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ERP Implementation At Tata Steel

ERP Implementation at TATA Steel

TISCO BACKGROUND
Indias 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 rebars, 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.

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

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

Process Flow in a TATA Steel

faced a cumbersome task exchanging faced and a cumbersome retrieving information task exchanging from theand system. retrieving information from the system.

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.

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

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

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

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 decisionmaking, transparency and credibility of data and improve responsiveness to customers across all areas.

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

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

ARCHITECTURE AT TATA STEEL

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

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

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

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.