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Manufacturer Proves Its Metal With IP Network

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Industry Focus

Largest family-owned U.S. metal services center

Size

$2.3 billion in annual revenues

Networking Solution

MPLS-based IP network reliably supports bandwidth-hungry applications and connects all company stakeholders

Business Value

Enhanced collaboration and improved customer satisfaction; ability to support growing diversified business

About Our Customer

O’Neal Steel, the largest family-owned metals service center in the U.S., offers a vast array of products and multi-stage processing capabilities delivered by more than 3,500 employees spread across 75 locations. Founded in 1921 by Kirkman O’Neal, the company was built on initiative, flexibility and free thinking. It strives to partner with customers, anticipate their needs, customize services for them and help them improve profitability.

Situation

Through significant acquisitions over the last 3 years, O’Neal Steel has diversified its focus from carbon and steel to a wider array of metals, allowing it to enter new markets such as aerospace. The company has also expanded from minor processing that would cut, bend or burn metal to sophisticated manufacturing processes that now account for more than half of its business. These steps opened up new markets for O’Neal Steel, but created challenges as well. The company needed to accommodate the needs of the acquired companies, support the move to manufacturing and handle future growth while maintaining its signature customer service.

Solution

Broadening its product lines, skills and knowledge base helps O’Neal Steel successfully navigate an increasingly competitive environment. The company supports its growing manufacturing business with a new ERP solution powered by an MPLS-based IP network that provides the necessary bandwidth and responsiveness. Collaboration with customers, suppliers and acquired companies is enhanced, positioning O’Neal Steel to ensure the high levels of service its customers expect.

Family Business Succeeds with Customer Focus

Kirkman O’Neal founded a steel fabricating plant over 85 years ago with a commitment, in his words, “to turn out each piece of work and each contract the very best that can be done.” O’Neal and his descendents have always kept this promise, and as a result O’Neal Steel has become the largest family-owned metals service center, with a reputation for dependability, a solid work ethic and strong customer relationships.

The third generation of O’Neals is now running the family business and the company’s employees, many of whom have been with O’Neal Steel for 30 to 40 years, are like part of the family. All are proud of the company’s reputation for quality that’s as strong as the heavy carbon steel it distributes.

Today, the metals distribution industry has become a $115 billion market in North America alone. O’Neal Steel and its competitors have been faced with volatile raw materials costs and rising consumption by the U.S. and fast-developing countries like China and India. These and other new industrial markets demand increasing quantities of quality finished metals.

The defining services that separate the industry leaders from other players in today’s global metals market are availability, speed and security of delivery. O’Neal Steel works to provide all three and exceed the expectations of its customers, employees and shareholders.

“It’s not by chance that we list our customers first,” said O’Neal Steel CIO Michael Gooldrup. “We are a very customer-centric business, and our customers enjoy doing business with us.” O’Neal Steel’s customers include global manufacturers like John Deere, Hytrol, GE, Mitsubishi and Toyota. “Our goal is to be the recognized leader in our industry,” said Gooldrup.

All Roads Can Lead Anywhere

Specialty metals like alloys, stainless and aluminum, traditionally a small part of O’Neal’s business, have become more important as the company diversified and extended its product portfolio. A new ERP solution helped O’Neal with this expansion, but stressed a network that was already feeling the strain of increased employee demand for email and Internet access.

In addition, emerging applications like VoIP and videoconferencing were attractive to O’Neal. Officials recognized that the company needed a new networking solution that could support ERP as well as these new applications and ensure business continuity as the company grew.

A conservative approach has served O’Neal well for more than 80 years, so that the company rarely adopts new technology without methodical analysis of potential risks and benefits. After careful research, it chose an MPLS-based IP VPN for its ability to support collaborative applications. “We saw an IP network as a way to extend our capabilities and capacity and at the same time actually reduce our costs,” O’Neal Steel Technology Manager Kenny McCrary said.

The results were immediate and dramatic. O’Neal effectively doubled its bandwidth while simultaneously lowering communications costs. This is significant for an industry whose customers typically pressure their suppliers to keep costs down.

O’Neal faced a major technology shift when it moved from its mainframe environment to the client server architecture that the ERP solution required. With its former network – a hub and spoke frame relay configuration – all data had to pass through company headquarters in Birmingham before it could be routed to any other company location. “We used to say all roads lead to Birmingham,” Gooldrup said. “Now all roads can lead everywhere.”

The MPLS-based IP network creates opportunities for added redundancy and offers classes of service, enabling officials to carve out dedicated priority for business-critical applications like ERP. “The MPLS network has given us a better infrastructure for information, and has also provided tools that we didn’t have before,” he said.

Capitalizing on Opportunities to Collaborate

O’Neal’s IP VPN supports the demands of employees at the company’s 28 production plants and at some affiliate locations. One of the biggest benefits has been the potential for enhanced collaboration. Although most of the companies O’Neal has acquired continue to run as separate organizations, Gooldrup has noticed increasing requests for exchange of inventory, financial and customer information.

“Right now we keep this pretty simple, basically doing a consolidation here in Birmingham,” he said, “but as we become more accustomed to being a single entity then the request for collaboration and the exchange of information will allow us to explore a more converged network environment.”

The company’s network already supports vendor-managed inventory, which gives suppliers limited access to company inventory levels. Approved vendors can replenish supplies without interacting with any of O’Neal’s purchasing managers. The company plans to extend this capability to customers to provide more of a service-level product.
Additionally, networking the company’s 28 production plants has led to an increased pooling of manufacturing capability and inventory resources, McCrary added, “so from a customer standpoint it all looks like it comes from a local facility.”

“Improving the Way We Do Business”

Information is one of the most valuable assets of any company. O’Neal Steel recently made it much easier for employees to get the information they need to do their jobs. “Information on Demand,” is an online tool that employees access for information such as sales, inventory and purchasing in O’Neal’s data warehouse. “That would not have been possible had it not been for the new MPLS network,” McCrary said. The company uses webcasting to train employees on this new capability.

Because accessing this important information is a top consideration, O’Neal now has significant network redundancy. “Once we rolled out the ERP we knew it was critical to have the network up at all times and at all locations to receive, process and ship orders and perform all required interactions,” McCrary said.

An ISDN backup helps ensure that systems will be up and running, even if any unexpected issues arise with the VPN. Significant network redundancy protects O’Neal from single points of network failure and disaster scenarios. AT&T fully manages the network, with an eye on keeping business critical applications available.

The IP network will improve the quality of videoconferences and will increase the collaboration opportunities among employees, business partners and customers. O’Neal also plans to implement a VoIP telephony solution that will support advanced features such as unified messaging and four-digit dialing, further bolstering employee productivity and trimming telecom expenses.

Employees appreciate the ability to work from anywhere, thanks to strong remote access capabilities. “In specific cases we have started telecommuting so that buyers can work from their homes and technical people who often work away from the office can be supported,” said Gooldrup.

“With our new network we have been able to service end users in ways that we haven’t been able to in the past,” he added. “Now we’re bringing them new functionality and an ability to respond faster and push more information down to our internal customers, and I think that’s the difference.”

“We have the opportunity to really improve the way we do business and to improve our customer service,” McCrary said. “We have a platform to build new applications. There are a lot of opportunities and we are beginning to see the benefits.”

Voice of the Customer

“We used to say all roads lead to Birmingham. Now all roads can lead everywhere.”

– O’Neal Steel CIO Michael Gooldrup