17-04-2014, 03:21 PM
ERP Implementation At Tata Steel
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Analyzing SAP ERP's success in TISCO
The critical success factors of ERP systems mainly include proper implementation and usage. Beside this there are several other factors that decide the regular functioning of ERP in organizations.
While many organizations have not incurred the necessary benefit in terms of money and other measures there are lots who have witnessed multiple profits. Studying them will help in understanding the critical success factors for ERP implementation. They will help in deciding ERP success.
TISCO PROFILE
This company founded and established in the year 1907 is known to be one of the leading steel giants in the country offering multiple products and successfully running many subsidiary corporations. Being a large entity does not stop things from being subject to scrutiny and internal audit. They are regularly implemented with the help of committees who report to the selected members from the senior management. The company is dedicated to providing laudable services to the stakeholders improve on the quality and as thrive for innovations and improvements constantly.
BACKGROUND
TATA steel is India’s largest integrated private sector steel company that started its corporate journey in the year 1907. Backed by captive iron ore and coalmines, Tata Steel runs state-of-the-art Cold Rolling Mill complex at Jamshedpur, Eastern India. The enterprise has undergone a modernization programme costing $2.3 billion, resulting in production of steel at the lowest cost in the world. Being a large entity does not stop things from being subject to scrutiny and internal audit. They are regularly implemented with the help of committees who report to the selected members from the senior management. The company is dedicated to providing laudable services to the stakeholders improve on the quality and as thrive for innovations and improvements constantly. Tata Steel is a relentless pursuer of excellence. ASPIRE, Tata Steel’s quality initiative drive combining TPM, Six Sigma, Total Operational Performance, Suggestion Management and Quality Circles has reaped rich dividends for the company.
Tata Steel's Jamshedpur plant has a capacity of 4 mn tons per year, and produces flat as well as long products. Currently, to meet growing demands, the plant is being expanded to accommodate another million. Tata Steel has set up an ambitious target of 15 mn ton capacity per year by 2010. As part of its expansion plans the company recently made investments in NatSteel Singapore, which will expand its footprint in six countries in the Asia Pacific region and China.
Tata Steel's products include hot and cold rolled coils and sheets, galvanized sheets, tubes, wire rods, construction re-bars, rings and bearings. The company has introduced brands like Tata Steelium (the world's first branded Cold Rolled Steel), Tata Shaktee (Galvanized Corrugated Sheets), Tata Tiscon (re-bars), Tata Pipes, Tata Bearings, Tata Agrico (hand tools and implements) and Tata Wiron (galvanized wire products). The Construction Solution Group explores new avenues for steel utilization by techniques that are economical. Tata Steel has also developed 'galvannealed' cold rolled steel with technical assistance from Nippon steel for high-end auto applications.
ERP IMPLEMENTATION
TISCO deserves lot of credit for implementing ERP because of the fact that many organizations in the global level have given up the very idea of ERP due to the fact that there are lots of failures associated with it even in the implementation stage. ERP implementation did in wrong manner have caused havoc to organizations more than bringing profits. This being the case it is natural to expect a large company (in terms of Size and volume of operations) like TISCO to discourage the idea of Enterprise resource planning. However TISCO proved to be different from the others by choosing ERP in the right time and implementing it in a proper manner. They have also reported a whooping profit and reduction of costs in the whole process. Another amazing fact is that they implemented it into the whole systems in one single spree. The method of implementing it in one spree carries a lot of risks especially for a bigger company. Infact the success rate of this method itself is low in general and very low as far as bigger companies are concerned. Incase of the rare success organizations will experience effective results in their enterprise operations. TISCO has achieved that by way of meticulous handling and professionalism. The net results of their ERP software have been described to be pathbreaking and a trendsetting one.
WHY ERP IN TISCO
TISCO faced two major problems from the systems that existed for a long time. Firstly they were not customer friendly. The whole system was tuned to the process and very little attention was paid to the customer demands. Secondly the systems were outdates and the modalities of operation were too complex and not error free. In order to rectify these issues which would otherwise prove to be major setbacks to the company the organization resolved to take up ERP. This was instigated by the concerned departments. Leading consultants were hired and the business structure was studied and suitable plans were drafted accordingly.
What Should They Do?
Let’s say you’re the CEO of a large multi-national steel company, and you’re running a global operation with plants on four continents. You need to make good business decisions, and you rely on your IT systems to provide the data to make those good decisions.
But your IT systems are not well integrated. There are too many different systems, and too many gaps between them, a legacy of the company’s history of mergers, acquisitions, and improvement initiatives. You need a common information backbone. You’ve heard that ERP systems can do that, but you’ve also heard about ERP project failures from years ago.
Can ERP handle the challenges of a steel company today? And will that lead to business benefits for the company? answer are yes, and yes.
What is ERP?
ERP or Enterprise Resource Planning is IT software that integrates business activities across an enterprise—from product planning, parts purchasing, inventory control, and product distribution, to order tracking. ERP may also include application modules for the finance, accounting and human resources aspects of a business. SAP and Oracle are the two ERP leading vendors.
From a business perspective, ERP today has expanded from simply coordinating manufacturing processes to being the integrator of enterprise-wide backend processes. ERP has also evolved technologically from a monolithic legacy implementation into flexible, tiered, client-server architecture.
ERP Project Risks
In the late 1990s many ERP projects started, but more than a few failed. While ERP projects remain challenging even today, most can now be successful because the best practices have been identified and ERP professionals are more knowledgeable and more experienced with making the projects successful.