case study on scm in retail

8/12/2019 Case Study on SCM in Retail

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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 nternet2ntranet based purchasingapplication 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, %&&%'.


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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 )esignS( 5usiness (ll-in-One software


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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.


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Scoe 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.

Hot'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'odoo* 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.


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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'ateri"ation! Pan 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


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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.


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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$

Concetua Stud o# Su C'ain Mana*e+ent4lobali3ation 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, workinprocess

inventory, and finished goods from pointoforigin to pointofconsumption


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The definition one A+erican ro#e""iona a""ociationput 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 thepoint-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.


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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


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romoted in )/


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hase - To 1xtend S( in ;orks with 80O, !!, K H!

hase - To implement S( modules such as (sset !anagement K 5udget

management sub-modules of 80O, 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 Aen Ha+iton. The essence of the


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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. ( totalinvestment of about $s elhi.

Lo*i"tic" and Dei&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.


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C'anne Finance In Tata Stee

e2Coection!!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 tooffer 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 %&&/.


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e2Sein*! 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/,


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---QSTEP I----------QSTEP II-----------QSTEP III--------------STEP I5---Q

Fi* ,-6! T'e Proce"" Fo/ o# "ae" 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'aen*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 plansL $eshaping its business processes and T infrastructure

0+(T1$ G

Per#or+ance Mea"ure" o# Su C'ain Mana*e+ent.


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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.

Cce ti+e

Cu"to+er Ser&ice Le&e

In&entor Le&e"

Re"ource utii4ation

Cce 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
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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


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inventory. Thus measuring the actual inventory levels will provide a useful picture of

system efficiency.

Re"ource utii4ation

( 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.


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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-timedelivery, 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

Reation"'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.

Nost 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.


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7or0in* Caita Cce

;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 keeptied 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


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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


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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


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4raph ).B@ Shows labour productivity from )C-< to %&&/-&

E3ITDA Mar*in

$efers to 15T>( divided by total revenue. 15T>( margin measures the extent to

which cash operating expenses use up revenue. 15T>( 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 Dereciation8 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 cashearnings without accrual accounting, canceling tax-?urisdiction effects, and canceling the

effects of different capital structures.

15T>( 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. 15T>(

also differs from free cash flow because it excludes cash re*uirements for replacing

capital assets "capex'.


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Gra' ,-:! E3ITA;Turno&er (


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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* caa$iitTata: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. Nmproving 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 Concu"ion

Reco++endation" and Concu"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


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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$ e-

mail 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 processdramatically 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.


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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


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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-orientedarchitecture "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


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Concu"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 e-

commerce has helped the Tata Steel to be more competitive. ;e have conducted anextensive 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.

case study on scm in retail

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