Management № 2 November 2018
The best way for steelmakers today to gain competitive advantages is by paying more attention to customer service. The future belongs to producers who strengthen partnerships with their customers, involving them in the development of new products and technologies.
Competition between steelmakers is no longer down to price alone – it also depends on several other factors that are important to customers. Attention to customer needs is crucial, and all the leading steel companies in Russia are working to strengthen ties with buyers of their products in order to improve business performance.
Customer focus is about more than providing quality products or the standard range of services. Today it is important to present extra opportunities at all points of interaction with customers from first contact through to after-sales service. Only through close contact with customers can you have the opportunity to influence their decision-making when picking a producer in the sector.
Steel companies have several strategies for building successful customer relationships. Most of these strategies have the additional effect of improving production technology, optimising supply chains and reducing product delivery times.
Key customer meetings
Hosting meetings with key customers is an excellent way of collecting feedback. Metalloinvest is committed to holding such meetings on a regular basis in the form of joint coordination councils with representatives of its customers. In 2017, meetings were held with United Metallurgical Company (OMK), Pipe Metallurgical Company (TMK), Chelyabinsk Pipe Plant, Russian Railways, truck maker KamAZ, and several other Russian companies. Metalloinvest lends special importance to coordination councils with OMK and TMK, which took place in 2018.
Metalloinvest has supplied pipe billets, flat products, long products and hot briquetted iron to TMK enterprises for many years, and a TMK-Metalloinvest meeting was recently held at the Volzhsky Pipe Plant, which is a subsidiary of TMK. Matters that were discussed included:
rolled steel product deliveries to Volzhsky fr om Ural Steel;
further development of flat product production;
possible expansion of billet deliveries by Metalloinvest to other TMK plants.
The coordination council with representatives of OMK was held at Ural Steel and discussions were focused on supplies of concast billet from Ural Steel for the production of railway wheels at the Vyksa Steel Works (part of OMK, located in the Nizhny Novgorod region). The council agreed:
to carry out joint work to identify and investigate all instances of defects in railway wheels produced at Vyksa;
to hold a joint meeting with specialists from the Bardin Central Research Institute of Ferrous Metallurgy to discuss ways of improving the quality of railway wheels.
Meeting with key clients is one of the best ways to obtain customer feedback
According to Pavel Stepanov, Director of the Vyksa Steel Works (VMZ) Engineering Technical Centre, meetings with key clients allow current issues to be addressed quickly and pave the way for improvements in production, which benefits all parties.
Other Russian metals companies have also turned to coordination councils as a useful way of optimising their work with customers.
In-depth surveys and polls
Information obtained from in-depth customer surveys and polls helps to understand levels of satisfaction with product quality, analyse market processes and assess trends in service provision and product innovation. The company can use this information to adjust its approach to production and sales.
Metalloinvest carries out:
an annual customer survey that meets the requirements of the ISO: 9001; 16949 quality management system;
visits to customers and conducting on-site interviews/polls.
Employees from various departments at customer companies of Metalloinvest are invited to take part in the polls.
Magnitogorsk Iron & Steel Works (MMK) also conducts annual client surveys. They are used to ensure the continuous improvement in the levels of client satisfaction. The survey results enable the company to identify any businesses performing poorly in terms of product or service quality. Remedial action can be quickly taken in response to customer feedback.
Metalloinvest conducts annual client surveys in accordance with the requirements of the ISO:9001 Quality Management System; 16949, on-site interviews with clients
The ongoing analysis of customer feedback makes it possible to develop and expand your service offering so it meets customers’ requirements as closely as possible.
Customers visiting their suppliers and vice versa helps to increase customer focus and strengthen the connection between the two parties. Metalloinvest regularly organises educational visits for its customers and sends its own representatives to familiarise themselves with the production facilities of its customers. This is an excellent way for Metalloinvest to demonstrate the quality of its technology and business processes and to better understand the needs and work environment of its customers.
Metalloinvest held more than 600 face-to-face meetings with its counterparties in 2017 alone. Educational visits to Lebedinsky GOK were organised for representatives of OTEKO, TMK and Volzhsky Pipe Plant, as well as foreign partners from Switzerland, Japan, Spain, Turkey, Lithuania, Indonesia, Korea and other countries. Representatives of OMK, TMK, Chelyabinsk Pipe Plant, Voronezhstalmost, Tyumenstalmost and Expatel visited Ural Steel. Additionally, in 2017, OEMK hosted delegations from AvtoVAZ and Gidrosila.
Important visits by specialists of Metalloinvest included the visit of a delegation to Brenco in the USA.
Metalloinvest sends representatives on regular joint visits with clients to loading and unloading ports in order to inspect product quality and handling procedures. Notably, in 2017, staff from Lebedinsky GOK inspected the loading processes at the ports of Klaipėda and Novorossiysk.
Face-to-face contact with customers facilitates a deeper understanding of their operations, helping the supplier to use their experience and capacities to meet customer needs more quickly and efficiently.
Participating in events
By taking part in industry conferences, exhibitions and associations, Metalloinvest is able to discuss market development trends, identify potential Russian and foreign clients and learn about potentially-attractive infrastructure projects and government initiatives.
By keeping an eye on developments in the sectors wh ere steel products could prove useful, producers can make early contact with potential customers and explore the volumes and quality of steel that they may require.
Metalloinvest sends its representatives to both Russian and international industry events. The company is also a member of the International Metallurgical Manufacturers Association (IIMA), and a Metalloinvest representative works on the IIMA board. The Association brings together companies specialising in the production and use of metal resources for steelmaking and foundry, carries out research and prepares analytical materials. It is also a key forum for the cooperation between producers and customers. The Association meets twice a year to discuss the biggest challenges facing the market and the development of the industry.
The carrying out of cargo inspections in ports is one way to increase client loyalty
Yuriy Gavrilov, Strategy, Development and Transformation Director at Management Company Metalloinvest, points out that, in just a few years, digital transformation has progressed from a vague idea to a make-or-break issue for companies, who must introduce digital solutions in order to survive. Hence, in 2015, the management of Metalloinvest committed to transforming the company business using digital technologies.
The timely introduction of new products to the market, responding to customer needs, making deliveries, etc., is more important today than ever before. However, this is also harder to achieve than ever before, as customers demand complex, tailor-made products rather than standardised alternatives, and ask for additional technical features, special packaging, unique transportation arrangements, and more.
Making quality products in a timely manner and anticipating and meeting customer needs is impossible today without automation based on digital solutions. All processes must be brought together in a single space and on a shared platform - only then will company-wide transformations occur systematically.
The speed of reaction to both internal and external challenges is a key objective of Metalloinvest’s digital transformation. “We all live in a rapidly changing world. We have to find a way of reacting and it would be good to do it on the basis of real and reliable data and as quickly as possible. We have to work and cooperate with suppliers and customers both at home and abroad, react to the state of the market and the competition, and be able to reconfigure processes (in both production and business support) far more quickly than we used to. If a customer comes to us with new requirements in regard to quality or type of product, then the system will allow us to consider and react to their wishes quickly,” concludes Gavrilov.
Digital transformation has become a necessity, otherwise it’s not possible to adjust to the changing business environment
Metalloinvest chose SAP products as the foundation of its digital transformation. The company has installed the SAP S/4HANA digital core as the basis for its integrated financial and business management system.
The company is also implementing more than 20 add-ons to the integrated management system in order to successfully implement the Industry 4.0 comprehensive digital transformation programme. The add-ons include:
transformation of 18 functional areas, including sales management, procurement, repairs, volume planning, IT and warehousing;
additions to multiple projects (‘quick closure’, ‘electronic document exchange’, ‘contract work’, ‘information security’ and ‘self-service’) and a manufacturing execution system (MES). Installation of the MES alongside the integrated financial and business management system ensures integrity of the IT system, as well as speed and reliability of data processing.
Lebedinsky GOK and Mikhailovsky GOK launched an integrated financial and business management system on 1 July 2018, as part of the first wave of Industry 4.0. The installation was carried out remarkably quickly (work began in October 2017) and included a detailed survey of the enterprises as well as more than 3000 organisational changes, six of which are designed to transform the repair, procurement, sales, production, IT and logistics functions.
Results of the first wave of Industry 4.0 at Lebedinsky GOK and Mikhailovsky GOK:
- transition to the single integrated SAP S/4HANA system;
- transferring calculation of employee payroll to SAP S/4HANA;
- creation of a single book of reference and regulatory information, unification of technical repair maps;
- unification of organisational structure and processes with improved consistency and data quality and transparency of business processes;
- increasing the integration between various functions at the plants;
- transition to real-time reporting on production and shipment operations;
- automating the receipt of procurement needs for production, repair and investment functions.
The following solutions have been implemented in sales and transport management:
- a new transparent end-to-end sales process comprising a single system of operation and document flow;
- reduction in the time taken to carry out the sales process from order to dispatch and analysis of results;
- integrated dispatch system including MES, auto-weighing etc., allowing operations to be displayed in real time 24/7;
- automated client histories and current client information;
- automated transport cost distribution process.
There are also plans to introduce a cross-company sales process and CRM system, increase the number of partners using electronic document management and develop client plans integrated with volumetric planning.
As a result, more than 4000 employees at the aforementioned enterprises now work on a single platform that centralises end-to-end business processes. A huge array of reference and regulatory information has been transformed into “clean data” as part of the work. The new platform is gradually replacing more than a hundred production and management systems.
Metalloinvest constantly monitors the quality and conditions to facilitate the careful loading of its products
The second wave of Industry 4.0 began on October 1 and focuses on OEMK and Ural Steel. Solutions implemented in the first wave will be adapted for these two enterprises, taking account all the lessons learned. Completion of the second wave is scheduled by mid-2019.
A full-feature electronic trading platform will be developed as part of the Industry 4.0 digital business transformation programme. The first stage was already completed last year when the company launched an electronic product catalogue (products.metalloinvest.com), which won the gold award of the Rating Runet-2018 national contest for sites and applications in the business services category. The catalogue is a highly-effective tool for interaction between Metalloinvest and its partners. Customers can view the full the range of products made by company enterprises and submit an online purchase application to the sales team.
The Metalloinvest online product catalogue won in the Business Services category
The task today is not only to meet customer needs, but to offer additional benefits, working with customers to develop new products and propose comprehensive technical and financial solutions to their problems. As a result, Metalloinvest can be viewed not just as a supplier of steel products, but valued as a genuine partner.