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Service Centers
Monday | 02 December, 2013 | 2:53 pm

Calculated tactics

By Gretchen Salois

Above: One of the stretch heads for the stretcher leveler. Together, two heads grab and secure the material with one of the stretch heads shifted hydraulically to stretch the material.

Mathematical formulas and industry experience help cut supply chain costs

November 2013 - A service center is expected to supply good-quality materials on time out of its available inventory. “We view these as the essential cornerstones of our business, but we also understand that they are just the start to serving our customers,” says Bill Werner, executive vice president of sales, Jemison Metals. Standing out in the crowd takes some strategy. “In the service center industry, you have to think about what makes you different—what separates you from the rest.” 

Longevity is the name of the game, and the goal is to obtain and retain long-term business. To this end, the Birmingham, Ala.-based service center has developed several software solutions that focus on taking cost out of the supply chain. “Removing inefficiency from the supply chain informs everything we do,” Werner says.

MM-1113-service-image1Developed by Jemison Metals’ research and development team, the company uses four different solutions. The company’s forecasting and inventory management system tracks customer metal consumption in real time and adjusts inventory pipeline levels allowing customers to avoid costly stockouts or over-inventoried situations. The system allows Jemison to provide mill partners accurate and timely forecasts of future demand. 

Another solution is Jemison’s bill of material optimization program. Here, Jemison Metals’ team of supply chain analysts load customers’ material specifications into its proprietary computer model and the software determines the optimal, or low cost, supply chain solution. According to Werner, “The software looks at all of the mill and internal processing costs and capabilities, including logistics and financial information, and determines the low-cost solution. We streamline and analyze each component of the cost through the entire supply chain to provide the most competitive price, backed up with the lowest-cost solution.”

Once an order is received, the third element of the software helps conduct a thorough contract review. Under the guidance of a team of employees from sales, quality and operations, Jemison confirms and loads part specifications and other order information into its system, and the software automatically reviews all of the details to make sure everything is input correctly and there are no entry errors.

The software has helped Jemison Metals maintain its company culture, keeping tabs on performance so management can see where the company is flourishing as well as highlight any areas for improvement. Since instituting this program, the company has achieved record company performance in all key metric areas. “And the software always lets us go back and analyze these records,” he adds.

Using complex mathematical algorithms and several optimization engines, the software assists customers in determining the optimal sheet size to purchase. The company finds out what process is being used by its sheet customers to produce flat finished parts, whether the material is punched or cut using laser or plasma, and comes up with a sheet size solution that will dramatically improve yield loss. MM-1113-service-quote

“Many of our customers order standard-size sheet and then rely on their nesting software to maximize yield,” explains Werner. “Our software looks at the finished sizes being produced and recommends an optimal sheet size to purchase. Instead of adjusting to a 48-inch-by-96-inch or 120-inch standard-sized sheet and accepting high yield loss, we can determine the optimal sheet size that, in most cases, will dramatically improve yields, saving our customers thousands, and in some cases, millions of dollars.” 

For customer consideration

Customers are taking notice of the new software. Emerson Electric Co., St. Louis, Mo., serves the information technology industry, producing parts for data solutions in computer rooms and data centers, including industrial automation and commercial and residential HVAC sales. Emerson purchases hot-rolled, cold-rolled and two types of galvanized materials from Jemison Metals.

Jemison Metals secured long-term business by providing quotes through Emerson’s online bidding process. Emerson Electric has run some test trials on a few sizes using Jemison Metals’ software and the numbers add up. “With the addition of Jemison Metals’ software, taking that kind of money out of our metal spend year-over-year is key to us,” says John Russer, commodity manager for flat-rolled steel, North America, at Emerson Electric. “The software is very attractive to us,” Russer says. “And because better yields result in lower upfront purchase volumes, we will drop our overall spending by a considerable amount just by optimizing the sheet sizes we use today.

 “For us, quality is key when producing parts for data centers,” he continues. “Our parts end up in cooling systems and battery backup systems placed in server farms and server rooms. Jemison provides us with consistently high-quality material in a timely manner. They’ve had good quality ratings with us.” Jemison Metals’ proximity to Emerson Electric is also a positive factor for the company as it helps cut freight costs.

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Equipment upgrade

In addition to its patented software, Jemison Metals installed a heavy-gauge Butech Bliss stretch leveler in its Decatur, Ala., facility to produce the ultraflat and memory-free steel that customers now require, says Werner. “We take into account customer needs and adapt accordingly,” he adds. This new plant in Decatur is Jemison Metals’ first greenfield project and is located near Nucor, one of its key supply partners. 

“We feel being close to the mill and having minimal inbound freight will let us continue to keep supply chain costs as low as possible,” Werner says. “This $18 million initial capital investment for the building and equipment includes plans for us to add two more bays and expand from an 84,000-square-foot facility to a facility with more than 250,000 square feet. 

The Butech stretcher leveler (0.060 inch to 0.625 inch by 96 inches) gives Jemison Metals the ability to run customers’ products through the machine either stretched or leveled, depending on specifications. It has state-of-the-art flatness, width and thickness variation detection equipment. The equipment is being installed in the last quarter of 2013 and scheduled to begin production in January 2014. 

“To our knowledge, we have one of the heaviest-gauge stretcher levelers in the U.S. for hot-roll, hot-rolled picked and oil, cold-rolled and coated product,” Werner says. 

The up-to-date and well-researched information and service provided to Emerson Electric is helpful. “I think the key for us is Jemison has already shown us that it is a proactive service center; it’s not a reactionary company,” Russer says. “They’re always quick to respond and will point things out to us regarding pricing, quality or mill delivery issues. We can talk to the guys out on the slitting line as well as we can talk to the vice president of procurement. The ease of doing business with them has been very good for us.” MM

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