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  • 8/3/2019 Erp Tata Steel


    [22nd Sept 2011]



  • 8/3/2019 Erp Tata Steel



  • 8/3/2019 Erp Tata Steel




    The critical success factors of ERP systems mainly include proper

    implementation and usage. Beside this there are several other factors thatdecide the regular functioning of ERP in organizations.

    While many organizations have not incurred the necessary benefit in terms ofmoney and other measures there are lots who have witnessed multiple profits.Studying them will help in understanding the critical success factors for ERPimplementation. They will help in deciding ERP success.


    This company founded and established in the year 1907 is known to be one of

    the leading steel giants in the country offering multiple products and successfullyrunning many subsidiary corporations. Being a large entity does not stop thingsfrom being subject to scrutiny and internal audit. They are regularlyimplemented with the help of committees who report to the selected membersfrom the senior management. The company is dedicated to providing laudableservices to the stakeholders improve on the quality and as thrive for innovationsand improvements constantly.


    TATA steel is Indias largest integrated private sector steel company that startedits corporate journey in the year 1907. Backed by captive iron ore andcoalmines, Tata Steel runs state-of-the-art Cold Rolling Mill complex at

    Jamshedpur, Eastern India. The enterprise has undergone a modernizationprogramme costing $2.3 billion, resulting in production of steel at the lowest costin the world. Being a large entity does not stop things from being subject toscrutiny and internal audit. They are regularly implemented with the help ofcommittees who report to the selected members from the senior management.

    The company is dedicated to providing laudable services to the stakeholdersimprove on the quality and as thrive for innovations and improvementsconstantly.Tata Steel is a relentless pursuer of excellence. ASPIRE, Tata Steelsquality initiative drive combining TPM, Six Sigma, Total Operational Performance,Suggestion Management and Quality Circles has reaped rich dividends for the


    Tata Steel's Jamshedpur plant has a capacity of 4 mn tons per year, andproduces flat as well as long products. Currently, to meet growing demands, theplant is being expanded to accommodate another million. Tata Steel has set upan ambitious target of 15 mn ton capacity per year by 2010. As part of itsexpansion plans the company recently made investments in NatSteel Singapore,which will expand its footprint in six countries in the Asia Pacific region andChina.

    Tata Steel's products include hot and cold rolled coils and sheets, galvanizedsheets, tubes, wire rods, construction re-bars, rings and bearings. The companyhas introduced brands like Tata Steelium (the world's first branded Cold RolledSteel), Tata Shaktee (Galvanized Corrugated Sheets), Tata Tiscon (re-bars), Tata

  • 8/3/2019 Erp Tata Steel


    ERP IMPLEMENTATION AT TATA STEELPipes, Tata Bearings, Tata Agrico (hand tools and implements) and Tata Wiron(galvanized wire products). The Construction Solution Group explores newavenues for steel utilization by techniques that are economical. Tata Steel hasalso developed 'galvannealed' cold rolled steel with technical assistance fromNippon steel for high-end auto applications.


    TISCO deserves lot of credit for implementing ERP because of the fact thatmany organizations in the global level have given up the very idea of ERP due tothe fact that there are lots of failures associated with it even in theimplementation stage. ERP implementation did in wrong manner have causedhavoc to organizations more than bringing profits. This being the case it isnatural to expect a large company (in terms of Size and volume of operations)

    like TISCO to discourage the idea of Enterprise resource planning. HoweverTISCO proved to be different from the others by choosing ERP in the right timeand implementing it in a proper manner. They have also reported a whoopingprofit and reduction of costs in the whole process. Another amazing fact is thatthey implemented it into the whole systems in one single spree. The method ofimplementing it in one spree carries a lot of risks especially for a biggercompany. Infact the success rate of this method itself is low in general and verylow as far as bigger companies are concerned. Incase of the rare successorganizations will experience effective results in their enterprise operations.

    TISCO has achieved that by way of meticulous handling and professionalism. Thenet results of their ERP software have been described to be pathbreaking and a

    trendsetting one.


    TISCO faced two major problems from the systems that existed for a long time.Firstly they were not customer friendly. The whole system was tuned to theprocess and very little attention was paid to the customer demands. Secondlythe systems were outdates and the modalities of operation were too complexand not error free. In order to rectify these issues which would otherwise proveto be major setbacks to the company the organization resolved to take up ERP.

    This was instigated by the concerned departments. Leading consultants were

    hired and the business structure was studied and suitable plans were draftedaccordingly.

    What Should They Do?

    Lets say youre the CEO of a large multi-national steel company, and yourerunning a global operation with plants on four continents. You need to makegood business decisions, and you rely on your IT systems to provide the data tomake those good decisions.

    But your IT systems are not well integrated. There are too many differentsystems, and too many gaps between them, a legacy of the companys history of

    mergers, acquisitions, and improvement initiatives. You need a common

  • 8/3/2019 Erp Tata Steel


    ERP IMPLEMENTATION AT TATA STEELinformation backbone. Youve heard that ERP systems can do that, but youvealso heard about ERP project failures from years ago.

    Can ERP handle the challenges of a steel company today? And will that lead tobusiness benefits for the company? answer are yes, and yes.


    In a quickly changing industry like steel, one need information systems whichquickly provide them the data they need. We believe that ERP, especially in itsmature implementations today, is the crucial component for a companys IT databackbone. ERP can play an essential role in:

    Driving accurate and fast decisions (product profitability, procurementspend) with consistently defined data

    Running broadly known and supported applications

    Harmonizing and optimizing back-office processes across the enterprisethat comply with finance requirements such as SOX and IFRS

    Enabling best-practice demand planning for supply-chain processes

    Future-proofing global applications that support global enterprises


    ERP or Enterprise Resource Planning is IT software that integrates businessactivities across an enterprisefrom product planning, parts purchasing,inventory control, and product distribution, to order tracking. ERP may alsoinclude application modules for the finance, accounting and human resourcesaspects of a business. SAP and Oracle are the two ERP leading vendors.

    From a business perspective, ERP today has expanded from simply coordinatingmanufacturing processes to being the integrator of enterprise-wide backendprocesses. ERP has also evolved technologically from a monolithic legacyimplementation into flexible, tiered, client-server architecture.


    In the late 1990s many ERP projects started, but more than a few failed. While

    ERP projects remain challenging even today, most can now be successfulbecause the best practices have been identified and ERP professionals are moreknowledgeable and more experienced with making the projects successful.


    ERP is an enabler of business benefits, and should not be viewed as a standaloneinitiative with the requirement to pay back its implementation cost. The mostimmediate ERP benefits include

    (1) Improved visibility of procurement spend and savings from improved

    sourcing policies,(2) Decrease of work-in progress and days-of-sale-outstanding,

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    ERP IMPLEMENTATION AT TATA STEEL(3) Improved productivity through better sales order handling, betterprocurement operations and more efficient planning.

    However, the most important business benefits will often be delivered after the

    ERP backbone is established, by other initiatives that use the ERP backbone:

    Integrated supply chain: from network planning through scheduling andManufacturing Execution Systems (MES)

    Easier integration of business processes with business partners

    Shared services and outsourcing of support functions

    Increased information transparency to enable better decisions

    Agility in acquisitions and carve-outs or divestments

    Increased regulatory compliance

    Robust and future-proofed backbone systems

    There are cost savings on the IT side, often around 10-15%, especially whendifferent ERP implementations are being harmonized. These IT savingsinclude:

    Reduced ERP implementation costs due to a common template

    Reduced application maintenance costs

    Lower integration cost