The Long (s) Story
 
Reinforced bars from Tata Steel

On the one hand there is the technology driven precision of Retail Value Management, the Replenishment Model, Fill Ratio, Channel Management and Action Plans, on the other there is the intangible and emotional appeal of product quality, brand loyalty, customer value, and the Tata Steel name. But on both accounts clearly set to be the market leader are Tata Tiscon and the Long Products business of the company. Virtually symbolic of the evolution of the company itself, today this business is witnessing a revolution a day.

Till recently a Long Products company, the change in this Division at Tata Steel has great significance as it marks the company's transition from the days of commodity sales to brand building, information technology and supply chain management. In long products the company caters to three specific segments: one, the construction industry; two, high carbon steel - which to a great extent is part of the construction industry through Low Relax Prestressed Concrete; and three, low carbon electrodes. It is, however, the first segment, where retail sales are involved, that the change is more apparent.

The entire effort here is focussed on "exceeding" customer expectations by offering them attributes which go far beyond product quality and into the realm of "brand promise". This endeavour has translated into small but meaningful changes such as smaller and more manageable bundles for retailers, meeting length and weight requirements of the customers, electronic weighbridges for each retailer and offering negative tolerance or more length for the normal weight.

With branding the company has also re-engineered its distribution process and developed dedicated or authorised distributors especially trained by Tata Steel. The company has extended the manufacturer-distributor relationship into an "extended family" concept by bringing them to Jamshedpur to visit the Steel Works, understand the company and accept the Code of Conduct. At the same time the Retail Management system has put in place an Annual Programme, which is reviewed on a monthly and quarterly basis.

Strengthening homes from within

The result is more than obvious. Retail sales have gone up from 1,00,000 tonnes per annum to 3,50,000. As the company expands capacity and volumes are ramped up, it will expand its reach further and further to the south and west, even Mumbai and Gujarat.

Bolstering this drive is the investment made by Tata Steel in Information Technology and the use of mathematical modelling for replenishment of supplies to retailers. This allows the company to deliver value by optimising supplies rather than by holding stocks with them. The company has as a result gained by reducing its level of working capital in the system. At the same time, it now caters to over three times the demand two years ago. Critical to this effort, of course, has been watching inventory to ensure that supplies reach distributors and retailers as the shelves empty. Once the dealer based software reaches across the country, Tata Steel will even be able to quickly reroute unsold stocks upstream, from a retailer to nodal or stock points so that from a single retailer, an entire region can have access to it. At the same time, any change in demand and supply can be dynamically corrected and stocks prevented from aggregating at any one point.

Demand forecasting is the next big IT enabled initiative that Tata Steel is preparing to launch. This effort is once again directly linked to "exceeding" the expectations of the end customers. Tata Steel's goal is to ensure that it meets the customised purchase list of eight out of every ten customers at each of its retail outlets. In a product such as steel, it is a huge vision.

The company will continue to improve its product line and profitability through these initiatives. It has for instance already migrated from wire rods to wires - to add more value to the same product.
 

 


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