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Employing Innovation to address operational discrepancies and risk mitigation.

At a CIO summit in the recent past, I had the opportunity to speak to a CIO of one of the world’s largest steel producers. During the conversation with the CIO, it was apparent that they faced operational issues and monitoring issues which led to risks at many levels.

The steel producer operates an integrated steel plant, iron ore mine, and coal mine. In addition to that, they produce tubular products which operate pipe plant, laboratory, and testing complex.

Having overcome considerable difficulties after recent mergers, the company stabilized steel and mining operations and initiated a series of strategic initiatives to upgrade technology, improve health and safety and environmental performance, and ensure long-term competitiveness in the market.

The type of issues faced was lack of transparency in coal production, holdup of mined coal, little or no real-time integration with the mined coal that is headed to the plant, lack of real-time numbers to plan production, lack of transparency to match production vs actuals.

With SAP set of a solution on the SAP Cloud Platform, SAP had an answer to the problems this steel producer was facing and mainly to mitigate risks extended from loss of coal in transit and loss of finished goods.

First and foremost, using Internet of Things (IOT) technology, it was possible to collect the data from each carriage carrying coal out of the coal mine. This would be achieved by weighing each carriage identified by a unique sensor ID attached to the carriage by a dynamic weighing system for railway carriages. Carriage number, tonnage the carriage has, date, time and location would be some of the attributes that would be collected and sent to the IOT platform. GPS data will be monitored to ensure carriages have not stopped during transit.

The measurement step would be repeated before the carriage(s) enter the steel plant to match the values. This is a critical step to check there is no pilferage, monitor any normal loss and control any abnormal loss and take preventive actions. The matched values can then be sent to the raw material handling system through SAP Cloud Platform (SCP) Integration services. By leveraging SCP process and data integration services, the goal is to have these values in real time in the production planning system which will allow the management to have a clear overview on the actuals that the plant produces. Due to manual processes, it is not possible to get correct data into the planning and reporting system today.

Another risk related issue was to monitor the production yard where finished steel sheet rolls are kept ready for shipping. The risk arose out of pilferage. With SAP Leonardo Machine Learning and IOT, a solution was proposed to capture images with geospatial coordinates by using drones equipped with a camera to identify any non-compliant activity and collect sensor data from sensors attached to finished steel sheet rolls. Today each of these sheet rolls is manually cut at the trailing end and numbered to check the status of their location and shipping details. This manual process is obviously error-prone and subject to misuse.

This strategic initiative by the CIO is to achieve operational excellence and drive shareholder value by making sure the production operations are streamlined, transparency is achieved, and risks are mitigated at all levels.

SAP proposal is being currently evaluated by the steering committee as SAP solutions provide the necessary tools to perform checks and balances across all levels in the mining and production activity.