April 24, 2024 The Truth Is Hard To Find: Data Can Show You The Way

Manufacturers are addressing uncertainty and boosting business through the inspired use of concrete data.

By Ursula Gruen & Stefan Koch

Whether it has to do with hallucinating artificial intelligence, political gaslighting, or the sorts of corporate behaviors that have led to the European Union’s greenwashing crackdown, the truth can be elusive in business. For manufacturers of mill products such as metals, building materials, paper, and packaging, the uncertainties are piling up: supply-chain and transportation disruptions, raw-material sourcing challenges, regulatory changes, and, not least, geopolitical turmoil.

The truth, in short, is hard to find. Data can’t imbue concreteness into a shape-shifting world. But it can provide a tighter rein over the variables they control and highlight ways to deal with ones beyond your reach.

Mill products manufacturers suffer no lack of data. It pours in from internal systems as well as from customers and partners up and down supply chains. Where manufacturers can improve is in exploiting ever-advancing tools supporting data-driven decision-making from the shop floor to the C-suite.

With that in mind, let’s consider four areas of a mill products business where data is getting to truths that build trust with partners and customers while bolstering the bottom line: production, logistics, sales, and sustainability.

Sales-driven production

Operational efficiency looms large in mill products. Increasingly, so does the integration of production and sales data. Steinbeis Papier and ArcelorMittal Nippon Steel (AM/NS) India are deriving valuable truths from both new and legacy data. With Steinbeis, integrated data from 25,000 factory and commercial sensors transmit 50,000 metrics per second. Advanced machine learning algorithms help monitor production, quality, and cross-domain performance data to respond to anomalies and optimize output.

AM/NS India is tracking granular data associated with 10,000 monthly orders of hundreds of steel grades and product types. That’s enabling faster, more flexible configuration of complex steel products while supporting real-time inventory valuation and sales order and production costing, among other benefits.

Profitable logistics

Logistics and shipping efficiencies are key focuses of mill products manufacturers. Celsa UK, a producer of steel from recycled sources, is saving 1% to 2% on transportation costs through optimized scheduling and routing. They’re matching different haulers to different metals, keeping customers closely apprised during load planning to catch discrepancies early, and tracking KPIs such as loading times, dispatches, and on-time deliveries in real time.

Louisiana Pacific, a U.S. building-materials manufacturer, draws on daily data to minimize costs in meeting sales-order demand in its engineered wood siding division. The system optimizes batches to maximize profitability and prompts planners to address unallocated orders based on real-time snapshots of warehouse inventory, fulfilment cost, and production capacity of a given mill. Profits are up 1.7% and order-entry time and associated clerical effort are down 60%.

While scenario simulation can pay back handsomely – energy cost modeling with respect to production-facility location being a good example – it can be a boon to logistics. A company that had modeled the possibility of trouble in the Strait of Hormuz will have done better than one taken by surprise by having to ship around Cape of Good Hope.

Sales that increase margins

Pricing and profit data can help answer some of a mill products business’s most elusive questions. Where am I making money? Where can I make more? How can I optimize margin across my many SKUs and customers? Advanced analytics and business AI help segment customers and consider variables such as competition and transportation costs in understanding where dynamic and predictive pricing can boost the bottom line.

AM/NS India is leveraging data for clearer sense of customer, order, product, and grade-level profitability. Real-time product configuration and pricing guidelines help sales  negotiate more effectively, and AM/NS has seen 60% increases in new retail customer registration and sales conversions.

Sustainability that pays dividends

Sourcing, production, and logistics data are central to improving sustainability through enhanced efficiency. Data is also critical to proving sustainability. Regulators and customers are or will soon be demanding actuals, not averages and estimates, on sustainability metrics – particularly with respect to carbon emissions. They’re looking for the truth through verifiable data. Mill products businesses must establish the emissions profiles of their products from mine and forest through mill and end customer. The good news is, carbon emissions relate directly to product composition and sourcing decisions, so more than simply satisfying government mandates, manufacturers can use carbon-related insights to improve their operations and supply chains. And an added benefit: better sustainability data and performance can make products more valuable and competitive – boosting sales while making the world greener.

The world is awash in obfuscations, overstatements, fibs, and worse. Mill products businesses must navigate it all like the rest of us. They have a big advantage, though: troves of their own and partners’ trusted data. They’re using it to better compete and reliably serve their customers, and that’s anything but fake news.

Ursula Gruen is SAP’s global lead for Building Materials.

Stefan Koch is SAP’s global lead for Metals.

www.sap.com

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