Siam United Steel (1995) Co., Ltd., winner of the Prime Minister’s 2009 Award for Logistics Excellence, puts its success down to astute corporate policy and continuing support from high-level management.  That starts with the careful selection of factory location, transportation and distribution systems, through to the continual revamping of internal organization and supply chain development.  Standardized operational systems combined with upgraded technology and a state-of-the-art IT system enables every division to make decisions based on real-time data.  Annual study tours to Japan and seconded Japanese trainers also enhance the personnel’s knowledge.

“Efficient logistics management starts with a top-level commitment to formulate and implement a clear-cut logistics strategy and action plan that includes internal and external activities.  SUS has also established indices to measure logistics efficiency,” said Mansaung Klaimanee, Logistics Department Manager.
 

Located on the Hemaraj Industrial Estate in Rayong, SUS has been producing and distributing Cold Rolled Steel Sheets for automotive applications, galvanized steel used in construction work, food and drinks’ containers for 15 years.  Working with 1 million tons annual capacity, sales revenue topped 22,536 million baht in 2008.  The road leading from the entrance to the factory cost 10 million baht and ensures safety for drivers, cargo and other users.

Accurate forecasting cuts inventory holdings
Raw material forecasts based on actual sales data and weekly video conference between sales and production departments and suppliers are more accurate than previous forecasting methods.  Direct data exchange also enables immediate adjustments of production and procurement plans and the optimization of inventory holdings.

“Small lot size management allows more frequent order placements.  Previously we used to order 10,000 tons of raw material per week, now it’s only 4,000 tons.  Closer collaboration with suppliers has also reduced the lead time for raw material delivery from 2 months to just 45 days.  As a result, the raw materials are better quality and there is minimum work-in-progress waste.”

Annual inventory turnover has been increased from 7 times to 14 times while the percentage of inventory more than 3 months old has dropped by 90%, from 30,000 tons to 3,000 tons.

In addition to the direct exchange of inventory holding data, SUS also worked with shippers to ensure just-in-time pick-up schedules and prevent the prolonged storage of goods.  Coordinated adjustment of production plans helped customers to reduce excessive inventory holdings and improved SUS’ inventory turnover from 25 times to 65 times.
 

In short, efficient logistics and supply chain management enables quick responses, flexible production planning, cost reductions and customer satisfaction while contributing to technological development and the import substitution of high grade steel.
 

Aiming to improve transportation efficiency, SUS negotiated with customers to shift from 10-wheel trucks to 22-wheel semi-trailer trucks and helped sub-contractors modify semi-trailer trucks so they could move in tight spaces.  Customers who agreed to use backhaul services were able to cut transportation costs by 30% on average while raising sub-contractors’ revenues.
 

Installation of the Global Positioning System combined with regular testing of drivers’ alcoholic intake, strict staff selection criteria, on-going personnel training and performance tests reduced the accident rate to zero during the past 2 years.
 

Higher loading capacity per trip and backhaul services also enabled SUS to reduce CO2 emission and accumulated transportation costs by 200 million baht from 2004 to 2008.
 

SUS Production Control System, developed in conjunction with Japanese experts, enables data linkage with external parties while planned RFID installation will reduce human errors during the weighing process.  All these measures result in a shorter lead time, quick responses, optimal inventory holdings, lower production and transportation costs, and excellent before and after sales services.

SUS’ logistics costs (administrative expenses which include import tariff, transportation costs, inventory holding and purchasing costs) have dropped from 3.9% of 2006 revenues to 3.5% in 2008, compared with 8% average level reported by competitors in the local market.