Santanu Sanyal

Kolkata, July 21

Tata Steel is undergoing a major restructuring of supply chain management and the replenishment process under the Theory of Constraints initiative. The pilot projects, rolled under the initiative, have started yielding results in reducing stock outs and enhancing sales, claim company sources.

The marketing and sales wings of the company are rolling out offers to various customers' segments depending on their requirements. Thus, replenishment offers are being made to distributors while vendor managed inventory offers to original equipment customers, auto offers to auto customers and rapid response offers to some other selected customers.

Top-class service

The essence of these offers, as it is pointed out, is to guarantee top-class service performance in terms of reliability of delivery at significantly reduced lead time.

However, as the sources point out, the rolling out of offers would not have been possible without redesigning the supply chain management through various measures such as joint identification of products covered in the offer, establishment of reliable replenishment time from the upstream manufacturing operations to the plant warehouse, then to regional warehouse/ stockyard and finally to customer, providing IT facilities for reporting daily consumption and receipt data by distributors and stockyards, calculating inventory requirement at various levels based on consumption within the reliable replenishment time, aligning sale planning and production planning and logistics to achieve the optimum results and finally strict monitoring of service performance.

In the case of flat products, the supply chain design is being dovetailed with i2 supply chain platform recently implemented.


Several benefits have followed from these initiatives, according to company sources. These include the ability to provide a reliable service in terms of delivery at significantly reduced time in certain areas, a reduction in overall system inventory, aligning supply closely with demand, improving inventory situation at the distributor and customer levels and, as a cumulative effect of all these, increasing the return on capital.

(This article was published in the Business Line print edition dated July 22, 2006)
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