IT tools help businesses to reduce the cost and to improve quality of production
Global digitalization leaders in the metallurgy have managed to increase EBITDA (earnings before tax. – red.) to USD 8-10 per ton of production. Such results were suggested by survey of the consulting firm McKinsey carried out in June 2020. According to the analysts’ estimates, such level may increase in coming years to tens of dollars per ton. Results of the Russian companies are more restrained to USD 3-5 per ton on average.
At the same time, as stated by Vyacheslav Kubaev, the partner of McKinsey Digital and the member of the Industrial Sector Digitalization Expert Group, more than half of global metallurgical companies have launched digitalization programs no more than three years ago. Recently, most Russian companies are also launching large digitalization programs and are setting more ambitious goals. Thus, Kubaev considers that Russian industry may well catch up global leaders.
Metallurgical companies were one of the first companies in the Russian industrial sector to speak of the need for launching Industry 4.1 in all business processes. Research project Barometer had prepared the activity rating of the Russian companies with regards to operations with open innovations for July 2019 – June 2020. Top-30 included our 7 representatives (“Severstal”, “RUSAL”, MMK, etc.).
“Nowadays, key digitalization players in the industry are mainly major companies”, states Mikhail Buchnev, partner and head of practice for rendering of services to companies of metallurgical and mining industry PwC in the Russian Federation, “Most companies have completed formation of the digital project portfolio only in 2019 after active digitalization start and have started their meaningful implementation since 2020”.
In 2016-2018, metallurgists were mainly focused on application of big data, math modeling, and big data store technologies. In 2019-2020, the focus has shifted to application of computer vision and virtual reality (VR) technologies to improve the level of industrial occupational safety, as well as web-enabled digital advisers to reduce the cost of production and to minimize waste.
Recently, most Russian companies are also launching large digitalization programs and are setting more ambitious goals
According to Mikhail Buchnev: “Severstal”, NLMK, MMK and EVRAZ are paying attention to introduction of innovative technologies to improve the effectiveness of production processes (improving production processes, of which by using neural networks, quadcopters, machine learning and computer vision technologies, and marking systems) and investing in new production and inputs quality improvement technologies, as well as in artificial intelligence and the Internet of Things. For instance, NLMK Group has introduced QR-coding system in this year for all types of flat and long products produced in Russia. QR-code is placed on each product unit with reference to page where steel grade, weight, mass, size, batch number, and other characteristics of a certain product unit are indicated. Electronic version of the certificate of quality could be saved as it contains information on GOST, specification number, and other details. QR-code and electronic certificate allows automatic transfer of data to the information system of the buyer, for instance, to warehouse management system.
Meanwhile, VR-simulator had been developed at Magnitogorsk Iron and Steel Works (MMK) to train employees in safe operation rules. Recently, virtual reality technologies are of common use to identify violations and unsafe actions in various locations. Employees are virtually tested for knowledge of occupational safety rules. To that end, two zones equipped by virtual reality glasses, headphones, joysticks, and TV-panel were prepared for visualization of actions in each location by the instructor.
Several locations, of which BOF, Coke, Sheet Rolling, and Locomotive Shops, were selected to enable employees from various subdivisions to sharpen their skills in identification of risks on work places. Real production sites were reproduced with maximum accuracy. Built-in situations are, for instance, cargo movement by crane, violations related to allocation of various foreign objects on site and to the use of personal protection means by employees, and equipment state. When all violations are identified and recorded, an employee may see the summary table with all violations.
According to McKinsey estimates, practically three fourths of outcomes are obtained from digitalization of the main production activity of metallurgical companies
Experts note that although these are major market players, digitalization rates of middle metallurgical companies are slower. Mikhail Buchnev noted: “They are at initial stages of digitalization, implementation of related organizational changes, and training of employees. The attention is paid to issues of HR-process robotic automation, implementation of calendar planning systems, and optimization of logistic and payment processes”.
The Head of Metallurgy Unit of IBS, Dmitriy Karasov, told that key companies in the industry have completed the ERP-system basic automation and implementation stage for main business processes. Recently, they are realizing digitalization programs aimed at creation of a digital business model, increase in performance and effectiveness of managerial processes.
This year, the number of requests for IT solutions related to remote working conditions of the companies had increased
In particular, the expert believes that IT solutions in technical maintenance and support domains are traditionally demanded. Karasov added, “Nowadays, this direction is supplemented by scenario modeling, financial and economic indicator forecasting, and reliability and technical state indicator modeling functions”.
Data research solutions are of the great interest among the metallurgists. Big companies have accumulated a vast amount of AODB-level technological data and metering devices. These are terabytes of information on production process and proved material properties. Karasov considers that today’s utilization rate of such data is very low, no more than 5 per cent. Mathematical statistics and machine learning methods may allow developing models to aid the companies in analyzing the concerned information, in identification of data insights, and in improving of existing technologies and products based on such analysis.
Out of the relatively new requests, the expert highlighted the interest in remotely piloted vehicles, which was also facilitated by launch of remotely piloted underground mining truck at Norilsk Nickel Minery. “All companies pay attention to technological partnerships, creation of joint laboratories or participate in joint scientific and technical cooperation projects”, Mikhail Buchnev noted, “Moreover, innovations and digitalization are often realized with creation of innovative centers or separate legal entity dealing with collection of innovation requirements, R&D requirements, search for innovative solutions, and organization of checking thereof before for scaling within the company”.
By the way
We surely cannot ignore changes in requests for IT-solutions in this year due to pandemics and altered working conditions of the companies. Director of the Department of Operations with Ore Mining and Smelting Companies of CROC IT-company, Oleg Terekhov, highlighted that metallurgical companies, like any other companies, take care of health of their employees. According to him, systems allowing organizing comprehensive remote management of business activity have taken central stage in 2020. Such systems, for instance, involve ERP unifying management of business resources and processes, VDI allowing safe connection to conventional working places, telecom solutions, legally significant document flow, and other solutions for organization of remote activity.
Author: Evghenia Noskova
Head of Metallurgy Unit of IBS
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