A STUDY ON OPERATIONS MANAGEMNET OF TATA STEEL

ITS ISSUES AND LIMITATIONS

By:

Diya Jain – 74012118677

Jahnavi Agarwal – 74012118730

Rohan Ghai – 74012118183

Shine Soni – 74012118258

Yuvraj Kapoor – 74012118649

UNDER THE GUIDANCE OF

Prof. Anantha Murthy

NMIMS

Bangalore Campus

Svkm’s Narsee Monjee Institute of Managemnet Studies, Lakshmipura Village, Anekal

Taluk, Bannerghatta Road, Kalkere, Bengaluru, Karnataka 560083

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 Acknowledgement
We are grateful to Dr. Narayani Ramachandran, our acclaimed director, for her steadfast
support and availability of crucial resources that enabled this initiative to succeed. We thank
our chairman, Mr. Dileep Menon, for providing great ideas, constructive feedback, and
encouraging us to approach our job critically. His imaginative leadership and the opportunity
to conduct this report have been crucial to our achievement.

We are grateful to Prof. Anantha Murthy, who provided valuable direction and experience in
defining and improving our research. He was helpful in providing clarification, answering
questions, and guiding us through the process.

Finally, we want to thank our friends and classmates for their constant support and
encouragement. Their combined efforts, different perspectives, and rigorous proofreading
were critical in achieving this momentous milestone.

We are grateful for the invaluable support of these individuals who have helped us achieve
success.

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 Declaration

We solemnly declare that the work presented in this report is the findings of our original
research, analysis and findings. All sources referred to in the project has been duly mentioned
and acknowledged. This report has been prepared with the utmost diligence and integrity, and
we affirm that no part of it has been plagiarized or misrepresented.

Diya Jain

Jahnavi Agarwal

Rohan Ghai

Shine Soni

Yuvraj Kapoor

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4
 Table of Contents
S.No. Chapters Page no.

1 Introduction 6

2 Literature Review 11
3 Model Framework and Methodology 14

4 Analysis and Findings 28

5 Conclusion, Suggestions and 32

Recommendations

Bibliography 35

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 Chapter 1-
Introduction

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Introduction of the industry:

The steel industry is a vital sector that plays a significant role in the global economy. It serves
as the backbone of various sectors, including construction, automotive, infrastructure, and
manufacturing.

The industry's significance extends far beyond its economic impact. It is a key driver of
employment, providing livelihoods to millions of people worldwide. Steel mills and
manufacturing plants employ skilled workers who contribute to the production and
processing of steel, ensuring its availability for various industries.

Moreover, the steel industry has a profound effect on global trade and commerce. Steel
products are traded internationally, with countries specializing in different aspects of steel
production.

The steel industry also faces challenges, such as fluctuating raw material prices, changing
market dynamics, and the need to adapt to emerging technologies. However, it has
consistently demonstrated resilience and adaptability, evolving to meet the demands of a
rapidly changing world.

Overall, the steel industry is a vital sector that underpins economic growth, infrastructure
development, and technological advancements. It continues to play a crucial role in shaping
the modern world, driving innovation, and supporting the progress of societies across the
globe.

Introduction of the company:

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TISCO, or the Tata Iron and Steel Company. TISCO was the company's previous name
before becoming Tata Steel. It was founded in 1907 and has since grown to be one of India's
largest and best-known steel companies.
Tata Steel manufactures and distributes a variety of steel products. They produce flat steel for
use in automobiles, construction, and appliances. They also produce long steel, which is used
in construction, infrastructure, and even railway track manufacturing. In addition to flat and
long steel, Tata Steel manufactures specialty steel. This includes steel for use in industries
such as aerospace, defence, and oil and gas. They offer a wide range of products to meet the
diverse needs of their customers. Tata Steel is a major player not only in India but also
globally. They have manufacturing facilities around the world, including Europe, Southeast
Asia, and Africa. This enables them to serve customers all over the world and become a
market leader in the global steel industry. Furthermore, Tata Steel is heavily invested in
community development initiatives, with a focus on education, healthcare, and infrastructure
development in the regions where it operates. By fostering partnerships with local
communities and stakeholders, the company hopes to generate shared value and positive
social impact. Tata Steel has grown its global presence through strategic acquisitions and
partnerships, establishing itself as a key player in the competitive steel market. Tata Steel's
resilience in the face of fluctuating steel prices and market volatility stems from its relentless
pursuit of excellence and commitment to delivering value to customers, shareholders, and
society.

Introduction of the topic:

Our project focused on the analysis of the operational framework of TATA Steel, with a
focus on analyzing the company’s supply chain and gain an understanding of its distribution
channels. We would dive into operations management to ensure everything in the company
runs smoothly. We will be overseeing the production of goods and services efficiently,
managing quality, controlling inventory, and optimizing processes. Every organization,
despite the size or industry, needs operations management. It ensures that organizations meet
their goals, and it helps to maximize profitability. The primary objectives of operations
management include increasing efficiency, improving quality, reducing costs, and enhancing
customer satisfaction. To achieve these objectives, operations managers must employ various
strategies and tactics. Furthermore, our project will study the drivers behind TATA Steel’s
successful supply chain management and their effective distribution channels. The
examination of the company allowed us to learn from the company’s operational prowess and
also helped in providing insights into potential areas for future improvements in the supply
chain and also learn from them.

Swot Analysis of TATA Steel

Strengths: -

• Low cost and efficient labor force

• Strong managerial capabilities.
• Strongly globalized industry and emerging global competitiveness.
• Modern new plant.
• Stable balance sheet.
• Experience of tata group in doing.

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Weakness: -

• High cost of energy.

• Higher duties and taxes.
• Dependence on imports for sale.
• Manufacturing equipment and technology.

OPPORTNITIES: -

• Huge infrastructure demand.

• Rapid urbanization.
• Increasing demand for consumers durables.
• Untapped rural demand.
• Consolidation trend in steel industry to get exposed tothe global steel market.

THREATS: -

• Slow growth in infrastructure development.

• Market fluctuation.
• Global economy slows down
• Threats to hostile takeover by its competitors.

Objectives:
The main objective of out project is to analyze the supply chain management of TATA Steel.
To specify it more it will be as follows:
• Efficiency: We examine how effectively resources like labor, materials, and
equipment are utilized by TATA Steel.
• ⁠Cost Reduction: We scrutinize expenses to identify areas where costs can be
minimized without compromising quality in the company.
• Supply Chain Management: Effective supply chain management has become a key
objective of operations management. Operations managers oversee the coordination
and integration of activities across the entire supply chain, from raw material sourcing
to final product delivery is a very important objective of our project.
• Quality Improvement: We will see on enhancing the quality of products or services by
implementing quality control measures and continuous improvement processes.
• Compliance: We ensure that the company adheres to legal and regulatory
requirements. This includes safety standards, environmental regulations, labor laws,
and industry-specific regulations.

Limitations:
The study was limited by a number of factors. Some of the constraints were:
• Availability of data: Limited sources of both external and internal data were available.
Productions schedules, quality control metrics, market research data were not
available and it might lead to misleading results of operations management of TATA
Steel.

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• Data silos: Different departments might keep their data to themselves, making it hard
to see the big picture and coordinate efforts across the company.
• Lack of real-time data access: If you can't see data as it's happening, you might miss
out on current trends or issues that need quick action.
• Challenges in data integration: Bringing together data from various systems or
formats can be tricky, but it's necessary for a comprehensive analysis.

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 Chapter 2-
Literature Study

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In this research paper “A Holistic Approach to Quality Success in Tata Steel(B. K. Singh1,
A. K. Jha2 and V. Kumar)” authors study the impact of quality management on the steel
industry and on TATA Steel. They tell us why quality, is important in today’s global
competitive environment, and is no longer a “luxury”. It is a necessary ingredient for success.
Quality has a significant impact on the return on investment and market share of all business.
Thus, TQM helps organization in increasing sales, productivity, improving product quality,
improving profitability, improving employee morale and reducing customer complaints by
improving process capabilities.
Thus, Tata steel has implemented TQM by using certain steps like understanding of customer
needs, by strengthening infrastructure, by improving the thoughts, by performance
improvement and through people involvement. This leads to a significant development in all
the areas especially in coal production, steel production and also increased selling of finished
products in a competitive environment.

In the research paper “A study on inventory management system at tata steel processing and
distribution ltd.( J.Pavithra, S.Fabiyola Kavitha, Gowtham D)” the objective of the study is to
have a practical bright knowledge of the working of the organization, its decision, its brief
historical background and its future prospects. The project is done on the entire steel industry
and involves the study of internal and external work culture of the company to maintain the
quality and effective service. From this research we got to know EOQ calculated is
suggesting that the company is obtaining its inventory requirements by placing orders on one
time replenishment and that the Proper Communication system between various departments
should be properly implicated. They also suggest that the company should implement some
advance technique so as so that it can do away with waiting time for a receipt of materials.

In the research paper of Automation Impact on Indian Steel Industry the writer Atul Kumar
Kaushik, Amit Goyal, Punit Kumar Rohilla, Vikas Acharya
The Indian steel industry has embraced automation to enhance productivity and
competitiveness in the global market. Post-World War II, automation became crucial to meet
the increasing demand for high-quality products. A review of 42 research papers identified 11
key parameters related to automation in the steel sector, covering aspects such as
Organizational Policies, Technological Capability, Operation Control, and Market Demand.
Over time, the focus of automation research in the steel industry has evolved. Before 1980,
the emphasis was on technological advancements and societal impacts. In the 1980s, attention
shifted to technological capabilities and innovations for production system modernization.
The 1990s saw a broader exploration of market behavior and the influence of government
policies on automation initiatives. From 2000 to 2010, technological advancements and
operational control emerged as key research areas, reflecting the industry's drive for
efficiency and competitiveness.
In research paper of Government Policy and FDI Triggering Growth Opportunities of Iron
Steel in India, Authors Dr. Shailendra Kumar Chaturvedi and Ms. Suruchi Tripathi
The Indian steel industry is on a track of growth, fuelled by rising consumption and
production levels. Government policies emphasizing infrastructure development and local
manufacturing are key drivers of this positive trend. Despite fluctuations, exports are
anticipated to increase in the future. The recently introduced National Steel Policy sets
ambitious targets for India to achieve self-sufficiency in steel production by 2030-31, with

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projections of a crude steel capacity of 300 million tonnes and per capita consumption of
158kg of finished steel, compared to the current 61kg.

Authors Dr. Shailendra Kumar Chaturvedi and Ms. Suruchi Tripathi have highlighted the
impact of liberalization policies, which have facilitated the growth of the private sector and
the establishment of new steel plants in India. Reforms in Foreign Direct Investment (FDI)
and substantial investments in infrastructure projects are driving demand for steel, positioning
the Indian steel industry for global competitiveness. The focus on infrastructure development,
including rural areas, and the encouragement of projects like roads, rail, and port facilities,
are crucial for maintaining competitiveness.
With a positive outlook for the industry, the Indian steel sector is expected to play a
significant role in the global market in the coming years, showcasing growth potential and
opportunities for further development.

In the research paper “Inventory Management Issues in Indian Steel Industry: A Qualitative
Study (Meenakshi Kumari)” the qualitative analysis of this study sheds light on the various
factors influencing inventory management within the Indian steel industry. Addressing a
notable research gap, this investigation delves into the driving forces behind inventory
management issues and proposes solutions, including tackling overinvestment,
overproduction, mismanagement, and excessive inventory levels. The study advocates for the
adoption of effective inventory control techniques such as Just-in-Time (JIT), ABC analysis,
inventory speculation, inventory postponement, inventory consignment, and reverse
inventory consignment.
Managerial implications are diverse and include enhancing understanding of inventory
management factors, facilitating the adoption of best practices through benchmarking, and
encouraging cross-sector learning. Furthermore, the identified dimensions provide a
foundation for future research on inventory-related issues, their impacts, drivers, and barriers,
aiding organizations in developing and implementing policies for improved inventory
management. Ultimately, these efforts are expected to enhance inventory management
practices, bolstering the performance of steel enterprises and contributing to overall economic
growth and societal well-being.

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 Chapter 3-
Model,
Framework and
Methodology

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 Methodology
Data collection:

Data collection is the process of collecting and evaluating information or data from multiple
sources to find answers to research problems, answer questions, evaluate outcomes, and
forecast trends and probabilities. We collected data from both primary and secondary sources.

Primary Sources:

To prepare this report we collected data mainly from the TATA Steel’s website. We also saw
interviews from the executives of TATA Steel. We also analyzed the company’s financial
statements, annual reports and case studies providing valuable insights of the company’s
operations.

Secondary Sources:

An extensive review of existing literature, industry reports, academic publications, and

relevant online sources. We explored relevant articles and publications that delved into the
broader context of the Indian steel sector, studying the data to analyze TATA Steel’s
operations. We also examined and studied news articles about TATA Steel and its inventory
management practices by searching online databases.

Plant Location

When Tata Steel considers selecting a plant location, they take various factors
into account. Some key considerations include:

1. Proximity to Raw Materials: Tata Steel looks for locations that are close to
sources of raw materials like iron ore, coal, and other essential inputs for steel
production. This helps in reducing transportation costs and ensuring a steady
supply chain.

2. Infrastructure: The availability of good transportation networks, such as

roads, railways, and ports, is crucial for Tata Steel. They consider locations with
well-developed infrastructure to facilitate the movement of raw materials and
finished products.

3. Market Access: Tata Steel considers proximity to target markets while

selecting a plant location. Being closer to customers helps in reducing
transportation costs and improving responsiveness to market demands.

4. Skilled Labor Force: Availability of a skilled and qualified labor force is an

important factor for Tata Steel. They look for locations with access to a skilled
workforce, as it contributes to efficient operations and productivity.

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5. Government Policies and Incentives: Tata Steel considers the business
environment and government policies of potential locations. They assess factors
such as tax incentives, regulatory requirements, and support for industrial
development.

6. Environmental Considerations: Tata Steel takes environmental factors into

account while selecting a plant location. They consider aspects such as air
quality, water availability, waste management, and compliance with
environmental regulations.

7. Cost Factors: Tata Steel evaluates the overall cost structure of potential
locations. This includes factors like land costs, energy costs, labor costs, and
other operational expenses.

By carefully considering these factors, Tata Steel aims to select plant locations
that optimize operational efficiency, minimize costs, and support sustainable
growth.

With an annual crude steel production capacity of 34 MnTPA, Tata Steel is one
of the most geographically diversified steel producers in the world. They are
one of the few steel producers that are fully integrated - from mining to
manufacturing and distribution of finished products. Tata Steel Group operates

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in India, UK, Netherlands, Thailand and Canada. Their operations span the steel
value chain from mining to market. They continuously develop their capabilities
by optimizing production capital, mines, steel industry assets, steel mills, rolling
mills and warehouses and logistics operations ensuring operational safety and
reliability.

Raw material mines

The company owns and operates mines that deliver cost competitiveness
through production efficiency and ensure a continuous supply of high-quality
raw materials. Their raw material operations are spread across India, which
ensures improved raw material security. Tata Steel has four iron ore mines in
Jharkhand and Odisha that enable 100 percent iron ore utilization and coal
mines in West Bokaro and Jharia that meet about 21 percent of the coal
requirements of its Indian operations. In addition, Tata Steel India has three
captive manganese mines in Odisha. The availability of manganese ore from our
mines is guaranteed, so ferromanganese is 100% available for Indian steel plant
operations.

Steel manufacturing
Tata Steel has a crude steel production capacity of 19.6 million TPA in India
with production facilities located at Jamshedpur and Gamharia in Jharkhand,
Kalinganagar in Odisha and Meramandal. Meramandal steel plant with a
capacity of ~5.6 MnTPA was purchased by Bhushan Steel (hereinafter referred
to as Tata Steel BSL) which was merged with Tata Steel in FY 2021-22. We
have commenced the Phase-II expansion of Kalinganagar steel plant to increase
crude steel production capacity to 8 MnTPA with a corresponding increase in
hot rolling capacity and commissioning of a new 2.2 MnTPA cold rolling
complex.

Long products have Steel Processing Centers (SPC) located all over India and
processes crude steel into finished steel products. We have several service
centers to meet the refined steel requirements of customers such as automotive
OEMs or construction companies by providing serviceable steel.

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 Plant layout

Tata Steel's plant layout has been designed with careful consideration of various
steelmaking processes. It usually contains separate parts such as coke oven
battery, blast furnace, steel mills, rolling mills and preparation lines.

A coke oven battery is where coal is heated without air to produce coke, an
essential fuel. in the steelmaking process. In a blast furnace, iron ore, coke and
limestone are combined and heated to separate the iron. The separated iron is
then processed in steel mills, which may contain basic oxygen furnaces or
electric arc furnaces, depending on the steelmaking method used.

After the steel is made, it passes through a continuous smelter where the molten
steel melts. solidifies into semi-finished products such as plates, flowers or
blanks. These semi-finished products are then sent to a rolling mill where they
are formed and converted into different shapes such as plates, sheets or rolls.
Finally, finishing lines perform additional treatments such as pickling,
galvanizing or coating to meet specific customer requirements.

The layout of the plant is carefully designed to optimize material flow,

minimize energy consumption and ensure worker safety. Advanced automation
and control systems are often used to improve the efficiency and quality of the
entire production process. Tata Steel's commitment to sustainability is reflected
in its efforts to minimize environmental impact, including waste management
and emissions measures.

Quality Management
TATA Steel’s journey in field of quality

1. Acceptance- TATA Steel realized that they had to accept the importance
of improvement. To survive you continuously need to grow and improve.

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 2. Adopting Total Quality Management- In 1990, Tata Steel adopted TQM
as one of their principals. In 1995, they adopted TATA Business
Excellence Model which is a self-assessment tool.
3. TBEM assessment- TATA Steel achieved very low points on the scale.
Then they decided to go for complete makeover with a crucial focus on
aspects like productivity, technology, innovation, safety etc.

The quality control at Tata Steel is fairly thorough. Using a Total Quality
Management (TQM) approach, they strive to improve not just the steel
production but every aspect of their business. This is an explanation:

1. Customer Focus: They pay close attention to what their consumers demand
and want to make sure they're providing goods that satisfy those needs.

2. Process Control: A strict eye is kept on every stage of the production process.
Statistical process control is used to monitor quality and ensure that all
parameters are met.

3. Certifications: They are still in compliance with ISO 9001, the norm for
quality control systems. It guarantees that their quality remains constant.

4. Employee Training: The newest techniques for quality control are routinely
taught to their staff. In this manner, everyone is in agreement about upholding
high standards.

5. Technology & Innovation: They make investments in cutting-edge

technology, such as automation and real-time monitoring systems, to aid in
quality control.

6. Continuous Improvement: To continuously enhance their procedures and cut

waste, they apply techniques like Kaizen and Six Sigma.

7. Supplier Quality: Since they are aware that quality begins with the raw
materials, they also ensure that their suppliers adhere to high standards of
quality.

Quality Control Check

Tata Steel maintains rigorous quality control checks throughout its production process to
ensure that its steel products meet the highest industry standards and customer requirements.
Here's an overview of the quality control measures employed by Tata Steel:

Raw Material Inspection: The quality control process begins with the inspection of raw
materials such as iron ore, coal, and alloying elements. Tata Steel sources raw materials from

19
reputable suppliers and conducts thorough inspections to verify their quality and compliance
with specifications.

Process Control: Throughout the steelmaking process, Tata Steel employs advanced process
control techniques to monitor and control various parameters such as temperature, pressure,
and chemical composition. This ensures consistency and uniformity in the quality of the final
product.

In-process Testing: Samples are taken at various stages of the manufacturing process for
testing and analysis. These tests include chemical analysis, mechanical testing, and
microstructural analysis to verify the properties of the steel and detect any deviations from
quality standards.

Quality Assurance Laboratories: Tata Steel operates state-of-the-art quality assurance

laboratories equipped with advanced testing equipment and instrumentation. These
laboratories perform comprehensive testing and analysis of steel samples to assess their
mechanical properties, chemical composition, surface finish, and dimensional accuracy.

Certifications and Standards Compliance: Tata Steel adheres to international quality

standards and certifications such as ISO 9001 for quality management systems and ISO
14001 for environmental management systems. Additionally, Tata Steel's products often meet
specific industry standards and certifications required by customers in various sectors such as
automotive, construction, and engineering.

Continuous Improvement: Tata Steel is committed to continuous improvement in its quality

control processes. They regularly review and analyze quality data to identify areas for
improvement and implement corrective actions to enhance product quality and customer
satisfaction.

Customer Feedback and Satisfaction: Tata Steel actively solicits feedback from customers
regarding product quality and performance. This feedback is used to further refine quality
control processes and ensure that customer expectations are consistently met or exceeded.

Inventory Cycle of TATA Steel

Tata Steel maintains rigorous quality control checks throughout its production process to
ensure that its steel products meet the highest industry standards and customer requirements.
Here's an overview of the quality control measures employed by Tata Steel:

Raw Material Inspection: The quality control process begins with the inspection of raw
materials such as iron ore, coal, and alloying elements. Tata Steel sources raw materials from
reputable suppliers and conducts thorough inspections to verify their quality and compliance
with specifications.

Process Control: Throughout the steelmaking process, Tata Steel employs advanced process
control techniques to monitor and control various parameters such as temperature, pressure,
and chemical composition. This ensures consistency and uniformity in the quality of the final
product.

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In-process Testing: Samples are taken at various stages of the manufacturing process for
testing and analysis. These tests include chemical analysis, mechanical testing, and
microstructural analysis to verify the properties of the steel and detect any deviations from
quality standards.

Quality Assurance Laboratories: Tata Steel operates state-of-the-art quality assurance

laboratories equipped with advanced testing equipment and instrumentation. These
laboratories perform comprehensive testing and analysis of steel samples to assess their
mechanical properties, chemical composition, surface finish, and dimensional accuracy.

Certifications and Standards Compliance: Tata Steel adheres to international quality

standards and certifications such as ISO 9001 for quality management systems and ISO
14001 for environmental management systems. Additionally, Tata Steel's products often meet
specific industry standards and certifications required by customers in various sectors such as
automotive, construction, and engineering.

Continuous Improvement: Tata Steel is committed to continuous improvement in its quality

control processes. They regularly review and analyze quality data to identify areas for
improvement and implement corrective actions to enhance product quality and customer
satisfaction.

Customer Feedback and Satisfaction: Tata Steel actively solicits feedback from customers
regarding product quality and performance. This feedback is used to further refine quality
control processes and ensure that customer expectations are consistently met or exceeded.

Inventory Management

One of the most crucial managerial tasks is managing inventories. In addition to

India, TATA Steel operates its own quarries and mines in a few other nations.
Both materials from its own source and those acquired from third parties are
included in the raw material inventory. Thus, the inventory of raw materials is
located at both the site of extraction and the place of operation. These are
delivered to the workplace via train and truck.
It takes work to keep the inventory at the bare minimum that is needed. There
are numerous factors that determine which number is appropriate for every
given firm. The majority of the raw materials in TATA STEEL's inventory are
coal and iron ore, however numerous other materials are present in trace
amounts.

Materials can be transported to the Jamshedpur works from various locations

with the assistance of TATA Steel's transportation system.
Every kind of production department keeps a different degree of inventory.
TATA Steel keeps a variety of inventories on hand, including raw materials,
work-in-progress, finished goods, transit, buffer, anticipation, and cycle
inventory.

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TATA Steel often employs the EOQ approach for ordering and the FIFO
method for inventory value.
First in, first out (FIFO) is an inventory valuation technique where costs are
assigned based on the notion that products are used or sold in the order that they
are received and put into stock.

The term "economic ordering quantity" (EOQ) refers to the ideal number of
items for which, in the event that orders are placed, both the total cost of placing
the orders and the total cost of carrying the inventory will be reasonable. Either
way, nothing will be lost. The determining elements for any given good are its
annual requirement in units, the cost of placing an order, and the cost of keeping
one unit in inventory for a full year. The EOQ of that item will alter if any one
or more of them change.
The formula to calculate EOQ is = √ 2A0/C.
where A is the annual consumption, 0 is the ordering cost, and C is the carrying
cost.

Benefits of effective inventory management

By implementing effective inventory management practices, Tata Steel can

experience several benefits.

1. Cost reduction: Effective inventory management helps minimize carrying

costs associated with excess inventory. This ensures that only the required
amount of inventory is kept, reducing storage and holding costs.

2. Better cash flow: By optimizing inventory levels, Tata Steel can free up cash
that would otherwise be tied up in excess inventory. This improved cash flow
can be used for other business needs or investments.

3. Improved production planning: Inventory management enables better

production planning by providing accurate information about inventory levels
and demand patterns. This will help Tata Steel avoid inventory and production
delays, thereby improving customer satisfaction.

4. Waste reduction: Effective inventory management helps minimize waste by

reducing obsolete or obsolete inventory. This ensures efficient use of materials
and avoids excess inventory.

5. Smooth supply chain: With a well-managed inventory system, Tata Steel can
optimize its supply chain operations. This includes better coordination with

22
suppliers, better demand forecasting and shorter lead times resulting in a more
efficient supply chain.

6. Better customer service: With proper inventory management, Tata Steel can
respond quickly to customer demands. The right products at the right time
ensure timely delivery of orders and increase customer satisfaction.

ABC Analysis
ABC Evaluation of Tata Steel Stock:

Tata Steel's inventory would be divided into three groups according to the
annual consumption value using an ABC analysis:

A Items (High Value): This group probably consists of expensive raw materials
such as specialized alloys, coking coal, and iron ore. These items normally
make up 10–20% of the total inventory items, but they account for 70–80% of
the entire inventory value.

B Items (Medium Value): This group may include semi-finished goods such as
slabs, blooms, or particular steel plate grades. These products probably make up
a higher percentage of the inventory as a whole (20–30%) and add a
considerable amount to the overall value (10–20%).

C Items (Low Value): Products in this category are probably inexpensive

consumables, replacement parts, or specialized tools used in manufacturing. Of
the inventory, these goods would make up 60–70% of the total, yet they only
account for 10–20% of the value.

Advantages for Tata Steel

Through the application of ABC analysis, Tata Steel stands to gain multiple
benefits:

Better Inventory Control: They may use strategies like vendor-managed

inventory or safety stock optimization to apply more stringent management
controls to high-value (A) items.

Decreased Inventory Carrying Costs: Tata Steel can free up cash for other uses
by optimizing ordering and possibly lowering safety stock levels for low-value
(C) goods.
Enhanced Efficiency: Inventory management can be made more effective
overall by concentrating efforts on overseeing key (A) items.

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Limitations of ABC Costing Method

ABC is time consuming and costly.

Setup costs and updating cost for example in the automobile industry is very
high and ABC fails to inculcate it.

Business with similar product and services output that require similar activities
then the benefits from ABC are very limited.

Supply Chain of Tata Steel

Supply chain is a critical element in Tata Steel's value creation process to ensure
timely delivery of right quality raw materials, other goods and services to
production sites and delivery of finished products to customers. The storage of
semi-finished products and finished products is a critical process to maintain the
timeliness, safety and quality of delivery.

Managing a Diverse Supply Chain

Our main production points are located in the eastern part of the country, states
of Jharkhand and Odisha, while profit centers like Wires Division etc. and
customer supply points are located all over India. To meet our customers'
delivery and quality requirements, we have steel processing centers and
warehouses in strategic locations across the country to optimize delivery time
and costs. Our captive iron ore mines and mining facilities are located around
Jamshedpur and Kalinganagar.

Although the railways are India's most environmentally friendly mode of

transport, they are wholly owned by the government, which distributes the
wagons among various agencies of the country. For the raw material segment,
we are fully dependent on Indian Railways for inbound shipments. We have
closed loops that operate between captive mines, ports and production sites. We
are one of the first in the steel industry to benefit from the Indian Railways -
Special Freight Train Operator (SFTO) program incentives and long term tariff
agreements.
Road conditions are not ideal for transporting high quality steel products that
have to travel. up to 1,700 km from production sites to locations across India.

24
The country's inland waterways are under development. Therefore, this is not an
open option at the moment, although it is the most environmentally friendly
way.
Therefore, we must adopt several modes of transport, taking into account the
above-mentioned limitations, and strive for the best possible delivery
requirements and costs. . taking utmost care of safety and environment.
Increasingly focusing on the environment and reducing its supply chain from
new regulatory and other climate change risks, TATA Steel is now focusing
more on green supply chain and exploring third party logistics concepts,
modern. state-of-the-art warehouses, energy efficient and newer ecological
design the use of ships, coastal transport to reduce land ton miles and the use of
digital feeds to simplify the flow of raw materials and other purchased goods
(maintenance repair, bulk, etc.) and services. We ensure the realization of
human rights throughout the supply chain. The schematic depiction of our
supply chain with the flow of materials is shown below:

25
 Benefits of effective supply chain management

By putting into practice efficient supply chain management techniques, Tata

Steel gained the following advantages:

Improved Delivery Performance: On-time delivery was one of the main gains.
Tata Steel was able to considerably boost their delivery accuracy and complete
more orders on schedule by optimizing procedures and enhancing visibility.

Decreased Inventory Costs: Overall inventory levels were lowered as a result of

better management of raw materials, completed goods, and works-in-progress.
Tata Steel will benefit from reduced carrying costs as a result.

Enhanced Efficiency: Tata Steel's manufacturing efficiency was raised overall

as a result of a well-oiled supply chain and improved departmental
collaboration.

Improved Supplier Relationships: Tata Steel's emphasis on working together

with suppliers led to improved alliances. Better communication, collaborative
creativity, and a more secure material supply were the outcomes of this.

Sustainable Practices: Tata Steel was able to cut carbon emissions and create a
more sustainable supply chain overall by using supply chain management to
streamline logistics and transportation.

Limitations while applying supply chain management

Costs of Implementation: Tata Steel may incur costs in the form of expenditures
for technology, training, and even hiring more staff in order to establish and
operate an advanced supply chain management system

Disruptions and Delays: Tata Steel's meticulously designed supply chain may be
impacted by outside variables such as natural disasters, political turmoil, or
abrupt changes in demand

Over-reliance on Suppliers: While solid supplier relationships are important,

Tata Steel runs the risk of being overly dependent on a single supplier for
essential commodities if that provider experiences interruptions

Data Management Challenges: Large volumes of data are necessary for efficient
supply chain management. For Tata Steel, ensuring data security, accessibility,
and correctness throughout the whole supply chain can be difficult

26
Integration Complexity: Tata Steel may find it difficult to manage the
integration of diverse supply chain systems and procedures across departments
and maybe international borders

27
 Chapter 4-
Analysis and
Findings

28
Here's an analysis of Tata Steel's operations management based on the
information that we discovered while studying TATA Steel’s operations:

Focus on Continuous Improvement:

Tata Steel emphasizes a culture of Total Quality Management (TQM), where

everyone participates in improvement. This fosters a continuous improvement
cycle across all operations.
Their Shikhar 25 program exemplifies this focus. Launched in 2016, it aims to
achieve benchmark operational excellence across the value chain. This program
has led to significant cost savings and improved performance metrics

Process control: They strive for efficient processes by optimizing practices in

areas like production scheduling and inventory management.
Asset management: Tata Steel prioritizes maintaining their production facilities
and equipment for optimal performance.
Supply chain management: Efforts are made to ensure a smooth flow of raw
materials and finished products throughout the supply chain.

Optimizing the Mix:

The company strategically adjusts its product mix to maximize efficiency and
profitability. This might involve producing more semi-finished products during
power shortages to maintain output
Technology and Data Analytics:

Tata Steel utilizes analytical tools like Sathi to monitor performance indicators
and enable proactive problem-solving. They might also employ production
modeling software to optimize production planning and minimize material
waste.

Sustainability:

Their operational excellence initiatives consider environmental impact. By

optimizing processes, they aim to reduce waste generation, improve energy
efficiency, and lower their carbon footprint
Overall, Tata Steel's operations management strategy emphasizes continuous
improvement, a focus on core processes, and leveraging data and technology to
achieve optimal efficiency and sustainability.

Some points that help TATA Steel in differentiating itself from its competitors:

29
1. Diversified Product Portfolio: With a wide range of goods to serve a variety
of industries, including construction, automotive, and packaging, Tata Steel has
an advantage over more specialized rivals like Nippon Steel & Sumitomo Metal
Corporation.

2. Strong Sustainability efforts: Unlike rivals like ArcelorMittal, which might

not have as strong sustainability programs, Tata Steel has been a leader in
sustainability practices, with efforts including waste management, water
conservation, and the adoption of renewable energy.

3. Innovative Technologies: Tata Steel has a technological edge over more

established rivals like ThyssenKrupp thanks to investments in cutting-edge
technologies like automation, digitization, and sophisticated steelmaking
processes.
4. Global Presence and Market Leadership: Tata Steel has a competitive
advantage over local rivals like POSCO because of its robust worldwide
presence and its position as a market leader in some areas.

5. good Brand Reputation: Baoshan Iron & Steel Co. and other rivals may not
have the same degree of brand awareness as Tata Steel, but the company does
have a good reputation for quality and dependability.

6. staff Development and Engagement: Tata Steel's emphasis on safety, staff

development, and engagement can result in increased productivity and creativity
as compared to rivals who might not place as much emphasis on these areas.

These highlights show how Tata Steel differentiates itself from its competitors
by its strategic focus on diversification, sustainability, innovation, global
presence, brand reputation, and staff development.

Findings
When studying the operations management of Tata Steel, you'd find that they
have a highly integrated approach. They focus on efficiency, sustainability, and
innovation. If you look at Tata Steel's operational management, you will see that
they have a holistic approach which includes the following:

1. Efficiency and Productivity: They use lean manufacturing to reduce waste

and increase productivity through advanced technology and continuous
improvement.

2. Supply Chain Management: They maintain a strong supply chain ensuring

efficient material procurement and timely delivery of products.

30
3. Quality Control: A strong focus is placed on quality control to ensure that all
products meet high standards and customer expectations.

4. Sustainability: They implement sustainable practices to reduce environmental

impact, including initiatives to reduce carbon emissions and water use, and to
recycle.

5. Innovation: investments in research and development are key to innovation in

their processes and products, which keeps them competitive in the steel
industry.

6. Employee development: They invest in their workforce through training and

development programs.

7. Safety: We foster a safety-based culture that aims not to harm our operations.

8. Customer Focus: They work closely with customers to understand their needs
and provide customized solutions.

These elements demonstrate Tata Steel's commitment to quality work, balancing

product efficiency with environmental and social responsibility.

31
 Chapter 5-
Conclusion,
Suggestions and
Recommendations

32
 Conclusion, Suggestions and Recommendations
We would like to conclude that TATA Steel’s operations management approach
is both sophisticated and strategic. They blend efficiency, sustainability, and
innovation to maintain a leading position in the steel industry. Their
commitment to quality, employee welfare, and customer satisfaction, alongside
their dedication to environmental responsibility, sets a benchmark for
operational excellence. Tata Steel's practices could serve as a model for other
companies aiming to optimize operations while remaining conscious of their
social and environmental impact.
Tata Steel implemented TQM using certain steps like understanding customer
needs, strengthening infrastructure, improving ideas, improving performance
and involving people. This leads to significant development in all areas,
especially in coal production, steel production, and also in the growth of sales of
finished products in a competitive environment.

Tata Steel has seen several significant benefits from improving its supply chain,
inventory and quality management:

1. Improved efficiency: streamlining processes and reducing waste has resulted

in improved operational efficiency.

2. Improved customer satisfaction: reliable and fast fulfillment of customer

requirements increased satisfaction and loyalty.

3. Cost reduction: Inventory management strategies have eliminated excess

inventory and reduced ownership costs.

4. Quality Assurance: Strong quality management systems have maintained

high product standards, reducing recalls and costs.

5. Collaboration with suppliers: Strong relationships with suppliers have led to

better quality and innovation.

By leaning on these areas, Tata Steel has strengthened its market position and
business excellence.

Suggestions and recommendations

1.Implement Advanced Demand Forecasting: Use machine learning and
historical data to better correctly estimate demand. This lowers the risk of

33
stockouts and overstocking while optimizing inventory levels and carrying
expenses.

2.Adopt a Just-in-Time (JIT) Inventory System: Prioritize prompt material

ordering and delivery to reduce inventory holding costs while maintaining a
consistent supply.
3.Leverage Automated Inventory Management System: Automate the inventory
tracking and reordering operations to reduce human error and increase
productivity.

4. Optimize Logistics Network: Examine transportation routes and warehouse

locations to improve delivery efficiency and reduce transportation expenses.

5. Embrace Digitalization: Use digital tools for procurement, logistics

management, and supplier communication to improve supply chain efficiency.

6. Market access: To reduce transportation distances and enhance delivery

times, consider suitable locations near expanding steel consumption markets.

7. Infrastructure and logistics: Evaluate the quality of infrastructure (roads,

ports) at potential locations to allow the efficient transfer of raw materials and
finished goods.

34
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