|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
|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.