Canadian Steel: Role of Information Systems (IS) Canadian Steel is the 5th largest integrated steel manufacturer in North America and the largest in Canada. Headquartered in Mitchell, Ontario, it can produce approximately 15 million tons annually. In the last fiscal year, Canadian Steels total revenue was $7.56 billion, with a net loss of $210 million. Its information technology budget was approximately 1% of the total revenue or $76 million, a very low number for the industry. Ford Motor Company and General Motors form Canadian Steels top two customers. Both automobile manufacturers viewed Canadian Steel as the worst in performance amongst its leading suppliers and threatened turn elsewhere for its steel supplies if no improvements are noted in Canadian Steels performance in the coming six quarters. We were in the danger of losing our top two customers business, explained Ronald Swanson, Canadian Steels Chief Information Officer. The automakers biggest complaint was that they were not notified when their steel shipments would arrive, leaving the car manufacturers unable to operate efficiently. For Canadian Steel, this threat was a wakeup call causing it to examine its whole production cycle. Canadian Steel identified several challenges beyond its notification system. It knew it needed to lower production costs, including its cost per ton of steel and the number of hours per person required to produce a ton, as well as the costly size of its steel inventory. It had to return to profitability, and to accomplish that it needed to increase its share of the high-end steel market. Internally it needed to centralize management of its various business divisions and factories as well as their locally controlled information technology infrastructure. Canadian Steels major problems were reflected in its order-taking process. Orders were often manual, very imprecise, and filled with errors. Moreover, once an order arrived, Canadian Steel was unable to track it during processing. Processing began when one of its four plants transformed the raw materials into steel coils, which were then sent to Canadian Steels processors to be turned into finished products. Canadian Steel has over 150 processors (65 of which work on Ford Motor Company and General Motors). A single piece of steel might be processed by up to seven different processors as they treat, shape, and finish the products. The reason for the complexities is that these orders require blending and shaping of the materials, including manipulating such characteristics as heat and tensile strength. Canadian Steel was unable to follow each order as it was processed and delivered. One problem was that each processor had its own tracking and order systems, and each assigned its own inventory codes, making tracking impossible for Canadian Steel. In addition, each processor communicated its processing data to Canadian Steel over a dialup system. When the data arrived, they then had to be manually translated into a format that could only be used by Canadian Steels own system before the information could be sent to the customer. This translation took about 90 minutes per message. It was a very expensive and inefficient system, and it left Canadian Steels customers without enough information for their own production planning. Canadian Steel did send advanced shipping notices (ASNs) to their customers notifying them of the arrival time, but ASNs often arrived after the steel, too late to benefit the customers. Late shipments made customers such as Ford Motor Company and General Motors more inefficient. Some of the car manufacturers plants are within 15 minutes away from the processors. If a truckload of steel arrived without an ASN, the automakers employees would have to record the delivery information manually, a process requiring excess labor while increasing errors. The tracking systems inadequacies also created forecasting and inventory problems, forcing the company to hold too much inventory, which in turn, raised Canadian Steels costs even higher. It needed to modernize its order taking, tracking, and inventory management systems. Canadian Steel moved rapidly to solve these problems. One objective was to enable customers to enter orders electronically so that they would be accurate. Using the Web, customers can now specify the product, quantity, price, composition, size, thickness, and even the delivery date for their orders. To achieve all of this, the system had to handle information on production limitations such as metallurgical rules and production capabilities. It even had to calculate cost and delivery dates. All of this had to be done rapidly so the customer knew cost and dates promptly after entering the order. Canadian Steel even connected the CRED system from EQUITEL Corporation to speed up credit authorization, enabling Canadian Steel to reduce uncollectible debts while approving most orders. To track orders, Canadian Steel developed an event-driven system that recorded each step in processing an order, automatically triggering the next step when the current step was finished, including the steps performed by the external processors. The new system even triggered ASNs and the delivery of the order. One benefit was that Canadian Steel was able to handle processor messages in 12 minutes rather than 90. Both Canadian Steel and the customers knew exactly where the supplies were and how the

Articulate the goal of the organization and the role of information systems in clear and concise manner.

Summarize Canadian Steels current competitive situation using Michael Porters five forces model. Specifically, analyze the industry and competitive marketplace as well as identify the best competitive strategy to pursue given the companys strengths, weaknesses, opportunities, and threats.

How are information systems related to the way Canadian Steel runs its business? What role is played by supply chain management system? How do these systems provide value for Canadian Steel?

How helpful were information systems in addressing Canadian Steels problems?

Evaluate the decision by Canadian Steel to sell its software to other companies. Could it help or hinder Canadian Steel? Explain your rationale.

Rationale

This assignment will evaluate the following course learning outcomes:

Assess the structure of information in a business context.

Effectively organize data to resolve business problems.

Employ standard system development and maintenance processes.

Demonstrate the role of the Internet and its associated technologies in a business organization.

Illustrate the management issues associated with information systems.

Demonstrate the role of information systems (IS) in the strategic planning, risk management and management process of an organization.

Identify common development methodologies and frameworks.

Employ detailed software development management strategies to resolve identified business issues.

Assess the impact of ethical and regulatory issues related to information systems.

Apply appropriate change management strategies to the implementation and use of information systems.

Discuss the issues of technical infrastructure selection for firms.

Discuss future trends in information systems.