SUPPLY CHAIN MANAGEMENT PRACTICES IN INDIA (A CASE STUDY OF TISCO) Introduction Todays world is moving in turbulent economic environment,

firms are striving for ways to achieve competitive advantage. One of the approaches is to manage the entire supply chain to reduce costs and improve performance to create competitive advantage and business success. Supply chains are now at the center-stage of business performance of manufacturing and service organisations. This research explores and investigates how high technology firms uses supply chain management to gain competitive advantage and increase business success. This research provides a theoretical framework to understand a firms performance and argues that supply chain management will help a firm to be competitive and successful. n order to leverage on existing supply chain investments, firms in the Steel !anufacturing industry, like many other industries, are faced with the challenge of being able to align their supply chain strategies with the effective use of technology. To this end, manufacturing firms are changing their focus from a simple product-focus, to a more customer focused approach, achieved through the development of more viable, longerterm relationships with their customers. !any firms in this industry sector have realised that the nternet is an effective tool that can be used to build these relationships. This is achieved by adding value to the services a firm offers to its customers "#alakota and $obinson, %&&&'. The result of this approach is a shift in supply chain management practices, whereby, a business to consumer link is added in the supply chain, typically at the distribution end "(nderson, %&&)' the business to consumer link is facilitated through the integration of nternet technologies into the supply chain. Supply chain management is not a static concept or solution. nstead, new advances and techni*ues for supply chain management continue to mushroom. This tremendous growth in new ideas and processes is starting to influence and change the business processes and models of companies. +ence companies have many choices in selecting programs in

supply chain management. n making their choices, companies need to plan for effective supply chain management, in order to gain competitive advantage. ( theory that has gained momentum in the last few years is the concept of supply chain management. n recent years, there have been numerous advances and developments in supply chain techni*ues and management. One of the reasons is that as trade barriers drop and markets open, competition have become more intense , hence companies need to be more competitive and cost effective. (n initiative to help achieve this is a supply chain management program. Supply chain management is the management of upstream and downstream activities, resources, and relationships with suppliers and customers, which is re*uired to deliver products or services. n theory, if this is done well it will lead to competitive advantage through differentiation and lower costs as suggested by -orter ")./&'.
Supply Chain: (ll the necessary activities re*uired for creating and delivering products and services to customers.

Supply chain management: This includes managing supply and demand, sourcing raw materials and parts, manufacturing and assembly, distribution across all channels, and delivery to the customer "Supply 0hain 0ouncil, %&&)'. Supply chain management: (ccording to the 0ouncil of Supply 0hain !anagement -rofessionals "0S0!-', Supply chain management encompasses the planning and management of all activities involved in sourcing, procurement, conversion, and logistics management. t also includes the crucial components of coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers. n essence, supply chain management integrates supply and demand management within and across companies. E-Procurement: 1--rocurement is essentially an nternet2 ntranet based purchasing application or hosted services that streamlines buying trading partners, maximi3es trade efficiency across the entire supply chain, and provide strategic e-commerce capabilities in internet time " T$4, %&&%'.

Logistics: The management and movement of product and services, including storage and warehousing, and their transport via air, land, and water "0oyle, 5ardi, and 6angley, ).//'.
Logistics: The management and movement of product and services. This includes storage and warehousing of products, and their transport via air, land, and water.

Logistics is that part of the supply chain process that plans, implements, and controls the efficient, effective flow and storage of goods, services, and related information from the point-of-origin to the point-of-consumption in order to meet customers' requirements. Tata Stee ! "formally known as Tata ron and Steel 0ompany 6td.' is the largest private sector steel company in ndia in terms of domestic production. $anked %7/th on 8ortune 4lobal 7&&, it is based in 9amshedpur, 9harkhand, ndia. t is part of Tata 4roup of companies. Tata Steel is also ndia:s second-largest and second-most profitable company in private sector. SAP AG! a multinational software development and consulting corporation, which provides enterprise software applications and support to businesses of all si3es globally. +ead*uartered in ;alldorf, 4ermany, t was founded in ).<%. t the largest software enterprise in 1urope and the fourth largest software enterprise in the world. company:s best known product is its S(- 1nterprise $esource -lanning "S(- 1$-'s. Li"t o# SAP Product" S(- 5usiness Suite S(- 1$- "1nterprise $esource -lanning' S(- 0$! "0ustomer $elationship !anagement' S(- S0! "Supply 0hain !anagement' S(- S$! "Supplier $elationship !anagement' S(- -6! "-roduct 6ifecycle !anagement' S(- =etweaver S(- 5usiness One S(- 5usiness 5y>esign S(- 5usiness (ll-in-One software The

O$%ecti&e o# t'e "tud(! The present study explores and investigates how Tata Steel uses supply chain management to gain competitive advantage and increase business success. This study provides a theoretical framework to understand a firms performance and argues that supply chain management will help a firm to be competitive and successful. The ob?ective of this study is to explore and investigate how firm scope, design, and implement supply chain management. t also tries to find the advances and new ideas in supply chain management. 5ecause the ma?ority of companies cannot compete on the basis of price alone, some sort of differentiation is necessary. The nternet coupled with other computer technologies, allow companies new avenues to distinguish themselves from their competition. One of these avenues is supply chain management, supply chain management allows a company to reduce its costs, create opportunities to increase value for its customers and increase its competitive ability in the market. !ost importantly, this study endeavors to determine how Tata steel implemented supply chain management 1$- Software that can provide competitive advantage n fulfilling this ob?ective, this study addresses the following research issues@ ). To see the effect of implementation of supply chain management techni*ue on the productivity of the company, across the period of time. %. To analy3e the profit margin of the company before and after implementation of supply chain management 1$- package. A. To study the inventory of the company before and after implementation of supply chain management. B. To make a study of the working capital management of the company before and after implementation of supply chain management. 7. To compare the reduction in the cost of production after implementation of Supply chain management C. To provide suggestions for the improvement of efficiency and functions of the company.

Sco)e o# t'e "tud(! The present study covers a period of ten years from )...-%&&& to %&&/-%&&. as ade*uate information and data for this research were only available for this period. The data is based on a single company operating in 9harkhand ndia. This research focuses on how Tata Steel implemented 1$- system, strategy and technology. To answer the primary research *uestion, a number of sub-*uestions have been developed. H()ot'e"i"! n order to reach the ob?ective of the study the following ma?or hypothesis were formulated. )' mplementing S(- has made a reduction on the working capital of the company. %' There has been a decrease in the volume and value of inventory of the company. A' There has been a decrease in cost of production of the company and increase in labour productivity. 7' There has been improvement in the customer order management and customer satisfaction. C' Supply chains of this company contribute to competitive advantage and long term profit and health of the company. Met'odo o*( o# t'e "tud(! This study employs the *ualitative research process using single case studies. There are several reasons for this@ Since the focus of this research is on high technology companies operating in ndia. Supply chain management is a vast collection of techni*ues. +ence, selection of supply chain factors and strategies can be a complex process. n such a dynamic setting it is best to use *ualitative research methodology "using case studies' to understand the situation. 8urthermore face-to-face meetings with respondents can help provide understanding and information on several *ualitative areas, such as@ reasons for implementing specific supply chain factors "or strategies'D customer needs data, and discussions and feedback on the *uestionnaire.

The secondary data needed for this study has been collected from various sources like 9ournals, annual report, -rofit and loss account, 5alance sheet, financial Statement of the company, online published document on internet, previous research report related to Tata Steel. This research is exploratory in natureD both primary and secondary data is collected.

C'a)teri"ation! P an o# t'e "tud(! This research is focused on how Tata Steel implemented 1$- system to manage its supply chain management to increase its $O and benefit to the company, investor and people at large. This research consists of seven chapters. 0hapter ). ntroduction. 0hapter %. 0onceptual study of Supply 0hain !anagement. 0hapter A. Tata ron and Steel 0ompany- (n overview. 0hapter B. mplementation of 1$- system S(- and 1- commerce in Tata Steel. 0hapter 7. -erformance !easures of Supply 0hain !anagement. 0hapter C. $elationship between supply chain management and performance in Tata Steel. 0hapter <. Suggestions and 0onclusion. Li+itation There are several limitations in this study. The theoretical model derived from this research is only applicable to the high technology companies. The research is focused on single company operating geographically in 9harkhand, ndia.
The most significant weakness of this study can be attributed to the chosen case study research methodology. Ein ")..B' cites several known limitations and criticisms of the case study research methodology. These include the lack of generali3ation, perceived lack of rigor, sub?ectivity, and voluminous documents. This study is an exploratory case study with a limited sample si3e. Therefore, the findings cannot be generali3ed beyond the context of this study. (s an exploratory study, the goal of this research effort is to seek greater

understanding that can lead to building a foundation for more extensive research in the future.

This research work has been completed after facing various types of difficulties because it is too tough to measure the success of an 1$- implementation in a company. The first tough task was collection of data for the purpose of review. Since the data is related to implementation of any 1$- systems are confidential of the company. 4etting primary data from the company is very difficult. 8or being a private company the employees of the company are reluctant to give any information, which is specific to that company. 4etting the response of the *uestionnaire was the toughest part in the collection of data, since the respondent were not willing to give their opinion to the *uestions. They left many of the *uestions unanswered. Through this thesis have tried to give useful and positive result so that it can act as guidance for further research in this field.

SF!!($E O8 T+1 0+(-T1$S 0+(-T1$ Introduction This chapter serves as an introduction to the research. t comprises sections, which cover the importance of the study, ob?ective of the research, scope of the study, +ypothesis of the study, source of data collection, a brief description of the methodology, an outline of the structure of the study, key definitions, limitations of this research, and the chapters conclusion. 0+(-T1$ Conce)tua Stud( o# Su)) ( C'ain Mana*e+ent 4lobali3ation also brings foreign competition into markets that traditionally were local. 6ocal companies are thereby forced to respond by improving their manufacturing practices and supply chain management. 1xperience shows that the gains to be made in cost, lead-time and *uality through working in partnership with customers and suppliers are significant. Supply chain management "S0!' is the process of planning, implementing and controlling the operations of the supply chain as efficiently as possible. Supply 0hain !anagement spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point-of-origin to point-of-consumption 4aneshan and +arrison have yet another analogous definition@ ( supply chain is a network of facilities and distribution options that performs the functions of procurement of materials, transformation of these materials into intermediate and finished products, and the distribution of these finished products to customers. (ccording to ;ikipedia.org Su)) ( C'ain Mana*e+ent (SCM)! Supply chain management is the process of planning, implementing, and controlling the operations of the supply chain with the purpose of satisfying customer re*uirements as efficiently as possible. Supply chain management spans all movement and storage of raw materials, work,in,process inventory, and finished goods from point,of,origin to point,of,consumption

The definition one A+erican )ro#e""iona a""ociation put forward is that Supply 0hain !anagement encompasses the planning and management of all activities involved in sourcing, procurement, conversion, and logistics management activities. mportantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers. n essence, Supply 0hain !anagement integrates supply and demand management within and across companies. !ore recently, the loosely coupled, self-organi3ing network of businesses that cooperates to provide product and service offerings has been called the Extended Enterprise. Logistics is that part of the supply chain process that plans, implements, and controls the efficient, effective flow and storage of goods, services, and related information from the point-of-origin to the point-of-consumption in order to meet customers' requirements. The broader view of S0! is depicted in the below figure in a simplified supply chain network structure. This would explain the basic difference between 6ogistics and S0!. Supply 0hain is inter-company integration of business process and relationships and where as 6ogistics is intra-company integration.

Fi*ure ,-.! "i+) i#ied "u)) ( c'ain net/or0 "tructure

)

-roviding enhanced value to customers at the least Total cost Galue, Gelocity and Gisibility.

S0! -rinciples@ Fltimate customer focus, =etwork of organi3ations working for common purpose and mutual benefits, -rocess orientation, Total systems thinking, 0ost >imension. nventory Transportation ;arehousing nformation 0+(-T1$ Tata Iron and Stee Co+)an( 1An O&er&ie/ The history of steel making in ndia can be traced back to B&& 50 when the 4reek emperors used to recruit ndian archers for their army who used arrows tipped with steel. !any more evidences are there of ndians perfect knowledge of steel-making long before the advent of 0hrist. (rchaeological finds in !esopotamia and 1gypt testify to the fact that use of iron and steel was known to mankind for more than six thousand years and that some of the best products were made in ndia. (mong the widely-known relics is the ron -illar near Hutab !inar in >elhi. The pillar, built between A7& and A/& (>, did not rust so far -----an engineering marvel that baffles the scientists even today. Eet another engineering feat is the famous Sun Temple at #onark in Orissa, built around )%&& (>, where steel structurals were used for the first time in the world. The Tata 4roup is almost )7& years old. t currently comprises .C operating companies, which together employed some A7<,&&& people worldwide and had revenues of FSI <%.7 billion "8eb %&&.' billion in %&&/-&.. Tata is active in seven ma?or business lines@ information systems and communications, engineering, materials, services, energy, consumer products and chemicals. ts %/ publicly listed companies have a combined market capitalisation of FSI<%.7 billion that is the second highest among ndian business houses in the private sector, and a shareholder base of over % million. The 4roup has operations in more than 7B countries and its companies export products and services to )%& nations.

-romoted in )/<B by 9amset?i Tata with a single textile mill, the group has always been controlled by the Tatas, a -arsee family of the close-knit Joroastrian community, and the Tata Trusts. Tata Stee , formerly known as TISCO "Tata Iron and Stee Co+)an( Li+ited), is the world:s sixth largest steel company, with an annual crude steel capacity of A) million tonnes. t is the largest private sector steel company in ndia in terms of domestic production. $anked %7/th on 8ortune 4lobal 7&&, it is based in 9amshedpur, 9harkhand, ndia. t is part of Tata 4roup of companies. Tata Steel is also ndia:s second-largest and second-most profitable company in private sector with consolidated revenues of $s ),A%,))& crore and net profit of over $s )%,A7& crore during the year ended !arch A), %&&/. ts main plant is located in 9amshedpur, 9harkhand, with its recent ac*uisitions, the company has become a multinational with operations in various countries.

0+(-T1$ G I+) e+entation o# ERP "("te+ SAP and E2 co++erce in Tata Stee S(-, an 1$- system, was implemented at Tata Steel for better customer order management and fulfillment. S(- was introduced in the areas of sales and distribution, material management, 8inancial-(ccount $eceivables and control. Tata Steel has adopted S(- $2A an 1$- technology to take a lead in the competitive steel industry and through constant learning, innovation and refinement of its business operations, has transited seamlessly from a production-driven company to a customerdriven one. Tata Steel planned a big-bang approach of going live with all the modules at the same time, in ?ust a span of eight months. >riven against the speed of time, the pace of implementation was fast with all activities backed by a lot of thought process and meticulous planning. On )st =ovember )... Tata Steel pulled off a big bang implementation of all S(- modules at one go across BC countrywide locations, as per the set deadline.

-hase - To 1xtend S(- in ;orks with 8 0O, !!, -- K H! -hase - To implement S(- modules such as (sset !anagement K 5udget management sub-modules of 8 0O, -lant maintenance, +uman $esources, -roduction Optimi3er "such as S(- (-O' -hase - S1! "Strategic 1nterprise !anagement'

L The solution covered /7M of Tata Steels business-process re*uirements. L S(- has a large customer base and is a leader in ndias 1$- market. L The solution incorporated E%# functions that Tata Steel desired. L S(- could provide skilled implementation partners.

8igure ).)@ S(- mplementation n Tata steel I+) e+entin* e2co++erce n %&&), Tata Steel and S( 6, two of the largest steel companies in South (sia, reali3ed the significant contribution that the nternet and e5usiness could make to reengineer the steel supply chain and they ?oined hands to set up metal?unction services limited which went on to become the world:s largest e!arketplace for steel, and ndia:s largest e0ommerce company within a short span of time. !etal?unction was renamed to m?unction to give a new corporate identity to the company. Ser&ice" )ro&ided $( +%unction E2di"tri$ution! n a bid to cut down on the distribution cost and serve customers better, Tata ron K Steel 0ompany 6td proposes to adopt the Nhub and spoke:: concept, as recommended by the management consultant, 3oo4 A en Ha+i ton. The essence of the

concept is as follows@ Tata Steel will gradually do away with its stockyards, in their placeD it will set up at different locations hubs which will act as stocking points of generic materials to serve a much larger number of customers. There will be rail connections between the hubs and the company:s 9amshedpur plant and road connections between the hubs and various consumption centers in the region concerned. ( beginning has already been made. The company has closed down nearly a do3en of its %/ stockyards and the closure of the rest will be undertaken in due course, as and when the G(T is in force. The first hub, located within the 9amshedpur plant itself, has already started functioning on an experimental basis. (t least four more are in view. These will be located at Sankrail near #olkata, Gi?ayawada, =agpur and >elhi. ( sub-hub might also be considered for 8aridabad to cater to the specific re*uirements of the customers in the region. ( total investment of about $s <& to $s /& crore is being planned for setting up the hubs. ;hile the company will provide the land and the handling e*uipment, it will not participate in the day-to-day running of the hubs. nstead, the day-to-day operation will be left to the private vendors. The company is believed to have already identified the vendors. ( move is afoot to make the hubs at Sankrail and Gi?ayawada operational in the current financial year itself. The lands about %& acres at Sankrail and A& acres at Gi?aywada O have been identified. This is followed by the one at >elhi. Lo*i"tic" and De i&er( Ti+e Tata Steel puts a lot of emphasis on enhancing logistics in order to improve delivery time, reduce transportation cost and better inventory management at stockyards located at strategic points. The import 2 export logistics is handled by its T#! >ivision. Tata Steels expertise in both in-bound and out-bound logistics makes its 8erro (lloys and !inerals >ivision "8(!>' the preferred supplier of imported thermal coal to customers in ndia. Tata Steel has its own stockyards and exclusive berths alongside both +aldia and 0alcutta ports, e*uipped with sophisticated material handling e*uipment, to ensure damage-free smooth shipment and manned by trained personnel, well-versed in handling logistics and loading. 5esides, storage is planned in con?unction with experts and the actual loading is supervised by an internationally reputed independent inspection agency.

C'anne Finance In Tata Stee e2Co ection! !etal9unction has offered buyers the convenience of paying for materials with a simple click of the mouse. ( cash management service arranged in association with 0itibank and +>80 has expanded the scope of e-selling to include the collection of money. Tata Steel and !etal9unction are working together to not only increase the *uantities of products sold over the last fiscal year but are also identifying new products to be sold through this highly efficient route. 0hannel finance !etal9unction provides a uni*ue service of arranging finance for the distributors of Tata Steel on an online, %BP< basis. !etal9unction has negotiated with some leading private and foreign banks in ndia to offer credit to the distributors of Tata Steel. This has ensured that Tata Steel need not offer credit on sales. This has increased realisations and lowered the working capital re*uirements of Tata Steel.

Gra)' ,-.! S'o/" )enetration o# c'anne #inance The above graph is ?ust a pictorial depiction of the continual K sustainable increase in channel 8inance as a proportion of Sale towards regular >istribution 0hannel of Tata Steel. 0redit Sales of Tata Steel have steadily decreased over the period from 8iscal %&&% to 8iscal %&&/.

e2Se in*! Tata Steel initiated the first online e-Sale through !etal9unction in the month of 8ebruary %&&% and since then has sold %%),%7. !T. The products that Tata Steel has sold through !etal9unction are@ +S! >efectives, +S! -O$, 4- 0oils, 6- >efectives, -rime 5illets and Secondary -roducts. The results have been extremely encouraging for Tata Steel, with products being sold to customers all over the country. The prices obtained by !etal9unction have been reflective of the market situation. The entire cycle time of selling materials is reduced by the speed and efficiency with which on-line competitive bidding events can be created and managed. Through intensive market-making efforts and the use of technology, !etal9unction is bringing in both, greater efficiencies to processes and greater focus to the sale of non-core products of Tata Steel. !etal9unction.com commenced e-selling in 8ebruary %&&% and has worked with its clients to migrate products from the traditional offline process to the online platform. Till A) !arch %&&A, !etal9unction.com sold %7/,<%A !T of steel aggregating $s.ABA 0rore. !etal9unction.com offers two types of e-selling services@ 8ull Service on a business process outsourcing"5-O' mode !etal9unction.com takes end-to-end responsibility of selling client:s low :value: and2or standard products. Fndertaking market research and market-making activities to generate buyer leads. 0reating suitable market lots to ensure maximum participation from buyers. 0onducting the auction event 8ulfillment services Fndertaking collection of payments, like earnest money deposit and principal. 1nsuring fast and secure handling of money. !etal9unction.com has tied up with 0itibank and +>80 5ank 0ollecting sales tax documents- !anaging customer complaints. T'e Proce"" F o/ o# "a e" order in SAP This is a uni*ue fully automated B-step process starting from Sales Order to !oney $eceipt generation in Tata Steel S(- $A system and finally dispatch of materials from the stock-yard which is powered by the integrated channel finance application designed, developed and hosted

---QSTEP I----------QSTEP II-----------QSTEP III--------------STEP I5---Q Fi* ,-6! T'e Proce"" F o/ o# "a e" order in SAP )&&M secured receivables )&&M timely payment ncreased buying power of the distributors mproved margin and supply chain visibility Single window in terms of visibility of ! S C'a en*e" in i+) e+entin* SAP 1$- implementation is not as simple as installing software package since it involves a lot of changes to be done in the mindset of the people of the company to be successful. The paper looks at these factors and discusses how adoption of new 1$- system results in the creation of improved processes, practices and capacities. These *uality initiatives mandate a transformational change in the mindsets, attitudes and culture and focuses on critical elements like leadership, employee involvement, training and education, teamwork and many others. These critical elements create a foundation, which facilitates 1$- implementation. (s Tata Steel works toward its goal of becoming a top player in the world steel market, it faces several challenges and opportunities. These include@ L Operating in a competitive market L Supporting ambitious growth plans L $eshaping its business processes and T infrastructure 0+(-T1$ G Per#or+ance Mea"ure" o# Su)) ( C'ain Mana*e+ent.

Supply chain performance measures can be classified broadly into two categories *ualitative measures "such as customer satisfaction and product *uality' and *uantitative measures "such as order-to-delivery lead time, supply chain response time, flexibility, resource utili3ation, delivery performance, etc.'. n our study we consider only the *uantitative performance measures. mproving supply chain performance re*uires a multi-dimensional strategy that addresses how the organi3ation will service diverse customer needs. ;hile the performance measurements may be similar, the specific performance goals of each segment may be *uite different. Huantitative metrics of supply chain performance can be classified into two broad categories@ =on-financial and financial. ,) Non2Financia Per#or+ance Mea"ure" 6) Financia Mea"ure" =on-8inancial -erformance !easures mportant metrics include@ cycle time, customer service level, inventory levels, resource utili3ation, performability, flexibility, and *uality. There is a detailed discussion of these in. ;e will focus here on the first four measures.

C(c e ti+e Cu"to+er Ser&ice Le&e In&entor( Le&e " Re"ource uti i4ation

C(c e ti+e 0ycle time or lead-time is the end-to-end delay in a business process. 8or supply chains, the business processes of interest are the supply chain process and the order-to-delivery process. 0orrespondingly, we need to consider two types of lead times@ supply chain lead-time and order-to-delivery lead-time. The order-to-delivery lead-time is the time elapsed between the placement of order by a customer and the delivery of products to the customer. f the items were in stock, then it would be e*ual to the distribution lead-time and order management time. f the items were made to order, then this would be the sum

of supplier lead-time, manufacturing lead-time, distribution lead-time, and order management time. The supply chain process lead time is the time spent by the supply chain to convert the raw materials into final products plus the time needed to reach the products to the customer. t thus includes supplier lead time, manufacturing lead time, distribution lead time, and the logistics lead time for transport of raw materials from suppliers to plants and for transport of semi-finished2finished products in and out of intermediate storage points. 6ead-time in supply chains is dominated by the interface delays due to the interfaces between suppliers and manufacturing plantsD between plants and warehousesD between distributors and retailersD etc. 6ead time compression is an extremely important topic because of time based competition and the correlation of lead time with inventory levels, costs, and customer service levels. Cu"to+er Ser&ice Le&e 0ustomer service level in a supply chain is a function of several different performance indices. The first one is the order fill rate, which is the fraction of customer demands that are met from stock. 8or this fraction of customer orders, there is no need to consider the supplier lead times and the manufacturing lead times. The order fill rate could be with respect to a central warehouse or a field warehouse or stock at any level in the system. Stock out rate is the complement of fill rate and represents the fraction of orders lost due to a stock out. (nother measure is the backorder level, which is the number of orders waiting to be filled. To maximi3e customer service level, one needs to maximi3e order fill rate, minimi3e stock out rate, and minimi3e backorder levels. (nother measure is the probability of on-time delivery, which is the fraction of customer orders that are fulfilled on time, i.e. within the agreed-upon due date. In&entor( Le&e " Since inventory-carrying costs can contribute significantly to total costs, there is a need to carry ?ust about enough inventories to satisfy the customer demands. nventories held in a supply chain belong to four categories $aw materials, work-in-process "unfinished and semi-finished parts', finished goods inventory, and spare parts. 1ach type of inventory is held for different reasons and there is a need to keep optimal levels of each type of

inventory. Thus measuring the actual inventory levels will provide a useful picture of system efficiency. Re"ource uti i4ation ( supply chain network uses resources of various kinds@ manufacturing resources "machines, material handlers, tools, etc.'D storage resources "warehouses, automated storage and retrieval systems'D logistics resources "trucks, rail transport, air-cargo carriers, etc.'D human resources "labor, scientific and technical personnel'D and financial "working capital, stocks, etc.'. The ob?ective is to utili3e these assets or resources efficiently so as to maximi3e customer service levels, minimi3e lead times, and optimi3e inventory levels. Financia Mea"ure" There are several fixed and operational costs associated with a supply chain. Fltimately, the aim is to maximi3e the revenue by keeping the supply chain costs low. 0osts arise due to inventories, transportation, facilities, operations, technology, materials, and labor. The financial performance of a supply chain can be evaluated by looking into the following items.

0ost of raw material $evenue from goods sold (ctivity-based costs such as material handling, manufacturing, assembling, etc. nventory holding costs Transportation costs 0ost of expired perishable goods -enalties for incorrectly filled or late orders delivered to customers 0redits for incorrectly filled or late deliveries from suppliers 0ost of goods returned by customers 0redits for goods returned to suppliers

Typically, the financial performance indices can be put together using the following ma?or modules@ activity based costing, inventory costing, transportation costing, and inter-company financial transactions.

Developing and maintaining a supply chain performance measurement system represents one of the more significant challenges faced in SCM initiatives. However, if supply chains are to be improved, decisions need to be based on objective performance information and will require sharing of this type of information with ey supply chain members. !rgani"ational willingness to share information with other supply chain members is a critical selection criterion for SCM membership. #n organi"ation that is willing to receive information from other supply chain members but is reluctant to share information is a poor candidate for inclusion in an SCM initiative. n today:s economy the battlefield is shifting from individual company performance to what we call Supply hain !erformance. Supply 0hain -erformance refers to the extended supply chain:s activities in meeting end customer re*uirements, including product availability, on-time delivery, and all the necessary inventory and capacity in the supply chain to deliver that performance in a responsive manner. Supply 0hain -erformance crosses company boundaries since it includes basic materials, components, subassemblies and finished products, and distribution through various channels to the end customer. t also crosses traditional functional organi3ation lines such as procurement, manufacturing, distribution, marketing K sales, and research K development. The nternet is a key enabler of both supply chain performance improvements and richer supply chain performance measures.

0+(-T1$ G Re ation"'i) $et/een Su)) ( C'ain Mana*e+ent and )er#or+ance in Tata Stee The introduction of S(- $2A solutions within Tata Steel has led to efficient business processes, enhanced customer service, reduced costs, improved productivity, accelerated transaction time, workflow management and reduction in the number of credit management errors. N-ost the introduction of the S(- solution, the results have been terrific. The company has spent close to $s.B& crore on S(- implementation, and has saved $s.AA crore within a few months of implementation.

7or0in* Ca)ita C(c e ;orking capital cycle, also known as the asset conversion cycle, operating cycle, cash conversion cycle or ?ust cash cycle, is used in the financial analysis of a business. The higher the number, the longer a firm:s money is tied up in business operations and unavailable for other activities such as investing. The cash conversion cycle is the number of days between paying for raw materials and receiving cash from selling goods made from that raw material. ( short cash conversion cycle indicates good working capital management. 0onversely, a long cash conversion cycle suggests that capital is tied up while the business waits for customers to pay. The longer the production process, the more cash the firm must keep tied up in inventories. Similarly, the longer it takes customers to pay their bills, the higher the value of accounts receivable. On the other hand, if a firm can delay paying for its own materials, it may reduce the amount of cash it needs. n other words, accounts payable reduce net working capital $aw material holding period has increased by 77M while there has been an efficient !anagement in the stocks in process and stores K spares holding period this is depicted by a decrease of C&M and A&M in the holding days respectively. The credit receivables period has also been brought down considerably by about <<M which shows the efficiency of the debtors management. 4ross working capital during the period )../-.. was highest for the company. ;e can see from the graph it came down slowly from )... onwards.

4raph ).)@ ;orking capital analysis. T'e in&entor( +ana*e+ent The inventory management in %&&A-&B and %&&B-&7was best in the company history. Online availability of data will further improve nventory !anagement in the stockyards, leading to better customer services. 6ead time re*uired to process orders, settle complaints, develop new products and reconcile accounts, in substantially lesser time.

4raph ).%@ nventory turnover " n >ays' ( reduction in lead time for spending approvals, now )/,%& days from C7,<& days earlier. The inventory carrying cost has drastically deflated from $s. ).& per ton to $s. )77 per ton. To add to this, there have been significant costs savings through management of resources with the implementation of S(-.

De$tor" Turno&er The average debtors to turnover were down to . days from C/ days cent, which was the highest in the period from )..C to %&&..

4raph ).A@ - >ebtors Turnover in number of days La$our )roducti&it( 6abour productivity in 0rude Steel has been continuously improving from .A Tons2 !an year in )..C-.< to )7% Tons2!an year in %&&&-&) and stands at A<& Tons2!an year in %&&/. 6abour productivity has multiplied three from )...-%&&& to %&&/. Total number of employees has come down from </,%<C in !arch )..A to B/,%7% in September %&&) and about A7,&&& in %&&/.

4raph ).B@ Shows labour productivity from )..C-.< to %&&/-&. E3ITDA Mar*in $efers to 15 T>( divided by total revenue. 15 T>( margin measures the extent to which cash operating expenses use up revenue. 15 T>( is a rough approximation for cash flow and it is calculated as revenues - expenses "excluding taxes, interest, depreciation, and amorti3ation'. E3ITDA is the acronym for Earnin*" $e#ore Intere"t8 Ta9e"8 De)reciation8 and A+orti4ation. t is a non-4((- metric that is measured exactly as stated. (ll interest, tax, depreciation and amorti3ation entries in the ncome Statement are reversed out from the bottom line =et ncome. t purports to measure cash earnings without accrual accounting, canceling tax-?urisdiction effects, and canceling the effects of different capital structures. 15 T>( differs from the operating cash flow in a cash flow statement primarily by excluding payments for taxes or interest as well as changes in working capital. 15 T>( also differs from free cash flow because it excludes cash re*uirements for replacing capital assets "capex'.

Gra)' ,-:! E3ITA;Turno&er (<)from )..C-.< to %&&/-&. Cu"to+er "ati"#action 0ustomer satisfaction was a real issue at Tata Steel. ;hen orders were placed, customers were promised a due date that was not based on hard data, plant capacity or raw-material availability. Orders were delivered when promised only about 7& percent of the time. To make matters worse, customers would generally not receive advance notice if their order would not be ready as promised, and this lack of communication burdened customer resources down the line, in the finishing and distribution channels. The plant would often scramble to address the needs of high-priority customers, further alienating customers whose orders may have been ?ust as important but less urgent. ;ithout any method to analy3e forecast versus actual performance, it was impossible to design improvements in the overall delivery system. $eali3ing that its industry-leading position was hanging in the balance, Tata started the improvement process by articulating its strategic drivers@ improved customer satisfaction and higher asset utili3ation. To address customer needs, the company conducted an exhaustive survey to establish detailed customer re*uirements. The survey yielded three imperatives. 8irst, provide an accurate promise as to when the order would be delivered. Second, in the event that the order due date would be missed, notify the customer early in the processOnot at the point of the missed delivery. (nd third, accurately pro?ect a revised delivery date so that the customer could modify its schedules accordingly.

t leads to complete transparency in customer ledgers, orders, stock ledgers, dispatches and credit lines. t is nternet enabled and allow customer to use S(- to get information on their orders. ;ith S(- solution Tata Steel can now update their customers on a daily basis and provide seamless services across the country improving customer management. The availability of online information has facilitated *uicker and reliable trend analysis for efficient decision-making. 5esides the streamlined business process reduces the levels of legacy system and also provides consistent business practices across locations and excellent audit trail of all transactions. Team (SS1T at Tata Steel. Foreca"tin* ca)a$i it( Tata:s forecasting ability has also improved dramatically. -rior to implementing supply chain software, the company had no systematic insight into how to evaluate the accuracy of its forecasts for demand as well as for raw materials. =ow, it has the tools to analy3e its forecast predictions against actual results, enabling root-cause analysis capabilities to identify what has caused the differences. N mproving our ability to forecast allows the company to use due-date-based planning, which helps them to meet demand with higher utili3ation. 0+(-T1$ G Reco++endation" and Conc u"ion Reco++endation" and Conc u"ion 8rom the above analysis and discussion it can be concluded that, Supply chain management has become not ?ust a *uestion of efficient logistic process, but is related to the growth and survival of organi3ation"s'. ;ith customers becoming more demanding in their re*uirement of services from the suppliers, the construction of an efficient and integrated supply-chain has assumed paramount importance. nformation technology plays a ma?or role in the formation of the supply chain. 1fficient dissemination of information upstream and downstream is a ma?or re*uirement for the implementation of the supply chain, T provided with nternet, 1> and 4roup;ares and other application

softwares. (fter analy3ing the complete implementation have the following suggestion which can be added to the present 1$- environment to make it more effective. ). n purchasing, the approval process is not integrated with the companys e-mail system, which results in additional unnecessary effort, less control, and longer lead times. Tata Steel could streamline its purchasing process by using myS(- 1$- email integration for workflow approvals. n addition, the company could save time and streamline communication by using the new S(- solutions, rather than spreadsheet the solution to handle its budget process outside. %. 1valuate S(- functions for a monthly rolling budget forecast based on a total cost breakdown for existing cost centers. This would speed up the budget process dramatically and free management from non-value-added tasks. t would enable the use of what-if scenarios to show the pro?ected budget impact of various business decisions. A. n "trate*ic )urc'a"in*, the company must increase the share of annual rate contracts in total purchasing, and there is an opportunity to reduce inventory-carrying costs by improving the share of vendor-managed inventory. B. Tata Steel faces considerable data duplication in its purchasing functions, as some parts have multiple universal material codes. ;ith the companys current expansion plans, the number of parts is bound to grow, with a parallel increase in duplication. Tata Steels interaction and integration processes, as well as its T landscape, are also likely to expand. 5ecause data interfaces between S(- and non-S(- software are batch oriented, processing for real-time updates is not possible. n addition, there are multiple systems in place at Tata Steel that involve a variety of independent software vendors using different technology and interfaces. n plant maintenance, employees have found it difficult to enter work-order data. This can be resolved through the use of mobile asset management during maintenance operations. !eanwhile, if Tata Steel hopes to increase total steel capacity using the same number of resources, it must free up personnel from routine activities.

7. n +anu#acturin*, a real-time analytics engine could aggregate and deliver a unified version of events, alerts, key performance indicators, and decision-making support to production personnel through role-based dashboards. C. !eanwhile, if Tata Steel hopes to increase total steel capacity using the same number of resources, it must free up personnel from routine activities. The new S(- software offers untapped potential for Tata Steel. 0urrently the company exerts an unnecessarily large effort to gather information on product batches for production and sales order processing. ndustry-specific functions within the new software could solve this problem, which is typical for many mills. <. >rive (dditional Galue Through 1xtending the S(- 8ootprint Tata Steel has additional re*uirements that could be satisfied by other S(- applications. 5ecause the company releases significant amounts of emissions into the atmosphere during its manufacturing processes, for example, the management of emission certificates is a very important issue that could be enhanced through further automation. /. 1valuate the S(- =et;eaverR !aster >ata !anagement "S(- =et;eaver !>!' component for powerful data cleansing functions. This component can also be helpful for unifying and maintaining customer data. Ena$ e Furt'er 3ene#it" t'rou*' 3etter Deci"ion Ma0in* (vailable reporting processes are insufficient at all departments. Standard reports dont cover management needs. 0reating reports takes too much effortD non-S(- data must be entered manually. The heads of the individual business units seem to be looking for a better solution that will help them eliminate routine data and events and enable them to focus on exceptions. To support business decision-making, data must be collected from different SystemsD this is currently done without seamless system support. .. 1valuate the S(- x(pp (nalytics composite application, which helps managers *uickly create a wide range of reports and graphic representations of data without programming. 1valuate manufacturing intelligence dashboards. These dashboards

are user centric and role based, filtering out daily routine data and helping managers retrieve data that is important to them. (vailable roles include plant manager, production supervisor, *uality manager, and maintenance technician. The dashboards also offer powerful functions for data cleansing. Reco++endation=" #or ne9t "te)" 5ased on this experience, we developed a wide range of recommendations , from capturing additional value from the companys current T investments to deploying new technology to support future innovation. Fsing an approach similar to 4artners !agic compares the potential value creation "on the hori3ontal axis' for each recommendation with the effort "on the vertical axis' involved in its implementation. ;e can see in 8ig ).A that enterprise service-oriented architecture "enterprise SO(' ")%' has the highest potential value creation but also comes with very high effort. On the other hand, analytics ")A' and dashboards ")B' re*uire relatively low effort but return good value. Strategic purchasing with the myS(Supplier $elationship !anagement "myS(- S$!' application "7', a master roll-out template ").', and two composite applications "< and .' have a positive balance of value for effort.

8ig ).A! Gartner=" !agic

Conc u"ion 8rom the above analysis and discussion it can be concluded that, Supply chain management has become not ?ust a *uestion of efficient logistic process, but is related to the growth and survival of organi3ation"s'. ;ith customers becoming more demanding in their re*uirement of services from the suppliers, the construction of an efficient and integrated supply-chain has assumed paramount importance. nformation technology plays a ma?or role in the formation of the supply chain. 1fficient dissemination of information upstream and downstream is a ma?or re*uirement for the implementation of the supply chain. The purpose of this research was to provide better understanding how S(- and ecommerce has helped the Tata Steel to be more competitive. ;e have conducted an extensive analysis and managed to collect sufficient information in order to provide comprehensive answer to the research *uestion. The purpose of this study had been mainly to describe a phenomenon within a specific area of research. ;e aimed to get a better understanding of the phenomenon by answering the research *uestions connected to S(-, e-procurement and other initiative taken by Tata Steel to make them more competitive in the market. The analysis and interpretation of the data from the case study
was drawn out in 0hapter C. (fter going through the analysis we can assume that all the

research issues were answered. +owever, there are several limitations to this study and further research can be undertaken.