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Scheduling and costing for processing profits.

Article Excerpt
As service centers take on more value-added processing, their operations are becoming considerably more complex. Software vendors offer a variety of products to help manage processing for maximum profitability.

Over the past 10 years, fabricators and OEMs have outsourced more finishing and first-step manufacturing operations to service centers, who have responded by expanding their processing capabilities. During this same period, many service centers have grown into much larger companies with multiple facilities.

With this growth in both operational complexity and size, many service centers are finding that their existing information systems do not provide the support they need for scheduling, control and costing of processing services.

Leading software vendors report a new wave of technology investment by the service center industry, driven partly by recent industry prosperity, but also by the realization that companies need a better handle on their true costs to ensure their profitability.

Vendors estimate that 80 to 90 percent of scheduling and costing in the service center market is still done manually on paper. "Generally speaking, the steel industry is lacking in keeping up with technology and utilizing the tools that are out there," says George Walton, president and CEO of 4GL Solutions Ltd., Markham, Ontario. 4GL markets its Steel Manager III MRP system primarily to steel plate processors.

"In the service center industry, internal costing didn't used to be that big a deal because there was plenty of margin in the resale of the material. Now that a lot of companies, particularly in the automotive industry, have instituted master coil programs [where the end-user buys mill direct], the service center is basically the processing arm," says Doug Baldwin, president of Integrated Steel Management Inc., Mississauga, Ontario, which offers the Steel Service Center Manager enterprise system.

Service centers traditionally have just used standard costs for processing, based on weight and grade. "For years, many of these companies treated the processing side as a service, while they focused on making money off the buying and selling of steel. That is changing. Services have become a major profit center," says Tim Holman, director of sales and customer relations at Bayern...

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