Analysis

of
TATA Steel
Supply Chain Management
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Group Members
S.No. Name ID_Number
1 JYOTI PRAKASH RATH 2017A2PS0927P
2 YASH VIJAY 2017A2PS0858P
3 RAKSHIT MISHRA 2017A2PS0884P
4 ADITYA JOSHI 2017A1PS0027P
5 HRISHIKESH CHANDRAYAN 2017A1PS0665P
6 SIDDHARTH GOYAL 2017A4PS0380P
7 DRISHTANT RAGHAV 2017A2PS0094P
8 SAURABH RAI 2017B3AB0656P
9 ADITYA MUKHERJEE 2017ABPS0943P

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INTRODUCTION
TATA Steel
• Geographically diversified steel producer – operations in 26
countries, commercial presence in 50+ countries.
• Current Crude steel production capacity of 27.5 MTPA .
• Employee strength of 70,000+ across the world.
• Significant market positions in India and Europe with diversified
product base targeting multiple end user segments.
• Highly integrated and profitable India operations.
• Largest producer of Ferro Chrome in India.
• FY18 consolidated revenues from operations: USD18bn.
• Current market capitalization: USD11.8bn.

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SUPPLY CHAIN AND PRODUCT

CONFIGURATION
Supply Chain Configuration
• Supply chain is a critical element in Tata Steel’s value-creation
process for ensuring on-time delivery of the right quality of
raw materials, other goods and services to manufacturing
locations, and finished products to the customers.
• Its major manufacturing locations are located in the eastern
part of the country, To meet the delivery and quality
requirements of customers, they have steel processing
centers and stockyards at strategic locations across the
country to optimize the delivery time and cost.
• Tata steel’s supply chain is majorly focused on optimizing
inbound and outbound logistics network and managing
suppliers and channel partners.
• Tata steel started using AIMMS software to increase its supply
chain accuracy, by this they have increased its supply chain
delivery accuracy from 60% to 95%.

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Supply Chain Configuration

Given below is supply chain configuration roadmap

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Product Configuration
• Tata Steel manufactures a comprehensive portfolio of high quality strip and long
products, ranging from hot-rolled to metallic coated, pre-finished steels, alloy steels,
profiles and construction systems. it makes products for various segment which are
agriculture, automotive steel, construction, consumer goods and engineering etc.
• Tata Steel product is divided in two major parts which are –
1. Retail products
• Tata TISCON - It is thermo mechanically treated rebar brand having more
than 6800 dealers across the country.
• Tata Shakti - Tata Shaktee manufactures superior quality Galvanized
Corrugated (GC) sheets.
• Tata Kosh - Tata KOSH is a brand of galvanized plain steel . It is used by
fabricators to make storage & utility equipment like trunks, grain silos etc.
2. ECA Products
• Tata Astrum - Tata Astrum is the brand for HR Sheets & Coils
• Tata steelium - Tata Steelium is the world's first branded cold rolled steel
(CRS)
• Tata galvao – it makes Galvanised Plain sheets and coils are superior quality
zero-spangled products with unmatched surface finish and corrosion
resistance
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Product Configuration

Tata steel’s other products and their sales -

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ACHIEVING
STRATEGIC FIT
Understanding the customer and
Supply Chain Uncertainty
• It focuses on high-end, high strength products as domestic needs of
global manufacturers for high-quality products as well as the
continuously evolving demand for newer, high strength grades of
steel
• Ability to develop Services & Solutions addressing consumer needs
is one of the key strategies of TATA Steel
• The Demand Uncertainty
of the products offered
by TATA Steel is not very
high as the level of
product differentiation
and variety of variants
is quite less as compared
to the electronics industry

• Hence, the overall attribute of customer demand does not fluctuate

very much

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Understanding the Supply
Chain
• Operational efficiency is a key strength and it primarily focuses on
operational excellence
• moving from ‘price’ to ‘value to customer’ 
• showing unwavering personal commitment 
• aligning everyone—from worker to senior manager—with the ‘greater
cause’ of survival and growth
• Moving from ‘operational
excellence,’ which has
been the pivotal strategy
in the past, to ‘customer
focus’ as the theme for
the future
• TATA Steel has been able
to meet a high service
level by meeting short lead
times adequately responding
to the demand

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Achieving Strategic Fit
• Creating a balanced portfolio of key global customers from
different end-user industries and different geographies
• Evolving a formal process to keep track of the changing
needs—both products and services — of these customers,
and linking them to R&D/product/service development
initiatives
• Developing an organizational culture, which is predominantly
‘local’ today, to one that is ‘global’
• achieving global benchmarks on performance
• better and innovative usage of raw materials 
• attaining higher capacity utilization and productivity
• modernizing the plants

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Strategy Planning- Process
Overview

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LOGISTICAL
DRIVERS
Facilities
• Tata Steel operates an integrated supply chain with ownership of mines,
manufacturing plants, downstream production sites and distribution centers all
around the world.
• The major dedicated steel manufacturing plants of Tata Steel are -
1. Jamshedpur Plant - 10 mTPA capacity of crude steel production.
2. Kalinganagar Plant - 3 mTPA capacity with plan to expand it to 8 mTPA
with the ultimate goal to reach overall 30 mTPA production just from
India.
3. IJmuiden, Netherlands Plant and Port Talbot, Wales Plant - Total 12.1
mTPA capacity.
• Tata Steel Recently divested it’s South Asia holdings of NatSteel and Tata Steel
Thailand with a Capacity of 3.7 mTPA.
• Tata Steel Recently Acquired Bhushan Steel and Usha Martin Steel Business
with a combined capacity of 6.6 mTPA with major locations in Sahibabad,
Khopoli, Dhenkanal etc., along with their captive mines and power plants.
• Total capacity of Crude steel Production in India for Tata Steel is around 20
mTPA and for the whole world is around 33 mTPA.

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 Facilities
• Tata Steel also has 37 Steel Processing Centres in 11 locations for customized
production and 6 zonal Hubs for Key consumption centres.
• It as 18 stockyards, 202 distributors, 27 sales offices and over 12000+ dealers in
India.
• It has Separate Tube, Bearings and Wire Manufacturing Units in Jamshedpur,
Kharagpur, Pithampur etc.
• It also operates ferro alloys plants in Gopalpur, Bamnipal, Anantapur etc.
• It operates it’s own mines in India and in Canada, Australia, Mozambique etc.

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Facilities

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Inventory

• Inventory Turnover ratio of 6.27 (financial year 2019)

Possibly holding up for a better price.
• Less Safety inventory
Due to less demand variability in the market.

TATA Steel Inventory

Manufacturing
Households
Industries

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Inventory

Automotive sector
Major products:
Hot rolled products: Rolled high strength steels (1200 Mpa)
Cold rolled products: Rolled steel sheets (590 Mpa)
Other products: Micro alloyed HSS, IF steel, Galva
annealed 2-wheeler fuel tanks, vehicle body panels

Major clients

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Inventory

Other major products

• TATA Shaktee: Economic galvanized iron sheets for roofing.
• TATA Steelium: Rolled steel sheets for paneling and protection
• Galvano: Galvanized corrosion resistant sheets for engineering
solutions
• TATA Agico: hoes, shovels, hammers etc.
• TATA Astrum: Rolled coils for manufacturing industries
• TATA Bearings: Bearings for automotive and production industries

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Transportation
• For the raw material segment, Tata Steel is totally dependent
on the Indian Railways for inbound transportation.
• Some other raw materials like limestone, pyroximite,(from
UAE) steel making dolomite (from Denmark) etc. imported in
vessels( panamax, ULCC).
• Closed-circuit rakes run between the captive mines, ports
and manufacturing locations to transport the raw materials.
• Some raw materials(approx 5%) from Joda, Gomardih are
also transported by trucks. Tata Steel does not prefer trucks
as they are not economical and due to risk of theft.
• Inland waterways in the country are in the early stages of
development. Hence, it is not an open option at this stage,
even though it is the most environment friendly mode.

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Transporation
• Tata Steel plays a pivotal role in ensuring close co-ordination
and planning between overseas miners, load ports, ship
owners, port authorities in India, the Indian Railways and it’s
plants receiving the raw materials.
• At present Indian Railways charges Rs 380 per tonne from
Dhamra Port to KalingaNagar plant and Rs 370 per tonne
from Paradeep Port to KalingaNagar plant for providing
rakes. The total capacity of a rake is 3800 tonnes. The
present demurrage charges are Rs 100 /wagon/hour.
• Tata Steel is one of the first in the steel industry to capitalise
on incentives by the Indian Railways – Special Freight Train
Operator (SFTO) Scheme and long-term tariff contract. The
SFTO scheme waives the demurrage charges by a fixed
percentage.

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Transporation
• Almost 65% vessels hired by Tata Steel are of GHG class A to D.
Average grams of CO2 emissions per tonne nautical mile for
vessels hired by Tata Steel in FY 2018-19 was 4 gm as compared
to the global average of 10.9gm .
• Implementation of the Solid State Interlocking (SSI) system to
improve safety in rail network. This also resulted in savings of ~`1
Cr. in manpower productivity and ~`25 Cr. on rail penal charges.
• Coastal steel shipping is to be introduced as a de-risking
mechanism, for reduction in transport-related CO2 emission and
ensuring sustainable supplies for our customers in South and West
India.
• Reduction in the consumption of wooden dunnage ( wood saving
of 80,352 cu. Ft per year) used in FG steel dispatch by introducing
SFTO rakes with inbuilt saddles has reduced the adverse effect on
environment.

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CROSS -FUNCTIONAL
DRIVERS
Information
• The TATA Steel Supply Chain has a set of guidelines which
communicates on how to work with the various supply chain
partners and set out their expectations and minimum standards for
fair business practices, health, safety and other parameters.
• The business partners are expected to continually improve with
respect to policy requirements:-
✔ Integrating them across all business decisions.
✔ Putting in place management systems to enable continuous
improvement.
✔ Extending these principles to their own supply chain
✔ Aligning themselves to global/industry standards

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Information
• The analytics department in TATA Steel is comprised by data
scientists who work on developing AI models, as well as OR
specialists who focus on supply chain optimization, simulation and
mathematical programming.
• TATA Steel has invested significantly in the development of life cycle
assessment models for various sectors. It helps the customers at
the design stage of their products made from steel to minimize
energy usage,
• TATA Steel Europe is also working with other steel makers on major
research and development projects, ULCOS (ultra low CO2
steelmaking), to develop breakthrough technologies which can
reduce CO2 emissions by at least 50%.

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Information
• NatSteel Singapore (acquired by TATA Steel in 2004) plant
processes and recycles ferrous scrap materials, in one of the
world’s most energy efficient Electric Arc Furnace, into high quality
steel products used in the construction industry.
• All TATA Steel mines and collieries have developed Biodiversity
Management Plans(BMPs), and knowledge Centres have been
established across Raw Material Division to enhance employee
skills and productivity.

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Sourcing
• Components of Sourcing Decisions include: supplier
selection, and procurement
• TATA Steel plants are strategically located for our inbound
supplies and our imported raw materials sourced from around
the world are routed through three major ports: Dhamra,
Paradip and Haldia (approx. 350 km, 400 km and 250 km
from Jamshedpur, respectively).
• In FY 2017-18, Tata Steel imported almost 8.3 Million Tonnes
(MnT) of coal from Australia, New Zealand, and North
America, Canada/US, and CIS; 4 MnT of fluxes were
imported from the Middle East and Vietnam.
• Mined raw materials: 28MnT
Imported raw materials: ~12MnT

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Sourcing

• It’s supplier base is >5000 and its total number of local

suppliers are >1500
• As depicted, 22MnT Ore, 4MnT coal, and 2MnT Flux is
taken from mines and is then transported generally via
Rail logistics to the plant.

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Sourcing
• The range of purchase price, average
purchase price and average purchase
quantity vary with the wide variety of
products hence cannot be stated as a
specific value

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Pricing
• At the end of the FY year 2018-19, turnover of Tata Steel were
70,611 crore rupees and total assets 137,498 crore rupees
• There are several fixed and operational costs associated with a
supply chain. Ultimately, the aim is to maximize the revenue by
keeping the supply chain costs low. Costs arise due to inventories,
transportation, facilities, operations, technology, materials, and
labor.
• Pricing policy of Tata Steels is hugely dependent on firm’s
communication; distribution and product policies .The factors that
have a direct impact on its strategies are
• 1. Production Costs
• 2. Market demand
• 3. Competition
• 4. Government regulations

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Production Costs
Tata Steel is the lowest cost manufacturer of steel and keeping production
costs low have played a major role in achieving that. The following
measures have been taken to do so:

1. Acquiring sources of raw materials in India : Tata Steel has captive

iron ore and coal mines at Noamundi, West Bokaro and Jharia. The mines in
Bokaro have reserves of over 196 million tones and the coal mine in Jharia can
produce 1.9 million tones of raw coal annually.

2. Capacity expansion: With the expansion of its Jamshedpur plant by 2012

and Greenfield units in Orissa and Chhattisgarh becoming operational in 3-4
years, its manufacturing capacity will jump to 21 MTPA.

3. Technology: (a)Process innovation and use of blue dust in sinter plants

increased productivity by 60%.
(b)Stamp charging technology was indigenously developed to
convert low quality coal to high quality coking coal. This reduced the import of
coking coal.

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Pricing Strategy

• The pricing strategy adopted by Tata Steel is the Market Penetration

Strategy
• This strategy is based on the assumption that demands for the
product is highly elastic. By setting relatively low price Tata Steel
has managed to obtain large market share. The advantage of this
kind of pricing is that it discourages competition
• Since Tata Steel is in control of large iron ore deposits it has
increased its capacity manifold and so enjoys economies of scale. It
has thus maintained prices of its products lower than its
competitors and has increased the scale and efficiency of
operations, since it has lower production costs.

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Co-ordination
in
Supply Chain
Co-ordination
The long journey of Tata Steel has seen the Company re-define its performance
parameters in many ways to become the global steel industry benchmark for value
creation and corporate citizenship. It ensures a total commitment to its ethical
business practices and a people-oriented vision. The Tata Steel Group has always
believed that mutual benefit of countries, corporations and communities is the most
effective route to growth.
• TATA Steel has a vertically integrated supply chain with full ownership  of mines,
manufacturing plants, distribution Centre and vendor points(check facilities slide).
• TATA steel implement integrated organization perspective having same strategies
for all. It can be useful as it is time saver and standardization form. 

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Co-ordination
• Tata Steel plays a pivotal role in ensuring close co-ordination and planning
between overseas miners, load ports, ship owners, port authorities in India, the
Indian Railways and our plants receiving the raw materials. Some important
decisions-
• TATA steel majorly uses Indian Railways for their transporting needs and has
inked Long Tariff contract(LTTC) for better coordination with the railways.
• Special Freight Train Operation(SFTO) arrangement  with TATA steel started in 2017
in which railways is encouraging private investment in rolling stock. This gives TATA
steel more control in transportation of their finished steel coils.
• TATA steel are one of the first major steel manufacturers to initiate the deployment
of energy-efficient and environment friendly vessels for ocean transportation.
• TATA steel uses Vendor Management inventory(VMI) to maintain information and
product flow with vendors and customers. VMI model is an integral element laid
down in the supply chain. As per this, one manufacturer supports all the retailers/
customers through distribution centre (DC) of several types:Manufacturer Owned
DC, Retailer/ Customer Owned DC  etc. It depicts how the process works from
manufacture to customers.
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 Digital Tools
TATA steel uses lot of digital tools for smooth functioning of its supply chain managing
procurement ,manufacturing and distribution.
• SAP- Tata Steel has started  implementing SAP in partnership with Cape Gemini in a
phased manner in 1999 to increase the coverage of business processes and business
units, which included the implementation of Supply Chain Management and Business
Warehouse. Furthermore it extended the usage of SAP system to customers and
business partners  using Internet technologies and B2B integration in 2004. A new
agreement was signed with Cap Gemini in 2014  the growth of Digitization of work. Now
TATA steel can check their work performance, progression and can control over work
with this system.
• TCS and TATA steel started working together in 2006 for streamlining the process design,
project management and business consultancy functions and  to allow appropriate levels
of evolution, revolution, and harmonization for Tata Steel to manage the required
change.
• Product Application Group and MODE-used for management of customer
complaints, customer feedback (internal survey), external survey feedback (MODE).

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 Obstacles in achieving
Co-ordination
in Supply Chain
• Lack of coordination occurs because intermediate stages start
prioritizing local objectives to maximize their profits; the
strategies are not aligned towards one goal.

• The major obstacles to achieving coordination in a supply chain

are:
1. Information Processing Obstacles
2. Operational Obstacles
3. Pricing Obstacles
4. Incentive Obstacles 
5. Behavioural Obstacles

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Recent Obstacles in Supply Chain
of TATA Steel
• Tata Steel is the biggest steel producer in our country has to
ensure that it can maximize the levels of coordination in its
supply chain.

• One of the major obstacles is the ever-increasing input costs

of Scrap, Coal, Iron Ore and Coke and other raw materials.

• Lack of a common order management system and

standardized product definitions along with the absence of
detailed product costs led to non-fulfilment of orders and
delayed production.

• Also, in the steel industry, the cost of logistics is very high as

compared to other manufacturing industries.

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Recent Obstacles in
Supply Chain of TATA Steel
• Tata Steel is planning to invest Rs. 5,000 Crore in TMILL to
reduce its logistics cost, and improve consistency in logistics,
which results in less inventory, which reflects in inventory-
carrying cost and working capital rather than the cost of
transportation. 

• Tata Steel is all set to build slurry pipelines from its mining
locations to its steel plants to carry the raw materials
extracted.

• Also, there are factors like raw material price volatility, climate
change risks, change in regulation, safety risks. The
slowdown in economies, especially in developing countries
like China and Financial risks are some of the obstacles that
are in the supply chain of Tata Steel.

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Current Issues
• The Major issue for the Tata Steel supply chain is to reinvent itself with
the increasingly stringent climate change regulations.
• GAIL is in talks with Top Steel Producers to switch from coal-fired to
gas-driven power plants to reduce their emissions.
• This switch will be very disadvantageous to Tata Steel.
• It plans to get 10% of its revenues from new materials and climate
friendly sources.
• It is also upgrading its furnaces and rolling mills to generate less
emissions.
• CO2 emissions from the transportation has been an important concern.
• A special focus is given to this concern in north-eastern states where
environmental conditions are too sensitive for air pollution.

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Current Issues

Proposed solutions
(under TATA Steel’s consideration)
• Inland waterways: Connecting North-East India through barge
transport on inland waterways from Kolkata through Bangladesh.
• Coastal shipping for south and west India.
Other Issues
• Trade wars and increasing protectionism
• Slow growth in steel market
• New technologies (such as fibre reinforced polymers) taking over the
steel market.

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SWOT ANALYSIS

STRENGHS:
1. Mineral Reserves - Tata Steel has two collieries in West Bokaro and
Jharia, in the state of Jharkhand. The iron ore units are located in
Noamundi, Joda and Katamandi in the states of Jharkhand and Orissa.
2. Management Team - Tata Steel has a highly credible management
team who has displayed their skills in expanding the company through
inorganic route.
3. Information Technology -The entire mining operation of the Company
is safe guarded against accident occurrence. Proactive measures are
undertaken to ensure the employee's health and productivity through
ergonomically designed work stations and by protecting them from
occupational hazards
4. Brand value - The TATA brand owing to its highly ethical and a socialistic
approach to business have made its name synonymous to trust.

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SWOT ANALYSIS

WEAKNESSES
1. High attrition rate
2. Huge debt burden
3. Degradation in brand value owing to job losses

OPPURTUNITIES
4. Competitive position of the company
5. Newer technologies

THREATS
6. Resources to cushion the from business environmental change
7. International competition
8. Financial Crises

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