The ThyssenKrupp supply chain and compliance story

Just this week, BP Trends published a case study that is well-worth taking in. ThyssenKrupp Steel USA spent US$6B to create a seamless system for producing rolled steel primarily for the automotive industry.  They made very early decisions to make sure their enormous capital investment broke from traditional industry by focusing on business process rather than functional organizational silos.

Download the case study

I’ve been to the plant in Calvert, Alabama, and what they’ve accomplished is remarkable to see first-hand.  An hour or so north of Mobile, there is an exit labeled “ThyssenKrupp Drive” and as you crest the hill, the horizon is filled with a very modern-looking version of a very traditional industry…rolling and galvanizing 8-ton ingots of steel that are produced in Brazil and operationally managed from Rotterdam, The Netherlands.  To make such a geographically dispersed system work with any sort of efficiency meant creating a system that allowed common business processes at a macro (marketing, orders, confirmations, delivery) level as end-to-end as the micro (OSHA, work instructions, training).  They do this by having a single, centralized repository of process and its supporting information available to every employee, even those who don’t work with PC’s (they have kiosks).   They are the embodiment of centralize, govern and distribute something that everyone can understand and follow.

Compliance

Because they have a centralized way to see how all business is done, they have by extension a centralized way to show their compliance to several ISO standards.  The Case Study covers their aggressive schedule for certification, which would be unachievable in such a complex and start-up environment without the business process effort they’ve undertaken.  Why is compliance significant?

Supply chain competitiveness

Compliance is the single greatest way to assure their end customers that they have the ability to provide a reliable supply of rolled steel, at a quality level expected, and delivered in the amounts and on the dates contracted.  As a start-up system, they would otherwise take years to establish a track record that would provide these assurances.

Getting attention

The Wall Street Journal took notice of their unique model in a recent article that lays out an external perspective on what they’ve done.   The article does a great job of describing how the multiple locations come together in a single business model.  Beyond that, they’ve garned a great deal of attention from the marketplace they were seeking to impress…auto manufacturing.  The initial orders came more quickly than expected and put the mill on notice that there would be no slow ramp-up.

In December 2010, their model was demonstrated as part of the APQC Frameworks Study as they accelerated development by basing their process model on the APQC PCF.  Having a broadly-used standard allowed them to avoid a great deal of debate as they decided how to align their business and avoid the classic pitfalls.  You can download a free copy of the APQC Frameworks Study findings to see the story from a frameworks angle.

Take a moment to download the case study.  It is very detailed and gives an excellent step-by-step breakdown of how ThyssenKrupp arrived at their current state.