Aisha Steel Mills Limited

Reduction in Inventories and localization of spares

Course: Risk Management in Supply Networks

Instructor: Syed Muhammad Arif Azam

Introduction
Aisha Steel Mills Limited (ASML) is a Group Company of Arif Habib. ASML was incorporated in 2005 and
started its commercial operation in 2012 and its one of the largest manufacturer of Flat Rolled Steel –
Cold Rolled and Hot Dipped Galvanized coils located in Port Qasim, Karachi- the most suitable plant
location for export market.

It is a state-of-the-art Cold Rolling and Hot dipped Galvanized Rolling Complex with a capacity of 700,000
metric tons per year

Challenge 1:

The risks associated with reduction in inventory levels and their mitigation.

Challenge 2:

The risks associated with localization of spares and their mitigation.

Pareto Analysis of Excess

Invetory
80% 60%
60%
40% 15%
20% 10% 10% 5%
0%
Import Spares Uncommon Inaccurate No check Others
Spares record points before
keeping ordering
 Cause & Effect Diagram

Man
Method 1- Ordering in excess.
1-Running plant on 2-Not using stored
capacity excess than inventory.
recommended by OEM. 3-Inaccurate record
2- No check points before keeping.
ordering. 4- Reordering.
3- Ordering bulks to 5- Low skill workforce.
obtain discounts.
4-Variety of spares
required for different
equipment.

Excess inventory

Machine
1-Machines requiring Material
uncommon spares. 1-Export items which are
2- Specialized customized ordered in bulk quantity
OEM Parts. due to longer lead-times
3- Lack of frequent and freight costs.
maintenance resulting in 2- Inferior quality
higher breakdowns. material requiring
4- Warranty Claims frequent replacement.

Value Chain analysis

~ Keeping buffer
while ordering. ~ Improper storage
~Uncommon system.
~ Ordering Bulk
spares. ~ Poor Segregation
quantity to reduce
~Not proper and record keeping.
freight cost and
Preventive ~ Theft.
obtaining discounts.
maintenance. ~ Not proper
~ Inaccurate record
Utilization of Area.
keeping
~ Mishandeling

Material Handling and

Need Recogniton Purchasing Material Reciept
Requirement Storage

~ Not verifying ~ Receipt of faulty

actual quantity. material.
~ Multiple ordering. ~ Not proper data
~ Wrongly keeping.
calculating ~ improper
requirement. Information sharing
~ Not checking local
vendors for
ordering

Results:
To reduce the inventory levels detailed analysis of the existing system was carried out the identify the grey areas
using different tools and techniques A revised SOP for procurement cycle is proposed to control the inventory
levels. This reduction in inventory levels is accompanied with several risks whose mitigation strategies are
implemented to make sure that the process is efficient and not adversely effected by new SOP’s.

Group Members: Fasih Ur Rasheed, Kashif Ali,Usama Bin Ali Khan