Case: TATA GROUP RIDES ON "THEORY OF CONSTRAINTS"

Presented by:Chinky Chhiroliya(15) Ingit Bharadwaj(26) Madhu Vinita(40) Natansh Pareek(48) Prashant Sen(56)

TATA Steel Ltd. at a Glance(as of 2001)

Founded in 1907. Formerly known as TISCO(TATA Iron and Steel Company). Ranked 6th world wide. Ranked 231 among the Fortune 500 companies. Loyal workforce of 35000 employees. Recorded a turnover of Rs. 147,329 in FY: 2008-09. Reported a revenue of 62.5 Million USD in

2001 Economy Slowdown

Steel Industry was called the Sunset Industry.

Consequently, new vision was created:

EVA Positive Company-Economic Value Added-difference between return on invested capital & weighted average cost of capital.

TATA Steel launched a new program called

ASPIRE to have an EVA Positive growth.

Improve the Quality of Life- improve the quality of life of its Employees.

Observations of TATA Steel for Continuous Improvement Process

3 major weaknesses, organizations pursuing continuous improvement process face:

Less attention is paid on Product Differentiation. Objectives may not be Aspirational. Lack of testing the new process in order to determine the new interventions in the process.

ASPIRE
Aspirational Initiatives to Retain Excellence. Launched on 2nd May, 2003. Philosophy evolves around Self-confidence Desire to excel Vision To become global industry benchmark for value creation & corporate citizenship. Concentrates on determining the goal first and then choose the tools to deliver those

Improvement Tools
ASPIRE includes improvement tools like Value Engineering(VE)

Organizational approach for identification & elimination of unnecessary cost.

Total Operational Performance(TOP)

Focuses on cost reduction, quality and throughput Improvement.

Six Sigma To improve quality of process outputs by identifying and removing the causes of defects and minimizing variability in manufacturing and business processes.

Improvement Tools (Contd)

Knowledge Management To formally share and transfer learning concepts, best practices and other implicit knowledge. QIP, QC and Benchmarking Quality Circle(QC)- small group activities that involves first line employees who continuously control & improve the quality of their work products and services. Benchmarking- process of exploring for best practices and performances across the world putting systematic efforts to bridge the gap.

ASPIRE T3
Launched in November, 2006 Focuses on TOC, TQM and Technology. To enthuse its people to newer heights of excellence.
Service

quality is focused through

TOC.
Product

quality is focused through TQM and Technology.

Total Quality Management(TQM)

Integrative philosophy of management for continuously improving quality products and processes.

Capitalizes on involvement of management, workforce, suppliers and even customers in order to meet or exceed customer satisfaction.

TQM at Tata Steels

TQM elements practiced by company are Policy management- a structured strategy development and deployment process. Daily managementa structured methodology to carry out activities on a regular basis to attain the purpose of the job efficiently involving operating employees. Problem solving and task achieving- a structured methodology for identifying root cause and solving major problems or accomplishing major tasks.

Theory Of Constraints
A Constraint is any factor that limits the performance of a system and restricts its output. Theory Of Constraint- is a systematic management approach that focuses on managing constraints. TOC methods increases the firms profit more effectively.

Major Components of TOC at TATA Steel

Building and selling win-win market offers based on delivery service and reliability.
Building supply chain capability for reliable service. Building operational exploitation capability.

How TOC Contributed

A Robust back end supply chain redesign based on TOC and its implementation has helped in achieving service reliability of over 83% (FY: 200708). TATA Steel adopted Critical Chain Project Management( Project Management the TOC Way) to plan and execute projects. CCPM adopted in more than 55

Technology

To foster a technology mindset amongst a cross section of employees. The ASPIRE T3 Knowledge Management Programme includes provides the platform so that employees are engaged in the process of knowledge creation and dissemination.

Customer centric approach of TATA Steel

Along with application of TQM and TOC, its customer focus and market orientation has also undergone a see-change. Initiated a culture of value creation with customers and suppliers. Specific approaches focused on needs rather than wants of the customers. Programmes include: customer value management, retail value management, solution for sales and supplier value management.

Customer centric approach of TATA Steel(contd)

Customer centric activities include:

Categorizing customers: right focus and developing plans for opportunity customers. Creating group wide key performance indicators.

Thank You.!!