ES4C9 Supply Chain Management

Globalisation – Tata Steel0818179 – Daniel Booker

[1]

Contents

• History

• Global Span of Tata Steel Group & Tata Steel Europe

• Tata Steel Organisational Structure

• Definitions of Globalisation (Anti-globalisation)

• Drivers of Globalisation

• Local Cultural Needs

• Logistics and Inventory Strategy

• Implication of International Competition

• Future

History

• Tata Steel Group subsidiary of Tata Group• 12th largest steel producing company in the world• Indian multi-national steel producer headquartered in

Mumbai• Largest steel plant located in Jamshedpur, Jharkland

$ millions % change from 2010

Revenues 27,738.8 +6.4

Profits 1,125.0 -42.9

Assets 28,904.6

EBITDA 2,660 -21.0

• Tata Steel Europe was formally Corus• TSE EBITDA (FY11) = $349 million• Contributed 13.12% in 2011

[2], [3]

Global Breadth

[4], [5]

Organisation Structure

Tata Steel Group

• Tata Steel Europe• National Steel Holdings• Tata Steel Thailand• Tinplate Company of India• Tayo Rolls• Tata Ryerson• Tata Refractories• Tata Sponge Iron• Tata Metaliks• Tata Pigments• Jamshedpur Injection

Powder• TM International Logistics• Tata Steel International

• mjunction Services• TRF• Jamshedpur Utility and

Service Company• Indian Steel and Wire

Products• Tata Blue Scope Steel• Dhrama Part Company• Hooghly Met Coke & Power

Company• Lanke Special Steel• Sila Eastern Company• Tata Steel KZN• Tata NYK

[6]

Implication of international competition

Trading Industries

Sheltered Industries

Global Industries

Multinational Industries

International Investment (foreign owned assets)

Inte

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Definitions of Globalisation

• The growing integration of economies and societies around the world.

• Is the convergence of trends in markets, products, consumer behaviour and society.

• Anti-globalisation groups argue that these practices replace domestic economic life with an economy that is…controlled from overseas…seen as a surrender of power to the corporations, or a means of keeping the poorer nations in their place.

[7], [8]

Drivers of Tata Steel Globalisation

Overcapacity in many industries

Lower labour costs

Global transport infrastructure

Information technology improvements

Regionalisation of trade

Liberalisation of world trade

Growth in world trade greater than growth in GNP/GDP

Search for better product

[2], [9]

Why Has Tata Steel Become Global?

• Search for better product• Increased quality and decreased price of raw materials e.g. coking coal

─ GLOBAL SOURCING

• The acquisition of more advanced manufacturing techniques e.g. TSE─ GLOBAL ACQUISITION / JOINT VENTURES

• Regionalisation of trade• Many competitors are monopolising markets e.g. ArcelorMittal• Increase customer base e.g. Europe

• Information technology improvements• Recent deployment of SAP (2009)• Use of RFID to track high value assets

• Global transport infrastructure• Move towards vertically integrating logistics, shipping and distribution firms

Tata Steel Globalisation Strategies

• Purchase existing manufacturing and distribution facilities• Purchase technical innovations and advanced manufacturing

knowledge• Move up the value stream• Vertically integrate supply chain for automotive steels (JLR)

• Tata NYK Shipping 50:50 venture – 12 chartered and 2 owned vessels

• Dhamra Port Company Ltd 50:50 venture – deep water port, fully mechanised berths

• TM International Logistics partnership with Tata Steel

[4], [10]

Tata Steel’s Consideration of Local Cultural Needs

• Labour costs

• Energy prices

• Environmental legislation

• Health and safety legislation

• Unions

• Cycle to work scheme in NL

[4], [11]Currency th’$

Tata Steel Europe Supply Chain Transformation

How is Tata Steel Europe attempting to reduce supply chain costs to increase EBITDA profit?

PHASE 1• Evaluation• Awareness

PHASE 2• SAP• Supplier negotiations

PHASE 3• Centralisation and

restructure of administration functions

• 21st Century Stores[10]

Tata Steel Europe Logistics Strategy

Iron Ore

Coking Coal

Lime

BF coal

Fero minerals

Steel Works

Hot Rolling Mill

Cold Rolling Mill

Tube Mill

Section Mill

Rod Mill

CAPL

Additional Finishing

Raw Material Supplier

Primary Manufacture

Secondary Manufac.

Inventory

Distribution Centre

“Stage 4 – Postponed manufacturing”

[9]

[10]

The Effects of Supply Chain Transformation Program

2007 2008 2009 2010 20110

10

20

30

40

50

60

70Tata Steel UK Financial Ratios

Debtor Days Creditor Days Stock Turnover

Year

Day

s

2003 2004 2005 2006 2007 2008 2009 2010 20110

20

40

60

80

100

120ArcelorMittal Europe Financial Results

Debtor Days Creditor Days Stock TurnoverYear

Day

s2003 2004 2005 2006 2007 2008 2009 2010 2011

-80

-60

-40

-20

0

20

40Comparison of Cash to Cash Cycle

Tata Steel Europe ArcelorMittalYear

Day

s

Significant change and associated strategic advantage post supply chain transformation project.

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The Future?

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References

[1] Tata Steel Europe, 2012. Tata Steel European Operations. [Online] Available at: http://www.tatasteeleurope.com/file_source/StaticFiles/Functions/Media/Tata-Steel-Customer-Brochure-English.pdf[Accessed 21 November 2012]. [2] CNN Money, 2012. Fortune Global 500 (401. Tata Steel). [Online] Available at: http://money.cnn.com/magazines/fortune/global500/2012/snapshots/11459.html[Accessed 22 November 2012].[3] Tata Steel, 2012. Tata Steel Reports Consolidated Financial Results for the Financial Year Ending, March 31st 2012, Mumbai: Tata Steel Europe.[4] Tata Steel Limited. (2012). Investor Presentation. Mumbai: Tata Steel Group[5] SAP Co-ordinator., 2011. An Introduction to SAP. Port Talbot, Tata Steel Strip Products UK.[6] Tata Group, 2012. Tata Group Companies. [Online] Available at: http://www.tata.com/company/profile.aspx?sectid=jsA69xFbDUA=[Accessed 21 November 2012].[7] Sharpe, D., 2012. ES4C9 Supply Chain Management Lecture 5 "Globalisation". Coventry: The University of Warwick.[8] Sharpe, D., 2012. ES4C9 Supply Chain Management Lecture 5 "Globalisation". Coventry: The University of Warwick.(See Slide 12 Notes)[9] Clker, 2012. Clker Clipart. [Online][10] Europe, P. R. E. T. S., 2012. The globalisation of Tata Steel Europe [Interview] (19 November 2012).[11] Oak, R. (2011, December 28). The Economic Populist. Retrieved November 21, 2012, from China and India really are cheap labour in manufacturing: http://www.economicpopulist.org/content/china-and-india-really-are-cheap-labor-manufacturing[12] Amadeus, The University of Warwick Library [Accessed 19 November 2012][13] BBC News. (2012, November 23). Tata Steel: 600 Welsh jobs cut, mainly at Port Talbot. Retrieved November 23, 2012, from BBC News UK: http://www.bbc.co.uk/news/uk-wales-20461523

QUESTIONS?

Organisation Structure

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