G LO BAL R ESO U RCI NG-ACH I EVI NG SUCCESS IN METALS INDUSTRY AUTOMATION PROJECTS THROUGH

PARTNERSHIPS

JAYANTA CHATTERJEE GARY YI NG LI NG

INDUSTRY SALES, USA ALLEN-BRAD LEY I NOlA AND ALLEN-BRADLEY GLOBAL

A major shift in emphasis is occurring in the metals industry. While few integrated mills will be constructed in the coming decades there is a dramatic proliferation of cost-effective mini mills. These minis require a streamlined management system and a lean manufacturing philosophy. The resulting success has fostered changes in management culture among the integrated mills that are now trying to emulate the success of their sealed-down counterparts. One of the keys to the success of mini mills is their reliance on automation partnerships to bridge the technology hurdles.

Partnering is the only practical methodology that OEMs and automation suppliers can consider if they desire to participate with these new-style producers. To be successful over the long term the automation suppliers internal organisational structure must be extremely flat with broad product offerings that are focused only on industrial control and automation. They must be able to react globally to customer needs in minimal time and provide accurate proposals the first time. They must have partners who address control and information systems in every application in the metals industry and be able to provide the technology to support them. They must be able to drive decision making to the lowest levels practical in the organisation. Finally they must be committed to quality in product, architecture to commissioning and support with total commitment to customer satisfaction no matter where in the world they are doing business.

The metals industry is more global in nature than almost any other heavy industry. Consequently, the supplies of automation equipment machinery and process technology serving the metals industry are found in every industrialized nation. Their customers the end users are found in even more diverse locations-from corn fields in the central U S to the tundra of Siberia. The transfer of technology from supplier to producer then becomes an exercise in

global logistics. Customers who recognise the benefits of sole-source supplier are also aware that no single Company can provide the range of products required and the global resources necessary to provide complete solutions. To satisfy the industry-wide need to high quality industrial automation products and services on a global basis suppliers are increasingly formulating partnerships where each company can focus on what it does best. Through team work these Companies are able to meet the challenge and deliver to customer anywhere in the world the products and expertise necessary to succeed in the highly competitive metals industry.

Unprecedented industrial growth has forced steel producers in some areas of the world particularly those not often organised as manufacturing centres to seek system solutions from major conglomerates whose primary interests lie in areas other than automation products. Suppliers are also facing dramatic problems ,

with delivery of control product system solutions and support services. Providers these technologies are challenged to develop the most logical answers.

Large diversified companies, those dealing in an encompassing range of products and services, sometimes present themselves as experts in all areas, as having the ability and expertise to consult design deliver and commission any application in any industry and maintain the ‘cradle to grave’ cycle also by dictating long-term exclusive support agreements. But end-users today are not as easily convinced. Process expertise many times resides in Companies that are focused on specific applications yet offer enough versatility to meet the product and engineering standards dicated by the end-user.

Conscientious automation suppliers have dedicated themselves entirely to the business of manufacturing these products. They do not dilute the effectiveness of their products, their technologies or other focus with

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unrelated business, These manufacturers understand that they cannot be everything to everybody. They cannot be process experts on a broad scale if they are to be the leaders in factory automation products. They do not let ego get in the way of satisfying the customers. They also understand that if they are to develop a partnership with companies that specialise in process expertise they must choose only those with impeccable credibility. They are forming relationships with computer companies distributed control companies, hardware suppliers sofrware suppliers and system integrators. Sometimes these relaltionships take the form of “virtual” coporations - organisations that share resources risks and costs yet are not actual physical entities. All are dedicated to bringing application knowledge to bear on customer needs solving them as quickly and cost-effectively as possible.

Conscientious automation product suppliers also know partnering means much more than having names jointly engraved on a plaque. Partnering means total dedication to the end-users’ needs. Delivery must be on time and within budget. Commissioning must be flawless. Training and necessary support must be part of the total offering.

Understanding this is fundamental to successful partnering End-users must ensure that support responsibility extends ovoer the entire life-cycle of the operation. They must count on continuous improvement services, modifications, upgrades and fine-tuning with an eye to exceeding the original productivity expectations. End-users must be assured that product upgrades when released by the supplier will be immediately available and compatible with existing systems. The automation company must migrate technology - not obsolete it. It is the responsibility of the automation suppliedpartner to protect the end-userlpartner’s current and prior investments.

Programs such as preventive maintenance remote diagnostics emergency help and local availability of parts and service are of utmost importance to end- users-especially to end-users located in areas of the world previously unrecognized as industrial centres.

So, how does the global end-user develop the required selection criteria? In some cases this can be provided by the automation supplier. Automation companies that have a solid history of quality partnerships are able to provide the customer with a matrix that cross- references the solution delivery partner with the process expertise required. Other pertinent considerations

might be : What local partners and support can be offered? Where are the nearest offices located representing the supplier ? To what degree does the company globalize? What defines “global” in their Company? What is the status in achieving a true global profile ?

Automation suppliers must have the ability to partner with OEMS. Everyone involved benefits when the OEM can supply automation products that are not supporting a competitors secondary business. To clarify many OEMs have a primary business focus in an area other than industrial automation products yet they manufacture automation products in an attempt to provide the solutions built in their own automation platforms. This limits their flexibility when quoting systems to an end-user that has standardized on other automation products.

Automation strategies are incomplete without factoring in the availability and quality of local service. Developing an automation strategy tailored to your company’s business goals is no small task and is a critical factor in its success. It requires considerable up-front planning and painstaking attention to details. Unfortunately, with so many decisions to make on the top floor, companies sometimes overlook what it takes to keep things running smoothly on the plant floor. Local service is vital to long-term productiivity.

Should your business units and individual plants standardize on common control systems? Should your local purchasing be done to support standardization or to get the lowest price regardless of brand? If you plan to standardize does the company you have chosen have local distribution agents or joint ventures to fully support your needs? Will they maintain adequate stocks of spare parts so you don’t have have to? Do they have full-time qualified technical specialists who can help you with system configuration? Can they arrange training for your people ? Can they provide emergency service ? Will they still be there to serve you years from now? Ask your automation supplier for their long-term business plans.

Selecting a qualified System Integrator one who knows your business and application is a low risk approach to automation. There is no learning curve. No false starts. Your objectives are quickly understood and everything it takes to meet them is precisely defined. Size or complexity should not matter as long as the end-user and the automation supplier are in total agreement on the solution delivery vehicle - the System integrator. Typically operating without the inherent

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costs of a large company System Integrators bring very focused cost-effective solutions to applications. System Integrators are not always independent engineering companies but they certainly must look and act like one.

The System Integrator must possesses the management skills to implement single production cells ot plant-wide systems. They must be specialists at pulling together the best technology and the best people to deliver the best solutions. Within their capabilities they must be able to accpet turnkey responsibility for everything from design to start-up and do it within a predetermined budget and according to an agreed upon time schedule.

It is of utmost importance that the automation products supplier is as particular about the System Integrators you are considering as they are about the quality of their own products. Before agreeing to become ppartners check and double-check their credentials and make sure the automation product supplier has done the same by evaluating the System Integrator’s industry expertise, their project history, the experience and skills of their people and the range and depth of their automation hardware and software knowledge. Finally decide whether or not you will feel comfortable working together. Mutual respect and trust are vital to the success of your relationship.

Partnering has to be routinely practiced at home not just in new geographic areas of opportunity. Make sure the automation supplier is experienced at partnering. Do they “walk like they talk”? Allen-Bradley Company has partnership with its suppliers and demands only the highest quality components that meet the environmental and quality characteristics which A-B guarantees on its products. A-B has strategic alliances with other major suppliers in the automation and information business-companies like Digital Equipment Corporation, Hewlett-Packard and IBM. This shows creation of a seamless integrated control and information environment for end-users. Practically speaking many of todays’ partnering relationships were inspired by customers who had to react faster to changes in demand.

The Allen-Bradley Company also licenses technology provides who have niche expertise that develop modules addressing specific application (vibration analysis precise positioning, weighing systems etc) that fit into the standard I/O chassis. A-B also partners with many software companies using products supplied from these partners to delivery turnkey solutions. A-B also

licenses various technologies to other Companies - including competitors. These are all value added services that add up to a significant difference in productivity and profitability thorugh the life-cycle of the end-user’s automation investment.

A third party System Integrator on rare occasions may be unsuitable. There are times when logistics due to location or scope of supply outweighs system integrator capabilities. It is times such as this when the automation product supplier is required to become the automation solution supplier - if it is within its capability.

An example is a recent opportunity that was presented to A-B in Southeast Asia. The opportunity involved a new large section mill a continuous cster and related processes. A-B’s Engineered Drives Systems team in Mequon Wisconsin was asked to participate due to their recent experience on an almost identical project at a U S based steel producer. Because of some specific equipment outside the realm of A-B’s offerings, A-B partnered with a Japanese competitor who has strong capabilities with cyclo-converters. A-B India sent three of its top metal industry project managers to Mequon for eight months of training. There they became very familiar with engineering design fabrication and commissioning of similar processess. They would provide on site Project management several Indian & Thai engineers at the final facility. A-B Japan in this case provided direct support to key OEMs in Japan to ensure thorough communications and correct quoting and purchasing procedures occurred. Metals industry specialists at A-B’s office Pittsburgh, Pennsylvania and Cleveland, Ohio provided necessary communications with U S based OEMs and A-B’s Metals Industry Team. Global industry Sales at the world headquarters in Milwaukee Wisconsin co- ordinated communications globally between A-B offices and product groups. With locations in more than sixty countries and thirty manufacturing facilities worldwide the utilization of all available resources on a global scale is an exercise planned far in advance of any opportunity for Allen-Bradley. This sort of case study is now becoming generic for many Metals Industry projects around the world.

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Now for those of you who are planning to globslize here are some thoughts on getting started

1. Understand the global trends in your business and those of your customers

* Technology * * Competition * * Markets *

Customer requirements International standards

Costs and prices

2. Have a very focused effort REFERENCES :

* Select specific target markets and customers 1. R.M. Kanter, becoming PALS : Pooling, Allying & Linking across companies, Academy of

3. For targeted markets, develop an understanding Management Executive, 3(3), 183-1 93 (1989).

R.H. Waterman, The Renewal Factor, Bantam Books, NY (1987).

of the local market and customers’ requirements.

* Product requirements 2.

* Channels to market 3. C. Oliver, Determinants of interorganisational relationships : intergration & future directions.

* Standard business practices Academy of Management Review, 15(2), 241 - 265 (1990).

* Economic and political stability C.K.Prahalad & G. Hamel, The core competence

4. Modiify your product or service to meet local of the corporation, Harvard Business Review, market requirements MaylJune, pp 79-93 (1990).

4.

5. Go there yourself 5.

* Seek advicie but do not depend on others to do your thinking

6. 6. Involve your best people

*

7. Avoid making long-term commitments (such as joint ventures) until you have thoroughly evaluated the market possibilities. 8.

8. Put in the personal efforot required to develop long term relationships

Give preference to qualified volunteers 7.

* Customers, distributors, System Integrators, Government etc.

9, Be friendlly, responsive and easy to work with Show respect for culture.

* This applies to your entire organization not just those directly involved in international business.

10. Educate your whole organisation on the importance of a global business perspective

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G.Hamel, Y.Doz & C.k. Prahalad, Collaborate with your competitors and win, Harvard Business Review, Jan/Feb, pp 133-139 (1989).

M.E.Porter, The com’petitive advantage of nations, Harvard Business Review, March-April, pp 73-93 (1990).

B.G. Posner, Strategic Alliances, Inc, 74-78 & 80, June (1985).

System Integrators - implementing a cohesive strategy, Cover Feature, Managing Automation, May/June (1993).