Near Death Experience: Making Tata Steel most cost effective

“If you don’t act fast, you will die very soon”, was the short summary of the several hundred page report submitted by our international
B Muthuraman
consultant after spending several hundreds of man hours looking at various aspects of Tata Steel. This was in 1991. At that time, Tata Steel looked very different from what it does today — an outdated plant and technology, high costs, lack of customer and market orientation across the company, lack of innovation in processes and products — all a combined result of long years under administered control of the government in a socialist regime, protection from imports and lack of competition. All this meant that Tata Steel was not ready to face the consequences of the impending economic liberalisation, leave alone seizing the opportunities that would be created in the new era of an open and resurgent economy.

The report was a confidential one to the senior management of the company. It was easy to have shoved the report to the bottom drawer of one’s table and carry on with life. Many CEO’s may have done this since the report was an indictment on all of us. But we had a leader who chose to make the report public to all the key executives of the company and to the Unions. Accepting the “current reality” is, of course, fundamental to any improvement effort.

Over the next ten years, several improvement initiatives were undertaken across the company. Quality Circles, Value Engineering, 6 Sigma, TPM, Total Operating Performance Programme, Knowledge Management – you name it, we had it. There were campaigns like “Customer har haal mein” across the company. More and more employees got involved in improvement programmes. We perhaps had as many consultants as there were in the world! We learnt from everyone around us. Executives were sent to some of the best leadership development programmes in the world. We went to wherever we could get new ideas.

It was amazing that we spent huge sums of money on consultants from whom we learnt a great deal, on training that improved the calibre of our people, on visits to overseas steel plants that gave us global exposure. It is hard to believe that a company that found itself in dire straits with many shortcomings and low profit margins was willing to spend huge sums of money on improving the quality of its people. This expenditure on people was done at a time when most companies in the world would have thought of curtailing these very expenditures.

With all the efforts we undertook during these 10 years, we had become one of the lowest cost producers of steel in the world by 2001, and a company that the global steel industry started recognising. We had arrived at a stage where we could dream of a future and take firm steps to build that future. We did dream. We did strategise, we did make plans, we did take actions - which is why we are where we are today.

The current economic situation is far tougher than what the company found itself in, in the nineties. It almost looks as if the world economy was waiting for us to get prepared – through the experience of the nineties and later on, to get our systems and processes better aligned ..... that won us the Deming Prize recently. There is one thing that I have learnt through tough times – which is, prepare your people, place trust on them, empower them, enable them, energise them, make them envision their future and then they will perform beyond your expectations.

http://economictimes.indiatimes.com/Features/Corporate_Dossier/Near_Death_Experience_Making_Tata_Steel_most_cost_effective/articleshow/4050395.cms