SAP S/4HANA as a Core for

Business Transformation
Industry 4.0
Impossible is Possible
Oleg Laktyushin
CIO Metalloinvest Management Company LLC

Dmitry Toporov
MD Accenture CNR
Metalloinvest Company Profile

Metalloinvest is a leading global producer and supplier of HBI and

iron ore products, and a regional producer of high quality steel.

Metalloinvest extracts iron ore from the second largest measured

iron ore reserve base in the world with approximately 14.1 billion
tonnes of proven and probable reserves on a JORC (IMC Montan)
equivalent basis and about 140 years of reserve life

The Company’s Mining Segment comprises Lebedinsky GOK and

Mikhailovsky GOK, the two largest iron ore mining and processing
facilities (by production volume) in Russia.

The Company's Steel Segment comprises OEMK (Oskol

Electrometallurgical Plant), Ural Steel and Ural Scrap Company.
Metalloinvest is the fifth-largest steel producer in Russia by volume.

Employees – over 48 000

Operating revenue in 2017 - 6.2 billion dollars
 Industry 4.0 Program Overview

2015 2016 2017 2018 2019

Duration of the Program is 5 years.

Industry 4.0

Scope of the project includes 2 waves:

SAP 1. Mining Segment(Lebedinsky GOK, Mikhailovsky GOK)
Implementation 2. Steel Segment(OEMK (Oskol Electrometallurgical
Plant), Ural Steel)
Business Main goals:
Transformation • SAP S/4 HANA Implementation is unified company
platform
Change • Improving the efficiency and manageability of the
company
Management • Unification of business processes
• Creation of Shared Service Center (Metalloinvest
Corporate Service)
• Reduce operating costs
 Industry 4.0 S/4HANA Implementation
Roadmap
2017 2018 2019
Jul. Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sept. Oct. Nov. Dec.

SAP S/4HANA Wave 1, Analytics SAP S/4HANA Wave 2

Budgeting, Sales and Operation Planning Wave 1 Sales and Operation Planning Wave 2

SAP HCM Wave 1 SAP HCM Wave 2

SAP S/4HANA 1709

SAP HANA 2.0
SAP MDG for S/4HANA 9.0
WHY
SAP HCM
SAP Access control for S/4HANA
SAP S/4HANA Finance
S/4HANA 1709?
• The Program were implemented in standard ASAP methodology.
SAP BW • Realization is splitted – 1st wave Mining Segment, 2nd wave Steel
SAP Process Orchestration 7.5 Segment
SAP Solution Manager 7.2 • Main rule for additional functions - Keep it Standard!
 SAP Support Channels

Enterprise
Support + SAP S/4HANA
Customer Care

28
Meetings on weekly
4
Info-sessions
7
Enterprise
13,5
Times Faster
base with Customer Early Knowledge Support Services
CPTD Performance
Care Support Team Transfer Done
after BPPO Service

ES Services:
CQC Custom Code Maintainability Check

5
CQC for Implementation (Analysis session)
CQC Business Process Performance Optimization Showstopper incidents were closed
CQC Security Optimization during Cut-Over period
CQC Technical Performance Optimization
CQC Going Live Support
CQC for Implementation (Verification session)
 HANA 2.0 ready Data Center

Key features: Data Center #1 Data Center #2

• Latest version of SAP S/4 HANA x86 x86
1709* 0 1 2 3 4 5 6 7
ID

SR630
0 1 2 3 4 5 6 7
ID

SR630

• Latest version of HANA 2.0

0 1 2 3 4 5 6 7
0 1 2 3 4 5 6 7 ID
ID

SR630
SR630

• More than 10 production systems.

0 1 2 3 4 5 6 7 0 1 2 3 4 5 6 7
ID ID

SR630 SR630

67 SAP systems. IBM POWER IBM POWER

• More than 40 third party systems SAP HANA
System Replication
integrated. E880

Database servers (LPAR)

E880

• Hybrid architecture – Database

servers on IBM Power, Application
Storage Replication System Storage

servers on x86.
System Storage

Application servers (VM) 1 24

• SDN solution - Cisco ACI

1 24
System Storage

System Storage

• Tier-3 ready Data Center

1 24

1 24

Сisco ACI Multipod

SUP 1 SUP 2

SUP 1 SUP 2

Cisco Nexus 9504

Cisco Nexus 9504

BCN SUP FAB IOM PSU FAN PWR MGMT

BCN SUP FAB IOM PSU FAN PWR MGMT

* - latest version at the time of Go-Live

 Functional Scope
• S/4HANA Finance • Plant Maintenance:
• Accounting, Taxes, IFRS • Master Data
• Treasury & Risk Management: • Notification
• Analyze: Credit Risk Analyzer • Maintenance Orders
• Transaction Manager: Money Market, Securities, • Procurement & Inventory:
Trade Finance, Foreign Exchange, Derivatives • Master Data
• Financial Supply Chain Management: Cash • MRP New
Management, Cash and Liquidity Management, • PO
Liquidity Planning, Bank Communication Management • Sales and Distribution:
• Controlling: • LO-VC*
• Product costing, Material Ledger, Overhead Cost • Formula Based Pricing based on BRF+
Controlling, Profitability Analysis • Outbound Delivery online integrated with MES
• PS/Program Portfolio Management*: • Budgeting:
• Project Planning • 70’s Budgeting form based on SAP BPC
• Project Execution • Analytics:
• Integration with Primavera • 10 CDS Views in S/4HANA, 29 reports in SAP BW
• Production Planning: • RCM:
• Master Data, LO-VC(BRF+), Production Planning, • Legal Contracts integrated with
Shop Flor Control, MES Integration Procurement/Sales/TRM and external workflow
system
(*) - additional functionality will be implemented in Wave 2
 Industry 4.0 – S/4HANA & MES Integration

Daily update of mining operations Unified Product Definition Library (VC/BRF+)

Online
C-level Daily
Weekly
reports Monthly
Product
Costing
S4HANA Sales Order Production
Production Order SFP Outbound
Configuration Planning
Order confirm FG Delivery
Inventory Product Production
Integration Layer Definition Scheduling
Sales Production
MES Level Analysis Execution

Production
Load/Haul Quality
ROM Crush Process Product
Stockpile Stockpile
 Industry 4.0 – Integration BPC + S&OP

S&OP Model Budget model

18 M/ 3Y
100 Products Production Plan
BPC
250 Resources 8 Main Budget Forms
150 Customers Sales Plan 180 Budget Forms in
130 RWS \ Harbors Inventory Plan Total

Sales History

S/4HANA Sales Contracts

Capacity Availability Actuals Approved Budget Scenario

One source for MM PUR PP CO-PC

Master Data
SD PM CO-OM
 SAP HCM
2017 2018 2019
jul aug sep oct nov dec jan feb mar apr may jun jul aug sep oct nov dec jan feb mar apr may jun jul aug sep oct nov dec

SAP HCM Wave 1 SAP HCM Wave 2

Payroll for Management levels

24 000 51 from 13 to 6
employees is performed in SAP HCM Organizational unit were unified in Organizational structure

Next Steps:
• SAP HCM Wave 2 Implementation for Steel Segment
• Self-services for employees based on SAP ESS and
HR-bot(Viber, WhatsApp, Telegram)
• Talent Management based on SAP Success Factors
 Plant Maintenance Business Transformation

• Reduce Unplanned Downtime

• Improve control and process
transparency
1550 16000+
PM employees work in Maintenance Orders
• Manage maintenance cost SAP S/4HANA on planned and executed
• Improve material planning daily basis each month

Current Result: Next Steps:

• Unified PM Master Data for Mining Segment • SAP S/4 Implementation for PM in Steel
• New Organizational structure for Plant Segment
Maintenance for Mining Segment • Unified PM Master Data and Organizational
• 1.2 million historical Maintenance Orders migrate Structure for Steel Segment
to SAP S/4HANA • Mobile Plant Maintenance
 Procurement
Transformation Initiatives
• Operational Model (definition,
piloting, full implementation)
• Process review for Service
Procurement
• Develop sourcing capabilities
• Contracting procedure
optimization
Key Achievements Next Steps:
• New operational procurement • FMB model implementation
model (FMB pilot launched)
• Stabilization of new
• Centralized model to manage processes
service procurement
• New digital ways to buyer-
• Sourcing strategy templates, supplier interaction
action plans to develop
sourcing category
• Balanced Contracting
Procedure (Simplified
Process for small deals)
 SAP S/4HANA as Digital Core

• Get more business value through usage of S/4HANA

digital components for Procurement and Accounting

• Fine tuning of Business Process Infrastructure

Business Process
Optimization Cost Optimization
• Keep Infrastructure TCO balanced while allowing
business get access to data

• Cloud Platform for digital pilots

SAP SAP Quantity SAP Predict SAP DATA SAP

Process contract Arrival of Stock in Cash Aging Cloud
Mining consumption Transit Application Platform
 Next Steps

• SAP HCM Go Live for OEMK (Oskol Electrometallurgical Plant), Ural Steel
1st of January
2019

• SAP S/4 HANA Go Live for OEMK (Oskol Electrometallurgical Plant), Ural
1st of July Steel
2019

• SAP BPC Go Live 2nd Wave

• Sales and Operation Planning for OEMK (Oskol Electrometallurgical Plant),
1st of October
2019
Ural Steel