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Industry 4.0 Programme

Metalloinvest launched its Industry 4.0 comprehensive business transformation programme in 2016. The Programme is focused on improving the efficiency of the Company’s business processes, reducing operational man-hours, increasing the accuracy of planning and improving follow-up control, as well as maintaining transparent accounting and timely decision making.

The Programme includes three projects:

  • Creating an integrated financial and business management system, including the development of guidelines on budgeting and consolidating IFRS statements
  • Setting up a Multifunctional Shared Services Centre
  • Developing methodology for strategic corporate KPIs

Andrey Varichev, CEO of Management Company Metalloinvest, is the Chairman of the programme’s Governing Board and personally supervises its implementation.

The integrated financial and business management system uses solutions developed by SAP to create a shared information space for all of Metalloinvest’s enterprises based on uniform rules and standards. The system covers almost all business processes and management levels of the Company enabling faster and more efficient management decision making, streamlined information sharing between the business units and accelerated reporting.

The system design stage was completed in mid-2017. The team was strengthened and the project office developed, a capability and support centre was established, and Accenture selected as the key contractor for the implementation stage. The Board of Directors approved the high-level programme and determined the key stages of the system rollout, which is to be carried out in two waves: at Lebedinsky GOK and Mikhailovsky GOK in mid-2018 and at OEMK and Ural Steel in mid-2019.

To enhance its management system, Metalloinvest developed business model transformation KPIs, which summarised targets for the integrated management system and a set of related projects. These were approved by the Board of Directors in late 2017.

The additional projects launched in 2017 to enhance the functionality of the integrated management system include:

  • Volumetric Planning
  • Customer Relationship Management (CRM)
  • Scheduling
  • Supplier Relationship Management (SRM)
  • Mobile Maintenance and Repairs Management

As part of updating functional strategies, the Company has launched a number of related projects, such as:

  • drafting an IT strategy and enhancing internal integration processes, including Manufacturing Execution Systems (MES) integration, developing an automated process control system and integrating it with Enterprise Resource Planning (ERP) and MES
  • enhancing core functions, executing repair services reorganisation strategy, transforming the functional strategy and operating models of sales and procurement

The multifunctional shared services centre consolidates standard processes for all Metalloinvest’s enterprises. The shared services centre will provide five functional services:

  • Accounting
  • Tax accounting
  • HR management
  • Procurement
  • Payment factory

The multifunctional shared services centre operates as a separate subsidiary, LLC Metalloinvest Corporate Service, based in Stary Oskol, which was selected due to its proximity to three of the Company’s enterprises as well as the accessibility of infrastructure and skilled personnel.

The shared services centre started operations in January 2017, with accounting, tax accounting, and HR management personnel transferred there to provide shared services. The Company also opened regional customer service offices (front offices) and developed feedback collection tools such as questionnaires, customer feedback forms, and a hotline.

Regional Metalloinvest Corporate Service teams were transferred to a single location in Stary Oskol in July 2017 after the renovation of a state-of-the art six-floor office with over 700 modern workstations.

The processes used to consolidate and analyse the man-hours of the shared services centre personnel, as well as to develop and disseminate the report on scanned documents, were automated in September 2017

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The accounting and tax accounting front offices at OEMK, Mikhailovsky GOK, and Ural Steel were fully centralised in December 2017, and an automated man-hour accounting system was introduced.

Production System

The proprietary Production System has been under development at Metalloinvest’s enterprises since 2016.

The system operates on a lean basis and aims to improve the Company’s competitive edge through implementing international and domestic best practices. This is not a new project – the Company had been successfully implementing its Operational Efficiency Improvement Programme for several years and decided to make these efforts even more consistent in 2016.

The Production System development at each of the four plants was launched by selecting two priority pilot sites to introduce lean tools and test new labour management methods.

The first Production System tools introduced at Metalloinvest’s enterprises were:

  • Factory of Ideas
  • Visual management and 5S
  • Process mapping
  • Standardised operations
Factory of Ideas
5S
Process mapping
Operations standardisation