The entire world is undergoing a digital transformation that uses new technologies to improve existing business and industry practices. The steel industry is among the first to adopt digital technologies to create new opportunities, increase efficiency, enhance the quality of products, and boost profits.
Digitalization is a direct result of big data analytics, and it involves analyzing massive amounts of data to improve forecasting and get a better understanding of processes. Digital analytics in the steel industry is reforming most practices, bringing them to a whole new level. Let's see how digital technologies and analytics impact the steel industry.
Challenges of Implementing Digital Technologies in The Steel Industry
The steel industry, as well as most other heavy industries, is extremely complex. Steel manufacturers have to manage all kinds of processes, such as connecting assets to a centralized system, tracking production, and ensuring that customers get high-quality products. The biggest challenge is to optimize material distribution, product distribution and ensure that the supply chain is in perfect working order on both sides of the operation.
If only one material needed for production is missing from the inventory, the production has to stop. That can reduce profits, harm customer satisfaction, and harm overall success. When you consider that most production plants and assets work in silos, it's clear that supply chain management is a massive challenge.
Traditionally, supply chain managers had to stay in contact with all individual elements to make accurate market change predictions. Unfortunately, even the most skilled manager has little access to real-time information, which leads to mistakes and high risks. That makes it almost impossible to make accurate long-term plans, so most manufacturers had to focus only on short-term goals and lose plenty of business opportunities.
The challenge here is to find a way to make accurate long-term plans, which requires the use of modern technologies such as Artificial Intelligence (AI) solutions, big data analytics, and Internet of Things sensors. Together, these technologies drastically improve the monitoring of complex systems and allow managers to gain access to accurate real-time calculations. Digitalization is practically the only available solution to the supply chain issue, helping the steel industry unlock its full potential.
Digitalization Is The Solution The Steel Industry Needs
The steel industry will never be the same again. Over 78% of surveyed steel manufacturers have already started a digital program designed to help improve productivity and increase efficiency. New technologies needed to analyze vast amounts of data are not as expensive as they used to be a few years ago, allowing companies to adopt them for a reasonable price.
Many companies invest in their solutions that focus on improving business assets and processes one by one. These solutions work together to help drive value to the company and increase internal processes. They also help align business goals with the current market needs, helping them stay one step ahead of the current trends.
New technologies lead to revolutionary practices that give steel companies an advantage over their competitors. For example, predictive analytics can improve production speed while reducing costs. It also helps simplify the implementation of new technologies. All of that is possible only because of big data analytics. Without data, companies couldn't generate insights or identify patterns to improve operations.
When applied to sales, digital technologies can help predict an increase in demand by monitoring customer needs and factors that increase demand. Understanding what customers expect and having the ability to anticipate the rise in demand allows steel manufacturers to reduce inventory, improve margins, and deliver a better service overall. Advanced analytics can segment the demand into individual components to make more accurate predictions for each category. Companies then use these insights to create highly-accurate demand predictions than any traditional method.
Significant Forecasting Improvement
The ability to accurately predict an increase in demand and industry trends gives steel manufacturers an edge over their competitors. Moreover, as machine learning algorithms become smarter, the accuracy of predictions will improve further over time. As soon as a company adopts new technologies such as AI, ML, and IoT, it gets a 20 to 30% increase in forecasting accuracy. That way, manufacturers will have more time to focus on customers and their needs.
However, real-time monitoring and data analytics offers even more benefits that can add up to significant operational cost reduction. The practice of predictive maintenance helps companies reduce maintenance downtimes, costs, and frequency. The AI solution that tracks all components and assets can predict the exact time a machine will break down. It can also tell which parts need replacing, so companies don't need to spend as much money on replacement parts. Instead, they have to buy only those parts that need replacing.
Compared to traditional predictive techniques that depend on expert advice and experience, modern predictive methods are much more accurate. AI solutions use operation data to analyze the entire production constantly, leaving no room for error. Digital solutions are far more accurate for predicting the future, which gives companies more time to prepare for shutdowns and market changes.
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Three Main Elements For Implementing Digital Technologies
We addressed some challenges in implementing digital solutions in traditional steel manufacturing. However, every successful digital transformation depends on the three primary elements:
- Using digital technologies to analyze large amounts of data
- Creating a strong digital company core
- Constant focus on business value
Using Digital Technologies to Analyze Large Amounts of Data
Adopting new digital technologies offers significant benefits, but only if done right. That's why it's essential to break down problems into specific categories and introduce digital technologies that solve issues one by one. That way, companies can capture value early, during every step of the implementation process, without waiting for the complete solution.
Creating a Strong Digital Company Core
Introducing digital solutions into a steel manufacturing operation is one thing, but ensuring its sustainability is something completely different. Apart from transforming business and manufacturing processes, a change of culture and behavior is also needed to ensure a successful transition.
Departments will no longer work in silos. Instead, they will access digital technologies that promote collaboration and speed up specific processes. Companies also have to assign new roles to the right people and hire data scientists to develop and maintain algorithms. The rest of the workforce will require extra training to develop new skills to complement new technologies and increase efficiency.
Constant Focus on Business Value
Ensuring that digital technologies provide the expected value is one of the hardest things to achieve. To do so, you need agile teams who can link initiatives to benefits and use available insights to introduce new ideas during the development phase. That will help simplify the digitalization process and lead to better results faster.
The digitalization process in the steel industry is still in its earliest stage. However, those companies that adopt it sooner have a significant advantage over their competitors. Like it or not, digitalization is the way of the future, and it will soon transform the entire industry forever. Steel manufacturers who don't want to update their technologies will undoubtedly fall behind the competition and lose revenues over time.
The challenge is to set up a sustainable digital strategy that delivers results but doesn't require a huge investment. The digitalization process is long and comes with all kinds of challenges down the road. However, with the proper setup, expert teams, and a few good ideas, it's an initiative that will solve existing problems and prepare the company for the future.