Business ExcellenceThe TQM way
Anand Sen
Vice President (TQM & KPO)
TATA STEEL LTD.
Dec 06, 2012
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The Emergent Business Environment
An Integrated TQM Framework2
TQM for Business3
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The Emergent Business Environment
An Integrated TQM Framework2
TQM for Business3
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1. ContextCurrent good performance often masks the imminent d anger
Global giants in our backyard! Competition
catching up!
Share of domestic RM
declining with expansion
The threat of alternate technologies looms large!
Cut-throat competition even in niche market segments!
Formidable external environment!
Our processes are not near world benchmarks!
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Let us take a look at the Indian Steel Industry con text …..
Theme Aspiration
1 Raw Materials
▪ Upstream production process able to handle flexible raw material mixes (‘flex fuel’ mindset)▪ Relentless control of yield losses▪ Profitability shifting to RM
2 Production / productivity
▪ Current facilities are debottlenecked instead of just building new capacity▪ Specialization and rationalization of asset base
3 Human resource
▪ Labor effectiveness and new skill set critical to deal with an ever-changing environment▪ Further labor productivity to enable cost reduction
4 Customer▪ Integrated S&OP leading to dynamic margin optimization▪ Maximized predictability and OTIF (On time in full)
5 Energy Efficiency
▪ Steel plants completely self-sufficient in energy requirements▪ Clean and green public image of steel companies
6 Contract models
▪ Online monitoring of raw material prices and flexible reaction to changes▪ Full hedging against raw material price fluctuations
1. Steel IndustryThe new aspiration
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Business to Business
Distributors and
Retailers
Directly to Consumers
Auto
Construction
Heterogeneous
input
▪ Diverse operating characteristics at different stag es of steel making and selling
Raw materials Iron & Steel Finishing Mills
HomogenizationDeveloping wide
variety of products
Different type of
marketing efforts
Need for an integrated improvement framework with relevant TQM methodologies to address different operating environment is necessary
1. Steel IndustryNeed for an integrated improvement framework
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The Emergent Business Environment
An Integrated TQM Framework2
TQM for Business3
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2. TSL IndiaAn Integrated TQM Framework
Strategy Management:
•Strong MD Diagnosis process for effective Policy
Management
•Introduction of “KVHS” for accelerated EBITDA
generation.
•Improved Risk Management
Higher Student A at Corporate level
510
131
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71
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3 4
6
FY10 FY11 FY12
16 16
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Achieving Superior performance- FY12
EBIDTA WBM
Project DDP (LP)
WBM
WSS Cost WBM
Customer Claims
Co. Best
No. of Strategies
AB
C
D
WSS – Works Saleable SteelWBM – World Benchmark in Steel DDP – Due Date Performance
Key improvements:
Effects:
MD Diagnosis in progress
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Mid 1990s
Annual Business Planning
• Management by objective (MBO) framework
• Monitoring performance vis-à-vis targets
1997-2005
ABP + Balanced Score Card
� Linking targets with activities
� Alignment of the organization towards overall company objectives
� Dashboard for monitoring performance at company and divisional levels
2006- 2008
ABP + Policy Management (PM)
� Greater focus on the ‘process (activities)’ for achieving the targets
� Emphasis on cause - effect relationship
� Focus on vital
few items
SMS with Integrated PM & ABP • Integrated framework for Business
Planning.
• Plan for check.
• Assessment of business planning and
effect ( MD Diagnosis).• Coverage across Divisions & Corporate
functions.
2009 onwards
Towards Achieving World Benchmarks
2. TSL India: Evolution of Strategy Management System (SMS )
Strategy Management System
Leadership Directions
1.Create value for our customers through our offerings.
2.Mitigate the rising input prices through efficient use of resources and high productivity
3.Achieve new benchmarks in Safety, Health and Environment
4.Improve the quality of life of the communities we serve.
2. Leadership Directions
Vision
We aspire to be the global steel industry benchmark for Value Creation and Corporate Citizenship
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2. Business Objectives & Strategies (BO&S)
Corporate Objective KPM Key Strategies
1a) To create value through enhanced offerings (products and services) to customers
• Revenue• Share of Business Auto• Premium
• Value Creation for Customers• Redesigning Supply chain and logistics solutions• Enhance system for NPD• Integrated QA system in TSL
1b)To increase our presence in chosen segments/customers
• Sales to Auto• Market share in Hi-end
Auto• Sales to construction
• Meet Growing Customer Demand through 2.9MTPA Brownfield Expansion at TSL, Jamshedpur
1c) Improve Cost competitiveness
• WSS Cost index• WSS Cost
• “Trilemma”• Operational excellence through focused
improvement implementations (KVHS)
2) Developing proficient & engaged employees
• Employee productivity• Develop capability of employees• Leadership development & succession planning
3) Achieve benchmark levels in safety performance
• Fatality• Loss Time Injury
Frequency Rate
• Fool proofing of fatality potential hazards• Reinforcing behavioral safety management• Improvement of contractor safety
4) To remain the Indian steel industry benchmark on CO2 & Dust emission
• CO2 and Dust emission• Adoption of the best technologies, reduction of
coal consumption and up gradation of existing APCEs
5) IMPACTING a million lives-Improving Quality of life of communities around us
• No. of lives impacted• Serving the targeted rural stakeholders in
Jharkhand & Odisha, and the urban stakeholders in Jamshedpur
Information Technology Strategy is an enabler for most of the Objectives & Strategi es11
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Shared Services
FP
LP
CSI
RM
Energy Efficiency
Speed & through-put
Reliab-ility
Supply chain & logistics
Auto-mation
Dep
loym
ent D
ivis
ions
Competencies
Problem Solving
TOC, CCPM
Weibull
Simulations
Multi-variate
▪ Technical competencies are defined across x- axis, divisions, SBUs, PCs are defined across y-axis
▪ Each area leverages various analytical tools (z-axis) for which experts with relevant skill sets are defined
▪ Prioritized based on current work and importance in FY13
▪ Experts identified for each area to run improvement
Deployment of improvement projects thru’ Focussed
methodologies
Focus areas
2. Customized improvement approach to achieve BO&S
Effective PDCA for elevating and sustaining performance
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Sustaining Improvement through DM
……
Sustaining Improvement through DM
……
Technical Limit
Benchmark
Internal Best
S D
C
S D
C
S D
C
Improvement Journey (time)
Elevate
P
CA
Per
form
ance
A
A
A
P D
CA
D
P D
CA
2. Improvement PDCA: Indexed on Benchmarking
2. Business Excellence: Focus on performance and health
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HealthPerformance
Sustainability of the system to deliver
improvementYear-on-year
▪ Relentless focus on benchmarking
▪ Analytics to identify solutions ,
▪ Rigorous efforts to implement
▪ Review systems to ensure target
▪ Institutionalization of improved processes through S&P (SOPs, MSCs etc.)
▪ Develop thematic change agents (EE, Reliability, V-I-U, Analytics, Supply Chain,
Asset Exploitation)▪ Change leadership pipeline through
Development programs across hierarchy
Deliver Rs. Cr impact thru KPI Improvement Year-on year
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The Emergent Business Environment
An Integrated TQM Framework2
TQM for Business3
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Effectiveness
3.TQM for Business: The Improvement Philosophy
TSL has maintained its cost competitiveness through focus on LT Strategy, Operational improvements and organizational improvement
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Cost Competitiveness
3. TSL’s profitable growth Increasing revenue & maintaining cost competitive ness
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EBITDA has been growing(up by 23% during post-DAP
period)
EBITDA % - industry benchmark status maintained
Revenue(up by 40% during post-DAP period)
Cost(cost leadership position)
Enabled by value creation for customer through:�Significant improvement in product and service quality (reduction in claims)�Very high level of delivery compliance�New Product Development�Benefit transfers�Continually debottlenecking facilities to improve capacity utilization
Enabled by operational improvement through:�Continually improving productivity in steel operations�Continual reduction in coke rate (prime cost element : 47% of cost)�Maintaining desired level of captive coal share�Enhancing mine life and relentless control of yield losses�Continually enhancing employee productivity
Iron MakingIron Making Steel MakingSteel MakingRaw Material MiningRaw Material Mining
� Diverse high end product mix: Customized shapes, sizes, chemistry, properties ..
� Balancing “Quality-Cost-Mine life” (‘Trilemma”) sustainability
� Process adjustments : Variation in Raw Material impurities; high temperature (up to 17000C) processes
Salient features
Rolling & further processing
7 Types of RM 1 Hot Metal 291 Steel grades 955 Distinct Products
Cus
tom
ers
Raw
Mat
eria
ls
HeterogeneityHeterogeneity HomogenizationHomogenization CustomizationCustomization
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3a. Integrated Quality Assurance across a long & complex value chain
Key challenges & Salient features of QA
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Tracking & reviewData analysis,
diagnostics
Aspiration setting
Ideation
Prioritisation
DetailedEvaluation
Impl
emen
tatio
n
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5
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Cycle 2 targets?
3b. Process & deploymentThe 6-step KVHS process
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Cement from BF slag
Coal tailing briquetting
Pooled Iron Granulation
Blending rejects with tailings
Improving Rejects sale
Middling in Ferro Alloys
3b. An example of KVHS deployment: Secondary Products
Launch:14 th Aug12 Aspiration setting Idea Generation
Cu recovery from cables
Improve productivity of MR&SPP
Models Developed
Cement conversion
Tailing briquetting
Middling to Ferro Alloys
Rejects and tailing blend Lazy capital mapping across TSL, India
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Iron Ore Mine Life (Indexed Years)
Life of Iron Ore Mines in years:
Good
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3. Achievement of Stretched Business Goals: Effects of “Trilemma”
Mine life is expected to increase by 6 years.Some of the in-house technologies adopted are Slime treatment & Total Beneficiation.
“High end sales” & “% component localisation”
Good
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3. As a result….a rich history of improving KPI lev els year-on-year ….
• A host of improvement projects result in year-on-year improvement of our major KPIs over the current baseline(s)
• Special focus on product quality through integrated QA approach and cross-functional management.
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Thank you Thank you
When you are inspired by some great purpose, some
extraordinary project, all your thoughts break thei r
bonds - your mind transcends limitations, your
consciousness expands in every direction, and you
find yourself in a new, great and wonderful world.
Dormant forces, faculties and talents become alive
and you discover yourself to be a greater person
by far than you ever dreamed.
Patanjali (400 BC)
Thank you!Thank you!
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