Profit Velocity CASE STUDY
Turning data insights into profits at Stelco
As part of its digital transformation strategy, Stelco (Steel Company of Canada) was looking for a way to analyze its production costs, customer revenues and profitability to a much more granular level of detail. Profit Velocity came through with a tool that has completely transformed the way Stelco integrates data, performs financial analyses and makes decisions that significantly grow profits.
A complex array of products
Stelco produces over 8,000 different products, spanning 180 different chemistries, six major product lines and multiple sub-categories. Product costs vary dramatically depending on specifications such as strength, width, thickness and coating weights.
As with many manufacturers, the sales, operations and finance teams at Stelco all had their own sources of production and commercial data, plus differing interpretations as to which products were most successful. The company wanted a unified profit information platform that could provide a ‘single source of truth’ all departments could trust. What made this challenge particularly difficult was that the detailed source data they needed to pull together resided in multiple business systems.
“We would often debate the best products to run in our mills at the best margin. Our operators and sales reps often had strongly differing opinions. Now we understand the true profitability of each product.”
Three teams, three very different world views
The key decision-making teams at Stelco were all looking for something a little different in a new solution.
- Sales wanted to generate faster, more precise pricing quotes
- Operations wanted sales to appreciate their operating constraints
- Finance wanted to shift the product mix to maximize profitability
A desire to share information faster
In the past, it would often take days for vital data to be shared among departments. This prevented sales from being able to accurately quote prices quickly. The company tried various profitability tools to remedy this, but none adequately captured the enormous complexity of Stelco’s business.
A need to see the speed of profits
Profit Velocity was the only company Stelco talked to that focused on measuring and managing the speed of making money at whatever level of granularity was most relevant to decision-makers. Analyzing ‘margin per production hour’ along with traditional ‘margin per ton’ made sense to Stelco. Management understood that operational constraints were impediments to profitability and had to be considered to give a comprehensive picture of the business.
Shortly after project kickoff, Profit Velocity was able to help Stelco transform the way its internal teams worked together. It put accurate information and actionable insights at the fingertips of key decision-makers and gave them powerful new visibility into production costs, margins and profitability. It also got the various teams focused on the same metric – margin per hour.
The Profit Velocity solution
Very limited training needed
Integrates information from disparate data sources
Accurately conveys productions costs and margins
Single source of truth for all departments
Accurately forecasts with instant ‘what if’ planning
Meets infrastructure, access and security standards
Nothing like it on the market
Stelco could not find another product that could match how Profit Velocity could extract information from half a dozen different business systems and present it in an easy-to-use interface that gave users valuable, time-based insights to uncover hidden opportunities and grow profits.
Despite the massive complexity of its operations, Stelco was able to implement the Profit Velocity platform within just a couple of months. The Profit Velocity team worked closely with Stelco to configure the solution. Users were able to learn the Profit Velocity system during a brief training session to begin running analytics and exploring ‘what if’ scenarios that would drive up profits.
Bringing people together
Once the Profit Velocity’s web-based platform was implemented, cross-functional teams within Stelco could collaborate far more effectively than ever before by looking at the same trusted data at the same time. This helped them reach sound, data-driven conclusions about which products and customers they needed to focus on most, which in turn helped the business gain a significant competitive advantage in its marketplace.
“We’ve gotten away from estimates, averages and assumptions. We’re able to drill down to all those important metrics that really drive your bottom line that we didn’t have before.”
A clear view of operating costs and margins
“It enables us to quickly see where the products are that we’d ideally like to target as well as the products that perhaps we should be rethinking.”
‘What if’ planning and forecasting
Profit Velocity’s ‘what if’ planning capabilities allow Stelco to change variables on both the cost and revenue side to instantly and accurately forecast the impact of those potential changes on the bottom line. PV users can also drill down into the exact profitability of specific customers, market segments, products and facilities. These new insights have enabled Stelco to focus on its optimal product mix to help drive up overall profit.
It will work for you too
If your manufacturing company produces more than 500 different SKUs, you can benefit from working Profit Velocity. You’ll be able to:
- Track all key manufacturing KPIs
- Measure the speed of profits generated by all your products, customers and production lines
- Run ‘what if’ scenarios for how adjustments to production costs, manufacturing productivity and pricing will affect your profits
Profit Velocity is unequaled in its ability to give you access to accurate, real-time data about your operations so you can gain total control over how you generate profits.
The advantage of a time-based perspective
Measuring the exact speed of margin flowing through its production facilities has allowed the Stelco management team to determine which products, markets and customers deliver the best return for each hour consumed on its production assets. For example, they’ve been able to see that certain grades of steel had much lower or much higher profitability than conventional margin-per-unit metrics had led them to believe. They’ve also been able to develop new products with technical specifications that deliver significant financial rewards.
“What amazes people with Profit Velocity is how quickly different scenarios can be analyzed.”
“If you’re in the manufacturing industry and want to improve your bottom line, I would definitely recommend the Profit Velocity solution.”
See the full video
For more details, watch the full-length (7-minute) video on how Stelco is leveraging the Profit Velocity data analytics platform to measure margins per hour and boost profitability.
Let’s set up a quick call.
If you have questions, let’s schedule a 15-minute call to see if our solution is right for your needs. Typically, our platform is most effective in growing profits for manufacturers that have 500+ SKUs, an ERP system in place and annual revenue of $100 million or more.