INTEGRATED OPERATIONS CENTER USIMINAS

INTEGRATED OPERATIONS CENTER USIMINAS Raymond Russ, National SAP Practice, Neoris Wednesday, March 17, 2010

INTEGRATED OPERATIONS CENTER USIMINAS SAP 2008 / Page 2

Agenda 1. Executive Summary 2. USIMINAS - Business Description 3. Corporate Strategy and IT Strategy 4. Project - Integrated Operations Center 4.1. IT Challenges 4.2. Implementation Methodology 4.3. Strategy and Phases 4.4. Technological Environment 4.5. Implementation Schedule and Highlights 5. Benefits Achieved and Learning Points SAP 2008 / Page 3

1. Executive Summary Challenges Innovation Collaborative management Integration of employees from various production processes Visual standardization to ease understanding Project Objectives Design and provide visual key indicators necessary for integrated management of plant Provide an integrated view of information from the various processes Put together employees of various processes in a single room

1. Executive Summary Strategic Benefit Provide proactive actions with integrated vision on the plant management, aligned with strategic corporate goals Why SAP MII? The SAP MII tool met all the basic Project requirements The possibility of using the existing structures for SAP, directly migratable for the MII application The high resolution graphics library that allowed the presentation of graphics in both Video Wall and employees screens, without distortion A web application development that allows extensibility and mobility required by the Project Ease of data extraction from SAP ECC and manufacturing execution systems

2. USIMINAS - Business Description STEEL WORKS MINING AND LOGISTICS STEEL TRANSFORMATION CAPITAL ASSETS THIRD SECTOR AND CULTURE Ipatinga Plant Mining Assets Usiminas Solutions Fasal Usiminas Mechanical HMC CSFX COI FSFX Cubatão Plant MRS Rio Negro Usicort Usiminas Automotive Usiminas Usial Health Unigal Usiminas Usifast Zamprogna Usiminas Security Usiroll Rios Unidos Consul Ternium Siderar Hylsamex Imsa Cultural Institute Usiminas

2. USIMINAS - Business Description Usiminas stands out as the largest flat-steel manufacturer in Latin America and one of the 20 largest in the world. It operates in the steel industry and business which steel is of strategic importance. Its headquarters is located in Belo Horizonte, the capital Minas Gerais Brazil. The Ipatinga plant (where the project took place) is located in the city of Ipatinga, Minas Gerais. This region is known as the Steel Valley and it is located 137 miles far from the capital of the state. It is close to one of the largest reserves of iron ore in the world, the Iron Quadrangle of Minas Gerais. Its production capacity is 5 million tons of liquid steel per year. Vision: Being a steel group of global reach, innovative, and grow sustainably, to be among the most profitable in the sector.

Agenda 1. Executive Summary 2. USIMINAS - Business Description 3. Corporate Strategy and IT Strategy 4. Project - Integrated Operations Center 4.1. IT Challenges 4.2. Implementation Methodology 4.3. Strategy and Steps 4.4. Technological Environment 4.5. Implementation Schedule and Highlights 5. Benefits Achieved and Learning Points SAP 2008 / Page 9

3. Corporate Strategy Material flow Management Sales Orders follow ups and associated priorities Achieving greater customer understanding Transport s internal logistics orientation Promote synchronization between the equipments Create value for Shareholders and Customer Care Production Management Inventory Management Leverage gains and minimize the production chain losses Manage bottlenecks (failure risk or productivity loss) Programming/editing production and shipping Ensure appropriated quality and levels for finished and intermediate stocks Distribution and control of wagons (CVRD) and trucks (carriers) to supply / outflow

3. IT Strategy Business Processes Challenges How can IT help overcoming the challenges Production Plan and Control Identify necessary information on the business data Keep an updated database Get a satisfactory performance on the database update Create precise summarized database Update the precise summarized database Develop routines/interfaces with adequate response timing Production Control Results Define objects that visualize the information Update objects Create visual objects Create SAP MII interfaces to update objects according to the summarized database Production Process Schedule Allow interaction between employees and the system Create SAP MII functions that allow enterprise s database update according to employees' decision

4.1. IT Challenges Enterprise Data There is a great amount of Purchase, Order Admission, Sales, Planning and Production Control information that summarized and displayed in an integrated manner should help and improve employee s decision making. Database Due to frequent updates in corporate operational information it is made necessary to also maintain the database updated in real time, which will enable faster and more proactive decision making. Innovation Through new technologies its possible to integrate data sources such as visual objects, cameras and GPS in a more legible away, allowing employees interaction.

4.2. Implementation Methodology The USIMINAS Informatics Study and Solution Methodology was used Success Factors: The project management and the development phase divided into 7 steps Choice of NEORIS, OPTIMIZA and MAUELL as partners Shared management between USIMINAS and NEORIS The USIMINAS sustainable database Effective participation of USIMINAS employees Project team: 07 USIMINAS IT resources 06 NEORIS resources 02 MAUELL resources 05 PCP unit resources Moreover the participation of several employees from various production processes.

4.3. Strategy and Phases 1 Draft, Scoping 2 Choice of partners companies 3 Negotiation and contract preparation 4 Project development Go Live!

4.4. Technological Environment Platform Version SAP MII version 12.0 Databases Oracle Database and Shop Floor systems Support Database and Operating System Others NEORIS, SAP MII developing and training

4.5. Implementation Schedule and Highlights Year 2008 Year 2009 Jan Feb Mar Apr May Jun Jul AugSep Oct NovDec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Draft, Scoping Choice of partners companies Negotiation and preparation of contract Project development Duration Start Go Live

4.5. Implementation Schedule and Highlights This project had two strategic partners in addition to NEORIS: - Responsible for providing Video Wall s rear projection panels, 60 high-resolution cameras manufactured by BOSCH, the environment management software and the cameras that can be remotely managed from any authorized user. OPTIMIZA - Software Company responsible for developing the application that created the Web Service consumed by SAP MII, which notifies the geographical location of each USIMINAS wagon - through the GPS module. SAP MII receives this information and plots the location and operational status of each locomotive on a map located on the right top of the Video Wall.

Operators SAP MII consumes a Web service provided by Optimiza and publishes a map with the location of all locomotives in the Video Wall. SAP MII Images Generator Video Wall Engine Data Extractor SAP MII has scheduled routines that periodically extract data from the data sources, dynamically generates objects images and publishes the information on the Video Wall. Mauell images controller receives requests from the MII and publishes the cameras images on Video Wall. Mauell e.tool Wall Op Through a Web-based screen any user can view the bookmarks, open the details of each object and publish information on the Video Wall. Through Bosch software "live" images are sent to Muell controller Optmiza s software accesses GPS devices information and provides a Web Service with a USIMINAS map presenting the updated position of all locomotives. Optmiza GPS Software SAP ECC Shop Floor Systems Other Systems SAP MII Database MII Database stores all information related to Video Wall objects configuration

5. Benefits Achieved and Learning Points Benefits Achieved Greater integration of production process Improvement on various material flow processes Emergence of new control areas Integration of employees from different processes Proactive actions with integrated vision, aligned with strategic corporate goals Visual Standardization for easy understanding of business data Appraisal of Production Control processes Partnership, synonymous with faster technological progress 350 High Resolution objects developed, all with drill down From the Operator s desktop it is possible to access all available information, which allows him drilling-down in order to obtain detailed data on any object and/or access interactive features

5. Benefits Achieved and Learning Points The Integrated Operations Center have a Video Wall screen with approximately 43 feet wide by 6 feet high.

5. Benefits Achieved and Learning Points In this room, 28 operators perform and monitor the entire end-to-end steel production process. This process begins with the entry of raw materials and finishes with the shipment of finished products.

5. Benefits Achieved and Learning Points Data displayed is enriched with symbols that indicate: Situation of planning and production control Equipment availability Production orders in execution Inventory levels Etc

5. Benefits Achieved and Learning Points All information is accessed through the operator s terminal, in an easy to use way that allows him to drilldown into the details and verify the existence of any problem. The Operator can also publish this information to the large screen by means of the existing application s interface in the terminal.

5. Benefits Achieved and Learning Points Operator s Terminal

5. Benefits Achieved and Learning Points The Video Wall provides logistics data (supply and disposal) of the process, integrated with GPS equipment. Also provides cameras showing real-time images of the areas with active alerts.

5. Benefits Achieved and Learning Points The NEORIS Video Wall solution met all the client's business requirements: The existing systems were integrated and employees have a holistic view of the process; Everyone can access relevant information required to execute the production logistics in a single, unique environment; They can quickly respond to questions related to production, logistics, equipment and materials, while monitoring the manufacturing KPI's, real-time.

5. Benefits Achieved and Learning Points

5. Benefits Achieved and Learning Points Learning Point The real-time visibility of what happens on the shop floor and the possibility of all those involved in the manufacturing and delivery process working together is essential to improve processes, reduce costs and intermediate stock levels and moreover the improvement in various industry operational indicators. Testimonials Our goal was to combine functions and people at the same place, in which Video Wall would be a site for information and alerts, where each professional could look not only at a particular process, but at the production supply chain as a whole. Sometimes the decision about a process can be good by itself, but can harm the following process." Zenobio (Manager of Programming and Production Control Usiminas) With this Integrated Operations Center we have materialized the aspiration of increasingly gathering the various strategic areas in the same network interaction. This is a differential that will allow even more efficiency in our operational lines, in addition to products delivery efficiency gains." Marco Antonio Castello Branco (President Usiminas)

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SAP CUSTOMER VALUE NETWORK Thank You! Raymond Russ, National SAP Practice, Neoris ray.russ@neoris.com SAP 2008 / Page 32