Cold Rolled Milling Operations - BlueScope Steel Industry Australia - Case Study Example

Cold Rolled Milling Operations BlueScope (Lysaght) Steel Industry Australia. An effective supply chain management defines the success of any organization. It entails the organization of activities, human personnel, resources and information of services and products to the consumers from the supplier. In addition, a supply chain incorporates the transfer of raw materials from the point of production to the processing point. Due to the principle of “survival for the fittest”, an organization requires to organize its resources, personnel and information effective to remain competitive in the market. An organization also requires to diversify its supply chain processes with the changing dynamics of the market. This includes redefining the distribution channels, supply techniques and other related activities. The steel industry in Australia had its genesis in the 19th century when gold mining and processing was at its peak. Some people believe that the steel industry began with John Lysaght in England, while others believe that it began with Charles Rasp at Broken Hill. Others attribute the commencement of the industry to Hoskins family at Port Kemble or even Lithgow. All these founders, however, in one way or another depended on funds from gold and silver towards the foundation of the steel industry. One of the two main Steel Industry Producers in Australia is BlueScope steel industry. BlueScope industry is located in Collins Street, Melbourne, Victoria, Australia. Australia is its central headquarters among others in Asia, North America, New Zealand and Pacific Islands. The company commenced in 2002 and was then called BHP steel. Later in 17th November, 2003, the company was renamed BlueScope limited. The company has employed over 16000 employees, who perform the different routine operation. Major products produced by the company include; automotive steel, cold roll milled products, corrugated galvanized iron, hot rolled coil, steel slab, and color bond. The primary processing facilities are located in New Zealand steel, Hasting Western Port, and Port Kemba in Illawarra. BlueScope is listed position 41 out of 2000 major industries in Australia. Its management team include; Mr. Paul O’Malley as the chief executive, Mr. Graham Kraehe as the chairman among others. The primary focus of this analysis, therefore, is to focus on Cold Rolled flat steel production and marketing in BlueScope Steel, Australia (Landes, 1969). The main purpose of Cold Roll milling is the reduction of the thickness of steel to the required specification of customers. Hot roll band passes to and fro between iron roll until the desired thickness is obtained. The cold mills are in most cases able to handle two coils at a time where one coil lies while it awaits the other one to be processed. A number of computerized controls gauges are used in many cold mill reversing mills. The process undertook upon the arrival of rolled coil into the industry include; first, the loop awaiting processing entered the tension reel, where it is uncoiled and passed through a number of rollers. Second, the roller applies a lot of pressure to the coil to the desired thickness while at the same time maintaining its width and shape. Third, the pressed coil is passed to the delivery tension reel where it is reversed to the rolls for further thickening. Fourth, a thickening gauge is used to measure the thickness of the steel as it passes through rolls. Finally, after the desired thickness is achieved, the steel is coiled again as it awaits metallic coating. After coating, the final product is transported to the customers mainly using rail freight. This is because iron is heavy hence proving rail to be the best means of transportation (Landes, 1969). In addition to Cold Mill processing, BlueScope company engage in iron smelting and steel manufacturing, structural steel fabrication, and metal roof and gutter publication. The company is the primary distributor of steel and iron to Australian building and construction projects. They also contain the Lysaught business that produces branded products for the construction and building industry. In addition, there is the BlueScope water company that manufactures rainwater storage tanks. Apart from production for internal use, the industry also produces products for export to other countries. BlueScope Company has a number of competitive advantages that hinders other companies from entering and dominating the steel cold milling sector. These factors act as barrier to entry into this sector. These include; high initial capital requirement, economies of scale, patents, copyrights, brands and product differentiation (Landes, 1969). As discussed, the founding fathers of this industry depended on money from gold and silver production to set forth the steel industry. Therefore, enormous financial resources are required which hinders many investors from entering the industry. In addition, BlueScope Company has patent and copyrights that protect its cold milled products from imitation and sale outside the company jurisdiction. The BlueScope Cold Milling plant in Australia also engages in large production which enables the company to enjoy economies of scale. The company can, therefore, be able to regulate prices in their favor hence eliminating other many companies from the industry. The primary threat facing the Cold milling processing in BlueScope Company is a reduction in both local and international markets for their final products. According to statistics, a downward trend in the production of steel has been experienced. Lack of the adequate market has been attributed to this decline. For instance, a decline from 9.4 million Mt to 8.27 million Mt was experienced in 2003-2008 (Landes, 1969). Lack of an adequate market for cold-rolled products is attributed to the entry of new firms into the industry. These companies have availed cold rolled products to consumers at a lower price and their convenience. This has reduced the number of customers to BlueScope Limited Company. In order to curb this situation, BlueScope Company has to transform its business and marketing activities. First, the company has to adopt a cost reduction strategy. In order for the company to enjoy a cost advantage, it has to abide by the following sources; Economies of scale, proprietary technology, preferential raw materials access, capacity utilization and an effective supply chain management (Landes, 1969). An effective supply chain management entails restructuring the distribution channels towards the control of the flow of goods and services. In order to timely avail the products to customers, the company should consider water transportation that may be faster as compared to rail. The distribution of raw materials from the production site to the processing site should also be enhanced. In addition storage facilities should be appropriate. Upon processing, the final goods should be transported to the final consumers without delay. The company should strive to adopt recent technology for the sake of future prosperity. Emerging cold mill processing companies are entering the market with new production technologies that may soon out face BlueScope? Therefore, for the company to remain competitive, it has to update its production, as well as marketing techniques. A number of inventories are required in a cold roll mill. These entails essential elements required to produce the required thickness of a steel product. These lists include; Aluminum mills, Air separation plants, Compressors, Blooming Mills, Continuous casters, furnaces, grinders, bearings, annealing lines, coil inspection lines, gauges, cranes. Down coilers among many others. Each component has its significant role towards ensuring the desired thickness of steel is achieved. For instance, the gauges are used to determine whether the required thickness has been achieved. In conclusion, it is essential to have adequate market information to decide on the appropriate marketing techniques. The dynamic of current markets is changing each day. A company should assess its supply chain, and production techniques as well as it management criteria to ensure they are in line with the requirements of the current market. Reference Landes, David. S. (1969). The Unbound Prometheus: Technological Change and Industrial Development in Western Europe from 1750 to the Present. Cambridge, New York: Press Syndicate of the University of Cambridge. p. 91 BlueScope Steel Limited Company Report 30th June 2014. (Premium) Read More