Case Study Integrated Sales and Operations Planning at Usiminas
Modernized business processes with PSImetals
Usiminas (Usinas Siderurgicas de Minas Gerais S.A) is a leading steel producer and market leader in flat steel in Brazil. Headquartered inBelo Horizonte, the company operates two major production sites in Ipatinga and Cubatão. Usiminas`extensive portfolio includesslabs, heavy plates, coils and sheets available as hot-rolled, cold-rolled, electrogalvanized, and hot-dip galvanized steel.
Usiminas and PSI have a long-standing partnership dating back to 1997, successfully delivering numerous Supply Chain Management projects over 25 years. In 2022, both companies joined forces once again to implemented the PSImetals Sales and Operations Planning (S&OP) solution. This implementation covers operations at both Cubatão and Ipatinga and integrates detailed daily operational planning using PSImetals Flow and Order Planning (F&OP) for each production plant at these sites.
Challenges Usiminas encountered
Prior to the project, Usiminas relied heavily on Microsoft Excel to handle both S&OP and daily operational planning. The spreadsheet models utilized complex macros developed in Visual Basic, making them difficult to use, maintain, and adapt to changing business needs.
Executing Sales and Operations Planning in Excel spreadsheets was extremely time-consuming:
- Inefficient processing: Generating a single monthly plan typically took over a week.
- Outdated data: By the time a plan was finalized, market and operational conditions had often shifted, rendering the plan already obsolete.
- Isolated planning: The planning process could not analyze both production sites simultaneously to meet combined demand, preventing Usiminas from leveraging alternative production routes and capacities between the sites.
The solution
The S&OP process analyzes actual and forecast demand to define the optimal sales plan, maximizing financial results while respecting the constraints of existing operational capacities. On an operational level, it supports the definition of maintenance schedules, material campaigns on specific lines, and shift requirements (modus operandi). In the long term, it serves as a strategic tool to identify future investment needs to eliminate production bottlenecks.
The PSImetals S&OP solution was deployed in a single, centralized instance to generate monthly plans spanning a five-month horizon. With PSImetals S&OP, Usiminas now utilizes a unified system that covers both major sites. The solution generates an integrated plan in just about three minutes, enabling rapid simulation of multiple scenarios and facilitating collaborative management of the monthly S&OP process.
Key features of the Planning solution:
- Detailed site planning: Individually generates a daily plan for each site covering the entire order book (typically representing a detailed planning horizon of approx. 40 days).
- Robust model: Successfully migrated from unstable Microsoft Excel files to a robust, highly configurable supply chain planning model.
- Consistent master data: Shared master data (productivity, yields, routes, equipment, calendars, efficiencies, constraints) between S&OP and daily planning guarantees highly consistent results.
- Integrated Planning levels: Automated data exchange between S&OP and daily planning levels ensures seamless alignment and consistency across all planning horizons.
- High detail & speed: Evaluates every single piece of material individually. Despite this extreme level of detail, a plan is generated in under 10 minutes, allowing for rapid ad-hoc simulations. Separate system instances per site proved crucial to achieving this performance.
Results and business benefits
By introducing a standard-based software solution for both tactical (S&OP) and operational (F&OP) planning levels, Usiminas achieved significantly higher alignment between sales and actual production. This direct integration delivered key business benefits:
- Accelerated decision-making: Planning cycles were massively reduced. Decisions can now be made proactively, significantly improving communication with customers and operational teams.
- Scenario simulations: Teams can now easily create and test multiple scenarios to validate different demand and operating conditions, particularly focusing on galvanizing campaigns.
- High plan feasibility: Accurate master data and a realistic supply chain model ensure that all generated plans are fully executable.
- Optimized material flow: Best-in-class inventory sizing for work in process (WIP) and smooth material flow through production lines, respecting physical and process constraints.
- Enhanced delivery performance: Customer delivery reliability has been significantly improved, backed by regular, automated updates on delivery forecasts.
- Multi-site optimization: Enabled data-driven "make-or-buy" decisions when demand can be satisfied by either site, alongside precise planning of material transfers from Ipatinga to Cubatão.
- Accurate replenishment planning: Exactly defined monthly replenishment requirements for semi-finished materials (slabs), especially to support Cubatão's operations.
Before we implemented the PSImetals solution, we had tried other solutions but they did not satisfy our production needs as we needed over 24 hours to run the sales and operation plans. With the PSImetals Sales and Operations component, we take just a few minutes and we can try different scenarios. Even though we are still learning how to use the solution, so far, we are satisfied with its performance.
Conclusion
With PSImetals, Usiminas has modernized its sales and operations planning capabilities, setting new standards for integration, agility and decision-making across its two key production sites. This digital transformation does not just deliver immediate improvements in planning speed and scenario flexibility; it builds the robust digital foundation needed to achieve Usiminas' strategic goal: maximizing operational efficiency and customer delivery performance across a complex, multi-site supply chain.
