In-Depth

Straight to the Source

Working with consulting firm Arthur D. Little and optimization software vendor Strategic Systems International Ltd., the United States Steel Corp. (USX) opened its own "virtual service center" to help locate suitable inventory and distribute it as cost-effectively as possible.

• By David Essex
• 10/01/2002

Avoiding waste is serious business in the steel-processing industry. To maximize the yield from the costly materials, someone must locate suitable inventory and distribute it as cost-effectively as possible.

That's the problem that United States Steel Corp. (USX), in Pittsburgh, Pa., set out to tackle when it opened Straightline Source, a Web-based "virtual service center" in late 2001. To provide value, Straightline would need to set up convenient communication channels with its customers and the dozen or more processors who trim rolls to order. It would also need a fast, reliable way to match orders with real-time inventories, ship them when needed, and minimize waste.

Such a dedicated order-aggregation system (OAS) would "create a more efficient way of processing orders by aggregating orders with similar attributes," says Dan Pavlick, Straightline's managing director of strategy and information. At the time, USX workers handled aggregation by poring over Microsoft Access databases and Excel spreadsheets, a largely manual approach that obviously wouldn't scale on a Web site.

Product Information SmartStrategy SmartForecast Strategic Systems International Ltd. (SSI) Evanston, Ill. (847) 424-2480 www.ssidecisions.com

Steely Resolve
After asking consulting firm Arthur D. Little, based in Cambridge, Mass., to find the most user-friendly, flexible solution, Straightline chose parts of the SmartDSS suite from Strategic Systems International Ltd. (SSI), a specialist in optimizing the rolled paper, plastic film and steel supply chains, based in Evanston, Ill. Strategic System's industry-specific experience helped it beat out several competitors, says Pavlick. "SSI had a clear advantage. A lot of their linear programming algorithms were adaptable to what we were doing in rolled steel."

With help from Arthur D. Little, IBM Corp. and Strategic Systems, Straightline implemented several SSI SmartStrategy and SmartForecast modules, starting with order aggregation and decision support in 2001 and adding inventory-management and sales forecasting in 2002.

Two full-time Straightline staffers (a project manager and an integration specialist) managed the project from the outset, though Pavlick sometimes calls on in-house database experts and three fulfillment specialists to ensure requests are met and the design is accurate.

A 30-customer OAS pilot between July and November mirrored transactions to compare against the old system, and ran performance tests to confirm it would scale to higher volumes. Testers encountered problems integrating data from Straightline's Oracle databases into Strategic Systems' Microsoft SQL Server. "At first we were selecting a few too many tables to allow that to run optimally," Pavlick observes. "It was more fine-tuning than changing the design."

"We needed to synchronize that once a day or several times a day," recalls SSI president Shoaib Abbasi, so the database work had to be done "to ensure there were no lags in information getting into the system." Both men describe the fix as easy.

Now, Straightline reps generate marching orders from the Strategic Systems software, which runs on a dedicated Microsoft Windows 2000 application server and a second SQL Server machine at Straightline's hosting provider. Work orders go to Straightline's custom-written Oracle 11i order-management system, while Oracle Financials handles accounts payable and receivable, and invoices.

"The process on the Web integrates into the table in Oracle to produce a highly configured order," Pavlick asserts. (See Figure 1 for a top-level view.)

Figure 1. SSI's SmartDSS software complements Straightline's Oracle 11i order-management system. Straightline uses Windows 2000 Terminal Services in a thin-client configuration to minimize traffic over its wide-area network (WAN). Customers phone or fax orders or enter them at the Web site, while steel processors link up over an extranet and process documents via electronic data interchange (EDI). The front-end is IBM's WebSphere application server running custom user interfaces and Java 2 Enterprise Edition (J2EE) applications..

An inventory tracking module holds information on what material each processor has. "The software identifies all inventory in the system that can possibly be used to fill those orders," Abbasi says. SSI wizards walk Straightline employees through creating an optimal fulfillment plan, a process that can be as automatic as the user wants, according to Abbasi. He adds that users can select certain inventory for inclusion. If the software can't find already cut inventory, it looks for availability of uncut master coils.

Pavlick has asked SSI to add a master-schedule feature and support for newer types of steel in an upcoming SmartDSS upgrade. He plans to make work orders available via XML, and is considering enterprise application integration (EAI) tools such as IBM's MQ Series to smooth OAS data synchronization. "You can communicate with a large degree of integrity across disparate data sources," he says.

"Optimization of material is what we're all about," Pavlick declares, adding that engineers and product designers could use the Straightline tools for what Pavlick calls "forward-thinking demand management" that could even help them design new, faster-selling products. "We're able to provide them with the confidence that we have the tools to manage their inventory for them," he says.

Details: Straightline Source's Order Aggregation System (OAS) Team Leader: Dan Pavlick, Managing Director of Strategy and Information Organization: Straightline Source, a division of United States Steel Corp. (USX) Location: Pittsburgh, Pa. Web Site: www.straightline.com Goal: Add an order-aggregation and optimization component to a "virtual service center" for steel purchasers. Scope: Straightline has been gradually rolling out in regions having the biggest cost-saving opportunities, starting with the Carolinas and eastern Tennessee. Equipment/Platform: USX representatives used Microsoft Access and Excel to attempt to optimize order aggregation. Solution: Pair the new Web-based Oracle 11i order- management system with a dedicated, Windows 2000 server-based order-aggregation system (OAS) that employs industry-specific linear- programming algorithms and supply-chain modules from Strategic Systems International Ltd. (SSI). Product: SmartStrategy SmartForecast Strategic Systems International Ltd. (SSI) Results: Preliminary and anecdotal, but Straightline expects definite improvements in waste reduction, order processing and marketing. Lessons Learned: "Maintain flexibility and agility in your data structure," Pavlick advises. "The code must be flexible enough to accommodate changes and updates as your business changes." Milestones: The OAS debuted with Straightline in November 2001 after six months of planning and testing. Future Plans: Pavlick expects the OAS to: Help target field sales and direct mail Forecast future use of existing inventories Run what-if scenarios Provide that information online to customers