Using GATP for Allocations in Mill Products Commercial Metals Company

© Copyright Commercial Metals Company 2007

CMC Confidential

Using GATP for Allocations in Mill ProductsCommercial Metals Company

Presented by:

Nick Gagliano and Taylor Lindsey


Company Background

Founded in 1915, Commercial Metals Company (CMC) manufactures, recycles, and markets steel, metal products, and related materials

CMC is a GREEN company; we recycle metals

Fortune 500

$6.5B annual revenue

11,000 employees

CMC is overall divided into Americas and International

High degree of vertical integration

2 CMC | Using GATP for Allocations in Mill Products | 20-Jul-11


5 Steel mills5 Steel mills

5 Structural fab operations5 Structural fab operations4 Fence post shops4 Fence post shops10 Scrap/rail processors10 Scrap/rail processors4 Related businesses4 Related businesses

37 Rebar fab operations37 Rebar fab operations32 CRP distributors32 CRP distributors




Business Challenges

Broad variation of processes and systems solutions- Existing locations - Acquisitions- Lines of Business

Consolidation of reporting data- Inventory- Shipments- Financials



SAP Profile

Running SAP since 2008

4,000 users

What are the modules installed – ECC, SCM, BI

Where implemented – Lines of business

How many resources on project

How much customization?

Implementation



Flow Chart



Business Challenges

8

• Rebar Capacity• Production• Inventory

• Merchant Capacity• Production• Inventory

Internal CustomerDemand

External Customer Demand

VMI Customer Demand

Other Customer Demand

CMC | Using GATP for Allocations in Mill Products | 20-Jul-11


gATP Specific Need

9

Distribution Center-

We need to Allocate Tons at

this location

Internal Customer

Other Customer

External Customer

VMI Customer



Affiliate Process Change

10

OLD PROCESS BEHAVIOR BUSINESS RESULT

“Every man for himself” approach

Internal Customers competed with each other for material

Displaced inventoryHigher transportation costs

Mills and FAB did notcollaborate on demand plan

Each division operatedindependently

Lack of trust between Mills and Internal Customers

No ability to allocate in legacy system

“No Holds Barred” sales order entry

As demand increased we became oversold



Affiliate Process Change

11

NEW PROCESS BEHAVIOR BUSINESS RESULT

Regional organizational alignment

Work together as a team to maximize value in vertical integration model

Better communication and planning

Mill Forecasting Team works with FAB Supply Chain

Weekly Allocation meeting to discuss supply and demand

Higher level of inventory optimization

GATP Allocation used for protection of Internal Customers’ stock items

Allocation entered during demand planning process

Sales Orders and STO’s will not confirm unless Allocation exists



VMI Process Change

12

OLD PROCESS BEHAVIOR BUSINESS RESULT

Allocation managed by Inside Sales

Undisciplined sales order entry

Stockouts for VMI Customers

Allocation performed one-by-one for each VMI item

Inside sales tires of the cumbersome process

Inefficiencies lead to neglect of process

Lack of system tools to capture data for analytics

No data capture or real time visibility to allocation

Limited or case-by-case analytics



VMI Process Change

13

NEW PROCESS BEHAVIOR BUSINESS RESULT

Allocation managed by Planning team

Allocations are entered in APO

Secured process

Higher order fulfillment %

GATP/VMI planningbooks used manage allocations at a product family level

VMI allocations entered for each production cycle

Consistency in the process

Customer satisfaction

Reporting to view remaining allocation and near-real time visibility in planning books

Data captured; development underway for forecast analysis

Visibility and betterdecision making



VMI Planning Book



ATP REPORT

Unrestricted StockDeliveriesRem. int AllocSales OrdersSTO Demand

ATP Stk

15

Affiliates and VMI Orders book against the Rem.int Allocbucket

All other orders book against the ATP Stkbucket



FAB PACE SPREADSHEET

16

Req TonsActual Remain AllocFCST Tons/DayActual Tons/Day

Decision Points

Data pulled from



Key Takeaways

Integration partner

Implementation: “Big bang” vs. Tactical approach

Executive sponsorship

GATP methodology

Phased approach to data analysis

Where are you trying to create value?



Questions


Documents

Using GATP for Allocations in Mill Products Commercial Metals Company