SVKM’S Narsee Monjee Institute of Management Studies

HYDERABAD CAMPUS

Name : Yash Almal

Subject: Information System Management
Subject Coordinator: Prof. Vijay Bachu
Topic: Aligning IT with business objectives
What is the structure of the industry in which the firm is located?
My Company Almal Steel & Co. is a steel manufacturing company. On the basis of size, scale of
operations and the level of integration, steel manufacturers are categorised into Integrated Steel
Plants (ISPs) or primary producers. They have manufacturing facilities right from the iron ore
stage to the finished steel stage. Some Steel manufacturers uses blast furnace route for
manufacturing steel. They either sell cooled hot metal (called pig iron) or refine it further in the
steel melting shops using open hearth or BOF or LD converters. The output of the steel melting
shops is crude steel which is then rolled further into ingots or billets or into value-added finished
steel products like bars and rods, hot rolled sheets and coils, cold rolled sheets and coils.
The mini-steel segments comprises mainly EAF and induction furnace units, apart from other
manufacturing units. These units use scrap and sponge iron such as raw materials to produce
steel. The newer mini-steel plants are larger than the older ones.

What are some of the competitive forces at work in the industry? Are there new entrants to
the industry? What is the relative power of suppliers, customers, and substitute products
and services over prices?
Steel manufacturing is a competitive global industry. Consolidation within the industry and
continual improvements in manufacturing operations have contributed to increased productivity.
Hence employment levels have decreased, despite expanding steel production. However, in the
coming years, job opportunities are expected to be very good for engineers and skilled
production and maintenance workers. As steel industry is a huge large sector where huge cost is
involved as there is less new entrants because the steel companies like Tata Steel, JSW Steel is a
major player in steel sector for many years.
Is the basis of competition quality, price, or brand?
The Basis of competition is basically looking for top quality product, because steel is a product
which solely depends on the quality because it’s used in automobiles, construction of buildings.
It’s one of the important raw materials of a finished good. Thus, competition is somehow quality
sensitive plus as so much competition is present in the market somehow little variance of price
plays a major role in the market.
What are the direction and nature of change within the industry? From where are the
momentum and change coming?
Every industry requires some change in direction and new innovation techniques which can be
beneficial as today whole industry is shifting its point to industrialization 4.0. As the industry
continues to introduce technological innovations, the profile of the workforce will evolve and
require higher levels of education and training than ever before. This is particularly true with the
development of “breakthrough”, or next-generation steelmaking technologies that will be low in
CO2 emissions and result in significant changes to the way that steel is made. In this context, the
demand for engineers, computer scientists, business major, and skilled production workers is
expected to remain strong. This requires a significant skill level throughout the industry for
electrical and mechanical systems as well as software and programming which should be
implemented in the industry for better and smooth functioning.
Steel market conditions have been improving gradually in most regions since late 2015,although
it is uncertain how long the momentum can continue. Over the short and medium term, important
headwinds include the increase in trade actions, the rising number of new capacity investments,
the presence of distortive government support and subsidisation, and downside risks to world
GDP growth once fiscal and monetary policy stimuli are withdrawn. The following key
developments which lead to the change and momentum in steel industry are as follows:
• The Economic Situation
• The Steel Price
• The Demand of steel
• The Financial Situation of Steel making companies
How is the industry currently using information technology? Is the organization behind or
ahead of the industry in its application of information systems?
The iron and steel industry is a gigantic process industry,and its foundation is plant engineering
that covers from construction and maintenance of plants to extension of their useful life. The
plant engineering sector of steel industry, in collaboration has developed various technologies
encompassing plant diagnosis, automation, extension of plant life, and instrumentation and
control including those required for quality assurance. A variety of plants such as iron and steel
making plants, hot rolling mills, and cold rolling mills need to be diagnosed. A variety of plant
diagnostic technologies such as vibration diagnostic technology, lubrication diagnostic
technology, structure diagnostic technology, and electrical equipment diagnostic technology,
combinations of which are used as needed. Various diagnostic methods were established, each
tailored to a specific objective such as routine inspection, checking the conditions of facilities,
predicting the life of facilities, identifying the causes of abnormalities, and estimating the degree
and extent of damages. Steel Industry has developed a number of important technologies in-
house to suit the actual conditions of facilities and real operation sequences, as well as to make
plant diagnosis inexpensive and efficient. Examples include the portable vibration checker,
automatic oil analyzer, and compact insulation diagnostic meter. By rationally combining these
plant diagnostic technologies and their particular features, Steel Industries is able to precisely
and effectively use information technology to diagnose plant conditions.

Value chains in the steel and metal industry are extremely complex. Companies must contend
with a large number of interconnected volatile assets, a vast amount of product units, a diverse
customer base with varying service and quality requirements, and complicated distribution
channels with different margin implications. Asset utilization is often considered a priority and
incentives are structured accordingly, yet these decisions often don’t factor in all business drivers
influencing profit margin, service levels, or working capital. Supply chain executives have little
access to real-time information, leaving them unable to anticipate changes in the market. As a
result, companies perpetually act defensively, without the ability to anticipate and mitigate risk
or jump on short-term opportunities, which leads to significant value losses. Steel and metal
companies have been continuously trying to solve these issues, but traditional operational
improvement methods are close to their limit. To break through the human ability bottleneck in
monitoring complex systems and perform extensive real-time calculation, digitization becomes
perhaps the only solution for the current seemingly dead end.
What are the business, firm, and industry value chains for this particular firm?
The value chain developed by Porter is useful, mostly for manufacturing sector but not in all
cases in the value systems of other sectors. However it can be used as stepping stone for
developing the value chains for other sectors. Therefore a value chain model for steel
manufacturing sector is developed using a case of an integrated steel plant with five primary
activities and six supporting activities. In the primary activities operations is proposed as
operations/production management under product related activities and services is excluded from
product related activities and included in market related activities as service after sales. In the
support activities procurement is proposed as materials management and infrastructure is
proposed as services management. Finance is separated from infrastructure and shown as a
separate support activity as finance management. Projects management which is important
activity in the expansion of integrated steel plants is added as a support activity.
How is the company creating value for the customer—through lower prices and
transaction costs or higher quality? Are there any places in the value chain where the
business could create more value for the customer and additional profit for the company?

Company is creating value for the customer through higher quality as steel being a raw material
for many finished goods the value creation of customer is assigned by generating better quality
of a product. Product management in the value chain is where the business could create more
value for the customers because making the product with better quality and cost effective van
generate an additional profit for the company because as so much competitors are present in the
market a little variance in the price can shift the customers in your end and will generate an
additional profit for the company.
Does the firm understand and manage its business processes using the best practices
available? Is it taking maximum advantage of supply chain management, customer
relationship management, and enterprise systems?
Steel industry being such a huge sector so the firm under it have to understand and manage its
business processes using the best practices available to gain a better competitive advantage
against the competitors to become a major market player in the steel industry. Being in steel
industry it is always have issues such as overproduction, managing emission regulations, demand
fluctuations and efficiency. As part of efforts to overcome and adapt to the new global reality,
major firms across the steel industry are revamping their approach toward the production of steel
and steel products by significantly transforming their supply chain. Among the many objectives
for this transformation, the primary goals include greater access to new markets, technology
adoption, aligning with emission regulations, better coordination and engagement with the
customer and lower operating costs. By increasing product segmentation, steel companies are
trying to improve the efficiency of their supply chain, applying different approaches for different
products to improve material flow.
CRM is also a system that enables steel industry to nurture the relationship with a customer or
prospect to improve sales or sustain long-term profitability within the steel industry. The solution
also provides insights that help steel industry to make better business decisions.
Does the firm leverage its core competencies?
The firm leverage its core competencies because being in a steel industry it’s always important
for any firm to enhance the given resources available in the market and have to increase the
capability of the firm to gain a better competitive advantage. Strategic capabilities are the core
competency of the firm that enable it to outperform other firms in the industry or provide
superior value to the customer and achieve extraordinary profit.
Is the industry supply chain and customer base changing in ways that benefit or harm the
firm?
Steel industry are trying to improve the efficiency of their supply chain, applying different
approaches for different products to improve material flow which will benefit the firm. Sharply
fluctuating demand, raw materials supply and uncertain prices produce a negative impact on steel
production. At the same time, the supply chain of the steel industry has to consider multiple
objectives and multiple stages of steel production and supply chain simultaneously in a global
market which will benefit the firm in the market where it’s functioning. It requires an optimised
supply chain alternative by extending visibility of demand based on economy and market, raw
material supply based on transportation, and suppliers and their price. By changing the customer
base Steel industry are currently focusing on gaining a competitive advantage by developing
premium and value-added products. This strategy, which is being adopted to achieve
differentiation from rival companies, aims to move producers and manufacturers closer to
customers by building a direct relationship with them and building a better relationship.

Can the firm benefit from strategic partnerships, value webs, ecosystems, or platforms?
Steel Industry and the firm working under it can be get benefitted from the ecosystems and
platforms of information technology. Steel business can apparently not be done without the
internet any longer. Practically all companies in the sector are connected to the internet.
Procurement is a fundamentally important activity in the steel industry, as in most manufacturing
industries, because upstream supply chains tend to be complex and fragmented. Electronic
sourcing platforms can make procurement processes more efficient and reduce procurement
costs.
Where in the value chain will information systems provide the greatest value to the firm?
In Operations Management the information technology will provide the greatest value because
Information Technology and operation management has evolved over a period of time and has
moved from development of products into design, management and improvement of operating
system and processes. Usage of technology in operation management has ensured that
organizations are able to reduce the cost, improve the delivery process, standardize and improve
quality and focus on customization, thereby creating value for customers.
Have we aligned IT with our business strategy and goals?
Information technology plays an important role in delivering value for a business and supporting
organizational transformation which can help the firm to achieve the business goals. The aim is
to make an organization more competitive by aligning business strategy with IT strategy.
Organizations that want to improve their innovation capabilities and develop new products or
services for the market can which will help them to be different from their competitors should
have to collaborate with different IT solutions which will help them to ease the process and
functioning of the business which will help them to achieve business strategy and goals.
Have we correctly articulated our business strategy and goals?
Yes, as industrialization 4.0 is on its way and the whole industry process is changing to
automated one thus it’s necessary for every industry to develop and articulate the right business
strategy in terms of actions. If the business strategy aims to cut costs because of the market
happenings we have to design our business strategy according to it. We should give employees a
clear and measurable goals to the jobs they are doing and make the, be prepared for the
industrialization 4.0. which will make them be aware of the latest trends and change in the
business environment.

Is IT improving the right business processes and activities to promote this strategy?
Yes, as the industry in moving into automated ones IT plays a major role in improving the
business processes of steel industry which helps in to increase productivity, reduce costs and
improve customer relationships. Internal e-business systems can significantly enhance workflows
and business processes and thus increase productivity and reduce costs in steel enterprises.
Steel industry distribution channel emerging, moving from a product driven business model to a
steel solution business model is where the IT easies the business process making distribution and
logistics in the steel industry more effective.

Are we using the right metrics to measure progress toward those goals?
There are many KPI’s and metrics which can be used to check the accurate progress towards
how the business is performing to achieve those goals
Capacity Utilization – This measures how much of our available capacity we are actually using
on your production line. The higher the better. Buildings and equipment are expensive assets and
you want to maximize their use. It also helps to manage what we sell by production center so we
do not over or undersell a particular manufacturing line, thereby balancing the workload.
Overall Opearting Effeciency- It helps to standardize a time that how much percentage tof
value the employees are giving to the firm.
Quality- Establishing clear and consistent standards goes a long way to reaching your quality
goals. The only way to continuously improve is to and to be on a progressive note is just
measure the quality and if any problem happens determine the root cause and fix it.
Employee Turnover – Happy employees make happy customers. If our turnover is high, it is
time to do some root cause analysis to determine why. Quality and efficiency problems often
stem from high turnover due to training new inexperienced employees.
Revenue per Employee – This is a basic metric but can be a quick helpful way to see how the
operation is doing overall; improving, standing still or becoming less efficient. It is also a good
metric to use to compare your company against others in a similar industry.