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ES4C9 Supply Chain Management
Globalisation – Tata Steel0818179 – Daniel Booker
[1]
Contents
• History
• Global Span of Tata Steel Group & Tata Steel Europe
• Tata Steel Organisational Structure
• Definitions of Globalisation (Anti-globalisation)
• Drivers of Globalisation
• Local Cultural Needs
• Logistics and Inventory Strategy
• Implication of International Competition
• Future
History
• Tata Steel Group subsidiary of Tata Group• 12th largest steel producing company in the world• Indian multi-national steel producer headquartered in
Mumbai• Largest steel plant located in Jamshedpur, Jharkland
$ millions % change from 2010
Revenues 27,738.8 +6.4
Profits 1,125.0 -42.9
Assets 28,904.6
EBITDA 2,660 -21.0
• Tata Steel Europe was formally Corus• TSE EBITDA (FY11) = $349 million• Contributed 13.12% in 2011
[2], [3]
Global Breadth
[4], [5]
Organisation Structure
Tata Steel Group
• Tata Steel Europe• National Steel Holdings• Tata Steel Thailand• Tinplate Company of India• Tayo Rolls• Tata Ryerson• Tata Refractories• Tata Sponge Iron• Tata Metaliks• Tata Pigments• Jamshedpur Injection
Powder• TM International Logistics• Tata Steel International
• mjunction Services• TRF• Jamshedpur Utility and
Service Company• Indian Steel and Wire
Products• Tata Blue Scope Steel• Dhrama Part Company• Hooghly Met Coke & Power
Company• Lanke Special Steel• Sila Eastern Company• Tata Steel KZN• Tata NYK
[6]
Implication of international competition
Trading Industries
Sheltered Industries
Global Industries
Multinational Industries
International Investment (foreign owned assets)
Inte
rnat
iona
l Tra
de (
wor
ld
expo
rt)
[2]
Definitions of Globalisation
• The growing integration of economies and societies around the world.
• Is the convergence of trends in markets, products, consumer behaviour and society.
• Anti-globalisation groups argue that these practices replace domestic economic life with an economy that is…controlled from overseas…seen as a surrender of power to the corporations, or a means of keeping the poorer nations in their place.
[7], [8]
Drivers of Tata Steel Globalisation
Overcapacity in many industries
Lower labour costs
Global transport infrastructure
Information technology improvements
Regionalisation of trade
Liberalisation of world trade
Growth in world trade greater than growth in GNP/GDP
Search for better product
[2], [9]
Why Has Tata Steel Become Global?
• Search for better product• Increased quality and decreased price of raw materials e.g. coking coal
─ GLOBAL SOURCING
• The acquisition of more advanced manufacturing techniques e.g. TSE─ GLOBAL ACQUISITION / JOINT VENTURES
• Regionalisation of trade• Many competitors are monopolising markets e.g. ArcelorMittal• Increase customer base e.g. Europe
• Information technology improvements• Recent deployment of SAP (2009)• Use of RFID to track high value assets
• Global transport infrastructure• Move towards vertically integrating logistics, shipping and distribution firms
Tata Steel Globalisation Strategies
• Purchase existing manufacturing and distribution facilities• Purchase technical innovations and advanced manufacturing
knowledge• Move up the value stream• Vertically integrate supply chain for automotive steels (JLR)
• Tata NYK Shipping 50:50 venture – 12 chartered and 2 owned vessels
• Dhamra Port Company Ltd 50:50 venture – deep water port, fully mechanised berths
• TM International Logistics partnership with Tata Steel
[4], [10]
Tata Steel’s Consideration of Local Cultural Needs
• Labour costs
• Energy prices
• Environmental legislation
• Health and safety legislation
• Unions
• Cycle to work scheme in NL
[4], [11]Currency th’$
Tata Steel Europe Supply Chain Transformation
How is Tata Steel Europe attempting to reduce supply chain costs to increase EBITDA profit?
PHASE 1• Evaluation• Awareness
PHASE 2• SAP• Supplier negotiations
PHASE 3• Centralisation and
restructure of administration functions
• 21st Century Stores[10]
Tata Steel Europe Logistics Strategy
Iron Ore
Coking Coal
Lime
BF coal
Fero minerals
Steel Works
Hot Rolling Mill
Cold Rolling Mill
Tube Mill
Section Mill
Rod Mill
CAPL
Additional Finishing
Raw Material Supplier
Primary Manufacture
Secondary Manufac.
Inventory
Distribution Centre
“Stage 4 – Postponed manufacturing”
[9]
[10]
The Effects of Supply Chain Transformation Program
2007 2008 2009 2010 20110
10
20
30
40
50
60
70Tata Steel UK Financial Ratios
Debtor Days Creditor Days Stock Turnover
Year
Day
s
2003 2004 2005 2006 2007 2008 2009 2010 20110
20
40
60
80
100
120ArcelorMittal Europe Financial Results
Debtor Days Creditor Days Stock TurnoverYear
Day
s2003 2004 2005 2006 2007 2008 2009 2010 2011
-80
-60
-40
-20
0
20
40Comparison of Cash to Cash Cycle
Tata Steel Europe ArcelorMittalYear
Day
s
Significant change and associated strategic advantage post supply chain transformation project.
[12]
The Future?
[13]
References
[1] Tata Steel Europe, 2012. Tata Steel European Operations. [Online] Available at: http://www.tatasteeleurope.com/file_source/StaticFiles/Functions/Media/Tata-Steel-Customer-Brochure-English.pdf[Accessed 21 November 2012]. [2] CNN Money, 2012. Fortune Global 500 (401. Tata Steel). [Online] Available at: http://money.cnn.com/magazines/fortune/global500/2012/snapshots/11459.html[Accessed 22 November 2012].[3] Tata Steel, 2012. Tata Steel Reports Consolidated Financial Results for the Financial Year Ending, March 31st 2012, Mumbai: Tata Steel Europe.[4] Tata Steel Limited. (2012). Investor Presentation. Mumbai: Tata Steel Group[5] SAP Co-ordinator., 2011. An Introduction to SAP. Port Talbot, Tata Steel Strip Products UK.[6] Tata Group, 2012. Tata Group Companies. [Online] Available at: http://www.tata.com/company/profile.aspx?sectid=jsA69xFbDUA=[Accessed 21 November 2012].[7] Sharpe, D., 2012. ES4C9 Supply Chain Management Lecture 5 "Globalisation". Coventry: The University of Warwick.[8] Sharpe, D., 2012. ES4C9 Supply Chain Management Lecture 5 "Globalisation". Coventry: The University of Warwick.(See Slide 12 Notes)[9] Clker, 2012. Clker Clipart. [Online][10] Europe, P. R. E. T. S., 2012. The globalisation of Tata Steel Europe [Interview] (19 November 2012).[11] Oak, R. (2011, December 28). The Economic Populist. Retrieved November 21, 2012, from China and India really are cheap labour in manufacturing: http://www.economicpopulist.org/content/china-and-india-really-are-cheap-labor-manufacturing[12] Amadeus, The University of Warwick Library [Accessed 19 November 2012][13] BBC News. (2012, November 23). Tata Steel: 600 Welsh jobs cut, mainly at Port Talbot. Retrieved November 23, 2012, from BBC News UK: http://www.bbc.co.uk/news/uk-wales-20461523
QUESTIONS?
Organisation Structure
[4]