How to select a steel Mill (A micro level approach)

How to Select a Steel Mill? ( A Micro level Approach)

By

Madhusoodhanan Sayeenathan

www.knowyoursteel.com


Contents

• Challenges of a Steel Buyer

• Production Facility

• Product Range

• Quality Control

• Accreditation / Certification

• Research & Development

• Distribution Model / Geographical Spread

• Sales Organization Structure

• Customer References

• Conclusion


Challenges of a Steel Buyer

• Ensuring smooth production.

• Right kind of material at right price and right time.

• Steel - a technical product - knowledge the product is a must.

• Steel Industry has evolved - increase in number of steel mills.

• Buyers have to identify & develop few sources out of the whole lot.

• Smart selection based on scientific decision making. • Developing a steel source is a time, energy, resource consuming process

and steel buyers have to invest in selecting and developing a source for a long-term.


Production Facilities

• In Steel Industry, the quality of a mill mainly depends on the route of steel making and the facilities they employ.

• There are different ways of producing steel. Following are mentioned in the order of preference / ranking from in terms of quality control.

Blast Furnace – Basic Oxygen Furnace

Corex –Energy Optimization Furnace

Sponge Iron ( Any kind of Sponge Iron making) – Electric Arc Furnace

Scrap – Electric Arc FurnaceScrap – Induction Furnace


Production Facilities

• Some of the common facilities to all the production routes can be,

Vacuum degassing – This can control the gas levels in steel. Ladle Refining furnace – Where required chemistry is achieved. Continuous casting / Ingot Casting Rolling Finishing Facilities

• To summarize, the mill with blast furnace and BOF will have better quality steel. It also depends on the application.

• For example for re-bars, even Induction furnace would do.

• It is important to consider the application while looking at the production facilities.


Product Range • The mill with a vast range of products stands to benefit as this can be a means of

diversifying that can serve the steel demand of various end user industries.

• If a mill has quite limited range of products aimed at only one industry, for example if a mill has only re-bars, then there is a risk if the construction industry performs bad.

• Ideally for a flat product mill it is better to have – Hot rolling mill, Cold Rolling mill, Metal coating mill, Plate mill.

• For a long product mill which is concentrating on commodities, it is better to have re-bars, angles, channels and beams.

• For an Alloy Steel long product mill – Bars – (Round, Square, Hexagon), Wire rods.

• Ideally many big steel plants have the combination of all, to ensure their presence in all major products.


Quality Control

• It is impractical to produce 100% good steel and it’s impossible to inspect 100% steel produced. This does not mean that Quality control is difficult.

• By opting for higher levels of automations and by complying with efficient quality systems like Six Sigma, TPM, Quality control can be achieved at a steel plant.

• Controlling the parameters at different stages of the production and ensuring that the production department follows this is one of the main roles.

• Defining the rules of sample inspection and method of production also takes care of the quality.

• The overall view should be that quality is not a role of quality control department and that it is a collective role of all the departments. This attitude will ensure reduction of defective steel products.

• It is important that the steel buyer audits the relevant records at different levels of production to ensure the effectiveness of the system being followed.

• The percentage of internal rejections & the number of customer complaints is a yardstick of how effective is the quality control.


Accreditation / Certification

• When a steel mill gets accredited to various renowned quality standards viz., ISO, and other private quality standards, it can be an indication that a system is in place.

• Today ISO certification has become a mandatory and basic requirement of every steel plant.

• Some steel plants servicing to automobile customers have also accredited with ISO/TS-16949, which calls for stringent system.


Research & Development

• The amount of investment a steel plant makes in research and development, new product development will encourage and bolster customer’s confidence in them.

• Keeping abreast of technological improvements is a must.

• Today many steel plants engage in early development of products with their customers’ right from the design stage.

• This has ensured that steel cannot be sold just as a commodity. This can be possible only with a strong R&D highly qualified team and modern testing facilities.

• Steel plants should position themselves as steel solution providers rather than steel makers and sellers.


Distribution Model / Geographical Spread

• “Go to Customer” is the mantra for any product and in today’s scenario; Steel Industry seems to have aligned itself to this.

• For any customer, they should feel that the steel plant is close to them. This is possible by means of service centres, stocking points.

• For a Steel buyer to depend on the steel mill, it is important to ensure that the steel mill is flexible enough in deliveries and quantities.

• There are service centres, stockiest, steel retail centres opened by many steel mills that take care of small and timely requirements of customers.

• A buyer has to look if the steel mill has a robust distribution system with presence in major industrial/ end user hubs.


Sales Organization Structure

• For a Steel buyer, accessing the sales personnel irrespective of any level is the most important aspect.

• The steeper and multi-level the sales organization structure, the difficulty level increases for a customer.

• A buyer has to check as how customer friendly the sales team is and how their orders are taken care of. The key account manager plays a major role.

• Also if there are Zonal managers, then the influence of Zonal manager over the top management plays an important role.

• In many steel plants, the facilities and product may be good, but due to poor people management and attitude towards customer, their market share will dwindle.

• A mutual understanding, developing a mutual trust and co-operation for the benefit of both the parties should be aimed at.

• The sales organization structure should define the roles of each level with clarity and without any overlap.


Existing customer base / References

• One of the easiest ways of judging a steel mill is based on their existing clientele. While this can be a good and simple way, but this does not indicate that all customers can be served by the mill.

• The needs of every customer are different and only few steel plants can serve to diversified clients.


Conclusion

• These are some of the important parameters that can be of relevance to all steel buyers.

• If you are looking for a metric or a ranking method based on micro and macro parameters and base your decision making on this scientific method, please feel free to contact me at [email protected]

Happy Steeling!!


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How to select a steel Mill (A micro level approach)