The Digital Steel Mill - A case on the application of IOT to increase safety, inventory accuracy and warehousing productivity

CHANGE FOR MORE SAFETY AND PRODUCTIVITY

In its journey to digital transformation, a steel company decided to focus on the logistics process to exploit the benefits of IOT technologies as one of its work fronts.

Finished goods warehousing process was chosen as a first wave due to concerns about field operators’ safety and due to the urgent need (and expectancy in this particular process) to reduce operations costs as a response to the recent market deceleration and consequent reduction in profitability.

Safety has always been a concern and considerable managerial attention has always been given to implement best practices to reduce risks to people. However, the process of reading finished product barcodes was done manually exposing operators to walking through steel products at the docks and under cargo being moved.

In addition, there was difficulty in locating materials in stock, slowing down the picking operation and causing delays in loading trucks and trains.

To challenge the current situation, a new approach had to be developed and IOT technologies connecting products, equipment and processes through smart tags was the chosen path.

CONNECTED WAREHOUSE

This project created an automatic traceability environment for finished products and equipment movements, focusing on the processes of receiving, putting away, picking, vehicle loading and physical inventory management.

Smart-tag sensors have been installed on internal handling equipment such as cranes and forklifts, as well as on docks. These sensors are capable of tracking and controlling equipment during all stages of the logistic process.

Finished products, trucks, and rail cars have also been tagged to allow for a logic attachment between shipment documents and smart tags and to automatically identify vehicles in the loading area.

This connected environment enabled the automated the identification of finished products to be loaded onto trucks and wagons without human intervention apart from crane or forklift operators. It also enabled real-time consistency checking of items against picking list, reducing the checking effort at the dock level.


TANGIBLE AND SHORT-TERM IMPACTS

As a pilot project intended to verify benefits of IOT in steel warehousing environment, the case rapidly presented its benefits.

Benefits were classified in three main groups:

1. Improvements in personnel safety: the new approach enabled a 16% reduction of operational personnel, mainly in hazardous areas, such as dock personnel and inventory count personnel. The reduction itself represented an important productivity gain.
   
   
2. Improvements in "gate to gate" time reduction: the time that a truck spends in the yard waiting to be loaded, plus the loading time itself resulted in a 25% total reduction. This allowed for significant transportation efficiencies due to increased utilization of trucks assets that can now perform a larger number of trips.
   
   
3. Improvements in order shipping errors reduction: automated inventory counts and automated checking at pickup point and at shipment docks allowed for significant order accuracy improvement. Shipment errors were reduced by over 90%. The resulting benefits are diverse, such as reduced time to release trucks, personnel time to re-check loads and a reduction in the number of events where clients receive imperfect orders.