Sap Tata Steel (new) 2x6n3e

SAP At Tata Steel (TISCO) Group :

Roll No.

Clinton Mendonca

29

Malcolm Monserrate

30

Eric Simon

45

Jason Xavier

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INDEX 1. Overview of the Company. 2. Challenges faced by the Company. 3.

Need For ERP System.

4.

Solutions provided by ERP system.

5. Retail value management. 6. Implementation of SAP. 7.

Benefits got by implementation of ERP system.

8. Conclusion.

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The Company Tata Iron and Steel Co Ltd (TISCO), Jamshedpur, India. Company web site: http://www.tatasteel.com/ Est. in 1907, Tata steel is Asia’s 1st and India’s largest private sector steel company. Tata steel is among the lowest cost producer of steel in the world and one of the few select steel companies in the world that is EVA+(Economic Value Added). TATA steel is India’s largest integrated private sector steel company that started its corporate journey in the year 1907. Backed by captive iron ore and coalmines, Tata Steel runs state-of-the-art Cold Rolling Mill complex at Jamshedpur, Eastern India. The enterprise has undergone a modernization programme costing $2.3 billion, resulting in production of steel at the lowest cost in the world. Being a large entity does not stop things from being subject to scrutiny and internal audit. They are regularly implemented with the help of committees who report to the selected from the senior management. The company is dedicated to providing laudable services to the stakeholders improve on the quality and as thrive for innovations and improvements constantly. Tata Steel is a relentless pursuer of excellence. ASPIRE, Tata Steel’s quality initiative drive combining TPM, Six Sigma, Total Operational Performance, Suggestion Management and Quality Circles has reaped rich dividends for the company. Tata Steel's Jamshedpur plant has a capacity of 4 mn tons per year, and produces flat as well as long products. Currently, to meet growing demands, the plant is being expanded to accommodate another million. Tata Steel has set up an ambitious target of 15 mn ton capacity per year by 2010. As part of its expansion plans the company recently made investments in NatSteel Singapore, which will expand its footprint in six countries in the Asia Pacific region and China. Tata Steel's products include hot and cold rolled coils and sheets, galvanized sheets, tubes, wire rods, construction re-bars, rings and bearings. The company has introduced brands like Tata Steelium (the world's first branded Cold Rolled Steel), Tata Shaktee (Galvanized Corrugated Sheets), Tata Tiscon (re-bars), Tata Pipes, Tata Bearings, Tata Agrico (hand tools and implements) and Tata Wiron (galvanized wire products). The Construction Solution Group explores new avenues for steel utilization by techniques that are economical. Tata Steel has also developed 'galvannealed' cold rolled steel with technical assistance from Nippon steel for high-end auto applications. 3|Page

At Tata Steel, Strategic Sourcing has delivered 80 million US $ over last 5 years and these savings continue to grow every year. This has played a key role in making Tata Steel the lowest cost producer of steel.

Cost comparison

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The Problem/Situation Tata Steel has adopted ERP technology to take a lead in the competitive steel industry and through constant learning, innovation and refinements of its business operations, has transisted seamlessly from an industry-driven company to a customer-driven company. The existing system was a replication of the manual system. Not only did it operate as individual islands of information but the technology had outlived its lifetime and was completely obsolete. Further, the reliability of the information obtained was questionable due to inconsistency and duplication of data from different departments. Also there was no built-in integrity check for various data sources. Also some information against certain items were found to be missing.

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Need For ERP System TISCO faced two major problems from the systems that existed for a long time. Firstly they were not customer friendly. The whole system was tuned to the process and very little attention was paid to the customer demands. Secondly the systems were outdates and the modalities of operation were too complex and not error free. In order to rectify these issues which would otherwise prove to be major setbacks to the company the organization resolved to take up ERP. This was instigated by the concerned departments. Leading consultants were hired and the business structure was studied and suitable plans were drafted accordingly.

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Implementation of ERP System The management at Tata steel wanted the software to seamlessly integrate with its existing information system and further provide compatibility with its future implementations. After an in-depth study of functionality, cosst, time, compatibility, esteem and future implementation in organizational requirements was done, SAP topped the list of contenders. The implementation of SAP software was associated with certain strategic goals in mind. With this implementation, TISCO wanted to bring forth a culture of continuous learning and change. This would enable it to achieve world-class status for its products and services. Besides this TISCO also wanted the software to result in quick decision making, transparency and credibility of data improve responsiveness to customers in all areas. TISCO deserves a lot of credit for the fact that it implemented ERP even when many global organizations have given up the idea of ERP. This is because it has many failures associated with it even at the implementing stage. ERP implemented incorrectly, may have caused havoc to companies rather than bringing profit. However, TISCO proved to-be different from others by choosing ERP at the right time and implementing it in a proper manner. In the process, they also reported huge profits and reduction in costs. Another amazing fact is that they implemented it into the whole system in one single spree-big bang approach. The method of implementing it in this manner carries a lot of risk especially for bigger companies. TISCO achieved this by meticulous handling and professionalism. According to Mr. B Muthuraman, MD, Tata Steel, “implementing any ERP is a challenge for an organization because of the declining success rate of ERP implementations word-wide. The challenge is overcome if the ERP provider is a world leader-SAP. At Tata Steel, however the challenge for us did not lie in the successfully implementing of SAP or rolling it out to our 46 odd geographic locations across the country under the big-bang approach in just eight months. The challenge lay ahead in building a conductive environment such that SAP would be embedded into the hearts of the people and the customers of Tata Steel.”

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The path was set to achieve success through SAP. All the branches, which had huge no. of transactions and complexities were identified as a HUB and the smaller branches along with the consignment agents were called the SPOKES which were attached to these branches. In January 1999, the team from TISCO was decided and christened “TEAM ASSET” (Achieve Success through SAP Enabled Transformation). TEAM ASSET had 2 principles: “golive date-1st November 1999” and “there are only 24 hours a day”. With the PriceWaterHouseCoopers and SAP, it successfully lived up to the axiom and truly demonstrated leadership skills by going live across 46 locations in a record time period of only 8 months. “we wanted that Tata Steel be the no.1 in the steel industry ….we wanted to-be the 1st to have the latest systems…”, said by Mr. Sandipan Chakravortty, GM(sales), TISCO. On 1st November 1999, Tata Steel pulled off a big-bang implementation of all SAP modules at one go across 46 countrywide locations, as per the set deadline.

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Retail Value Management

Before • The managers were hardly aware of the market dynamics. • Wholesalers controlled the market and dictated the prices. • Tata Steel failed to assess the quality of the retail network in of its coverage and capacity to absorb volumes. • Lack of control led to unethical practices at retail points. After • Reduce volatility in its revenue streams and consequently stabilize profit margins for the distributors and retailers. • The marketing team was better positioned to appreciate the nuances of retail marketing and to develop area-specific initiatives. • This initiative has helped Tata Steel to gain number one spot in term of sales of galvanised corrugated sheets. 10 | P a g e

Implementation of SAP Before implementation of SAP  The employees and management at Tata Steel faced a cumbersome task exchanging and retrieving information from the system.  The reliability of information obtained was questionable because of inconsistency and duplication of data from different departments.  There was no built-in integrity check for various data sources. Several times the information against certain items was found missing.

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Benefits after the implementation of SAP The introduction of SAP solutions within Tata Steel has led to efficient business processes, enhanced customer service, reduced costs, improved productivity, accelerated time, workflow management errors. Other benefits include:  The company has spend close to Rs.40 crore on SAP implementation, and has already saved Rs.33 crore in 2 years  The manpower cost has reduced from $200 per ton to about $140 per ton in 2 years  The overview outstanding has been brought down from Rs.5170 million to Rs.4033 million in 1 year  The inventory carrying cost has drastically deflated from Rs.190 per ton to Rs.155 per ton in 1 year  In addition there have been significant cost savings through management of resources with the implementation of SAP such as improved customer management, faster and better decision-making, a lean and streamlined business process that reduces the levels of legacy system and provides consistent practices across locations and excellent audit trail of all transactions….

 With SAP's solution Tata Steel can now update their customers on a daily basis and provide seamless services across the country improving customer management.  The availability of online information has facilitated quicker and reliable trend analysis for efficient decision-making.

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Conclusion ERP is a key backbone application for companies in a fast changing industry like steel. Given an awareness of the best practices and a good understanding of the project complexities, the risks in an ERP implementation are usually outweighed by the benefits. The ERP discussion is often one of mindset more than one of standalone business cases. While implementing ERP can be challenging and demands sustained commitment from top executive levels, it is fundamental to enhancing the competitive position of a company in the dynamic environment of the steel industry today.

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