Indonesia Steel Tube Works refines raw material procurement

Indonesia Steel Tube Works (ISTW) manufactures around 140,000 metric tons of steel pipe and tube per year, primarily for Indonesia’s billion-dollar auto manufacturing industry. These customers rely on the Kanban lean manufacturing system, meaning materials are delivered to the assembly line precisely when they’re needed for production. “There is no room for delivery delays,” says Abdul Halim, General Manager of ISTW’s Purchasing Division. “Even a small delay can cause production issues for our customers.” And that, in turn, can cost ISTW money and jeopardize valuable business relationships.

To deliver for its customers, Halim and his team must balance customer demand — including last-minute order changes — with the supply of raw materials that ISTW orders from its suppliers. In the past, ISTW calculated raw material purchasing using spreadsheets. “There was a high risk of miscalculation and human error,” Halim recalls. “Calculating all the items one by one also took a long time.”

One view for raw materials, work in progress, and finished goods

ISTW addressed these challenges with Anaplan, assisted by QUNIE and Metrodata. “Qunie supported ISTW and Metrodata throughout planning and implementation of Anaplan,” Halim says. “The QUNIE team defined the requirements so the solution was suitable for our needs, and Metrodata supported the implementation.”

The Anaplan solution implemented at ISTW automates calculations for raw material procurement. It also calculates and tracks availability of work-in-progress (WIP) and finished goods (FG). “The ability to calculate WIP and FG is crucial for us to avoid overstocking of raw material,” Halim explains.

Using Anaplan, ISTW’s Product Planning and Inventory Control (PPIC) department can quickly determine how much of an order can be fulfilled using materials on hand. If additional raw material is needed, the Anaplan solution enables the PPIC team to calculate exactly what they need to procure. With Anaplan, raw material orders are completed monthly. Halim foresees a time when these calculations will be done daily using Anaplan.

Finished goods exactly when needed

The solution has accelerated procurement processes and improved collaboration at ISTW. All supply chain-related departments at ISTW have access to Anaplan, so they all see the same data at the same time. “There’s no need to ask another department to calculate stock availability and wait for the answer,” Halim says. “Decision-making is much faster, especially when sudden order changes occur.”

With Anaplan, the procurement team’s orders are more precise, which helps to control costs. “Order accuracy is higher because we avoid the possibility of human error due to manual input and calculations,” Halim explains.

The Anaplan solution also helps ISTW with data management, team efficiency, and product waste. For example, the solution flags incomplete product data and prompts users to correct gaps. “Previously it took time, effort, and special meetings to manually check product data,” Halim remembers, but now those data management tasks are distributed and automated. And with Anaplan, expired or unneeded goods are easily identified, which reduces inventory costs.

“ISTW’s material requisition planning creation is faster, more accurate, and more efficient now,” Halim concludes. “With Anaplan, we can be confident that the steel our customers need will be available on time.” And that keeps the Indonesian auto industry cruising in high gear.