How to select a steel Mill (A micro level approach)

How to Select a Steel Mill?
( A Micro level Approach)

By
Madhusoodhanan Sayeenathan
www.knowyoursteel.com


Contents
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Challenges of a Steel Buyer
Production Facility
Product Range
Quality Control
Accreditation / Certification
Research & Development
Distribution Model / Geographical Spread
Sales Organization Structure
Customer References
Conclusion

Challenges of a Steel Buyer
• Ensuring smooth production.

• Right kind of material at right price and right time.
• Steel - a technical product - knowledge the product is a must.
• Steel Industry has evolved - increase in number of steel mills.
• Buyers have to identify & develop few sources out of the whole lot.
• Smart selection based on scientific decision making.

• Developing a steel source is a time, energy, resource consuming process
and steel buyers have to invest in selecting and developing a source for a
long-term.

Production Facilities
• In Steel Industry, the quality of a mill mainly depends on the
route of steel making and the facilities they employ.
• There are different ways of producing steel. Following are
mentioned in the order of preference / ranking from in terms
of quality control.





Blast Furnace – Basic Oxygen Furnace
Corex –Energy Optimization Furnace
Sponge Iron ( Any kind of Sponge Iron making) – Electric Arc Furnace
Scrap – Electric Arc FurnaceScrap – Induction Furnace

Production Facilities
• Some of the common facilities to all the production routes can be,



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Vacuum degassing – This can control the gas levels in steel.
Ladle Refining furnace – Where required chemistry is achieved.
Continuous casting / Ingot Casting
Rolling
Finishing Facilities

• To summarize, the mill with blast furnace and BOF will have better quality
steel. It also depends on the application.
• For example for re-bars, even Induction furnace would do.

• It is important to consider the application while looking at the production
facilities.


Product Range
•

The mill with a vast range of products stands to benefit as this can be a means of
diversifying that can serve the steel demand of various end user industries.

•

If a mill has quite limited range of products aimed at only one industry, for example if a
mill has only re-bars, then there is a risk if the construction industry performs bad.

•

Ideally for a flat product mill it is better to have – Hot rolling mill, Cold Rolling mill,
Metal coating mill, Plate mill.

•

For a long product mill which is concentrating on commodities, it is better to have rebars, angles, channels and beams.

•

For an Alloy Steel long product mill – Bars – (Round, Square, Hexagon), Wire rods.

•

Ideally many big steel plants have the combination of all, to ensure their presence in all
major products.


Quality Control
•

It is impractical to produce 100% good steel and it’s impossible to inspect 100% steel produced.
This does not mean that Quality control is difficult.

•

By opting for higher levels of automations and by complying with efficient quality systems like Six
Sigma, TPM, Quality control can be achieved at a steel plant.

•

Controlling the parameters at different stages of the production and ensuring that the production
department follows this is one of the main roles.

•

Defining the rules of sample inspection and method of production also takes care of the quality.

•

The overall view should be that quality is not a role of quality control department and that it is a
collective role of all the departments. This attitude will ensure reduction of defective steel
products.

•

It is important that the steel buyer audits the relevant records at different levels of production to
ensure the effectiveness of the system being followed.

•

The percentage of internal rejections & the number of customer complaints is a yardstick of how
effective is the quality control.


Accreditation / Certification
• When a steel mill gets accredited to various renowned quality
standards viz., ISO, and other private quality standards, it can
be an indication that a system is in place.
• Today ISO certification has become a mandatory and basic
requirement of every steel plant.
• Some steel plants servicing to automobile customers have
also accredited with ISO/TS-16949, which calls for stringent
system.


Research & Development
• The amount of investment a steel plant makes in research and
development, new product development will encourage and bolster
customer’s confidence in them.
• Keeping abreast of technological improvements is a must.
• Today many steel plants engage in early development of products with
their customers’ right from the design stage.
• This has ensured that steel cannot be sold just as a commodity. This can
be possible only with a strong R&D highly qualified team and modern
testing facilities.

• Steel plants should position themselves as steel solution providers rather
than steel makers and sellers.


Distribution Model /
Geographical Spread
• “Go to Customer” is the mantra for any product and in today’s scenario;
Steel Industry seems to have aligned itself to this.
• For any customer, they should feel that the steel plant is close to them.
This is possible by means of service centres, stocking points.
• For a Steel buyer to depend on the steel mill, it is important to ensure that
the steel mill is flexible enough in deliveries and quantities.
• There are service centres, stockiest, steel retail centres opened by many
steel mills that take care of small and timely requirements of customers.
• A buyer has to look if the steel mill has a robust distribution system with
presence in major industrial/ end user hubs.

Sales Organization
Structure
•

For a Steel buyer, accessing the sales personnel irrespective of any level is the most important aspect.

•

The steeper and multi-level the sales organization structure, the difficulty level increases for a customer.

•

A buyer has to check as how customer friendly the sales team is and how their orders are taken care
of. The key account manager plays a major role.

•

Also if there are Zonal managers, then the influence of Zonal manager over the top management plays an
important role.

•

In many steel plants, the facilities and product may be good, but due to poor people management and
attitude towards customer, their market share will dwindle.

•

A mutual understanding, developing a mutual trust and co-operation for the benefit of both the parties
should be aimed at.

•

The sales organization structure should define the roles of each level with clarity and without any overlap.


Existing customer base / References
• One of the easiest ways of judging a steel mill is based on
their existing clientele. While this can be a good and simple
way, but this does not indicate that all customers can be
served by the mill.

• The needs of every customer are different and only few steel
plants can serve to diversified clients.


Conclusion
• These are some of the important parameters that can be of
relevance to all steel buyers.
• If you are looking for a metric or a ranking method based on
micro and macro parameters and base your decision making
on this scientific method, please feel free to contact me at
madhu@knowyoursteel.com
Happy Steeling!!


How to select a steel Mill (A micro level approach)

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