Here is a business case: a customer orders a material from a steel manufacturer. The specifications:
Mild steel sheets- 0.5 mm thickness, 2 meter width, Carbon 0.3%, Silicon 0.4%, Phosphorus less than 0.05%, Sulfur less than 0.045%
Quantity: 5 tons
Another customer makes the following order from the same manufacturer:
Mild steel plates- 5 mm thickness, 2 meter width, 10 meters length, Carbon 0.3%, Silicon 0.4%, Phosphorus less than 0.05%, Sulfur less than 0.045%
Quantity: 5 tons
Yet another customer makes the following order from the same manufacturer:
Mild steel rods- 5.5 mm diameter, Carbon 0.3%, Silicon 0.4%, Phosphorus less than 0.05%, Sulfur less than 0.045%
Quantity: 5 tons
If the order management system will be able to support these types of order? If the manufacturing system will be able to map manufacturing process? If the manufacturing system will be able to connect the shop floor system to gather all the manufacturing data?
First let us delve into the manufacturing process at any large and integrated steel plant. The manufacturing sequence is as follows:
- The plant purchases raw materials like iron ore, coal, dolomite, lime stone etc.
- The coal is processed in a coke oven to convert coal into coke.
- The coke, iron ore, lime stone is fed in blast furnace to make hot metal (liquid pig iron).
- The hot metal is taken to steel melting shop to make liquid steel.
- The liquid steel is converted into plates at continuous caster.
- The billet is fed into a rolling mill which converts plates into 1.5 mm thick sheets.
You can see a lot of manufacturing activities take place and only then a finished material like wire rod is produced. How all the materials during the entire manufacturing processes can be defined and later connected to the order management system so that the sales team also has visibility into the manufacturing process. The manufacturing in steel industry is mostly make to stock and most of orders are fulfilled through available stock in the stock yards.
We will discuss material definition aspects for the entire plant in my next post. In this post, let us see the aspect of order management with the available stock.
The stock yard may have stock available but not exactly as per specification of the customer. Some sheets may be 1.3 mm thick which the customer might agree to purchase. In the second type of order the length may also not be exactly 10 meters and the customer may consider to purchase sheets of length 9 to 11 meters length. In the third scenario, the customer may be willing to have rods with a tolerance of 5.4 to 5.7 mm diameter.
So how finished materials (in our case mild steel sheets, plates and rods with thickness, width, length and chemical composition) can be defined in the SAP system? obviously since there is deviation in length, width and thickness (even though the base material remains the same) we have to go for batch management. So how we can define the material master and provide a batch definition which can fulfill our requirements?
Even before you think about order management, the materials themselves can not be defined in the same way. The steel plates for example have a different need to be defined through the batch management compared to sheets or rods. It is because the plates come in flat form but sheets come in coils. Rods also come in coils.
In my next post I will continue this discussion. So stay tunes tomorrow.