ERP Project on Tata Steel

2. ERP Implementation At
Tata Steel

3. ERP Implementation
at TATA Steel

4. TISCO BACKGROUND
• India’s largest integrated private sector steel company
• Established in the year 1907
• Tata Steel runs state-of-the-art Cold Rolling Mill
complex at Jamshedpur, Eastern India
• Products include hot and cold rolled coils and sheets,
galvanized sheets, tubes, wire rods, construction re-
bars, rings and bearings
• Introduced brands like Tata Steelium (the world's first
branded Cold Rolled Steel), Tata Shaktee ,Tata Tiscon,
Tata Pipes, Tata Bearings, Tata Agrico and Tata Wiron.

5. What is ERP?
• IT software that integrates business activities
across an enterprise
• From product planning, parts purchasing,
inventory control, and product distribution, to
order tracking
• Application modules for the finance, accounting
and human resources aspects of a business
• SAP and Oracle are the two ERP leading vendors
• Evolved technologically from a monolithic legacy
implementation into flexible, tiered, client-server
architecture

6. ERP Design Challenges for Steel
Companies
• More than one planning strategy
• Complex product variations
• Flexible planning
• Specific Customer Service Requirements
• Complex production scheduling combining
both continuous and batch production
• Detailed margin analysis

7. Process Flow in a TATA Steel

8. Integrated IT Model for Steel
• The Supply Chain Management (SCM) application provides the
rough-cut planning
• When orders are being entered, availability checks assign the order
to a block and feeds back a promise date
• The mill optimizer then typically would re-shuffle orders in between
the blocks, and feed results back into the SCM application in order
to optimize the load balancing
• Right before production starts, planned orders from the SCM
application are converted into production orders and, via the ERP
system
• Detailed scheduling then takes place, sequencing and combining
pieces from various orders throughout the mill into lots for
optimization
• Production completion then posts an updated status of the orders
into the ERP system, including stock receipts of finished products,
and so forth.
faced a cumbersome task exchanging and retrieving information from the system.faced a cumbersome task exchanging and retrieving information from the system.

9. Implementation Process At Tata Steel
• Had a tough time especially to implement the software in one
stroke
• Meets the demands of a big firm like TISCO
• Associating and implanting TISCO to all the stakeholders
• time granted for the process was 8 months
• Business process was divided into two main segments:
 Core functions
 Supporting functions
• The company took all efforts to ensure that the change did not
produce any sort of resentment in the organization
• transited seamlessly from a production-driven company to a
customer-driven one
• faced a cumbersome task exchanging and retrieving information
from the system.
• Reliability of information

10. Design
• Arthur D. Little (Strategy Consultants) and IBM Global
Services (BPR Consultants) redesigned the two core
business processes:
• Order Generation &
• Fulfillment and the Marketing Development
processes.
• To improve customer focus, facilitating better credit
control, and reduction of stocks.
• Adopted the latest production and business
practices to offer innovative processes

11. The Real Challenge
• B Muthuraman, MD (Designate), said,
"Implementing any ERP system is a challenge for
an organization because of the declining success
rate of ERP implementations world-wide.”
• Successfully implementing SAP to 46-odd
geographic locations across the country under a
big bang approach in just eight months
• Building a conducive environment where SAP will
be embedded in the hearts and minds of the
people and the customers of Tata steel

12. Choosing The Platform And
Technology
• SAP software was associated with certain
strategic goals
• TISCO wanted to bring forth a culture of
continuous learning and change
• Enable TISCO to achieve a world-class status for
its products and services and strengthen its
leadership position in the industry
• wanted the software to result in quick decision-
making, transparency and credibility of data and
improve responsiveness to customers across all
areas.

13. Mapping Technology To Business Processes
• Huge numbers of transactions and complexity, were
identified as a HUB
• Smaller branches were defined as SPOKES
• 'Change Management' - to reach out to people involved
non-directly in the project to apprise them of the
developments taking place
• Tata Steel planned a big-bang approach of going
live
• Pulled off a big bang implementation of all SAP
modules at one go across 46 countrywide
locations

14. Achieving Business Agility Through SAP
• Web enabling of SAP R/3 is on the cards
• Plans to adopt the my SAP Customer Relationship
Management solution to enhance its customer
relationships in the near term

15. ARCHITECTURE AT TATA STEEL

16. THE OUTCOME
• Remarkable result in terms of financial technical
and managerial parameters
• The effective handling and speed delivery
resulted in greater sales .
• Drastic fall in the amount owned to creditors.
• The systems were made more user friendly.
• This improved the quality of work thereby
increased the productivity.
• Massive change in terms of accountability
administration and control

17. • Spent close to Rs 40 crore on its implementation and
• Has saved Rs 33 crore within a few months," said Ramesh C.
Nadrajog, Vice President, Finance.
• "The manpower cost has reduced from over $200 per ton two years
ago, to about $140 per ton in 2000.
• The overdue outstanding has been brought down from Rs 5,170
million in 1999 to Rs 4,033 million by June 2000.
• The inventory carrying cost has drastically deflated from Rs 190 per
ton to Rs 155 per ton.
• Significant costs savings through management of resources with the
implementation of SAP.
• With SAP's solution improving customer management.
• The availability of online information has facilitated quicker and
reliable trend analysis

18. Future Moves
• Motivating factor for both companies and ERP
vendors.
• TISCO is not determined to stop ERP or attain a
saturation point now.
• Improve and increase the scopes of ERP software
• A model guide
• Critical success factors for ERP implementation in
order to enjoy ERP success

19. Conclusion
• ERP is a key backbone application for companies in a
fast changing industry like steel.
• 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.
• 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.