IT interventions in the Steel Industry

Tanmay Roy gives a hands on, in-depth account of the ERP deployment at the Bhilai Steel Plant

Bhilai Steel Plant (BSP) is the flagship unit of Steel Authority of India Limited, the largest producer of steel in India and one of the leading players worldwide. According to World Steel Dynamics, SAIL—with a turnover exceeding $10 billion—ranks second in the league of ‘world class’ steel makers, evaluated in terms of a slew of performance measurement yardsticks. Currently producing five MT of steel, BSP—the largest in the SAIL family after a capacity expansion program that's currently underway—is set to produce seven MT of crude steel per annum by 2012.

Not only is it the largest in terms of volume of output, but it is the ‘best’ steel plant in India as well. BSP has earned the rare distinction of having won the Prime Minister’s Trophy for the ‘best integrated steel plant in India’ nine out of the sixteen times that the trophy has been awarded so far.

It's no wonder, therefore, that BSP has been in the forefront of adopting emerging technologies including IT in order to automate its operations. With the adoption of ERP in its core business areas, BSP has completed the circle of converging manufacturing and business processes into an integrated information backbone.

The role of the IT department

IT is a partner in the progress of the Bhilai Steel Plant. From ‘IBM’ to ‘EDP’ and now to ‘C&IT’, the department has led the charge of IT intervention in the plant. Unit Record Machines (IBM 402) yielded their place to auto coders (IBM1401) followed by mainframes (Burroughs 5900) and servers of different hues (Sun SPARC - 20) along with evolving databases (Oracle version 6 to 10g).

The process of metamorphosis commenced decades ago and reached a crescendo with the commencement of a SAP ERP project in April 2009 preceded by the roll out of two state-of-the-art data centers in 2008, all designed to catapult the plant to a higher trajectory of growth.

IT footprint

From a humble beginning in the womb of the Finance & Accounts Department, the C&IT department has gone on to successfully launch SAP ERP for BSP’s core business areas like Finance & Controlling, Materials Management, Production Planning, Quality Management and Plant Maintenance including Supplier Relationship Management and Advanced Planner-cum-Optimizer creating a strong foundation of Supply Chain Management.

Besides the above, independent and standalone IT systems have been developed to cater to specific application areas like:

• Employee services covering payroll, loan and fund management etc.
• Human resources services including contract, safety, training and recruitment functions
• Estate services covering allotment and billing of rented out properties etc.
• Medical services for the hospital management and billing functions etc.
• Enterprise Resource Planning

Advances in IT had led to the creation of isolated islands of applications posing problems galore for consolidation and integration. The effort of consolidating enterprise-wide IT applications evolved into the concept of an integrated and unified way of functioning, which is the basis of Enterprise Resource Planning. ERP enables an organization to synergize its resources, creates opportunities to reengineer its processes and helps it adopt best practices.

SAIL decided to adopt ERP in all its business units in a progressive manner and asked BSP to do the honor of leading the race. Responding to the call, BSP successfully embraced MySAP in six of its key functional areas viz. Finance & Controlling, Sales & Distribution, Production Planning, Quality Management, Plant Maintenance and Materials Management.

A consortium of leading IT consultants led by SAP India Ltd. along with Siemens Information Systems Ltd. and HP India Ltd. extended consultancy support in the implementation phase of the project. MDI, Gurgaon provided the consultancy during the project preparation and product selection stage. Wipro along with HP developed the data centers as a turnkey project.

BSP went with a big bang approach and all six SAP modules—supported by many other technology modules—went live on April 1st, 2009. From that point onwards, all of the plant's business operations are happening live on the ERP platform without any interruption. The ERP project was followed by the Manufacturing Execution System (MES) project.

Success did not come on a platter. Considerable efforts had to be put-in by all concerned including the top management, the project core team, the implementation partners, the shopfloor personnel and the IT personnel of the C&IT department who had to anchor the project.

An idea about the scale and complexity of the project can be had from the number of master data records that the system refers to in the post go-live stage.

Major Challenges

The standard ERP solution offered by SAP including the IS Mill option fails to map the characteristic features of a plant manufacturing iron and steel in a comprehensive manner. In BSP, a fair degree of customization and development had to be made on the standard solution offered by the vendor. Some innovations that may appeal to the iron and steel fraternity globally are:

• Raw material handling and reconciliation matching with the movement of railway rakes wherein the flow of documents invariably lags the materials
• Extensive use of variant configurations for defining steel products with their multitude of quality and other characteristics and complex pricing schema
• Innovative application of continuous and discrete production processes to match the production planning systems for iron zone, steel zone, rolling and finishing mills
• Reconciliation of theoretical and actual weights of production and dispatch statistics through a mechanism of allowing the generation of negative inventory balances on a limited scale
• Innovative handling of generation of scrap, production deviating from standards and reconciliation of the system stocks with the physical inventories
• Integrated production and dispatch planning consistent with the constraints of the rake movement imposed by the transportation agencies such as the Railways
• Extensive mapping of production processes in terms of make-to-order or make-to-stock scenarios matching with the production planning and order execution systems of different shops and mills
• Integrated planning and execution of engineering shops’ production processes in terms of maintenance, refurbishment and fabrication of orders
• Purchase procurement system consisting of two or more stages of bidding.
• Invoice verification and bill registration systems involving Bonus & Reward provisions, LD & Discount clauses
• Costing details down to the equipment level with innovative costing structure
• E-logbook for recording delays/breakdowns in maintenance of shops and mills
• Integrated e-payment and automatic bank reconciliation processes

The ERP system installed at BSP made some path breaking decisions with regard to the definition of the plant and organizational structure, products with variant configurations, innovative authorization and release strategies, integrated MIS and management dashboard, business continuity centers, external access with single sign on facility to name a few.

The conclusion to this article will appear in our next issue where the author will highlight the benefits of the deployment and detail the current IT set-up at the Bhilai Steel Plant.

The author is General Manager I/c (C&IT) Bhilai Steel Plant of Steel Authority of India Limited. He may be contacted at troy1950@gmail.com