“Five years ago we were in a pretty serious position, in a survival mode,” says David Bright, IT director for Corus Distribution & Building Systems in Wolverhampton, England. However, under the leadership of CEO Philippe Varin, former head of French aluminum producer Pechiney, the company has returned to profitability.

Reporting net losses of 419 million pounds in 2001, 458 million in 2002, and 305 million in 2003 (roughly $840 million, $920 million and $610 million U.S. at the current exchange rate), the company rebounded along with the economy in 2004, posting a 17 percent improvement in net operating revenues and a net profit of 440 million pounds ($880 million U.S.). Revenues grew by another 8 percent in 2005, but dipped by 4 percent last year while profits moderated to 229 million pounds ($458 U.S.) in 2006.

Corus was formed by the merger of British Steel and Dutch steelmaker Koninklijke Hoogovens NV in October 1999. The company was subsequently taken over this April by Tata Steel, which spent about $11.3 billion to outbid Brazil’s CSN.

Company officials claim the combination of Tata Steel and Corus creates the world’s sixth largest and second most global steel producer with a presence in 50 countries, 84,000 employees and total annual crude steel production of 27 million metric tons. Tata Steel’s access to raw materials and its strong presence in Asia promises to help Corus lower its cost of steel production and expand its market reach, while Corus brings leadership of the UK and Western European markets and additional expertise in processing, fabrication and distribution to its new parent.

Ratan Tata, chairman of Tata Steel, reportedly considered his successful bid for the Anglo-Dutch steelmaker a source of national pride for India. But observers question whether Tata has bitten off more than it can chew, and whether synergies between the two companies will ultimately justify the high price tag.

Corus operates mills in the UK, Netherlands, Germany, France, Norway and Belgium, and sales offices and service centers in over 40 countries. With annual revenues around $19 billion, the company is comprised of four divisions: Strip Products, Long Products, Distribution & Building Systems and Aluminum. Its aluminum division largely supports its building products operation since the August 2006 spinoff of its aluminum rolled products and extrusions businesses to Aleris International.

Corus is a player in nearly every steel segment, with five major mills. Its strip products division has business units that produce hot- and cold-rolled steel strip and coated steel products, steel tubes, hollow sections, line pipe, prefinished steels, plated precision strip products and electrical steels. Business units in the long products division offer plate, sections, wire rod and semifinished steel, special profiles, railway products and services. The Corus Engineering Steels unit produces engineering billet, straight and cooled bar, turned, drawn or ground bar and hot-rolled narrow strip. Teesside Cast Products makes slab and blooms.

Construction is Corus’s largest customer group, accounting for 34 percent of its business, followed by automotive at 19 percent, engineering at 18 percent, packaging at 11 percent, metal goods at 8 percent, and various other end-uses at 9 percent.

About 53 percent of the company’s revenues come from Europe, 27 percent from the UK, 9 percent from North America, 8 percent from Asia and 3 percent from the rest of the world—though that mix may change under the influence of Tata Steel.

Corus has suffered from a long history of disruptive organizational change and a lack of clear strategic direction. The company achieved its turnaround by centralizing such functions as finance, human resources, IT, purchasing and engineering. Focusing more on profitability and less on volume, the company also set out to sell more high-margin products and fewer commodities. With an emphasis on processing and fabrication, the company has selectively pursued value-added growth opportunities as it has improved customer service.

One major strategic weakness that remained for Corus was the jumble of aging legacy computer systems still being used by is various business units. In 2002, Corus decided it was time to face the monumental task of standardizing the IT infrastructure of its Distribution & Building Systems division. With a turnover of 3.2 billion pounds (about $6.4 billion U.S.), the division accounts for nearly one-third of Corus’s revenues.

The Corus Distribution & Building Systems unit oversees the company’s 46 service center sites in the UK, 11 in France and Spain, 28 in Central Europe and eight in Scandinavia. In addition, it’s responsible for 69 Corus International facilities and 62 sites within its Kalzip roofing products unit, plus a few others.

In the past four years, Corus has implemented the Stratix enterprise management system from Invera, Newtown Square, Pa., at all 46 of its UK distribution sites and is nearing completion at its UK Building Systems sites. It recently began the rollout in Central Europe with its first installation in Holland. All total, Stratix will replace legacy systems at an additional 20 sites in Central Europe and 11 sites in France, Spain and Italy over the next few years.

Combined with the standardization of the Kalzip and Corus International operations on Navision software, and Scandinavian operations on Baan software, Corus expects to invest about 9 million pounds ($18 million U.S.) on software upgrades, and reap a return of more than 5 million pounds ($10 million) annually moving forward.

While Corus’s production operations have standardized on SAP software, the company’s distribution businesses use SAP for financials in combination with Stratix for operations. “We needed a package that was designed specifically for service centers,” says Bright. Service center systems must be customer-focused, he adds. “You cannot afford to have salespeople go through 13 screens of information to take an order over the phone. It needs to be instantaneous. That’s why we went out to find a package that matched our requirements.”

In the UK, Corus primarily distributes products through one large hub at the Steelpark in Wolverhampton, near Birmingham, in combination with many medium-sized service centers that stock and process material, as well as small metal centers that do no processing but offer quick, short-distance deliveries or cash-and-carry sales of standard commodity items.

Corus has learned that people like to buy from a local business. “We use different models depending on the opportunity. We may open a sales office with the potential at some point in the future to convert to a stocking location or we may open a small warehouse,” says Andy Clay, Stratix business systems program manager. “We’ve opened 15 metal centers in recent years and plan to continue opening more on a regular basis.”

Clay has been the point man in the rollout of Stratix software, which he describes as a “business project, not an IT project.” He admits that employees did not always welcome the change from their old, familiar green screen to the new and very different Stratix interface. To get staffers to buy into the process, the company put Clay in charge of an implementation team made up of individuals from sales, operations and other departments, as well as information technology. Clay, who spent 20 years in service center operations before tackling this new IT task, speaks the employees’ language and has credibility when he assures them the systems change is realistic and will directly benefit the business.

Clay and his team traveled from location to location training selected individuals at each site, who would then pass their knowledge of Stratix along to their coworkers, with the support of Corus’s extensive IT staff. Key to the success of each site’s changeover was buy-in from top management, he says. At sites where the lead executive championed the change, employees were much more willing to follow. “Despite some early resistance, there are very few locations where, after six months or so, they’d want to go back to the old system,” he adds.

Peter Doucet, vice president of consulting at Invera, compliments Corus on the systematic and efficient way it was able to implement Stratix at so many sites in such a short timeframe. Bright and his IT team needed minimal support from Invera’s technical staff as they integrated the systems into Corus’s business processes, he says.

Rather than using their own implementation team to train personnel in Central Europe, Corus has hired a third-party consultant whose staff can speak the various languages and translate documentation. “Going forward, they will be the first line of support, so if people have a problem, they’ve got someone to talk to in the local language. If they can’t solve it, it gets passed to the [IT staff] in the UK, or Invera,” says Bright.

Alastair Aitken, managing director of Corus Distribution and Building Systems, UK & Ireland, says the biggest benefit of standardizing on Stratix is the synergies it offers by tying all the company’s locations together. By giving each site the ability to view inventory and processing capacity at all other sites across the UK, salespeople can source material from the location nearest the customer, reducing transportation costs. And Corus can cut down on inventory costs by reducing redundant stocks.

“Our previous IT systems did not give us that visibility. Before it was difficult for one site to even place an order with another one and get it delivered direct. Stratix allows us to run our business in a different way than we have historically,” Aitken says.

The system also makes much more information available to management. Capturing better data on actual costs leads to pricing decisions that can improve profitability. “Visibility of pricing is the next step. We’re in the early days of [controlling prices], but in a relatively small country, with over a 30 percent market share, being able to control what our salesperson is committing to is absolutely key,” Aitken says.

To get good information out of the system requires a high level of consistency in putting information in, he notes. “It’s been a big culture change. Some employees are resistant to the business disciplines. They have to get used to all the information they must put into the system. There’s no way to get around it; you can’t take shortcuts.” But it’s only with a common platform that the company can truly contemplate new business models that will allow better sharing of resources across its various businesses, he adds.

Clay and Bright detail the benefits Stratix has brought to Corus. Stratix is designed to enhance the productivity of sales and operations by streamlining the order fulfillment process and integrating processing functions. Its comprehensive reporting features help management enhance margins by monitoring purchasing and sales, as well as shop floor operations. It is also used for customer management functions such as handling complaints and checking credit.

Stratix and SAP operate side by side at the center of Corus’s system—SAP for financials and Stratix for operations (though Stratix also has full financial reporting capabilities). Each night, all information on the day’s transactions is transferred to a “data warehouse” where it is made available to the management information system. “It’s an overnight run. By 8 o’clock the next morning, managers can see what happened the day before at every site in the UK,” Bright says.

For data security, Corus has built two redundant Stratix environments in data centers located about a mile apart. The systems mirror each other, one a half second behind the other. “We are totally reliant on Stratix. We cannot afford to lose our systems for more than an hour. There is no paper-based system backing it up,” Bright notes. “If one of those data centers goes out, the whole lot switches over and starts running off the second data center. We’ve had instances where we’ve lost power in one data center and the users never noticed.”

As salespeople quote prices and enter orders into the system, they can see the company’s profit margin on-screen. The system automatically factors in all costs, including materials, processing and delivery. Processing costs are calculated with the help of computer terminals on the shop floor. Operators log in and out of each job, capturing the actual processing time, which is used to determine the hourly cost to operate each machine, including manpower, consumables, utilities, depreciation, etc.

“There are two benefits,” Clay says. “The big one is that you ensure you make enough money. The second is that it helps you spot any pricing errors.” Reducing pricing errors alone adds from $200,000 to $400,000 to Corus’s bottom line each year, Clay estimates.

Because salespeople can see what inventory is available at all Corus locations, as well as what product is on order and when it’s due, they rarely have to turn a customer away. Thus, the system supports “cross business” transactions, in which a salesperson in one location can sell inventory from another. This promotes direct deliveries from the most logistically efficient warehouse, and allows the company to reduce duplicated  inventory and cut back on the cost of transfers from one depot to another.

The system also allows the salesperson to check a new customer’s credit at the sales order stage, rather than discovering a credit problem later, perhaps when the order has already been processed. “That allows us to resolve issues up front and reduce firefighting,” Clay notes.

Because Stratix tracks each order every step of the way, the salesperson can respond to customer inquiries immediately with information in the system, rather than trying to track it down in the warehouse. Referring to an analysis done years earlier on how much time salespeople actually spent selling, Bright recalls, “Everyone was stunned to learn they were actually selling less than 20 percent of the time. The rest of the time they were off [chasing down information to respond to customers’ questions].” Today, salespeople can spend the majority of their time actually selling. The shift to Stratix has changed their routine—and in the process revealed those who were mere order takers and content to spend their time wondering around the warehouse, Bright adds.

Stratix also tracks deliveries, from expected dates to actual dates, and gives management a consistent way to measure on-time performance. “Delivery on the old systems was manual, and most businesses reported 99 percent on-time deliveries. In reality, the on-time performance captured by Stratix was far lower. The vast majority have used the software to genuinely improve deliveries to the high 90s,” Clay says.

Automating the information flow also helps avoid production delays. “If the production planner has to reschedule a job, he makes the change in the system rather than running paperwork out on the floor, and the line operator sees it when he refreshes his screen for the next job. It gives us a very slick way to control production scheduling,” Clay says.

Likewise, the shipping department, with its own computer terminals, can see when orders will be ready to ship, and how loads can be optimized for the most efficient delivery.

Using Stratix for purchasing, Corus is working to reduce its inventory and increase its turnover. “We have gone away from local site purchasing toward a centralized purchasing philosophy,” Clay says. “All of our 23 multi-product businesses place orders from the central site here at the Steelpark [in Wolverhampton]. Stratix gives them the ability to place bulk orders for multiple distribution, which is a strategy our old systems didn’t support.”

Clay sums up the ways Stratix has helped Corus reduce its costs of operation: Through more accurate pricing; tighter cost and margin controls; improved logistics; centralized purchasing; inter-depot sales and transfers of material; earlier detection of credit issues; and improved productivity in sales and warehouse functions. All total, he estimates that standardizing on Stratix has added at least $2 million and possibly more than $4 million annually to Corus’s earnings.

Corus has netted 1,000 new accounts in the past few years, at least in part due to improvements in customer service and management decision-making. “We could not have achieved this without changing systems,” Clay concludes.