INTRODUCTION

Tata steel was established in the year 1907, it was Asias first globally
integrated steel plant having annual crude capacity of around 30million
tonnes annually. At present it is the worlds second most geographically
diversified steel producer having operations in 26 countries, it is also
present in 50 countries globally. The Tata steel group has an annual
turnover of 22.32billion US$ in the year 2015, having more than 80,000
employee globally, it also features in fortune 500 company. Tata steel
aspires and striving towards attaining the benchmark of value creation
through the excellence in its supply chain by constantly and continuously
optimizing its supply chain lead time and also reducing down the cost
incurred in the entire supply chain process. Tata steel has the honour to be
the first integrated steel conglomerate in the world, outside Japan, to win
the Deming Grand prize 2012 coined by the Japanese union of scientists
and Engineers.
To begin with we need to understand the basics of supply chain, it is basically the
facilities involved in coordinating different functionalities and activities in
producing and delivering the product from the source, suppliers to the
customers. The basic objective is to optimize the pre and post production yield
level of inventory. It helps in achieving greater efficiency in terms of labour and
various equipment and spaces. The primary objective in supply chain is to
optimize the operational cost and to maximize the overall profitability. We know
that supply chain cost is an essential element in deciding the income of any
company specially the company like Tata steel which relies heavily on an
effective supply chain methodology to achieve its desired target of attaining
profitability and above all decrease the supply lead time which in turn is a great
value edition .The main challenge lies in creating a balance between the cost
incurred in inventory with that of availability to the customers. Through supply
chain optimization we strive to minimize the cost of operating expenses like
transportation which is a vital element in Tata steel supply chain process,
minimizing inventory cost and profit spread through supply chain is the function
of optimization. Tata steel has tried to address the supply chain optimization
through delivering their product through lowest cost and highest margin of
product. By doing so, Tata steel has also made the customers, party, by offering
them the highest quality of the product, which has been possible by trading off
the inventory cost ,distribution, transportation and manufacturing cost .Tata steel
off late has been successful in optimizing the storage and transportation cost by
applying product and packaging size as one of their important tool in cost
optimization.
Tata steel approach has been to forecast the future inventory demand as
precisely as possible by using technique such as Best fit by analysing the
demand based on the past figure and in turn helped them in predicting future
demands. This process actually requires a relatively small data base and some

sorts of manipulation; the uncertainty is addressed by maintaining a safety

stock, and by doing this company is being able to maintain an effective supply
chain. This process helps in knowing certain answers like , what should be the
volume of the steel ,company need to produce ,how much at each plant ,the
production output should be, which plant should be going for the safety stock.
What should be the modalities of transportation to achieve the given lead time?
Tata steel procures its raw materials from various sources across the world. It
procures its iron ore used in steel making from joda east iron ore mine in
Keonghar,joda west mining, Orissa ,chromite mine ,sukhinda, Orissa, noamundi
iron ore mine,west singhbhoom district ,Jharkhand,domardih dolomite quarry
,district sundergarh Orissa,jharia collieries ,district Dhanbad, these are some of
the main source besides this they have a mines in Canada ,Australia, U.K,
Indonesia, African regions which caters to the need of the raw material of the
Tata steel established in various countries. Tata steel mainly procures coal used
in steel making from Australia, it does so, since the Indian coal has maximum
ash content and it thus gives low calorific value. As a matter of fact Tata steel
incurs 60-70 per cent of its production cost in Raw material only, which is largely
dependent on the mechanism of supply chain. Tata steel in order to minimize the
transportation cost has made sure that so far as possible their manufacturing
units remain in the vicinity of 100 K.M from the source of its raw material
availability. Tata steel due to the obvious reasons uses all sorts of the modes of
transportation .viz. Rail, road and water. Tata steel has linked its plant with the
railway track in order to ship the large amount of finished products to its various
distributors. It uses water transportation to ship out and ship in, their finished
products and procurement of raw material and coal from abroad.
Tata steel has also devised the mechanism of low cost country sourcing from the
African countries like Mozambique, Nigeria and South Africa owing to the cheap
labour availability comparatively lower transportation cost
Supply chain planning process:
It comprises of two parts one is material required planning and another is
Demand planning. It covers the various elements or players of supply chain viz.
supplier, plants, ware house, logistic and retailer. Through extensive planning
process Tata steel is being able answer certain questions like
1-can they plan the supply process in advance, but can them delivers them the
product only against order at least 50%of the current level
Here we see that the company is carefully following both push and pull method
to avail the benefits of both the process, here the company is aiming to reduce
the inventory cost and also eliminate the risk of demand uncertainty.
2- Can the company meet the order with minimal inventories?
Here again the company is extending the first question, they want to expedite
the transportation process with effective optimization ,they want to anticipate

the estimation the demand beforehand so that they can get away with inventory
carrying cost.
3- Are they in a position to deliver, what they promise?
Here we gain see that ,they want to answer the equerries that having taken all
the optimization process, are they still in the position to deliver the product at
time, basically they want to make sure that they dont miss the demands. They
want to eliminate the both excess of stock in and out, excess of both stock in and
out have in past incurred a huge cost in the supply chain
4- Can the company reduce the lead time?
This is again a vital component, meeting the demand at minimal lead time can
give them cost efficiency. This is an important element of value addition.
OUT BOND SUPPLY CHAIN
Company of late revamped its out bond supply chain, company in the quest to
product its various specialized product .Tata steel followed the theory of
constraint initiative in restructuring the supply chain and replenishment
process .The pilot project under this initiative had given them the results in
optimizing the stock out and has increased sales. Under this the sales
department are offering depending upon their specialised demand. Thus,
replenishment offers are being offered to the distributors and retailers while
vendor are asked to manage inventory offers to original equipment customers
,they are also asked to cater to the rapid response offers to identified customers
PHOENIX i2 technology
Supply chain was redesigned mainly to assure high class service performance in
terms of reliability of the product delivery at significantly reduced lead time.
Various measures adopted were :
1- Jointly identifying the products covered in the offer
2- Establishing the reliable replenishment time from the upstream
manufacturing operation to the plant warehouse and finally to the
customers
3- Establishing the IT network for daily report of consumption and receipt
data by retailer and stockyards
4- Forecasting the inventory need at different levels depending on
consumption within the reliable replenishment time
5- Alignment of sales and production planning and logistics to get the desired
optimum results.
6- Continuous monitoring of service performance
Tata steel has reaped from these initiatives ,as per the company these
initiatives helped the company in achieving reliability in terms of delivery at
significantly reduced time in some areas ,a significant decrease in overall
system inventory ,it helped in alignment of supply closely with demand thus
reducing the lead time and inventory cost. It also helped in improving the

inventory control at the distributor and customer levels. Sales of Tata TISCON
have increased to thrice in comparison of the previous years. Above all the
cumulative effect of all these factors led to the increase in overall profitability
TOTAL PRODUCTIVE MAINTENANCE
Tata steel has launched TPM at all its plants in order to increase the
sustainability, competitiveness and to maintain its position as the lowest cost
producer and the most efficient and quality producer. Various measures have
been taken like maximizing the equipment effectiveness by doing so
company can actually increase the productivity at every stage. Company
aimed in TPM to eliminate the losses incurred in breakdown by regularly and
routinely going for the maintenances of all its equipment thus instead of
rectifying an equipment after its breakdown company through TPM is actually
looking after the health of all its equipment.
Company promotes autonomous maintenance through its day to day work
activities with the help of its workforce.
RESULTS
1- Inventory level was reduced up to 10-15 per cent
2 -markdown and scrap were reduced to 10-15 per cent
3- Resources were used 10-12 per cent more efficiently
4 Delivery reliability was increased up to 90-95 per cent
5- Outages was reduced up to 5 per cent
6-cycle time was reduced up to 10-15 per cent
7-transportation cost was reduced up to 10-15 per cent.
Of late Tata steel is pursuing to reduce the contact point in order to optimize the
cost of transportation. Company through the implementation of IT network keeps
the tab on the latest demand and level of inventory
Operational Risk
The raw material which accounts for the 60-70 per cent if the cost sometimes
faces a supply disruption due to the various political and unknown reasons .It has
an adverse effect on the supply chain and can hamper the production and hence
demand which in turn would decrease the overall profitability. In order to
overcome this problem company maintains a significant integration of raw
materials for its Indian operations and various strategic sourcing for other
regions .Tata steel undertakes impairment reviews as per the company policy
and it includes some assumptions .These assumptions sometimes causes risk to
the underlying policy due to the market dynamics. Procurement of raw material
many times faces legal and environmental problem .company is also taking
effort to adopt a policy which could mitigate the underlying risk

Suggestions for supply chain Excellency

Tata steel though has taken a number of initiatives to optimize its supply chain
cost; yet, company should adopt some more policy in order to further lowering
down cost of inventory and to reduce the lead time. Company need to reengineer its supply chain order planning and fulfilment process .As a matter of
fact steel industry is facing a low demand in addition to it china is a potent threat
which is producing the steel at a lower price. Company need to modify its supply
chain process to reduce the overall cost of production. Company need to
increase its supply chain efficiency by the following process:
-enhanced order fulfilment by actually decoupling of semi-finished products at
appropriate intervention points so that it could reduce supply lead time and
enhance the inventory flexibility
-designing and deploying the lean process across the supply chain by reducing
lead-times, working capital and more importantly by improving the material flow
- Increasing the supply flexibility by extending the product range that can be
exchanged within the TATA steel group so, that they can increase the value
creation and maintain supply continuity.
We can also introduce some strategic sourcing in order to optimize the supply
process. We need to continuously track the result and if needed carve a new
supply structure in order to reduce the overall cost of production.
Conclusion:
As we know steel demand is uncertain and due to the increased competition
specially by china company need to reduce the overall cost of production and
optimization of supply chain process is a vital parameter .we know 60-70 per
cent of its cost of production is incurred in procurement of Raw material and
owing to various reason the procurement sometimes is uncertain so we need to
coordinate and integrate various procurement division in order to meet the
demand and optimizing the supply chain process and reduce the inventory cost.
Company need to reduce the contact point so that they could reduce the order
lead time .company need to continuously improve and re-evaluates the supply
chain process to increase its value addition. Company need to stay alert to the
changing market dynamics and to response though initiatives that drive change.
The ultimate goal is to provide a reliable supply chain process which could
decrease the lead time and reduce the inventory cost which could in turn
decrease the ove all cost of production