RHI Magnesita: Uniting a Global Network Through Digital Planning

Summary

Highlights

• Adnan Shahed leads RHI Magnesita's transformation with a focus on planning and procurement efficiencies 💼.
• The 'Everest' project aims to replace outdated, siloed systems with a unified, advanced planning solution 🏔️.
• Implementation faced challenges due to supply chain disruptions from COVID-19, but sought to streamline operations 📉.
• Key objectives include reducing order touchpoints by 90%, enhancing efficiency, and boosting working capital 💪.
• A focus on North America is strategic for its demand planning potential and impact on working capital optimization 🌍.
• The initiative is part of a broader company interest in digital transformations beyond mere technological upgrades 🔧.
• AI and machine learning explorations are on the horizon to further optimize their planning processes 📊.

Key Takeaways

• RHI Magnesita embarks on a digital transformation journey with o9 Solutions, aiming to unify fragmented systems and enhance efficiency ⛰️.
• Their initiative, named 'Everest,' symbolizes the challenging yet rewarding climb towards digital integration and advanced planning 🏔️.
• Overcoming resistance and traditional silos, they focus on scalability and technological advancement to enhance business operations 🔄.
• The transformation process underlines the necessity of collaboration, resilience, and adapting to change within the organization 🙌.
• Future goals include leveraging AI and machine learning to propel their demand planning capabilities further into the digital age 🤖.

Overview

Chapters

• 00:00 - 00:30: Introduction and Background Adnan Shahed, Vice President at RHI Magnesita, oversees planning and procurement of resale products. His responsibilities include production planning, inventory planning, and statistical forecasting of finished goods. The company, valued at almost 4 billion euros, is focusing on growth and development in the refractory sector.
• 00:30 - 01:00: Importance of Refractory Products Refractory products are essential for the operation of industries such as steel, cement, and glass. An old saying suggests that these industries cannot function without refractory products. One of the speaker's previous bosses highlighted that refractories are among humanity's oldest inventions. The logic is that whenever fire was needed historically, stones or similar materials were required to control it, reflecting the longstanding importance of refractory materials.
• 01:00 - 01:30: Refractory's Role in Industry In the chapter 'Refractory's Role in Industry', the discussion centers around the crucial role that refractory materials play in various industrial processes. Specifically, it highlights how refractories are essential components in producing steel, glass, and cement, serving as the lining in high-temperature zones. This lining is fundamental in facilitating steel production and ensuring that these high-temperature processes can be maintained effectively. The chapter underscores the pride the company takes in producing refractory products capable of withstanding extreme temperatures, as encapsulated in their famous tagline, 'Can you stand the heat?'
• 01:30 - 02:00: Impact of COVID on Supply Chain and Need for Change The chapter discusses the significant impact of COVID-19 on supply chain operations and the pressing need for change. It highlights the challenges faced due to siloed operations and compartmentalized data sets, which led to different teams working with inconsistent and varied information. The experience of navigating the disruptions brought by COVID-19 showcased the need for integrated and unified approaches within supply chains to enhance resilience and effective response to future disruptions.
• 02:00 - 02:30: Development of Everest The 'Development of Everest' chapter touches on the realization of the necessity to address emerging challenges proactively while acknowledging the unfavorable timing for immediate action. Instead of hastily jumping into immediate solutions, it emphasizes the importance of first stabilizing the supply chain and operations. Investing in these foundational aspects was prioritized. Once stability was achieved, the focus shifted towards seeking a long-term solution through an advanced planning solution aimed at further stabilizing operations, referred to as 'Everest.'
• 02:30 - 03:00: Continuous Journey and Challenges The journey from an Excel-based individual truth to a unified planning solution is compared to climbing a mountain. It's a challenging but necessary transition that demands efficiency and cannot afford to take a prolonged period, like 10 years, to achieve.
• 03:00 - 03:30: Emphasis on Digital Transformation This chapter discusses the concept of digital transformation and likens it to climbing a mountain, such as Everest. It emphasizes the need for proper resources and investments in this journey. The journey towards digital transformation is ongoing and not something that can be completed in a short time frame. The essence of digital transformation is that the journey itself is the destination, highlighting its continuous nature.
• 03:30 - 04:00: Adoption of 09 and S4 HANA The chapter discusses the challenges faced during the adoption of 09 and S4 HANA software. The transition occurred at a time when supply chains were still recovering from the disruptions caused by the COVID-19 pandemic. The software 09, being relatively new to the market, added to the complexity of the situation. Additionally, the business conditions were unstable, which further complicated the process. This chapter highlights the significant changes and adaptations required to manage this transition effectively.
• 04:00 - 04:30: North America's Strategic Importance The chapter discusses the transition from Excel-based individual processes to a combined planning solution, emphasizing the need for stakeholder management. It highlights the importance of explaining the logic and necessity of advanced planning solutions, particularly in the context of the strategic significance of North America. Significant time and energy were invested in this process.
• 04:30 - 05:00: Demand Planning Focus The chapter titled 'Demand Planning Focus' discusses the ongoing journey of advancing demand planning within the organization. It highlights the effort being made to inform and guide the sales and commercial teams through changes. There are mixed rates of progress, with some areas adopting changes quickly while others lag. The strategy is to capitalize on areas where change is occurring effectively, utilizing positive change agents to promote this development, and working collaboratively to guide slower areas towards positive outcomes.
• 05:00 - 05:30: Reducing Process Touch Points In this chapter titled 'Reducing Process Touch Points,' the discussion revolves around the digital transformation initiatives at RHM Magnacita. The focus is on moving beyond simple digitization, such as switching from paper-based to online entry systems, to a comprehensive transformation of processes. The company identified specific weaknesses, likened to embarking on an 'Everest journey,' and recognized the need for significant changes to improve its operations. The speaker highlights the organization's commitment to transformation, indicating a strategic approach to modernizing processes.
• 05:30 - 06:00: Realization of Organizational Waste The chapter discusses the realization of organizational waste, focusing on improvements and changes in data platforms. It describes the transition, particularly in organizations using SAP systems. It talks about the necessary shift to SAP S/4HANA, suggesting that while initiating this process was a significant decision, it was not necessarily judged as timely or optimal. The emphasis is on the need to adapt and re-evaluate the ERP systems to mitigate waste and improve efficiency.
• 06:00 - 06:30: Non-linear Journey and Challenges In this chapter titled 'Non-linear Journey and Challenges', the focus is on strategic transformations using advanced software systems. The narrative discusses the decision to implement significant transformations, starting with a specific region using version 09. Following this setup, they plan to proceed with the S4 HANA transformation in that area. The emphasis is on ensuring that data platforms are compatible with future transformations. This approach allows for a cohesive transformation strategy, maintaining awareness and adaptability for future developments.
• 06:30 - 07:00: Defining Success and MVP In this chapter, the focus is on defining success and the concept of a Minimum Viable Product (MVP). The discussion highlights the evaluation of a solution or tool (referred to as '09') that impressed the evaluators by offering a comprehensive portfolio of activities. The speakers emphasize that they were not seeking specialized tools for specific tasks like demand planning or operations planning, as they already had such tools at their disposal, including PPDS with SAP and a demand planning software. Instead, they aimed to find a unified tool that could integrate all necessary functions and enhance their overall process.
• 07:00 - 07:30: Future of AI and Machine Learning The chapter titled "Future of AI and Machine Learning" discusses the comprehensive spectrum of order promising, beginning with demand planning. It describes the process starting from receiving sales forecasts through to production planning, allocation, inventory planning, and finally confirming the order to the customer. The scope of this process highlights the integration required from forecasting to delivery, proving it to be a strong systematic approach for ensuring successful outcomes across various domains.
• 07:30 - 08:00: Lessons Learned and Encouragement This chapter discusses the significance of the North American platform for business, emphasizing its crucial role in revenue and profit generation. Although similar in importance to other business areas, its smaller production footprint enables a focused approach on improving demand planning and autopromising aspects.

RHI Magnesita: Uniting a Global Network Through Digital Planning Transcription

• 00:00 - 00:30 so my name is Adnan Shahed i work for RHI Magnesita as the vice president and in charge for planning and procurement of our resale products my job essentially is to look after the production planning the inventory planning and statistical forecasting of all our finished goods and RHI Magnesita at this point is um going through a tremendous amount of development growth we are almost a 4 billion euro company focused mostly on providing refractory
• 00:30 - 01:00 products and services to steel plants uh cement plants glass plants and that industry actually the saying is that uh you cannot function without refractory and um one of my old bosses actually used to say refrati is one of the oldest invention uh for humans and the answer is correct because whenever you needed fire you also needed you know stone to actually you know control that fire to
• 01:00 - 01:30 sustain that fire to keep it warm and everything um refractory is essentially the product which is the essential component in producing steel glass cement it is the lining inside the high temperature zones it is what provides the uh facility for steel production a very famous tagline from our company is can you stand the heat which is basically for us something to be proud of because we produce products uh that can actually sustain everything beyond
• 01:30 - 02:00 1200° and even up to 1700° and that's that's quite phenomenal it started with the whole experience around COVID uh when we realized how difficult it was for us to you know reposition ourselves after what was happening uh in the supply chain world um we realized that a lot of our data sets were compartmentalized a lot of operations that we did between our planning teams was in silos they were they were talking different numbers different versions of the truth and
• 02:00 - 02:30 that's that's when we already knew this but we just realized that we need to do something about this going forward but also that time was not the best to actually jump into something like this you need to first stabilize your supply chain your operations and everything so that's what we invested in but then we went like okay we need to now step outside and look for a long-term solution with an advanced planning solution and try to bring that in and stabilize our operations yeah we call it Everest
• 02:30 - 03:00 because like the mountain itself it's it's not an easy climb so going from Excelbased you know everybody's own version of truth to a combined planning solution where everybody's looking at the same number yeah this is quite a climb this is quite a a mission so that's you know where where it started but we also felt that it's quite a steep climb because you cannot take 10 years to do this you you have to get this done in a certain amount of time with a certain amount of efficiency and with
• 03:00 - 03:30 you know the right resources and the right investment so it had to be planned like uh the climb of a mountain like uh the Everest climb and that's that's where we moved around with a few names but eventually we stuck with this and it reflected very nicely what we were trying to do i think the the answer over there is that this is not something that happens one week two weeks two months um actually the the terms are that the destination is the journey so you're basically continuously you know on the
• 03:30 - 04:00 change path for us what what has been very very difficult is that because we were trying to do this in a period of when supply chains were already you know sort of still recovering from the bullwip of covid and everything uh the software 09 itself was you know sort of newer in the market and at the same time we were also dealing with let's say conditions around the business which were not stable right so that's that's the tremendous amount of change that we had to bring in then we had to explain
• 04:00 - 04:30 how this process process which is you know very different from Excelbased individually owned processes to a combined uh you know planning solution that had to stick so we had to do a lot of stakeholder management we had to explain the project explain the logic behind you know why advanced planning solutions are needed why 09 is needed and we we spent a lot of time over there we spent a lot of energy over there um but at the same time we also I think we
• 04:30 - 05:00 are still in that journey uh we are still spending that time with the sales guys with the um let's say the commercial teams in the regions and everything trying to still explain but then you always have pockets of good change pockets of slow change right so you jump on the good change and then you know the change agents that are supporting this so that's that's what we've been trying to emphasize upon and uh yeah working with the others to actually keep moving them towards positive change agents [Music]
• 05:00 - 05:30 The thing is that I'm also lucky to work for RHM Magnacita at a time and as an organization which is very interested in digital transformations so this is not just about changing u let's say going from paperbased entry to actually you know now we have an online entry system and that's not what we're talking about so we really are talking about transformation here.09 or the Everest journey for our company came first because we needed that because that was identified as a as a weakness for us and
• 05:30 - 06:00 we had the capability to to actually you know see it and then deliver it so that's how we started of course that required a complete change on the data platform so so we had to you know rejig how we look at our ERPs and then prepare them for 09 s4 HANA is a is the journey that all organizations you know who use SAP have to go through we decided to start it already that does not mean that it's the best time or the worst time or or whatever but the point is that's how
• 06:00 - 06:30 we've decided to do it what it allows us to do is that we are doing 09 now in a certain region and then when we have set that transformation up we will now follow that up with S4 HANA transformation over there so what we are constantly trying to do is to keep an eye open not to set up any data platforms which are not suitable for what comes behind that and that's that's the that's the best part of doing these transformations together well um if you were there in
• 06:30 - 07:00 those conversations you would see that we were you know pretty impressed with with what 09 was actually offering we were looking for a solution which was actually giving us the complete portfolio of activities that we wanted to do so we were not looking for somebody who's very good in demand planning or very good in let's say you know operations planning or factory planning because for those we already had tools so we were already doing PPDS with SAP we were doing you know a nice demand planning software but essentially we were looking for a tool which could combine all of this and actually make us
• 07:00 - 07:30 you know successful across the spectrum uh one of the key things that we were also looking for was the order promising part so now this is starting from demand planning starting from where you know you receive let's say the forecast from your sales guys all the way through the factory with you know production planning uh production allocation inventory planning and then you know confirming the order to the customer this is this was the full scope that we were looking at and that's where we felt09 was a very strong
• 07:30 - 08:00 platform North America for us is is is a very important uh part of the business in terms of revenue and everything it's let's say there are other parts of the business who are comparable but from a pure um cash generation and also profit generation perspective it's a very important part of the business it also is a smaller production footprint for us so it allowed us to focus on let's say fixing the the demand planning aspect the autopromising aspect first and not
• 08:00 - 08:30 complicate matters too much on the on the supply planning aspect so it had some you know pros from that perspective internally we identified this as the biggest point of working capital for us because we wanted to improve the working capital situation in that part of our business so that was also one of the reasons why we started with that this the simple uh truth of the matter is that let's say from a change perspective this was also felt that there's a reason that this will adopt faster so that's also one of the things why we went with North America first
• 08:30 - 09:00 [Music] it's in simple terms we want our sales uh teams to focus on their markets on their customers on you know selling as much as they can on you know driving value from their aspect we don't want them to be worried about um let's say the supply challenges or the planning challenges that we have internally so allowing them to focus on an unconstrained demand and you know filling in or giving in their recommendations per customer per SKU
• 09:00 - 09:30 from that perspective was something we wanted to explore because especially through covid and the and the recent supply chain challenges a lot of this conversation had now become constrained because people were already like oh yeah but we can't do this because this connection doesn't work or we can't do this because we don't have inventory over here yeah but that's that's what we wanted to change so we allow by doing this deployment on demand planning for09 we allowed them to focus on their markets on their customers and serving their customers driving value over there
• 09:30 - 10:00 and leaving the internal challenges for for the planning team uh and for the tool to resolve i think I can share a lot of examples but one of the best examples that we see is the number of touch points um so every time the order actually comes through the organization we did this test before we actually you know went for any planning solution we actually analyze you know how many times the order is actually touched within the organization i mean it was like even
• 10:00 - 10:30 after the order is accepted by the customer it was something like 40 uh times that the order was actually touched which is like either somebody was you know replanning uh the activity or somebody was you know changing the date or changing the delivery conditions or changing the logistic conditions something was was happening to the order and that is what we think and what we are trying to now prove through through the deployment in North America pilot that we will be able to reduce this significantly i'm really talking about 90% less interactions and by doing this
• 10:30 - 11:00 this will tremendously release efficiency in the organization allow us to focus our energies on more productive efforts rather than just correcting the same order which yeah which we've been doing in the past the thing is that when we when we started with 09 and this is this is part of the journey that we didn't even realize ourselves and when we started writing down the processes involved and so level one level two level three we
• 11:00 - 11:30 actually discovered how much waste existed in our in our organization now that is a realization that that was not even there when we actually made the business case for for09 and this is one of the things that we we've been able to successfully demonstrate the amount of waste that we've been able to take out by actually deploying ONA in in the North America region that why we are able to actually move through faster in in our processes this is a realization that we feel will continue further i
• 11:30 - 12:00 know that we also made a business case for actually delivering uh inventory reduction this will come naturally we think we will be achieving on the you know on the side of something like 80 million euros inventory reduction in our footprint because of deploying a planning solution but I'm personally more interested and actually happier with the amount of waste that we are taking out from our processes uh because of this deployment some of the things that I I feel that people don't talk about enough
• 12:00 - 12:30 is that this is not a linear journey so it doesn't work that you start day one and you go like everything is going to be perfect and everything is going to be you know smooth sailing from here uh there was a lot of let's say resistance that we had to face in the beginning of the journey that we had to explain to people why we were doing what we were doing we also had to you know um explain to people that this is not about getting rid of their jobs and stuff like this so this was also a realization that had to be you know sort of explained again and
• 12:30 - 13:00 again i think the lessons that I would like to share with the others is that please do not expect it to be a linear journey please do not expect that your data maps are going to be you know um a simple exercise of connecting them to whatever 09 or whatever table that 09 requires um please also do not expect that when you go to a region that that region is exactly the same as what you know the previous region was or that because you've deployed it in one then the other one will be smooth sailing all
• 13:00 - 13:30 of these things actually tell us how important this journey was and still is and why we need to do this more than ever but it is not a linear curve it is not a straight journey so you will and just like climbing a mountain you will go up and down and then up eventually i think over here this this was something we really identified as as a very key element right from the beginning of the journey so we identified as something what we called
• 13:30 - 14:00 an MVP so minimum viable product right in my case it was like most valuable player because I that's how I looked at it because if you're not able to deliver something for the organization which is interesting enough quickly enough people start losing interest in in this thing this is what we defined so we defined a set of criteria and a set of KPIs already from the beginning that we want to look at these things within the first 6 months we want to have this up and running we want to have a view of the tool with our data with our numbers
• 14:00 - 14:30 inside it even if it's you know not programmed not automated yet but it's carrying our numbers so we did that we had our demand plan and our production plan showing inside09 within the first 6 months and that allows for the rest of the organization to see ah so there is some relevance here so it's not a journey where you know there are people at the back end programming this for the next year and a half and then we will see one big bang and everything will be fine so it's about creating that you know sort of interest throughout the
• 14:30 - 15:00 journey it took us a few months to set that up but I think this was a very important step to keep the interest of the organization i think as far as as a company goes again like I said RH Magna itself is very interested in these kind of solutions so we feel that we want to explore these uh these possibilities we are still in the process of writing those let's say those use cases where we could actually you know work on on some of these AI solutions in planning in other
• 15:00 - 15:30 parts of the organization we are already doing some experiments but we could we could do more the thing is that it's also you have to go from learning to crawl to walk to you know to run we are not in that phase yet where we could actually say let's go to demand sensing right we have to first get ourselves into that zone where we are consistently having a reliable input and output in09
• 15:30 - 16:00 demand planning then develop the next stage of AI and machine learning on that same set of data to actually determine you know your demand planning even faster or smarter than what we are doing but it's definitely part of our journey it's definitely what we are going to go after we will need those tools uh that's something we we are exploring And yeah we're looking for you know all kinds of help from09 on this the biggest part that we felt in
• 16:00 - 16:30 the beginning of the conversation was that oh we are not ready for this we maybe we should recheck our numbers maybe we should you know recheck you know the market and everything actually the part that I've learned through this experience is yeah you need to get in you just need to step into this you need to face this because only then you will realize how bad it really is because without knowing without actually exploring your own processes and you know sitting with smart people and actually going through breaking down
• 16:30 - 17:00 your components uh you will not realize you know what what you're leaving on the table uh so that's the the first thing I would encourage that people should just get into it it doesn't mean that you know you should install the advanced planning solution tomorrow but get into the habit of actually exploring digital solutions exploring all kinds of automated solutions that's one the second part is take care of your team because this is not a journey where you can you know power through because you have a great manager and a great leader
• 17:00 - 17:30 yes we will do all this yeah this is it doesn't work like that you really need very good strong people who are resilient uh who are not I mean this is a term that is coming around a lot anti-fragile so so you you need people who are able to take hits and then still get up and still keep moving this is the mantra that we are trying to you know sort of sell to our teams as well that yeah it's okay this one didn't work let's let's try again and let's keep moving forward because this this is like
• 17:30 - 18:00 I said a journey and if you have a good team you have a good set of people with you you will be able to get through this