PSI Blog

The Quest for Excellence

18/06/2019 - Industry 4.0, Production

©alexsl - iStockphoto.com; edited by PSI Metals

Competition is more and more a question of good time management. It’s not the big companies swallowing smaller ones, it’s the fast overtaking the slow in a race for the dream customer. The so-called "Center of Excellence", or competence center, contributes significantly to winning this race. It helps companies with client acquisition and provides a deep understanding of their industry. Many companies in the steel industry are also interested in establishing competence centers, for example for the implementation of a production management solution. This approach was met with great success at Tenaris, one of the world's leading suppliers of tube products, together with PSI. 

On December 11, 2017, Tenaris unveiled its $1.8 billion state-of-the-art seamless pipe mill in Bay City, Matagorda County, Texas.

“TenarisBayCity shows our commitment to domestic manufacturing, competitively supplying the US oil and gas industry,” said Tenaris Chairman and CEO Paolo Rocca in his inauguration speech.

“This mill, which incorporates the most advanced technologies available worldwide, will lead our domestic industrial and service network dedicated to the US market,” Tenaris Chairman and CEO Paolo Rocca added. 

The 1.2 million square foot mill combines a high level of automation and cutting edge technologies. Seeking the most widely used green building rating system in the world, LEED (Leadership in Energy and Environmental Design) certification, TenarisBayCity is the company’s most environmentally efficient mill.  Its strategic location near key shale plays enhances its ability to quickly supply high quality products to customer operations. With the plant’s annual capacity to produce 600,000 tons of OCTG (Oil Country Tubular Goods) Tenaris has strengthened its position as a leading producer of seamless pipes for the oil and gas industry, worldwide.

TenarisBayCity development over the years: June 2013 (left) and May 2018 (right) ©Tenaris.
TenarisBayCity development over the years: June 2013 (left) and May 2018 (right) ©Tenaris.

One year before the announcement of the TenarisBayCity project in 2013, Tenaris decided to implement PSImetals as MES platform at its welded tube production facility in Conroe, Texas. For this purpose, the company established a competence center consisting of its own employees in Veracruz, Mexico and Buenos Aires, Argentina. This was the first step in defining Tenaris’s vision and strategy for a rollout within a multi-site environment.   

Internal Bundling of Competencies

A Center of Excellence (CoE) is a cross-functional team that focuses on a specific area within an organization.

Its aim is to achieve business objectives efficiently by continuously transfering knowledge and promoting the pooling of resources and competencies. This improves the processes within a company sustainably, leading to consistent and efficient results.

By reducing IT and process costs through defined procedures and templates and by eliminating inefficient practices, a Competence Center also reduces the time required to implement new technologies and acquire new competencies.

The First Steps

After an extended proof of concept in 2012, Tenaris decided to implement PSImetals as its future MES platform in the company’s welded pipe plant in Conroe, Texas. The main goals of the project were to

  • improve business processes and staff effectiveness,
  • digitalize data,
  • reduce costs,
  • standardize procedures and
  • centralize order dressing to effectively target customers and markets.

After several technical and organizational difficulties during the complex implementation process in 2014, Tenaris decided to establish an internal CoE in order to increase flexibility and reduce costs for future rollouts. 

An Expert for Each Module

The Competence Center focused on establishing the technical aspects of the project. To this end, the head of the CoE recruited five talented professionals who met the tailored requirement profiles. Every professional was responsible for one big module: data base administration, GUI development, order dressing, quality, and production and material management. 

The CoE team worked closely with PSI experts, especially in the areas of specification, configuration, customization, and implementation, as well as in go-live and maintenance spheres. Daily meetings in order to plan, evaluate and/or distribute the tasks, as well as comprehensive trainings and mentoring support from the PSImetals Academy, were an integral part of the competence team’s everyday life. 

The Tenaris Competence Center team ©Tenaris.

The Conroe plant went live in 2014 and was able to perform slitting, forming, heat treatment, hydro testing/ nondestructive testings and threading of welded pipes. The order entry was integrated with SAP and quality assurance was warranted. After Conroe, the plant in Bay City was the second implementation of PSImetals solutions.

Interview with Marcelo Llambias - IT Senior Project Manager Tenaris

What role did the CoE play within the greater organization of Tenaris?

Marcelo Llambias: The relationship was very open. Employees from all areas had the opportunity to exchange visions, interactions and design processes. Regular meetings were arranged to review requirements, analyze solutions, define priorities, etc.

What were the challenges of working with a CoE on the TenarisBayCity project?

Marcelo Llambias: The first challenge was to find and develop the resources in our CoE. Conroe's experience and the trainings by the PSImetals Academy were very important. The team was well-skilled and showed an extraordinary commitment. The definition of the methodology (according to the PSI methodology adapted to the Tenaris standards) was decisive.

As a second point, I would like to mention the importance of the definition of the CoE's scope of action. We divided the project into three different phases. In each phase, we worked with PSI to assess the degree of autonomy we could achieve. Step by step, the team began to feel more confident.

Thirdly, I want to mention the challenge of coordination: we were developing from Argentina, Mexico and Berlin. Consequently, the maintenance of the source code defining deliveries was very important.

What made PSI the right partner for this project? 

Marcelo Llambias: First of all, the product and the people! PSI has a great deal of knowledge of the metal industry and the experience gained in many implementations for various customers has translated into product improvements. TenarisBayCity was designed as a very efficient and automated plant with a high degree of automation, so we needed a MES with a very strong and flexible order-dressing module. It should be able to provide a complete order specification for the automation and control the material pipe by pipe. PSImetals was able to cover most of the requirements. 

Lastly, we were interested in developing our CoE with the goal of reducing implementation time and costs. Although this was not usual for PSI at that time, they were completely open and committed to helping us build our CoE. They trained our team, shared best practices with us, assisted us with technical support and defined the scope of work based on our capabilities.

More Independence 

Construction of the rotary furnace in TenarisBayCity ©Tenaris.

The comprehensive training, mentoring and coaching PSI experts provided on the Conroe project ultimately gave the TenarisBayCity greater independence.

Thanks to this support, the Tenaris CoE team was able execute 80 percent of the project work themselves, while PSI took on a consulting role and provided a few additional training sessions. The main goals of the project were flexible order dressing, a high degree of automation as well as high visibility and transparency test results. 

TenarisBayCity is now following the latest requirements on digitalization process transparency across each stage of production. For example, the mill has an extensive US OCTG product portfolio, a high integration degree with L2 and ERP as well as a highly automated lean production process that ensures no more downtimes due to logistics reasons. An optimization of all transports and a complete error and defect analysis complete the profile of the world’s most advanced pipe manufacturing facility. 

Quest for Excellence © PSI Metals.

Lessons Learned 

Whether or not a company should establish its own CoE greatly depends on the scope or level of services it wants to address, the structure of the company, its objectives and its strategy. Based on Tenaris’s experience, there are some aspects that should be taken into consideration when establishing a CoE. 

  • The company should define and discuss the purpose of the competence center and how it will operate. This will clarify the governance of the center, its most optimal strategy as well as its most efficient functionality. 
  • The company should define main goals for its CoE. With clearly defined goals it is easier to measure effectiveness and success of the competence center. In this regard, it is important that the head of the CoE takes part in the team recruitment process after defining tailored profiles of professionals required. Only in this case, can he or she select the right experts to do the work and ensure the quality of the competency center. Building a small core team at the beginning of a project and gaining experience step by step is key.
  • There is no perfect size of a CoE. It is more important to assign every big module to one well-skilled visionary who focuses his or her work on this special field. This ensures the depth of knowledge in every single module, which is critical regarding the complexity of the particular system. 
  • The company should outline the role of the CoE within the greater organization and understand the needs of the CoE team so that employees can work more efficiently and achieve better results. One of these measures could be flexible working hours that allow employees to make the most of their performance curve.

The most essential part of creating success is to define a clear vision of the CoE.

With a clear vision, a clear set of goals and an early start of trainings, the CoE is likely to improve the business.

Raffael Binder

Director Marketing PSI Metals GmbH

After taking over the marketing department of PSI Metals in 2015 Raffael Binder immediately positioned the company within the frame of Industry 4.0. So it is no wonder that in our blog he covers such topics as digitalization, KPIs and Artificial Intelligence (AI). Raffael’s interests range from science (fiction) and history to sports and all facets of communication.

+43 732 670 670-61
rbinder@psi.de