OSC Assignment 2

Tata Steel & JSW

Steel

Animesh Rathi (006)

Somya Varma (055)

Chinmay Parandkar (013)

Prakhya Agarwal (039)

Tata Steel
Tata Steel Processing and Distribution Limited, formerly Tata Iron and Steel Company Limited (TISCO), is an
Indian multinational steel-making company headquartered in Kolkata, West Bengal, India, and a subsidiary
of the Tata Group.

It is one of the top steel producing companies globally with annual crude steel deliveries of 27.5 million
tonnes (in FY17), and the second largest steel company in India (measured by domestic production) with an
annual capacity of 13 million tonnes after SAIL.

Tata Steel operates in 26 countries with key operations in India, Netherlands and United Kingdom, and
employs around 80,500 people. Its largest plant (10 MTPA capacity) is located in Jamshedpur, Jharkhand.
In 2007, Tata Steel acquired the UK-based steel maker Corus.

It was ranked 486th in the 2014 Fortune Global 500 ranking of the world's biggest corporations. It was the
seventh most valuable Indian brand of 2013 as per Brand Finance.

Tata Iron and Steel Company was founded by Jamsetji Tata and established by Dorabji Tata on 26 August
1907, and began producing steel in 1912 as a branch of Jamsetji's Tata Group. By 1939, it operated the
largest steel plant in the British Empire. The company launched a major modernization and expansion
program in 1951. Later, in 1958, the program was upgraded to 2 million metric tonnes per annum (MTPA)
project.By 1970, the company employed around 40,000 people at Jamshedpur, and a further 20,000 in the
neighbouring coal mines. In 1971 and 1979, there were unsuccessful attempts to nationalise the company.
In 1990, the company began to expand, and established its subsidiary, Tata Inc., in New York. The
company changed its name from TISCO to Tata Steel Ltd. in 2005.

Tata Steel on Thursday, 12 February 2015 announced buying three strip product services centres in
Sweden, Finland and Norway from SSAB to strengthen its offering in Nordic region. The company,
however, did not disclose the value of the transactions.

In September 2017, ThyssenKrupp of Germany and Tata Steel announced plans to combine their European
steel-making businesses. The deal will structure the European assets as Thyssenkrupp Tata Steel, an equal
joint venture. The announcement estimated that the company would be Europe’s second-largest
steelmaker, and listed future headquarters in Amsterdam.

1
JSW Steel Ltd
JSW Steel Ltd. (BSE: 500228, NSE: JSWSTEEL) is an Indian steel making company based in Mumbai,
Maharashtra. It is a subsidiary of JSW Group. It is one of the fastest growing companies in India with a
footprint in over 140 countries. JSW Steel is an Indian steel company owned by the JSW Group based in
Mumbai, Maharashtra, India.JSW Steel, after merger of ISPAT steel, has become India's second largest
private sector steel company. The current installed capacity is 18 MTPA. A $13 billion conglomerate, with
presence across India, USA, South America & Africa, the JSW Group is a part of the O.P. Jindal Group with
strong footprints across core economic sectors, namely, Steel, Energy, Infrastructure, Cement, Ventures
and Sports. JSW's history can be traced back to 1982, when the Jindal Group acquired Piramal Steel
Limited, which operated a mini steel mill at Tarapur in Maharashtra and renamed it as Jindal Iron and Steel
Company (JISCO).

The Group set up its first steel plant in 1982 at Vasind near Mumbai. Soon after, it acquired Piramal Steel
Ltd., which operated a mini steel mill at Tarapur in Maharashtra. The Jindals, who had wide experience in
the steel industry, renamed it as Jindal Iron and Steel Co. Ltd. (JISCO). Jindal Vijayanagar Steel Ltd. (JVSL)
was set up in 1994, with its plant located at Toranagallu in the Bellary-Hospet area of Karnataka and
External Areas of Andra Pradesh, the heart of the high-grade iron ore belt and spread over 3,700 acres (15
km2) of land. It is just 340 kilometres (210 mi) from Bangalore, and is well connected with both the Goa and
Chennai Port. In 2005, JISCO and JVSL merged to form JSW Steel Ltd.JSW Steel has also formed a joint
venture for steel plant in Georgia. The Company has also tied up with JFE Steel Corp, Japan for
manufacturing the high grade automotive steel. The Company has also acquired mining assets in Republic
of Chile, United States and Mozambique.

In 1994, Jindal Vijayanagar Steel (JVSL) was set up with its plant located at Toranagallu in the Bellary-
Hospet area in the State of Karnataka, the heart of the high-grade iron ore belt and spread over 10,000
acres (40 km2) of land.[6] over a decade. It also set up a plant at Salem with an annual capacity of 1 million
tonne. It is on the threshold of a major expansion plan of adding 3.2 million tons per annum to its at
Vijayanagar Plant to achieve 11 MTPA by 2011. It has established a strong presence in the global value-
added steel segment with the acquisition of a steel mill in US and a Service Center in United Kingdom. JSW
Steel has also formed a joint venture for setting up a steel plant in Georgia. The Company has further
acquired iron ore mines in Chile and coal mines in USA & Mozambique.The current manufacturing capacity
of company is 18 MTPA. [7] In Aug 2014, it acquired Welspun Maxsteel Ltd in a deal valued at around 1,000
Crores.[8] JSW has already acquired 3 MTPA Hot Rolling Plant in Dolvi Maharashtra (earlier named Ispat
Industries Ltd.).

2
Strategic Sourcing:
Strategic Sourcing is an organized and collaborative approach to leveraging targeted spend across
locations with select suppliers that are best suited to create knowledge and value in the customer-supplier
interface.

The Strategic Sourcing process requires an organized approach or method that allows a supply chain
function to systematically work on spend areas or processes that can result in cost saving benefits. There
are 8 essential steps involved in the process beginning with identifying a spend area and culminating with
selecting and managing a relationship with supplier(s). All sourcing models, regardless of origin, contain the
following eight essential elements:

· Identifying the targeted spend area

· Creating the sourcing team (Touch Point Required)

· Developing a team strategy and communication plan (Touch Point Required)

· Gathering Market Information

· Developing a supplier portfolio (Touch Point Required)

· Develop a Future State

· Negotiate, evaluate, commitment, and agree (Touch Point Required)

· Supplier Relationship Management

3
Strategic Sourcing at Tata Steel:
Prior to strategic sourcing, the procurement division of Tata Steel was a typical purchase organization
driven by transactions and negotiations focused on price reduction only, with limited knowledge about the
commodity and its end use in the process of steel-making.

Over the years, this division has changed itself from a transactional unit to a knowledge-based buying
organization through the evolution processes it has undergone over the last five years. After the
introduction of strategic sourcing in 1999, the key service of the division has been identified as fulfilment of
a customer’s requirement through knowledge-based sourcing of different commodities, as well as services,
related directly or indirectly to steel-making processes.

Tata Steel’s approach is based on the principle that strategic procurement is an exercise beyond cost
reduction. Commodities used for steel-making processes and their allied services are being selected and
prioritized for study using strategic sourcing tools, before their annual procurement, depending upon their
annual purchase value and criticality of application. After the selection of commodities, a Commodity
Competence Team (CCT) is formed which is a cross-functional team wherein people from different
departments such as User/Operation, Research and Development, Quality Control, MRO, Supply
Management and Finance come together to formulate sourcing strategies for a commodity purely on a
techno-commercial basis. After the formation of the CCT, the commodity studies are carried out based on
different technical and commercial parameters.

Strategic Sourcing at JSW

Jindal Stainless Corporate Management Services’ Procurement arm is an integral part of Jindal Stainless
Group and is responsible for sourcing across all companies including raw materials, energy, industrial
services, industrial equipments, spares and maintenance. By enabling the centralized Procurement for all 4
companies (i.e. JSL, JSHL, JULS, JCL). Procurement department ensures single point of contact with all its
suppliers and brings in cost competitiveness and synergy in sourcing.

Objectives are driven to ensure the best value for the company by following best global practices for
sourcing and at the same time ensuring security of supply, quality of material at the most competitive
prices. Procurement team not only works towards bundling of requirement or capturing the best value, but
also work with strategic suppliers and internal stakeholders to ensure the lowering of total cost of
ownership and bringing value to our customers.

Global procurement is organized to work in tandem with operations, with a central purchasing team for raw
materials and lead buyers for scrap, alloys, refractories, rolls, metals, MRO and bulk gases. Along with
Global Procurement team, Local procurement teams are also based out of plants and takes cares of
domestic goods and services.

4
Main actions and initiatives in continuous improvement include: using “Total Cost of Ownership”
methodology, leveraging our scale by collective buying; regularly challenging our main key performance
indicators (KPIs) for improvement; and making sure use of best-in-class processes. Together, these
methods have enabled to reduce variable costs.

Supply Chain Management:

Supply Chain in Steel Industry

In the steel industry, the supply chain, apart from actual production, is an extremely complex task, requiring
the consideration of numerous factors and objectives. Sharply fluctuating demand, raw materials supply
and uncertain prices produce a negative impact on steel production. At the same time, the supply chain of
the steel industry has to consider multiple objectives and multiple stages of steel production and supply
chain simultaneously in a global market. It requires an optimised supply chain alternative by extending
visibility of demand based on economy and market, raw material supply based on transportation, and
suppliers and their price.

Supply Chain at JSW Steel

An effective supply chain management ensures uninterrupted business activity and flexibility.

JSW Steel key elements of supply chain include,

(i) procurement of key raw materials like, coal, iron ore, lime stone, dolomite, coke etc.

(ii) transportation of raw materials

(iii) procurement of support services.

Raw materials are procured from within the country and also from outside. JSW Steel use ship, rail and
road transportation.

Also, the company has been able to achieve, reduction in logistical footprint by making conscious efforts to
increasingly shift to transportation of raw materials and products within India by rail.

Manufacturing operations of JSW Steel do not cause any significant negative impact on biological diversity.
JSW Steel expects its suppliers involved in mining and similar operations, with potential impact on
biodiversity, to be compliant with applicable laws and take due care of biodiversity.

In addition, JSW Steel undertakes activities in and around our manufacturing sites to conserve, preserve
and enhance the biological diversity.

5
JSW has following value chain:

Raw Materials

Optimise mix and sourcing of key inputs like iron ore and coal to weather a volatile pricing environment

Explore various contract options like long-term/spot/ indexing

Backward integration through acquisition of iron ore mines

Inbound Logistics

Modal shift: 80% of raw material transported via rail/sea

Centralised logistics cell to ensure end-to-end integration

Optimisation of infrastructure spend

Manufacturing

State-of-the-art manufacturing facilities set up

Installation of latest technology to reduce consumption of water in operations

Energy management through waste heat and gas recovery

Processing

Hot rolled steel: Construction and infrastructure, industrial and engineering, pipes and tubes, automotive
and energy sectors

Cold rolled steel: Automotive and, industrial and engineering sectors

Electrical steel: Electric motors, generators, nuclear power stations and power plants, among others

Galvanised steel: Construction and infrastructure and consumer durables sectors

Colour coated steel: Construction and infrastructure, and consumer durables sectors

Outbound Logistics

Modal shift: 80% of finished products transported via rail/sea

Centrally integrated

Last-mile connectivity tracking using digital technologies

Use

Highly diversified portfolio

6
Focus on innovation and new value-added product development

Joint venture agreement with Marubeni-Itochu Steel Inc., Tokyo, to set up contemporary steel processing
centres

Recycling

Recycling of steel scrap

Increase in recycling of water

Supply of recycled water for irrigation in water-starved regions around the operations

Supply Chain at Tata Steel:

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. Storage of semi-finished and finished products is a critical process with respect to
timeliness of delivery, security and preserving quality.

It focuses on 2 key areas:

Optimising inbound & outbound logistics network

Managing suppliers & channel partners

Major manufacturing locations are located in the eastern part of the country, in the states of Jharkhand and
Odisha, while Profit Centres such as Wires Division, etc. and customer delivery points are located pan-
India. To meet the delivery and quality requirements of customers, Tata Steel have steel processing
centres and stockyards at strategic locations across the country to optimise the delivery time and cost.
Captive iron ore mines and collieries are located at sites around Jamshedpur and Kalinganagar.

While railways are the most preferred mode of transportation in India from an environment point of view, it
is wholly owned by the Government, which allocates the wagons to various agencies in the country. For
the raw material segment, Tata Steel are totally dependent on the Indian Railways for inbound
transportation. They have closed-circuit rakes running between the captive mines, ports and manufacturing
locations. They are 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 road conditions are not ideal for transportation of high-end steel products, which have to travel as far
as 1,700 kms from the manufacturing locations to pan-India. 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.

With increasing focus on the environment and on de-risking the supply chain from emerging regulatory and
other climate change risks, they are now enhancing focus on a Green Supply Chain and exploring the
concepts of third-party logistics, modern state-of-the-art warehouses, use of energy-efficient and newer

7
design eco-friendly ships, coastal shipping to reduce landside tonne miles and use of digital meals to
simplify the cargo flow of raw materials and other bought-out goods (maintenance repair operations, bulk,
etc.) and services. They ensure the implementation of Human Rights throughout the supply chain.

Flexibility in Supply Chain:

Flexibility in supply chains is the possibility to respond to short term changes in demand or supply
situations of other external disruptions together with the adjustment to strategic and structural shifts in the
environment of the supply chain. Flexibility thus combines agility and adaptability. Flexibility furthermore
combines mix, volume, new product and delivery time aspects.

Flexibility is related to three aspects:

1. Buyer-supplier relationship

2. Demand driven and the role of marketing

3. Production/manufacturing

Supply chain flexibility also takes into account two main aspects:

a. process flexibility of each supply chain plant, concerning the number of product types that can be
manufactured in each production site (supplier or assembler).

b. logistics flexibility, related to the different logistics strategies which can be adopted either to release a
product to a market or to procure a component from a supplier.

Flexibility in Supply Chain in Steel Industry:

The steel industry faces two major challenges. The first is increased volatility in both demand and raw-
material prices. Compounding these factors is the shift of consumption and production from traditional to
emerging markets. At the same time, the shift in production and consumption to developing markets leaves
limited growth options for companies in traditional markets. When a business environment changes in this
manner, so too do the assumptions governing company strategy.

In the first place, flexibility will have to operate across the entire supply chain. Companies need to look at
how they procure raw materials, as well as the respective value-in-use in the production process. They
must make sure that products meet customer require- ments and can be sold to the market. Flexibility
measures will extend to an increasing emphasis on capacity management. Adjustment of blast furnace,
rolling-mill, and downstream processing capacity and utilization can be used not only to achieve higher
flexibility but also to realize cost savings. The recent downturn saw steel companies “learning” to handle
lower blast-furnace utilization, sometimes as low as 30 percent, which is much lower than had been
considered feasible.

8
In addition to these short and medium-term changes, companies need to develop longer-term strategies
that will ingrain flexibility in their culture in the same way that concepts of efficiency are ingrained.

Make or Buy Decision:

Tata Steel:

Tata Steel has continually re-defined performance parameters in its journey towards becoming the global
steel industry benchmark for value creation and corporate citizenship. It is amongst one of the few steel
companies that has its operations fully integrated – from mining to manufacturing and marketing of finished
products.

Its manufacturing strategy has focused on ensuring raw material security. This goes a long way in enabling
cost competitiveness and efficiencies, and has enabled Tata Steel to become the lowest cost producer of
steel in Asia.

Raw Material Division operates captive iron ore and coking coal mines in the Indian states of Jharkhand
and Odisha. Key manufacturing functions are performed by the raw materials and iron making groups,
while Shared Services provides support for a smooth production.

Following a growth strategy of capacity augmentation through Brownfield and Greenfield projects, the
capacity expansion plans in Jamshedpur and Kalinganagar further help strengthen the product portfolio in
India while rebalancing steel-making capacities across the Group.

Tata Steel’s Jamshedpur plant, the very first steel plant in India (production started in 1912), is today among
the country’s largest integrated steel-making facilities, producing around 10 million tonnes of steel every
year.

JSW Steel:

JSW Steel, India's biggest steelmaker in terms of domestic capacity.

JSW Steel is also looking to focus on buying more niche, lower capacity plants which do not require huge
investments to turn around. JSW has steel-making capacity of 18 million tonnes per year, around 13 per
cent of India's installed capacity.

It has hence tried several bids for purchasing bankrupt steelmakers eg. Bhushan Steel.

9
 Operations Strategy
Tata Steel:

· In case of Tata Steel hot metal is converted into steel through a steelmaking process called the LD
process.

· Tata Steel launched Shikar 25 that aims to achieve benchmark levels while building institutional
capability. This initiative has resulted in a total savings of $706.183 Mn.

· Stepping up production at West Bokaro: The coal produced was made to replaced the imported coal
to steer a cost benefit of Rs. 3000/tonne. It reduced idle capacity to increase CC volume that helped avoid
vessel bunching and waiting at port. Further, Tata Steel started to source coal from public sector mines.
The raw coal volume then increased by debottlenecking the evacuation route from the quarry to the
washeries. This led to a dramatic increase in clean coal volume by 43%.

· It also launched the analytical tool, Sathi to monitor lead indicator and thus enable proactive action.

· Increase in sinter net production through stabilisation & reliability improvement: The plant crossed the
8 MTPA net sinter production (Indian benchmark). It is the only sinter plant in India with Stack Emission 46%
Sinter in Blast Furnace Burden. This helped in achieving a total savings of INR 20 crores.

· Development of an optimisation model to minimise transition losses at LD2: The model identified the
best possible grade/chemistry to be produced, checked order availability, and guided the steel maker to
modify the plan accordingly. This model led to reduction in transition losses by 40-50% and a total savings
of INR 30 crores.

· Reduction of idle freight and logistics costs: Installing IR certified in-motion weight bridge, load cells in
pay-loaders, and increasing the height of loading in coke wagons resulted in reduction of idle freight. The
significant reduction in logistic costs was brought together due to consolidation of cargo with third parties
and transshipment, as well as restructuring of legacy contracts with key suppliers at ports. The overall
result was reflected in the reduced landed logistics cost by 12%.

JSW Steel:

· Integrated steel manufacturing facilities – from raw material processing plants to value-added product
capacities

· Combination of state-ofthe-art steel making technologies: Corex, DRI, Blast Furnace

· Extensive portfolio of products – HR, CR, galvanized/galvalume, pre-painted, tinplate, electrical steel
(CRNO), TMT bars, wire rods, special steel bars, rounds and blooms

10
· Pan India marketing and distribution network, export presence in ~100 countries across the 5
continents

· Installed capacity 18 MTPA, at strategic locations in South and West India

· Focused expansion plans in India

· Optimized capital structure through deleveraging

· Operational excellence and cost reduction for sustainable operations by: Improvement in quality,
productivity, yield , and energy efficiency; sharing best maintenance, environment management, and safety
practices; benchmarking, training and talent sharing; standardization of processes.

· Diversified Product Profile: Wide offering of Flat and Long products Continuously increasing value
added products. Developing new products, capturing niche markets

· Focus on Operational Efficiency: Reduced raw material costs, Focus on process improvements, Waste
gas utilization for power, generation Solid waste management and zero, effluent discharge, Efficient
operations resulting in low conversion cost.

Difference between Tata Steel and JSW Steel

Quality:- Although TATA has already achieved many milestone in the field of quality control and quality
assurance. Got many national and international award for the same, which JSW aspirant for. But JSW is also
striving to achieve and maintain good steel quality status. Of course there is long way to cover for JSW
steels.

Production:- JSW Vijaynagar works is the Largest Integrated Steel plant in the single site of India. Currently
it is producing 14 Million Ton Per Annum in the single site and 5.2 MTPA Blast furnace is in the project. JSW
is coveted to achieve the total target of 50 MTPA by 2030. It will be almost 40% of total India’s steel
production. Commonly we can say it is apex on the steel production.

Special Grades and Automotive Steel:- With the installation of HSM#2 and CRM#2 JSW has registered
itself in the rare grade steel production . Successful trial of DP 980 and DP 1180 is done in CRM#2
Complex. So if someone is thinking of special grade or automotive steel material then going for JSW is
definitely a best step. Yes still quality is a severe constraint.

Employee welfare ans CSR:- JSW is involved in many CSR activity like Akshaypatra skill training centers. As
far as employee welfare is concern it is far behind the TATA steels.

JSW steel as a corporate sector, is in a win win situation in every aspect. Yet far to go and miles to cover in
quality and employee welfare compared to Tata Steel.

11