Supply Chain Management in the Steel Industry

Pages: 6 (1884 words) Published: November 20, 2011
Sonia Joseph

SCM | supply chain management in steel industry|


Details| Pg. No|
1| Introduction | 2|
2| Steel Industry| 2|
2.1| The four distinct components of the structural steel industry supply chain| 3| 2.2| Model of the general organization of the supply chain management in steel industry| 3|
3| Example: Tata Steel | 5|
4| Conclusion| 6|
5| Bibliography| 6|

1. Introduction
Supply chain management is the management of the flows of material and information, which are managed between facilities such as vendor, manufacturer and distributor. It performs functions of procurement of material, transformation of material into the finished goods and distribution of these finished goods to customers. Its strategy is to coordinate the various organizations’ objectives in order to increase the efficiency of the entire supply chain. Thomas & Griffin classified the operational coordination of the supply chain management into three categories; buyer – vendor coordination, production-distribution coordination and inventory- distribution. A supply chain management is a network of firm’s activities, organizations, and the technologies that performs the function of procurement of raw material from vendor firms, transformation of this material into intermediate and finished products and distribution of this finished products to the customers. The logistics concerns moving material, raw and finished;

1) Materials management plus physical distribution management equals logistics management 2) Supply chain encompasses logistics activities, with manufacturing planning added. 3) Supply chain looks at material flow from raw-material acquisition, through all value-added steps, to customer delivery 2. Steel Industry

Steel is an important indicator to analyze the economic development of a country. The steel industry is highly scientific and technology oriented. Technological advancement is very important for the overall health of the steel industry. The steel industry depends on three major categories of supplies for the procurement of raw materials: (1) Coal/coke, (2) Minerals (iron ore, limestone etc) and (3) electricity. Hence this industry needs a well designed a methodology for SCM, wherein it may be controlling the production of the raw materials to an extent, and depending on demand, supplement it with externally supplied raw material. The supply chain in this case needs to be totally integrated, as a shortfall in this case can lead to closing of the furnaces that can lead to their closure, leading to substantial economic and material loss.  In the steel industry, the supply chain, apart from actual production, is an extremely complex task, requiring the consideration of numerous factors and objectives. Sharply fluctuating demand, raw materials supply and uncertain prices produce a negative impact on steel production. At the same time, the supply chain of the steel industry has to consider multiple objectives and multiple stages of steel production and supply chain simultaneously in a global market. It requires an optimized supply chain alternative by extending visibility of demand based on economy and market, raw material supply based on transportation, and suppliers and their price. 2.1 The four distinct components of the structural steel industry supply chain Producers:

Producers of structural steel products include hot-rolled structural shapes (wide flange beams, plate, channels and angles) and manufacturers of hollow structural sections (formerly known as tubular steel). Service Centers:

Service Centers function as warehouses and provide limited preprocessing of structural material prior to fabrication.  Structural Steel Fabricators:
Structural Steel Fabricators  physically prepare the structural steel for a building through a process of developing detailed drawings (the work of a detailer) based upon the construction drawings provided by a structural...

Bibliography: * Sunil Chopra, Peter Meindl; Supply Chain Management Strategy Planning & Operation, Pearson Education, 2nd ed. 2004
* Guangyu Xiong, Petri Helo; Challenges to the supply chain in the steel industry
* Dr. K.K Agarwal and Manoj K Rakesh; Supply Chain Management practices in India (A Case study of TISCO )
* Santanu Sanyal; Tata Steel revamping supply chain management; Business Line; Kolkata, July 21
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