SAP-Based Solution for Planning of

the End-to-End Production and

Supply Chain of a Mining and

Metallurgical Holding

Contents

1. METINVEST Group

2

2. Supply planning powered by SAP

3. Planning mechanisms provided by SAP: limitations and course

of development

4. End-to-end "coal-coke-cast iron" planning model powered by

SAP

5. Course of development for the Company's integrated

planning system

METINVEST Group, a vertically integrated group of steel and mining companies

MINING

METALLURGY

SALES

SERVICELOGISTICS

* These data refer to 2016.

3

PRODUCTION ASSETS OFMETINVEST

Ukrainian assets of Metinvest (below)

Azovstal

Ilyich Iron and Steel Works of Mariupol

DKHZ

ZKHZ

SevGOK

CGOK

InGOK

HTZ

EMZ

KRDU

Zaporozhstal

UGOK

Ukrainian assets

Ferriera Valsider (Italy)

Metinvest Trametal (Italy)

Spartan (United Kingdom)

Promet Steel (Bulgaria)

United Coat (USA)

Global assets of Metinvest (above)

Assets

Joint Ventures

Independent Enterprises

Logistic routes

Legend

COKING COAL IRON ORE CONCENTRATE CAST IRON

SEMI-FINISHED PRODUCTS FLAT PRODUCTS LONG PRODUCTS PIPESmilliontons

milliontons

milliontons

milliontons

milliontons

milliontons

milliontons

thousandtons

STEEL

Operational Planning Business Model at METINVESTL

OG

IST

ICS

PR

OC

UR

EM

EN

TS

AL

ES

Sales forecast

Contracted volumes

Orders from the

distribution network

Incoming

information

Materials

Commercial

priorities and

limitations

Logistic costs

Logistic

limitations

PR

OD

UC

TIO

N

Available worktimefund of the primary equipment

Specifications and technological flow charts

Production versions

BU

DG

ET

ING

STRATEGIC

PLANNING

Long-term Planning (LTP)

Sales & Operations

Planning (S&OP)

Short-term Operational

Planning (OFP)

Calendaring (MS)

Management Company

Enterprises

Strategic Goals

and Objectives

Processes provided by SAP

Directions for further development

Planning

results

Operational plan:

Sales plan

4

Transportation plan

Procurement plan

Production plan

Architecture of the Solution for Implementing Planning Processes in SAP

SAP APO/SNP

SAP ERP

Supply chain planning

Materials

Specifications and

technological flow charts

Sales plan

Production plan

Transportation plan

Demand for primary raw

materials

Workplaces

Forecasted sales for product groups

Price forecast based on the terms of

sale

SAP MDG SAP APO/DP SAP BW

Materials

Forecasted commodity

prices

Schedule of repairs

Logistic component

SAP APO/DP

Logistic limitations

Planned Order Form

Planned orders

Purchase requests

Quoting table

5

SAP ERP

Supply Chain Planning Model at МETINVEST

Scope of the

supply chain planning model at

METINVEST:

• 12 manufacturing enterprises

• > 700 locations of demand

• > 3,000 transportation relations

Fragment of the logistical model of the intragroup

cooperation at METINVEST

Structure of the supply chain

planning model at METINVEST:

• Logistic model

• Production planning models

Fragment of the logistic model of commodity delivery from

metallurgical enterprises to the locations of demand

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Logistic model in SAP APO SNP

Logistic model:

Graph vertices:

• locations of demand

• suppliers

• load transfer point

• manufacturers

Graph edges:

• transportation

relations

SAP APO SNP

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Suppliers of raw materials

coalwaste metallimestonebentonitemiscellaneous

Mining and Processing

Coke and Chemicals

Metallurgical Transferstations

Loadingports

SSC

Locations of demand

Production enterprises

Graph vertex Graph edge

Production planning models powered by SAP ERP

Production model:

o workplaces

• production machines

o Materials Master Record

• manufactured

products

o master data

• specifications

• technological flow charts

• production versions

SAP ERP

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The capacity of the production vertices on the graph is determined by production planning models

sintering ore limesinter

pellets cokepig

Ferriticlime

waste metal

Rawmaterials

Semi-finished products

pigMaster

Plan

iron oreConcent-

rate

sinter cast iron

steeltransfer

bar

transfer bar grade

transfer bar

bars

railsbraces

Sinter production

Productionof cast iron

Productionof steel

Productionof cast bars Flat products

Production of railbraces

Cutting ofwire rod

raw materials

raw materials

raw materials

Oxygen-converter workshop Rolling workshop of EMZBlast-furnace workshopSinter workshop

pig

grade

grade

grade

grade

bars

railsbraces

Rolling workshops MF EMZ

EMZRaw

materialsSemi-

finished products

Master Plan

cast

ir

on

stee

l

sin

ter

Squ

are

tran

sfer

bar

strip

wire rod

wire rod

strip

AM No. 1

AM No. 2

AM No. 3

AM No. 4

DP No. 1

DP № 3

DP № 5

KK No. 1

KK No. 2

KK No. 3

MNLZ No. 1

MNLZ No. 2

Stan 360

Stan 550

Stan 150

Stan 390

POS

UPRS

Implementation of SOP on the Basis of SAP

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Planningof production

Planningof supply chainat METINVEST:

Planningof logistic flows

of commodity output

Planning andoptimization

of logistic flowsof commodity output

Logistics cost planning

Planning and optimizationof logistic flows of primary

raw materials and materials

Planning and optimization of

utilization of capacities of KHP

Planning and optimizationof requirements of KHP for METINVEST in relation to

coal raw materials

Planning and optimizationof requirements for

primary raw materials and materials

Sales forecasting

Planning and optimization of GOK capacity utilization

Planning andoptimization of utilization

of capacities of metallurgical complexes

Evo

luti

on

of

the

SOP

pro

ject

Planning Mechanisms in SAP APO SNP

– coke and chemical plants

– agglomeration and blast-furnace

processing at metallurgical

enterprises

?

Production planning

mechanism in SAP SNP

Determination (selection) of the most expedient

(optimal) version of the manufacturer from the

many versions loaded into the system

Applicability

– concentrating and burning

capacities of GOKs

– steelmaking capacities of

metallurgical enterprises

– rolling capacities of metallurgical

enterprises

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User Limitations

SAP APO/SNP

Pre-configured logistics model

powered by SAP

Materials

Specifications and

technological flow charts

Sales plan

Production plan

Transportation plan

Demand for primary raw

materials

Workplaces

Forecasted commodity

prices

Schedule of repairs

Planned orders

SAP ERP

Purchase requests

User Limitations

Logistic component

SAP APO/DP

Logistic limitations

Forecasted sales for

product groups

SAP APO/DP

Price forecast based on the

terms of sale

SAP MDG

Materials

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SAP ERP

SAP BW

Architecture of the Solution for the End-to-End Planning of the "Coal-Coke-Cast Iron" Technological Chain

Model of interrelations between qualitative indicators

Qualitative

indicators of

mix material /

coke

Coke

consumption

Productivity of DP

The end-to-end planning model consists of three modules:

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coal mine

Coke nut

Gross coke

Coke fine

Blast-furnace

Coke

Coke gas

Semi-finished products

gas

Coal concentrate

Rawmaterials

Master Plan

Mix material production

Productionof coke

Coke sorting

Pig iron

Master Plan

limesintering ore

iron oreconcentrate Sinter

Liquid cast iron

cokepellets

Sinter production

Liquid cast iron production

Cast iron pouring

Agglomeration and blast-furnace processing

DC

KHL

Semi-finished products

Rawmaterials

Liquid cast iron

(processed)

Results of Testing the Prototype of the Solution for the End-to-End Planning of the "Coal-Coke-Cast Iron" Technological Chain

Solution scope Results of testing

• 4 coke and chemical plants

• 3 metallurgical enterprises

• > 60 suppliers of coal and coke

Cost of coal mix material +0.2%

Specific coke consumption –2.6%

Production volume of cast iron +1.5%

Structure of the economic effect, $

Suppliers of coal and coal concentrate

Coke suppliers (third party)

KHP No. 4

KHP No. 2

KHP No. 3

KHP No. 1

Metallurgical Complex No. 1

Metallurgical Complex No. 2

Metallurgical Complex No. 3

Coke consumption

Economic effect

Coal mix material

Productionvolume of cast

iron

Computational performance

Interrelations model

(27,882 x 80,507)

SAP APO SNP

Calculations > 72 hours

restr

ictio

ns

variables

Data uploading – 1.5 minutes

Calculations – 15 seconds

Basic SOP solution(without the Interrelations

model)

Integrated Solution(Database + Interrelations model) SAP APO SNP

Two-stage calculation process

Key

parameters

Permissible

tolerances

Calculation ~ 2 hoursModel loading 15 minutes

Direct

calculation

process

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SLIDE 12

Directions for the Further Development of the Integrated Supply Chain Planning System at METINVEST

LO

GIS

TIC

SP

RO

CU

RE

ME

NT

SA

LE

S

Sales forecast

Contracted volumes

Orders from the

distribution network

Materials

Commercial

priorities and

limitations

Logistic costs

Logistic limitations

PR

OD

UC

TIO

N

Available worktime fund of the primary equipment

Specifications and technological flow charts

Production versions

BU

DG

ET

ING

Long-term Planning

(LTP)

Sales & Operations Planning

(S&OP)

Short-term Operational Planning (OFP)

Calendaring (MS)

Management Company

Enterprises

Planning results

Operational plan:

Sales plan

Transportation plan

Procurement plan

Production plan

SAP IBP

APO PP/DS & APS

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Thank you.

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