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EmiratEs stEEl industriEs

Casting sustainable business growth with saP® erP

QuiCk FaCts

"By providing real-time decision support information about our business, SAP ERP gives management the insight it needs to sustain our continued growth."

Soumyajit Ghosh, Controller, business Planning and erP Manager, emirates steel industries

Company · name: emirates steel industries · location: abu Dhabi, united arab emirates · industry: Mill products ­ primary metals manufacturers · Products and services: steel manufacturing and rerolling · employees: 1,500 · web site: · implementation partner: Mahindra satyam Challenges and Opportunities · support transition from rerolling operation to integrated steel plant · enhance cross-enterprise visibility for accurate, timely decision making · increase control over working capital and funds, enabling better treasury and credit management · improve quality control and traceability Objectives · Deploy integrated software solution to cost-effectively manage end-to-end business processes · integrate proprietary production systems with saP® software · harmonize processes across all plants for increased efficiency SAP Solutions and Services · saP erP application, including financials, production, inventory management, and hr functionalities · saP extended warehouse Management application · asaP methodology · saP solution Manager application management solution

Implementation Highlights · Deployed on time, in just over 7 months, and within budget · standardized software deployment using the asaP methodology · received support from the Ceo and CFo · Performed early feasibility study and preimplementation review · Consulted with industry peers, enhancing business buy-in · trained more than 300 users Why SAP · recommendation of independent consulting firm · reputation of saP erP as software of choice for steel manufacturers · Proven scalability of software Benefits · enabled automated data flow, allowing online, real-time access to production, inventory, and financial data · enhanced ability to manage employee attendance · harmonized processes across 5 plants · integrated proprietary production systems with saP erP · reduced need for additional staffing of new plants by 10% · Cut monthly close cycle from 10 days to 4 days · Decreased employee payroll processing from 8 to 3 days · retired legacy systems, reducing it maintenance costs

SAP Customer Success Story Mill Products ­ Primary Metals

Demand for new construction in the Middle east is driving rapid growth at emirates steel industries in the united arab emirates. to meet this demand, the company is expanding ­ becoming an integrated steel manufacturer with capacity to produce more than 5 million tons annually. it deployed the saP® erP application to support its transformation.

"by providing real-time decision support information about our business, saP erP gives management the insight it needs to sustain our continued growth," says soumyajit ghosh, controller, business planning and enterprise resource planning (erP) manager at emirates steel. Making this shift required a powerful business software solution ­ one that could help the company cost-effectively manage and harmonize its end-to-end processes across all plants. to support growth without compromising quality or

A Tempered Approach to New Business Software

to determine which software solution would best fit its needs, the company engaged a leading consulting firm to perform a feasibility study. "rather than relying on word of mouth, we wanted to make the choice based on our business processes and our expansion goals," says ghosh. the consultant recommended saP erP. emirates steel formed a steering committee for the project, which was headed by Ceo gregor Münstermann and co-chaired by CFo stephen Pope.

Structural Growth

a government-owned steel plant located in abu Dhabi, emirates steel was founded in 2001 to manufacture highquality steel products for the construction industry. it initially operated as a rolling mill, producing as much as 750,000 tons per year of reinforcing steel bars (rebar) and wire rods. to meet demand for new construction in the burgeoning region, emirates steel developed plans to become a fully integrated steel plant. the transition, which began in 2007, allows it to manufacture, roll, and fabricate a variety of steel products. when the phased expansion project is completed in 2012, the business will support a wide range of processes, from make-to-stock to make-to-order manufacturing.

"With the information we now have available, management can take rapid, decisive action based on actual data."

Soumyajit Ghosh, Controller, business Planning and erP Manager, emirates steel industries

customer satisfaction, emirates steel needed to improve quality control and traceability. executives also wanted to increase control over working capital and funds to enhance treasury and credit management. emirates steel had deployed proprietary, nonintegrated applications for many operations, including the company's production, warehouse management, and weigh-bridge systems. "we needed a full view of the complete business process, from the purchase of iron ore to the manufacturing and sale of fabricated steel products," says ghosh. "we couldn't support that kind of visibility with our disparate legacy systems."

the committee recognized saP erP as the preferred software for many of the world's leading steel manufacturers. the software also offered the scalability needed to support the future planned growth of emirates steel. the company sent eight of its key business process owners to visit a steel manufacturing company in Poland that uses saP erP. the process owners met with their peers and discussed the use of the saP software and the best ways to optimize the application. "that visit helped achieve buy-in from the process owners, and it gave them ownership of the project," says ghosh, who was the saP erP project manager along with saleem ahmed. ahmed also serves as it manager of emirates steel.

"The increased insight that we got from SAP ERP will help us become more agile, reduce the working capital cycle, and become a more profitable enterprise."

Soumyajit Ghosh, Controller, business Planning and erP Manager, emirates steel industries

to finalize the project scope, emirates steel conducted a preimplementation study. in just three weeks, the team created a plan for deploying the financials, production, inventory management, and hr functionalities of the saP erP software. in addition, the group created a project quality and change management plan to ensure that the deployment would be executed according to schedule and with process excellence.

Timely SAP ERP Rollout

with the help of implementation partner Mahindra satyam, emirates steel deployed saP erP on time ­ in just over seven months. the rollout was completed within the anticipated budget. "we used nearly all of the best practices supported by the saP software, and wherever possible we tried to align our business practices with saP erP," says ghosh. "that allowed us to finish our implementation in just over seven months. it effectively reduced the total cost of implementation and the total cost of ownership as well." ghosh and ahmed attribute the rapid deployment success to the use of standard implementation approaches, including the asaP methodology and the saP solution Manager application management solution, which was used to track deliverables. emirates steel was greatly helped by the checklists, checkpoints, and sign-off criteria provided by the asaP methodology. "the asaP methodology provides very clear guidelines, which helped us determine how to monitor progress and create milestones," ghosh says. "these tools gave us a proven plan to follow."

the company fast-tracked the deployment of the saP extended warehouse Management application. shortly after developing the overall project plan, the project management team realized the need to implement warehouse management functionality in phase one of the deployment to enable location control of its thousands of spare parts. to prevent the changed scope from threatening the timely deployment of saP erP, the steering committee decided to execute the warehouse management software implementation as a separate project with its own team. the warehouse management software went live with saP erP. the company trained more than 300 users from all areas of the business, including production, supply chain management, finance, and the sales and marketing departments. to maximize acceptance of the new software, emirates steel recreated several hrrelated employee forms and certain external-facing documents in arabic.

delivery notes, material test certificates, and sales invoices. in addition, shop floor production automation systems are integrated with saP erP. once production is complete, product weight is sent to the quality management and materials management functionalities of saP erP, composition data is shared with the quality control software, and skus are forwarded to inventory control. what's more, emirates steel integrated its employee attendance software with the hr functionality of saP erP. employees use a biometric application when entering and exiting company facilities. information from this application is sent to the saP software, which uses the data for payroll and overtime processing.

Reinforced Value

emirates steel realized multiple benefits from its deployment of saP erP. the automated data flow throughout the organization allows decision makers to access production, inventory movement, and financial data ­ online and in real time. by linking the saP software with the biometrics tools, the company enhanced its ability to manage employee attendance and related hr tasks, such as payroll and overtime payments.

Extensive Integration

emirates steel called its project "taka'mul," which is arabic for "integration." this name reflects the extensive integration between the saP software and the company's automated systems. For example, trucks entering or exiting the loading yard cross a weigh bridge, which calculates the vehicle and product weight. workers loading products onto the trucks scan in the bar codes on each item, and the data is registered by the saP software running on their handheld devices. all these logistics systems share data with the company's saP erP software, which uses the information to generate /contactsap

with three rolling mills and one of the two planned steelmaking plants online, emirates steel standardized and harmonized its processes across all plants. this harmonization enhanced efficiency and streamlined material movement. as a result, the company was able to reduce the need for additional staffing of the new plants by 10% ­ a reduction of approximately 100 new employees. other savings were realized. the monthly close process was reduced from 10 working days to 4. Payroll processing shrunk from 8 days to 3. reports on inventory, production, and receivables that previously took 1 to 3 days to distribute are available online. by decommissioning the legacy systems, the company reduced its it maintenance costs and headcount. "if we had to maintain and support those disparate legacy systems, we would have needed to hire an additional four or five people," says ahmed.

For now, however, emirates steel is satisfied with the value delivered by the saP software. "with the information we now have available, management can take rapid, decisive action based on actual data," says ghosh. this visibility is essential to the company as it faces new challenges. "in today's market, customers want to hold low inventories," says ghosh. "to meet their needs, we are moving from a make-to-stock business model to a make-to-order or finish-to-order model. with this shift, the increased insight that we get from saP erP will help us become more agile, reduce the working capital cycle, and become a more profitable enterprise."

Galvanized for New Success

in addition to rolling out saP erP to the new plants as they come online, the company expects to deploy the saP advanced Planning & optimization component, the saP supplier relationship Management application, saP businessobjectsTM business intelligence solutions, and employee self-service features.

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