Steel works

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Rutgers University, Newark *

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890

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Industrial Engineering

Date

Feb 20, 2024

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docx

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Steel Works, Inc. Business Situation - Steel Works, Inc. was formed in 1980 by three brilliant MIT material scientists. It produces customs and specialty division steel and had annual sales of $400 million in 1993. With 2500 employees spread across five locations, the company is currently facing significant internal issues like a high inventory level, subpar customer service that is costing them market share as customers switch to rivals, a 30% decline in sales, and a 25% increase in expenses. The CEO wants a week to fix all these concerns. Analysis and Insights – The custom division maintains three manufacturing sites and six product lines, all of which are close to their R&D centers and warehouses. They mostly rely on logistic networks to distribute their products, resulting in significant inventories. They reduce production costs by manufacturing product families at the same factory. Around 90 percent of the products are sold to one customer. The specialty division accounts for around 67% of overall sales, with one customer accounting for up to 10% of total revenue. The custom division generally creates goods under contract for a single customer until that product becomes a part of the company's system. Their lead times are relatively high, especially the supplier lead time. This will lead to delay in production and affect customer satisfaction. Recommendations - Steel Works, Inc. should focus customer service while also shortening production lead times and improving forecasting accuracy. Using ABC analysis, the items should be classified based on their importance in terms of sales and volume. Its primary focus should be on high-value, high-demand products, while crucial items should be kept in stock. To manage products in the highly variable category, customer forecasts should be followed up on in the specialty division. An enhanced inventory management system with data-driven computations should be deployed to attain optimal stock levels. OTD and fill rates should be

monitored to monitor supply chain performance, and the data gathered should be used to enhance the process.

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Steel works

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