age of Material

• Grade matching

• Width matching

• Routing priority

– slab yard

• Min/Max Coil

• Delivery weight

•Others can be specified

Order

2 0 5 0 2 0 2 1

0 0 0 0 0 0 0 0

0 0 3 0 0 2 0 4

0 3 0 0 0 4 3 01 0 0 0 1 0 0 1

0 3 4 0 0 0 2 0

0 4 0 0 3 3 0 9

3 0 0 0 1 0 3 0

Slabs

No Match

Matching Priority Table

Slab AllocationSlab Allocation

Infrastructure Real-time matching Built-in generic optimizer User friendly interface

Page 28: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL28

Order and Material OptimizationOrder and Material Optimization

Factory PlanningFactory Planning

Enterprise PlanningEnterprise Planning

Inventory AllocationInventory Allocation

Factory PlanningFactory Planning

Inventory AllocationInventory Allocation

Factory PlanningFactory Planning

Inventory AllocationInventory Allocation

Factory PlanningFactory Planning

Inventory AllocationInventory Allocation

Factory PlanningFactory Planning

Inventory AllocationInventory Allocation

Primary Operation Hot Mills Cold Mills / Finishing

Page 29: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL29

Order and Material OptimizationOrder and Material Optimization

Multi-Plant Order PlanningMulti-Plant Order Planning

Factory Planner Domain

Enterprise Planning Domain

Order planning across multiple plants Order sourcing based on customer location, capacity and material

availability

Page 30: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL30

Order and Material Optimization Order and Material Optimization

Improved delivery performance and customer service

Reduced manufacturing lead time

Reduced work in process and finished good inventories

Ability to react to unexpected problems

Reduced operating expenses Lower inventory carrying costs Reduced cost of expedites Better utilization of existing

capacities Higher planner productivity

Some Key Performance Indicators

On-time delivery

Work-in-process inventory Levels

Finished Good Inventory Levels

Manufacturing Lead Time

Plan versus Actual

Benefits

Page 31: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL31

i2 Metals Solution Suitei2 Metals Solution Suite

SpendSpendOptimizationOptimization

Order & Material Order & Material OptimizationOptimization

Order Fulfillment OptimizationOrder Fulfillment Optimization

Revenue Revenue & Profit& Profit

OptimizationOptimization

Logistics OptimizationLogistics Optimization

Cu

stom

ersC

usto

mersS

up

pli

ers

Su

pp

lier

s

MaintenanceMaintenanceOptimizationOptimization

Mill OptimizationMill Optimization

Distribution Network Optimization Distribution Network Optimization

Supply Chain Operating ServicesSupply Chain Operating Services

ERP/legacy systemsERP/legacy systemsERPERP ERPERP

Page 32: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL32

Mill Optimization Mill Optimization

Sub-optimal utilization of assets due to complexity of the operation

Balancing of hot metal across multiple casters Excessive grade transition High number of turnarounds Production of excess inventory Lack of coordination caster-hot mill Inefficient allocation of slabs to orders Low productivity due to partial rounds and re-heating

requirements Inefficient utilization of finishing mills due to complex scheduling

rules Poor due date performance

Business Problem

Page 33: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL33

Mill OptimizationMill Optimization

G6/ 1300/ B

G6/ 1050/ B

G4/ 1300/ A

Grade/ Width/ Round_Type Network

Grade/ Width/ Round_Type Network

Slab DesignSlab Design

OrdersOrders

Slab Designs1

Ch 1Ch 1

Ch 3Ch 3

Ch 5Ch 5

Ch11Ch11

Ch 5Ch 5

Ch 7Ch 7

Ch 1Ch 1

Ch 3Ch 3

Ch 9Ch 9 Ch 9Ch 9

Ch11Ch11

Ch 2Ch 2

Ch 4Ch 4

Ch 6Ch 6

Ch 8Ch 8

Ch 2Ch 2

Ch 4Ch 4

Ch 8Ch 8

Ch 10Ch 10

Ch 12Ch 12

Ch 10Ch 10

Ch 12Ch 12

Ch 13Ch 13 Ch 13Ch 13

CC 1 CC 2

Ch 7Ch 7

Ch 6Ch 6

Strand 1 Strand 2 Strand 1 Strand 2

Blank Heat SolverBlank Heat Solver

Network

2

S 1

S 5

S 6S 7S 10

S 11

S 15

S 19

S 21

S 22

Strand 1 Strand 2

S 51

S 24

S 25S 63

S 70S 104

S 41S 64

S 96S 33

S 26

S 23S 29S 49

S 37

S 44

S 53S 124S 46

S 36

S 42

CC 1

Detail Heat SolverDetail Heat Solver

Blank HeatSchedule

3

Strand 1

Strand 2

O 2O 6O 3

O 13O 19

O 17

O 11O 18

O 27

O 33O 49

Strand 1

Strand 2

O 25O 41O 32

O 43

O 2O 6O 3

O 13O 19

O 17

O 11O 18

O 27

O 33O 49

O 25O 41O 32

O 43

Post ProcessingPost Processing

Cast / SlabSchedule

4

Final CasterSchedule

5

Nextslide

Caster SchedulingCaster Scheduling

Page 34: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL34

Mill OptimizationMill Optimization

S12

S65

S26

S1

S4

S9

S8

S6

S5

Ch 1 Ch 2

S2

S3

S5

2

S53

Make-to-Stock slabsMake-to-Stock slabs

Ch 3 Ch 4 Ch 5

S18

S69

S24

S3

S4

S9

S8

S6

Cast 1 Cast 2

Ch 6

CC1Strand 1

CC1Strand 1

S19

S45

S35

Ch 1 Ch 2 Ch 3 Ch 4 Ch 5

S22

S66

S29

S14

Cast 1 Cast 2

Ch 6

CC1Strand 2

CC1Strand 2

Grade ChangeGrade Change

Final Caster SchedulingFinal Caster Scheduling

Page 35: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL35

Mill OptimizationMill Optimization

S12

S65

S26

S1

S4

S9

S8

S6

S5

Ch 1 Ch 2

S2

S3

S5

2

S5

3

Make-to-Stock slabsMake-to-Stock slabsSlab overlaps heat

boundariesSlab overlaps heat

boundaries

Cast Slab Schedule

time

Hot Mill Roll Campaign

S1 – O1S1 – O1

S5 – O1, O2S5 – O1, O2

S11 – O1S11 – O1

S4 – O2,O3,O4S4 – O2,O3,O4

S13 – O5S13 – O5

S15 – O8S15 – O8

S6 –O6,O7S6 –O6,O7

Applied Slabs from Slab Yards

Detailed Round Solver : Compute sequence of slabs within each roll, get slab rolling times. Uses hill-climbing optimizer

Hot Mill SchedulingHot Mill Scheduling

Page 36: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL36

Mill OptimizationMill Optimization

time

time

time

HSM 1

HSM 2

HSM 3

Hot Mill Campaigns

Hot Mill SchedulingHot Mill Scheduling

Page 37: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL37

Mill Optimization Mill Optimization

Improved utilization of critical resources

Better synchronization of resources

Inventory reduction due to scheduling inefficiencies

Better asset utilization due to optimized grouping and sequencing

Improved utilization of existing inventories

Some Key Performance Indicators

Hot Metal Dumping

Caster Operating Ratio

Percentage of Hot Charging

Tundish utilization

HSM round WKM

Planned vs Actual Rolling Date

Number of setups / turnarounds at key facilities

Benefits

Page 38: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL38

i2 Metals Solution Suitei2 Metals Solution Suite

SpendSpendOptimizationOptimization

Order & Material Order & Material OptimizationOptimization

Order Fulfillment OptimizationOrder Fulfillment Optimization

Revenue Revenue & Profit& Profit

OptimizationOptimization

Logistics OptimizationLogistics Optimization

Cu

stom

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usto

mersS

up

pli

ers

Su

pp

lier

s

MaintenanceMaintenanceOptimizationOptimization

Mill OptimizationMill Optimization

Distribution Network Optimization Distribution Network Optimization

Supply Chain Operating ServicesSupply Chain Operating Services

ERP/legacy systemsERP/legacy systemsERPERP ERPERP

Page 39: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL39

Logistics Optimization Logistics Optimization

Critical component in delivering the order to the customer

Difficult to determine the transportation needs Seasonality of equipment availability (trucks) Vessel schedules

High logistics costs How to reduce the number of vehicles and use the least

expensive mode of transportation

Complex operation Placement of products in the warehouses Load formation and load building considering dock constraints Availability of equipment (truck, trains, etc) and synchronize with

vessel schedule at ports How to proactive identify and correct problems

Business Problem

Page 40: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL40

Logistics OptimizationLogistics Optimization

Create the loads and load sequences. Schedule cranes

tasks. Provide estimated task start time and end time

MillWarehouse 1

MillWarehouse 2

MillWarehouse n

domestic

Schedule the trucks

Schedule unloader at port. Provide

estimated task start time and end time

Executes and monitor the entire lifecycle of the shipment process

Consider Ship schedules and

route

international

Page 41: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL41

Logistics Optimization Logistics Optimization

Reduce logistics cost Minimize number of equipments

(trucks, trains, etc.)

Reduced inventory at mill dock and ports due to better synchronization of products with vessel availability

Improve customer service by delivering on time

Allow proactively managing exceptions

Some Key Performance Indicators

On-time delivery

Inventory levels (dock, ports)

Average load weight per vehicle type

Loading time (vehicle assigned to load complete)

Benefits

Page 42: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL42

i2 Metals Solution Suitei2 Metals Solution Suite

SpendSpendOptimizationOptimization

Order & Material Order & Material OptimizationOptimization

Order Fulfillment OptimizationOrder Fulfillment Optimization

Revenue Revenue & Profit& Profit

OptimizationOptimization

Logistics OptimizationLogistics Optimization

Cu

stom

ersC

usto

mersS

up

pli

ers

Su

pp

lier

s

MaintenanceMaintenanceOptimizationOptimization

Mill OptimizationMill Optimization

Distribution Network Optimization Distribution Network Optimization

Supply Chain Operating ServicesSupply Chain Operating Services

ERP/legacy systemsERP/legacy systemsERPERP ERPERP

Page 43: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL43

Distribution Network Optimization Distribution Network Optimization

Complex decisions with dramatic impact on the business What are the costs and service tradeoffs of alternative sourcing,

manufacturing and distribution strategies? When capacity should be added? What types of logistics facilities are required to support finished

goods distribution? As a result of a recent or proposed merger, what would an

optimal, combined distribution network look like? Which ports should be used to bring product into and out of a

country? Into what new markets or marketplaces should I expand or from

which should I withdraw?

Business Problem

Page 44: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL44

Distribution Network Optimization Distribution Network Optimization

i2 Solution

Combines Simulation with Optimization

Simulation Further validates the

operational feasibility and robustness of the optimized solution accurate picture of the

expected performance of the network

create confidence in the solution more likely to be implemented

Optimization Allows searching

through a very large number of solutions to identify the optimal one that best satisfy the constraints and business conditions/scenarios

Optimization

Simulation

Use i2 Supply Chain Strategist and i2 Transportation Modeler toolsDelivery as a Consulting Engagement

Page 45: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL45

Distribution Network Optimization Distribution Network Optimization

Optimized supply chain network

Improved ability to serve YOUR markets and customers at lowest possible cost

Some Key Performance Indicators

Utilization of processes and facilities

Fill rates

Average fulfillment time

Inventory quantities and resulting costs

Benefits

Page 46: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL46

i2 Metals Solution Suitei2 Metals Solution Suite

SpendSpendOptimizationOptimization

Order & Material Order & Material OptimizationOptimization

Order Fulfillment OptimizationOrder Fulfillment Optimization

Revenue Revenue & Profit& Profit

OptimizationOptimization

Logistics OptimizationLogistics Optimization

Cu

stom

ersC

usto

mersS

up

pli

ers

Su

pp

lier

s

MaintenanceMaintenanceOptimizationOptimization

Mill OptimizationMill Optimization

Distribution Network Optimization Distribution Network Optimization

Supply Chain Operating ServicesSupply Chain Operating Services

ERP/legacy systemsERP/legacy systemsERPERP ERPERP

Page 47: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL47

Spend Optimization Spend Optimization

How to create, execute and sustain global sourcing strategies that reduce both supply risk and total cost and allow strategic win-win relationships with suppliers

How to avoid the proliferation of MRO parts to avoid unnecessary capital investment in parts

How to negotiate the best price and terms & conditions

How to leverage on the terms and conditions negotiated in corporate contracts

Business Problem

Page 48: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL48

Spend Optimization Spend Optimization

0%

5%

10%

15%

20%

25%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

FROM 20 SUPPLIERS TO JUST 3 SUPPLIERS

$ Sourced per Supplier Price of Material Transaction Cost

Page 49: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL49

Spend OptimizationSpend Optimization

Strategic Sourcing

Product Sourcing

Procurement

i2 Negotiate

i2 Contract Management

i2 Explore Catalog

Common Integration Framework

ERPERP PDMPDM LegacyLegacy

Page 50: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL50

Spend Optimization Spend Optimization

Eliminates redundant parts and suppliers for product cost & sourcing efficiency

Global visibility into enterprise spend by part, category, site and supplier to aggregate leverage

Commodity or Product line negotiation to secure optimal price and terms

Single-instance global procurement system for cost effective purchasing

Increased contract compliance to plug post-contract leakage

Some Key Performance Indicators

Purchasing Volume Preferred Suppliers

Purchasing Transaction Cost

Inventory Cost (MRO and direct materials)

Spot versus planned purchasing

Benefits

Page 51: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL51

i2 Metals Solution Suitei2 Metals Solution Suite

SpendSpendOptimizationOptimization

Order & Material Order & Material OptimizationOptimization

Order Fulfillment OptimizationOrder Fulfillment Optimization

Revenue Revenue & Profit& Profit

OptimizationOptimization

Logistics OptimizationLogistics Optimization

Cu

stom

ersC

usto

mersS

up

pli

ers

Su

pp

lier

s

MaintenanceMaintenanceOptimizationOptimization

Mill OptimizationMill Optimization

Distribution Network Optimization Distribution Network Optimization

Supply Chain Operating ServicesSupply Chain Operating Services

ERP/legacy systemsERP/legacy systemsERPERP ERPERP

Page 52: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL52

Maintenance Optimization Maintenance Optimization

Complex and high cost of maintenance operations

Un-balanced spare parts inventory across multiple facilities

Uncertainties in MRO needs causing high inventory levels of parts

Facility downtime affecting production Difficult to finish work in allowed down time due to

Unavailability of parts Labor Repair equipments

Business Problem

Page 53: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL53

Maintenance OptimizationMaintenance Optimization

How to reduce MRO parts inventories while achieving the target service levels for each production facility at minimum cost.

Pa

rt C

riti

calit

yP

art

Cri

tica

lity

Lo

wL

ow

Hig

hH

igh

ReliabilityReliabilityHighHighLowLow

Part Criticality Matrix

C1 C2 C3

D1 D2 D3

M1 M2 M3

• Boards• Motors• Bearings

• Drives• Switches• Relays

• Seals• Shafts• Keyboards

• Monitors• Pistons• Sensors

• Gears• Assemblies• O-Rings

• Belts• Relays• Probes

• Plugs• Gauges• Kits

• Bolts• Couplings• Breakers

• Fuses• Washers• Frames

Classifying the parts based on their criticalityClassifying the parts based on their criticality

Page 54: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL54

Maintenance OptimizationMaintenance Optimization

Enterprise Asset Management (Indus, Maximo, Legacy Systems, etc.)

i2 Maintenance Optimization

ï2 Solution enables:

Optimal budget planning considering target service level

Inventory balancing across multiple mill

Plant wide maintenance planning

Parts forecasting and replenishment

Service scheduling

Inventories, Capacities and

Maintenance Rules Work Orders

Purchase Order

Page 55: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL55

Maintenance Optimization Maintenance Optimization

Reduce maintenance costs

Reduced spare parts inventory

Improved asset service level – part available when needed

Synchronized maintenance operations across the mills

Better utilization of maintenance resources (equipments, parts and personnel)

Some Key Performance Indicators

Asset up time

Cost of spare parts inventory

% of time spare parts are available when needed

Benefits

Page 56: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL56

i2 Metals Solution Suitei2 Metals Solution Suite

SpendSpendOptimizationOptimization

Order & Material Order & Material OptimizationOptimization

Order Fulfillment OptimizationOrder Fulfillment Optimization

Revenue Revenue & Profit& Profit

OptimizationOptimization

Logistics OptimizationLogistics Optimization

Cu

stom

ersC

usto

mersS

up

pli

ers

Su

pp

lier

s

MaintenanceMaintenanceOptimizationOptimization

Mill OptimizationMill Optimization

Distribution Network Optimization Distribution Network Optimization

Supply Chain Operating ServicesSupply Chain Operating Services

ERP/legacy systemsERP/legacy systemsERPERP ERPERP

Page 57: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL57

Supply Chain Operating ServicesSupply Chain Operating Services

Application neutral integration infrastructure

Page 58: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL58

Supply Chain Operating ServicesSupply Chain Operating Services

Role-basedUIs

Buyers Planners Order

Management Sales Rep

BusinessProcess Workflows

Manufacturing Procurement Transportation

FunctionalServices

SCM, SRM Embedded 3rd Party Services

InfrastructureServices

Data Integration App. integration SSO Monitoring Data Management Analytics/ Reporting Transaction

ManagementLegacy/ERP

Legacy 2

Service-Based Architecture Service-Based Architecture

Page 59: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL59

Open Standards FoundationJ2EE XML

JMS WSDL

SOAP

JMx

JAAS

RMI

JCA

UDDI

Infrastructure ServicesSecurity

Logging

Exception Handling

Monitoring

Management

Load Balancing

Directory/Registry

Transformations

Authentication/Authorization

Workflows

3rd party Adapters

Introspection/Execution

Service-based architectureService-based architecture

Sourcing Order Mgmt TransportationPlanning Promising

Application Services

Page 60: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL60

Supported Hardware/OS StacksSupported Hardware/OS Stacks

Key vendor platform stacks are supported for 5.2 HP – HPUX 11.0, 11i Sun – Solaris 8 IBM – AIX 4.3.3

Oracle DB2

Microsoft – NT 4.0, 2000, XP

Page 61: © 2002 i2 Technologies, Inc. CONFIDENTIAL Optimizing the Steel Business Updated by Jose Favilla Oct/02 Michael Hilbrich Vice President i2 Technologies

© 2002 i2 Technologies, Inc. CONFIDENTIAL61

Stack Components Stack Components

Application Server: Weblogic Web Server: IIS, iPlanet Web, IBM

HTTP Database: Oracle, DB2 LDAP: iPlanet, IBM Secureway Corba: Visibroker

Security: Siteminder EAI: webMethods, Informatica Thin Client Browser: IE, Netscape

The stack components are based around the following categories of middleware components: