1

Ispat Industries Limited
An Integrated Approach for Linking
Individual PMS to Enable
Achievement of Company’s Business
Objectives – Developing the
Operational Vision
Top Management Workshop
Corporate Strategy Group
June 2007
2
Key
Objectives
Q
Develop an Approach for integrating Ispat’s business objectives with individual objectives
of all executives in order to provide the Company a platform for profitable growth in the
next 3-5 years time-frame
Q
Develop a plan for extending the Approach developed for Dolvi to cover Kalmeshwar also.
Implement “Fast Track” capital
projects that will ensure
significant cost reduction and
improve profitability in the short-
to medium term
Minimise quality and cost
penalty as compared to well
run global steel companies by:
Q
Bringing in a business
process focus for defining
the individual PMS of
executives
Q
Creating a customer focused
organisation by aligning the
PMS of individuals around
the business processes
Develop a comprehensive action
program that will shape
fundamental change in Ispat and the
way the Company will be run going
forward
3
Organisational
1
3
5
Business &
Operations
Strategy
Business
Processes
Processes
Structure
Measurement
Rewards
1
2
3
4
5
Awareness
Knowledge
Trial
Acceptance
Comprehension &
Mastery
6
Integration
Individual
Sustainable
Change
2
4
The success of any change journey depends primarily on how well individuals
embrace the change
Need to integrate organisational
and individual goals for
sustainable change
The Nature of Change
4
Why
Change
Product and process design
and technology
More
sophisticated
and demanding
Customers in
various
segments
Size, scale, product mix
and global presence
Supply chain and
external relationships
Environment, Health,
Safety focus including
reductions in
greenhouse gas
emissions
Factors influencing competitiveness Common characteristics in world class Steel plants
Performance parameters
Q
Productivity and Cost
Q
Yield and efficiency
Q
Quality at minimum cost
Q
On time delivery
Plant characteristics
Q
Flexibility in charge mix
Q
Optimum capacity utilization
Q
Minimal unplanned downtime
Q
Appropriate level of automation
Q
Management of varieties
Process control along the
supply chain
Q
Consistent quality and plant
reliability
Q
Strict adherence to SOPs
Q
Timely order deliveries (> 98%)
Q
High level customer satisfaction
People
Q
High attrition rate
Q
Teamworking
Q
SOPs and best practices
Q
Empowerment and accountability
Q
Continuous improvement in a learning environment
5
Why
Change
Our goal is to be “world class”…
Hence we are committing ourselves to achieving the following objectives
Q
Improve product quality by making the manufacturing
process consistent and reliable
Q
Reduce operating costs and in particular HRC
Cost/MT < $ 350
Q
Launch high-end value added products such as
Silicon, IF and Stainless Steel in the next 2 years in
order to enrich product mix and enhance average
contribution to > Rs 8000/MT
Q
Establish leadership position in Automotive,
Construction, API, LPG segments in the domestic
marketplace in the next 2-3 years
Q
Complete all planned capital projects within the
budgeted timeframe and costs
Q
Achieve an EBITDA margin of a minimum of Rs 2400
crores by FY2009 and Rs 3200 crores by FY2010.
6
Imperatives
for
change in
Ispat
Supply chain
Q
Integrated Logistics
Q
Integrated Supply Chain
Organization Culture
Q
Organisation
Q
Culture
Q
Values
Q
Style
Q
Design
Q
Recruitment
Work Practices
Q
Processes
Q
Procedures (SOPs)
Q
Key performance
indicators (KPIs)
Q
Continuous improvement
Knowledge capital
Q
Information Capital
Q
Skills up gradation Training
Technology
Q
Products
Q
Process
Q
Systems
Globalization
Q
Partnerships
Q
New competitors
Q
New products/process technology
Cost-effective
producer
World class
quality
Consolidati
on
of steel
industry
Innovation
Why
Change
7
Why
Change
Q
C
D
D
M
S
Issues of Importance for Defining PMS in Ispat
There is great urgency in the organization to bring about
fundamental changes
Significant potential exists for improvements in
performance levels relating to Quality, Costs,
Design, Delivery, Management Systems and
Safety
Ispat is currently organized according
to vertical functions and that has
limited our ability to take a business
process view
There is a great urgency to recognize
the need to enhance the speed of
innovation and research. The need is to
launch at least TWO technologically
superior products every year.
The individual KPIs must be aligned to
reflect the achievement of corporate
objectives based on QCDDMS
principles
There is greater focus on volumes (MT)
with limited/inadequate focus on
quality of output
Supply Chain is necessarily horizontal
process-driven but Ispat is not
organized according to processes. This
does not allow us to monitor and
control the costs and delivery lead
times across our supply chain.
There is a need to enhance the degree
of delegation and empowerment down
the line. This would instill a greater
sense of ownership and increased
motivation levels.
8
Why
Change
Þ
Far reaching, rapid
improvements in
servicing the customer
capability
Þ
Able to increase market
share continuously
Þ
Will be well positioned
during industry
consolidation phase
Þ
Sluggish, “me too”
improvement
Þ
May be able to hold
ground if they stay close
enough to early movers
Þ
Will lose some ground as
consolidation takes place
Þ
No action;
performance gap
leaves them far
behind
Þ
Market share gains of
early movers will be at
the expense of these
manufacturers
Þ
Consolidation/shakeout
will threaten survival
— The Winners — — The Survivors — — The Losers —
Company must move quickly; those who lag will survive at best
9
Why
Change
Use Enabling Technology
Emphasise Continuous
Improvement
Develop End-to-End Solutions
Compress Time
Focus on Customer
Empower People
X
X
Eliminate Non-Value
Added Activities
Reduce Costs
The implications
Eliminate Waste
Increase Productivity
Increase Efficiency
Q
Put Quality First
10
Need for an Operational
Vision
Define our
goals
Assess current
situation
Identify gap
between
Operational
Vision and As
Is Status
Develop
solutions to
bridge the gap
Develop
implementatio
n plan setting
out time
frames,
resources,
responsibilities
, and costs
The Operational Vision is the first step in our change journey towards achieving our objectives
Operationa
l Vision
Gap
Analysis
As Is
Status
To Be
Models
Master
Plan
11
Need for an Operational
Vision
Operational Operational
Vision Vision
Provides Provides
criteria for criteria for
decision decision
making making
Provides Provides
direction and direction and
drives the drives the
organisation organisation
Encourages Encourages
continuous continuous
improvement improvement
Empowers Empowers
employees employees
with with
motivation, motivation,
authority and authority and
enablement enablement
Provides a Provides a
vivid picture vivid picture
of focus areas of focus areas
An Operational Vision ...
12
Need for an Operational
Vision
Enterprise Transformation Requires a Holistic
Approach
Refocussing
Strategic
Intent/Response
Reinventing
Processes
Reshaping
Behaviour
Rebuilding
Information
Architecture
Reconfiguring
Organisation
Architecture
Reorienting
HRM
Architecture
• Core activity
clusters
• Technology
platforms
• Cross-process
linkages
• Applications
• Software/hardware
• User interfaces
• Value propositions
• Core competencies
• Target outcomes
• Core job/role clusters
• Target outcomes
• Cross-team relationships
• Recruitment/Selection
• Training and development
• Measurement/appraisal
• Compensation and rewards
• Career pathing
• Authority structures
• Management systems
• Physical resources
• Business partnerships
Areas to be
targeted for
Change
13
An Operational Vision Is a Statement of Intent...
Identification of key
performance indicators
(KPIs)
Translation of our strategic
objectives into actionable
elements (Operational
Vision)
Identification of milestones
to guide us on the change
journey (Timelines)
Definition of target levels
of performance (KPI
metrics)
Operational Vision
Definition
14
Þ
A framework defining
how we wish to
OPERATE
Þ
Includes operational
norms for key
elements of the
business
Þ
Encompasses the
entire organization
Þ
Does not take into
account current level
of performance on
each parameter
Þ
Forms the basis for
review of current
processes to identify
gaps vis-a-vis vision
• Accuracy and timeliness
of information
• Degree of integration
• Decision making
• Planning
• Operational flow
• Monitoring and control
Business Integration
People Technology
Process
Strategy
• Structure
• Roles
• Responsibilities
• Skills
• Motivation
Definiti
on
Operational Vision
Definition
Areas to be
targeted for
Change
15
Operational Operational
Vision Vision
Inputs from
Management
Organizing
Business
Plans
Best
Practices and
Benchmarks
Experience of
other Steel
Companies
Analysis of
the Business
Performance
Operational Vision
Approa
ch
16
The supply chain is the business process combining the material and
information flow required to source, make, and deliver goods and services
to the end customer.
An “end-to-end” process extending beyond the boundaries of one organisation
Design
Source
Make Deliver
Service
Sell
Suppliers
Customers
Supply Chain
Human Resources
Information Technology
Plan
Finance
Enablers:
The Extended Supply Chain
17
Alignment of Business
Components
The operational vision should guide our efforts in aligning the process, people and
technology components of the business with our strategy to bridge the gap
between current and target performance levels
•Technology applied to
enable dramatic
improvements in
business operations
•Improved
communication across
organisational
boundaries both
internal and external
•Instantaneous sharing
of information
•Supports new ways of
doing business
•Organization structure
is process driven
•There is complete
clarity on roles and
responsibilities
•Employees are
empowered
•Job requirements are
matched with necessary
skills /tools
•There is clear linkage
between strategic
objectives, success
factors and KPIs
•The HR policies support
reward based on
achievement against
KPIs
•Processes are aligned to meet
strategic objectives
•Processes ensure that each
activity undertaken adds
value to the products as
perceived by our customers
•Process orientation facilitates
quick response at lower costs
and improved quality
Strategy
Business
Integration
People Technology
Process
The Operational Vision Framework
18
Moving from Functional to Process
Orientation
Functions Drive
Business Activity
Functions Continue to Dominate
but Processes are recognised
Processes
Drive the
Business
F
I
N
A
N
C
E
E
N
G
I
N
E
E
R
I
N
G
M
A
N
U
F
A
C
T
U
R
I
N
G
M
A
R
K
E
T
I
N
G
E
N
G
I
N
E
E
R
I
N
G
M
A
N
U
F
A
C
T
U
R
I
N
G
M
A
R
K
E
T
I
N
G
F
I
N
A
N
C
E
DEVELOP PRODUCTS & PROCESSES
FULFILL DEMAND
GENERATE DEMAND
MANAGE ENTERPRISE
STAGE 1 STAGE 2 STAGE 3
Enterprise-wide process managers may be the most valued positions in the
organisations of the future.
The Operational Vision Framework
As Is Transition Stage Desired Stage
19
Þ
Xerox is world’s leader in
copier business
Þ
In 1992, the company realized
that improving customer
satisfaction was necessary to
strengthen their competitive
advantage
Þ
In 1992, Xerox began its
transition from a traditional
functional organization (see
below) to a customer focused
organization
Company Background
Þ
Xerox reorganized itself into business
divisions and cross-functional
business teams tied to specific
markets
Þ
Cross functional teams were
responsible for their own strategy
Þ
Xerox eliminated a number of
centralized corporate functions and
increased involvement in the lower
layers of the organization
Þ
The final reorganization was
completed in 1995 with Xerox having
more employees with more authority
working directly with customers
In 1996, Xerox recorded
following improvements over
1995:
Þ
Improvement in customer
service response times
Þ
15 % improvement in
customer satisfaction
Þ
10 % increase in sales
Þ
11 % increase in employee
satisfaction
Þ
8 % increase in employment
Leading Practice Implemented Business Benefits
Supportive organization

E
N
G
G.
M
A
N
A
G
E
M
E
N
T
M
A
R
K
E
T
I
N
G
Service Delivery
Customer Satisfaction
Product Development
20
Service Sales
Product
Development
Customer
Segment 1
Customer
Segment 2
Customer
Segment 3
Marketing
Traditional
Product
Marketing
C
u
s
t
o
m
e
r
N
e
e
d
s
C
u
s
t
o
m
e
r

M
a
n
a
g
e
m
e
n
t
Traditional
Product
Development
Traditional
Sales
Force
Traditional
Service
Organization
C
u
s
t
o
m
e
r
N
e
e
d
s
C
u
s
t
o
m
e
r
N
e
e
d
s
P
r
o
d
u
c
t

A
P
r
o
d
u
c
t

B
P
r
o
d
u
c
t

C
P
r
o
d
u
c
t

B
P
r
o
d
u
c
t

C
P
r
o
d
u
c
t

A
P
r
o
d
u
c
t

B
P
r
o
d
u
c
t

C
P
r
o
d
u
c
t

A
P
r
o
d
u
c
t

B
P
r
o
d
u
c
t

C
P
r
o
d
u
c
t

A
Supportive organization
Organizing around customer type is the emerging trend
21
Introduces External Focus
Q
Facilitates customer orientation
Q
Puts strong competitive pressures to perform
Q
Increases customer-employee interaction
Q
Facilitates single point of contact
Q
Logically extends into supply base
Brings about improvements in the workplace
Q
Facilitates end-to-end ownership
Q
Reduces compartmentalization
Q
Eliminates fragmentation of work
Q
Eliminates hand-offs
Q
Facilitates management to customer focussed outcomes
Q
Streamlined workflows
Moving from Functional to Process
Orientation
Advantages of a Process Driven Organization
The Operational Vision Framework
22
Improves Decision Making
Q
Decisions are made at the point of work
Q
Increased responsiveness to change and to customers
Q
Flattens the organisation structure
Increases Employee Satisfaction
Q
Utilises collective talents of workforce
Q
Enhances employee involvement and commitment
Q
Increases job satisfaction
Moving from Functional to Process
Orientation
Advantages of a Process Driven Organization (...contd)
The Operational Vision Framework
23
Q
Prepared a “Process Map” for Ispat’s operations; classified operations into 4 “Core
Processes”
C
M1 : Develop Products and Processes
C
M2 : Generate Demand
C
M3 : Fulfill Demand
C
M4 : Plan and Manage the Enterprise
Q
Identified Sub-Processes upto the 2nd level for each of the above core processes;
for example, “Generate Demand” was broken down further as:
C
M2 : Generate Demand
M-2.01 : Manage Customer Relationship
¨
M-2.02 : Create Market
¨
M-2.03 : Capture Market
Operational Vision
Approa
ch
24
Manage
Customer
Relationship
M-2.01
Create Market
M-2.02
Capture Orders
M-2.03
M-2 Generate Demand
Conduct
Research
M-1.01
Define Product
M-1.02
Design Products
/ Processes
M-1.03
M-1 Develop Products / Processes
Manage Supply
Sourcing
M-3.01
Produce
M-3.02
Fulfill Orders
M-3.03
Deliver Service
and Support
M-3.04
Manage
Logistics
Network
M-3.05
M-3 Fulfill Demand
Manage
Information
M-4.01
Manage
Financial
Operations
M-4.03 Plan Enterprise M-4.02
Manage Human
Resources
M-4.04
Manage
Relations with
Stakeholders
M-4.06
M-4 Plan and Manage the Enterprise
Business Process
Model
Core Processes for Steel Manufacturer
The Operational Vision Framework
Implement
Capital Projects
M-4.05
25
The Operational Vision Framework
M1 : Develop Products and
Processes
¤
Products co-engineered with suppliers (IF, DP, Stainless etc)
¤
Products are developed based on a documented methodology (example 8-Gate Approach)
¤
Product development objectives aligned with overall market strategy
¤
Concurrent engineering achieved through cross-functional teams
¤
Research portfolio balanced between breakthrough, platform and derivative products
¤
Performance measures include life cycle costs, time to market, etc
Characteristics of World
Class Companies
Conduct Research Define Products
Design Products and Processes
Develop Product and Processes
High
High
High
High
Potential for
Improvement in
Ispat
High
26
M2 : Generate
Demand
Manage Customer Relationships
Create Market Demand
Capture Orders
¤
Full supply chain integration with seamless information flow
¤
Field sales “Knowledge Workers” empowered to cover breadth of relationship
¤
Sales management tools track product mix margin and contributions
¤
Tightly integrated marketing, business, research and operations plans
¤
Iterative plan development tools perform “what if” analysis on market strategies
¤
Pricing capabilities established based on “true” cost of product/service
Generate Demand
High
High
High
High
High
High
The Operational Vision Framework
Characteristics of World
Class Companies
Potential for
Improvement in
Ispat
27
M3 : Fulfill
Demand
Manage Supply Sourcing
Fulfill Orders
Manage Logistics Network
Produce
Deliver Service and Support
¤
Production schedules integrated with supplier sourcing plan
¤
Customer specific performance goals and automatic tracking with exception reporting
¤
Advanced bar-coding and EDI for cross-docking /flow through distribution
¤
Target inventory levels based on total supply chain variability at the SKU level
¤
Replenishment schedules configured based on true market demand
Fulfill
Demand
High
High
High
High
High
The Operational Vision Framework
Characteristics of World
Class Companies
Potential for
Improvement in
Ispat
28
M4 : Plan and Manage the
Enterprise
Manage Information Plan Enterprise Manage Financial Operations
Manage Stakeholder Relations
¤
Common systems infrastructure; single data repository
¤
Continuous KPI “flash” reporting to provide current exception based feedback
¤
Multiple and flexible reporting views such as SBU, product line, customer, etc
¤
Comprehensive competency development curriculums with KPI monitoring
¤
Standardised jobs and codes; assign benefits based on category; shared service
Plan and Manage the Enterprise
Manage Human Resources
High
High
High
High
High
The Operational Vision Framework
Characteristics of World
Class Companies
Potential for
Improvement in
Ispat
Implement Capital Projects
29
Manage
Customer
Relationship
M-2.01
Create Market M-2.02
Capture Orders M-2.03
M-2 Generate Demand
Conduct
Research
M-1.01
Define Product M-1.02
Design
Products /
Processes
M-1.03
M-1 Develop Products / Processes
Manage Supply
Sourcing
M-3.01
Produce M-3.02
Fulfill Orders M-3.03
Deliver Service
and Support
M-3.04
Manage Logistics
Network
M-3.05
Business Processes -
Level 2
M-1.01 : Conduct
Research
Set General
Objectives
M-1.0101
Define Research
Scope
M-1.0103
Conduct Basic
Research
M-1.0105
Integrate Results M-1.0107
Manage
Intellectual
Property
M-1.0109
Set Specific
Objectives
M-1.0102
Integrate
Strategic
Partners
M-1.0104
Conduct
Advanced
Research
M-1.0106
Apply Results M-1.0108
Track
Performance
M-1.0110
M-1 .01 Conduct Research
M-3 Fulfill Demand
The Ispat Operational Vision
M-4.01
Manage
Financial
Operations
M-4.03 Plan Enterprise M-4.02
Manage Human
Resources
M-4.04
Manage
Relations with
Stakeholders
M-4.06
M-4 Plan and Manage the Enterprise
Implement
Capital Projects
M-4.05
Manage
Information
30
Manage
Customer
Relationship
M-2.01
Create Market M-2.02
Capture Orders M-2.03
M-2 Generate Demand
Conduct
Research
M-1.01
Define Product M-1.02
Design
Products /
Processes
M-1.03
M-1 Develop Products / Processes
Manage Supply
Sourcing
M-3.01
Produce M-3.02
Fulfill Orders M-3.03
Deliver Service
and Support
M-3.04
Manage Logistics
Network
M-3.05
M-3 Fulfill Demand
Business Processes -
Level 2
M-1.02 : Define
Product
Conduct Market
Research
M-1.0201
Identify
Manufacturing
Strategies
M-1.0203
Define Product
Requirements
M-1.0205
Establish Base
Price
M-1.0207
Establish Project
Schedule
M-1.0209
Develop Product
Objectives
M-1.0202
Identify Channel
Strategies
M-1.0204
Specify Product
Concept
M-1.0206
Identify Potential
Partners
M-1.0208
Track
Performance
M-1.0210
M-1.02 Define Product
The Ispat Operational Vision
M-4.01
Manage
Financial
Operations
M-4.03 Plan Enterprise M-4.02
Manage Human
Resources
M-4.04
Manage
Relations with
Stakeholders
M-4.06
M-4 Plan and Manage the Enterprise
Implement
Capital Projects
M-4.05
Manage
Information
31
Manage
Customer
Relationship
M-2.01
Create Market M-2.02
Capture Orders M-2.03
M-2 Generate Demand
Conduct
Research
M-1.01
Define Product M-1.02
Design
Products /
Processes
M-1.03
M-1 Develop Products / Processes
Manage Supply
Sourcing
M-3.01
Produce M-3.02
Fulfill Orders M-3.03
Deliver Service
and Support
M-3.04
Manage Logistics
Network
M-3.05
M-3 Fulfill Demand
Business Processes - Level 2
M-1.03 : Design Products and
Processes
Design Product M-1.0301
Analyse
Feasibility
M-1.0303
Enable
Production
Support
M-1.0305
Trial Heat
Production
M-1.0307
Manage Product
traits
M-1.0309
Design Process M-1.0302
Manage Design
Change
M-1.0304
Trial Product M-1.0306
Test Customers M-1.0308
Track
Performance
M-1.0310
M-1.03 Design Products and Processes
The Ispat Operational Vision
M-4.01
Manage
Financial
Operations
M-4.03 Plan Enterprise M-4.02
Manage Human
Resources
M-4.04
Manage
Relations with
Stakeholders
M-4.06
M-4 Plan and Manage the Enterprise
Implement
Capital Projects
M-4.05
Manage
Information
32
Manage
Customer
Relationship
M-2.01
Create Market M-2.02
Capture Orders M-2.03
M-2 Generate Demand
Conduct
Research
M-1.01
Define Product M-1.02
Design
Products /
Processes
M-1.03
M-1 Develop Products / Processes
Manage Supply
Sourcing
M-3.01
Produce M-3.02
Fulfill Orders M-3.03
Deliver Service
and Support
M-3.04
Manage Logistics
Network
M-3.05
M-3 Fulfill Demand
Business Processes - Level 2
M-2.01 : Manage Customer
Relations
Identify Potential
Customers
M-2.0101
Manage
Customer
Inquiries
M-2.0103
Maintain
Relationships
M-2.0102
Capture
Feedback
M-2.0104
M-2.01 Manage Customer Relations
The Ispat Operational Vision
M-4.01
Manage
Financial
Operations
M-4.03 Plan Enterprise M-4.02
Manage Human
Resources
M-4.04
Manage
Relations with
Stakeholders
M-4.06
M-4 Plan and Manage the Enterprise
Implement
Capital Projects
M-4.05
Manage
Information
33
Manage
Customer
Relationship
M-2.01
Create Market M-2.02
Capture Orders M-2.03
M-2 Generate Demand
Conduct
Research
M-1.01
Define Product M-1.02
Design
Products /
Processes
M-1.03
M-1 Develop Products / Processes
Manage Supply
Sourcing
M-3.01
Produce M-3.02
Fulfill Orders M-3.03
Deliver Service
and Support
M-3.04
Manage Logistics
Network
M-3.05
M-3 Fulfill Demand
Business Processes -
Level 2
M-2.02 : Create
Market
Track Market
Information
M-2.0201
Execute
Marketing
Campaign
M-2.0203
Plan Marketing
Campaign
M-2.0202
Introduce New
Products
M-2.0204
M-2.02 Create Market
Educate Sales
/Customers
M-2.0205
The Ispat Operational Vision
M-4.01
Manage
Financial
Operations
M-4.03 Plan Enterprise M-4.02
Manage Human
Resources
M-4.04
Manage
Relations with
Stakeholders
M-4.06
M-4 Plan and Manage the Enterprise
Implement
Capital Projects
M-4.05
Manage
Information
34
Manage
Customer
Relationship
M-2.01
Create Market M-2.02
Capture Orders M-2.03
M-2 Generate Demand
Conduct
Research
M-1.01
Define Product M-1.02
Design
Products /
Processes
M-1.03
M-1 Develop Products / Processes
Manage Supply
Sourcing
M-3.01
Produce M-3.02
Fulfill Orders M-3.03
Deliver Service
and Support
M-3.04
Manage Logistics
Network
M-3.05
M-3 Fulfill Demand
Business Process -
Level 2
M-2.03 : Capture
Orders
Prepare
Proposal/Quote
M-2.0301
Take/Close
Order/Contract
M-2.0303
Negotiate
Terms
M-2.0302
M-2.03 Capture Orders
The Ispat Operational Vision
M-4.01
Manage
Financial
Operations
M-4.03 Plan Enterprise M-4.02
Manage Human
Resources
M-4.04
Manage
Relations with
Stakeholders
M-4.06
M-4 Plan and Manage the Enterprise
Implement
Capital Projects
M-4.05
Manage
Information
35
Manage
Customer
Relationship
M-2.01
Create Market M-2.02
Capture Orders M-2.03
M-2 Generate Demand
Conduct
Research
M-1.01
Define Product M-1.02
Design
Products /
Processes
M-1.03
M-1 Develop Products / Processes
Manage Supply
Sourcing
M-3.01
Produce M-3.02
Fulfill Orders M-3.03
Deliver Service
and Support
M-3.04
Manage Logistics
Network
M-3.05
M-3 Fulfill Demand
Business Processes -
Level 2
M-3.01 : Manage Supply
Sourcing
Approve Supplier M-3.0101
Manage
Partnership
M-3.0103
Establish
Contract
M-3.0102
Purchase M-3.0104
M-3.01 Manage Supply Sourcing
Manage
Accounts
Payable
M-3.0105
Track
Performance
M-3.0106
The Ispat Operational Vision
M-4.01
Manage
Financial
Operations
M-4.03 Plan Enterprise M-4.02
Manage Human
Resources
M-4.04
Manage
Relations with
Stakeholders
M-4.06
M-4 Plan and Manage the Enterprise
Implement
Capital Projects
M-4.05
Manage
Information
36
Manage
Customer
Relationship
M-2.01
Create Market M-2.02
Capture Orders M-2.03
M-2 Generate Demand
Conduct
Research
M-1.01
Define Product M-1.02
Design
Products /
Processes
M-1.03
M-1 Develop Products / Processes
Manage Supply
Sourcing
M-3.01
Produce M-3.02
Fulfill Orders M-3.03
Deliver Service
and Support
M-3.04
Manage Logistics
Network
M-3.05
M-3 Fulfill Demand
Business Processes -
Level 2
M-3.02 : Produce
Develop
Demand Plan
M-3.0201
Develop
Production Plan
M-3.0203
Produce
Products
M-3.0207
Maintain
Equipment
M-3.0209
Model Resources M-3.0202
Schedule
Production
M-3.0204
Plan and
Reserve
Resource
Prepare for
Production
M-3.0206
Quality Test
Products
M-3.0208
Track
Performance
M-3.0210
M-3.02 Produce
M-3.0205
The Ispat Operational Vision
M-4.01
Manage
Financial
Operations
M-4.03 Plan Enterprise M-4.02
Manage Human
Resources
M-4.04
Manage
Relations with
Stakeholders
M-4.06
M-4 Plan and Manage the Enterprise
Implement
Capital Projects
M-4.05
Manage
Information
37
Manage
Customer
Relationship
M-2.01
Create Market M-2.02
Capture Orders M-2.03
M-2 Generate Demand
Conduct
Research
M-1.01
Define Product M-1.02
Design
Products /
Processes
M-1.03
M-1 Develop Products / Processes
Manage Supply
Sourcing
M-3.01
Produce M-3.02
Fulfill Orders M-3.03
Deliver Service
and Support
M-3.04
Manage Logistics
Network
M-3.05
M-3 Fulfill Demand
Business Processes -
Level 2
M-3.03 : Fulfill Orders
Creating Stock M-3.0301
Manage
Order
M-3.0303
Prepare
Invoices
M-3.0305
Manage
Claims &
Returns
M-3.0307
Manage Stock
M-3.0302
Despatch
Products
M-3.0304
Bill Customers M-3.0306
Manage
Accounts
Receivable
M-3.0308
M-3.02 Fulfill Orders
Track
Performance
M-3.0309
The Ispat Operational Vision
M-4.01
Manage
Financial
Operations
M-4.03 Plan Enterprise M-4.02
Manage Human
Resources
M-4.04
Manage
Relations with
Stakeholders
M-4.06
M-4 Plan and Manage the Enterprise
Implement
Capital Projects
M-4.05
Manage
Information
38
Manage
Customer
Relationship
M-2.01
Create Market M-2.02
Capture Orders M-2.03
M-2 Generate Demand
Conduct
Research
M-1.01
Define Product M-1.02
Design
Products /
Processes
M-1.03
M-1 Develop Products / Processes
Manage Supply
Sourcing
M-3.01
Produce M-3.02
Fulfill Orders M-3.03
Deliver Service
and Support
M-3.04
Manage Logistics
Network
M-3.05
M-3 Fulfill Demand
Business Processes -
Level 2
M-3.04 : After Sales
Support
Manage
Post Sales
Actives
M-3.0401
Manage
Complaint
redressal
Centre
M-3.0403
Track
Performance
M-3.0405
Manage
Quality Claims
M-3.0402
Provide
Services &
Support
M-3.0404
M-3.04 Deliver After Sales Support
The Ispat Operational Vision
M-4.01
Manage
Financial
Operations
M-4.03 Plan Enterprise M-4.02
Manage Human
Resources
M-4.04
Manage
Relations with
Stakeholders
M-4.06
M-4 Plan and Manage the Enterprise
Implement
Capital Projects
M-4.05
Manage
Information
39
Manage
Customer
Relationship
M-2.01
Create Market M-2.02
Capture Orders M-2.03
M-2 Generate Demand
Conduct
Research
M-1.01
Define Product M-1.02
Design
Products /
Processes
M-1.03
M-1 Develop Products / Processes
Manage Supply
Sourcing
M-3.01
Produce M-3.02
Fulfill Orders M-3.03
Deliver Service
and Support
M-3.04
Manage Logistics
Network
M-3.05
M-3 Fulfill Demand
Business Processes - Level
2
M-3.05 : Manage Logistics
Network
M-3.05 Manage Logistics Network
Manage Material
Inventories
M-3.0501
Orchestrate
Movements
M-3.0502
Schedule
Receipts
M-3.0503 Receive Material M-3.0504
Maintain
Inventory
Accuracy
M-3.0505
Schedule
Dispatches
M-3.0506
Track
Performance
M-3.0507
The Ispat Operational Vision
M-4.01
Manage
Financial
Operations
M-4.03 Plan Enterprise M-4.02
Manage Human
Resources
M-4.04
Manage
Relations with
Stakeholders
M-4.06
M-4 Plan and Manage the Enterprise
Implement
Capital Projects
M-4.05
Manage
Information
40
Manage
Customer
Relationship
M-2.01
Create Market M-2.02
Capture Orders M-2.03
M-2 Generate Demand
Conduct
Research
M-1.01
Define Product M-1.02
Design
Products /
Processes
M-1.03
M-1 Develop Products / Processes
Manage Supply
Sourcing
M-3.01
Produce M-3.02
Fulfill Orders M-3.03
Deliver Service
and Support
M-3.04
Manage Logistics
Network
M-3.05
M-3 Fulfill Demand
Business Processes -
Level 2
M-4.01 : Manage
Information
Develop
Information
Strategy and
Plans
M-4.0101
Define /Manage
Group-Wide Data
Standards
M-4.0103
M-4.0105
Manage Physical
Processing and
Network Assets
M-4.0102
Manage System
Development
and Maintenance
M-4.0104
Maintain Existing
Applications
M-4.01 Manage Information
The Ispat Operational Vision
M-4.01
Manage
Financial
Operations
M-4.03 Plan Enterprise M-4.02
Manage Human
Resources
M-4.04
Manage
Relations with
Stakeholders
M-4.06
M-4 Plan and Manage the Enterprise
Implement
Capital Projects
M-4.05
Manage
Information
41
Manage
Customer
Relationship
M-2.01
Create Market M-2.02
Capture Orders M-2.03
M-2 Generate Demand
Conduct
Research
M-1.01
Define Product M-1.02
Design
Products /
Processes
M-1.03
M-1 Develop Products / Processes
Manage Supply
Sourcing
M-3.01
Produce M-3.02
Fulfill Orders M-3.03
Deliver Service
and Support
M-3.04
Manage Logistics
Network
M-3.05
M-3 Fulfill Demand
Business Processes -
Level 2
M-4.02 : Plan
Enterprise
Monitor the
External
Environment
M-4.0201
Design
organisation
structure
M-4.0203
Develop
Operational
Plans
M-4.0207
Develop Mission
and Vision
M-4.0202
Design
Relationships
Between Units
M-4.0204
Develop
Contingency
Plans
M-4.0208
M-4.02 Plan Enterprise
Develop
Organisational
Goals
M-4.0205
Develop
Strategic Plans
M-4.0206
The Ispat Operational Vision
M-4.01
Manage
Financial
Operations
M-4.03 Plan Enterprise M-4.02
Manage Human
Resources
M-4.04
Manage
Relations with
Stakeholders
M-4.06
M-4 Plan and Manage the Enterprise
Implement
Capital Projects
M-4.05
Manage
Information
42
Manage
Customer
Relationship
M-2.01
Create Market M-2.02
Capture Orders M-2.03
M-2 Generate Demand
Conduct
Research
M-1.01
Define Product M-1.02
Design
Products /
Processes
M-1.03
M-1 Develop Products / Processes
Manage Supply
Sourcing
M-3.01
Produce M-3.02
Fulfill Orders M-3.03
Deliver Service
and Support
M-3.04
Manage Logistics
Network
M-3.05
M-3 Fulfill Demand
Business Processes - Level 2
M-4.03 : Manage Financial
Operations
Manage
Financial
Resources
M-4.0301
Report
Information
M-4.0303
Manage the Tax
Function
M-4.0305
Process Finance
and Accounting
Transactions
M-4.0302
Conduct Internal
Audits
M-4.0304
Manage Physical
Resources
M-4.0306
M-4.03 Manage Financial Operations
Support Costing M-4.0307
Manage
Investments
M-4.0308
The Ispat Operational Vision
M-4.01
Manage
Financial
Operations
M-4.03 Plan Enterprise M-4.02
Manage Human
Resources
M-4.04
Manage
Relations with
Stakeholders
M-4.06
M-4 Plan and Manage the Enterprise
Implement
Capital Projects
M-4.05
Manage
Information
43
Manage
Customer
Relationship
M-2.01
Create Market M-2.02
Capture Orders M-2.03
M-2 Generate Demand
Conduct
Research
M-1.01
Define Product M-1.02
Design
Products /
Processes
M-1.03
M-1 Develop Products / Processes
Manage Supply
Sourcing
M-3.01
Produce M-3.02
Fulfill Orders M-3.03
Deliver Service
and Support
M-3.04
Manage Logistics
Network
M-3.05
M-3 Fulfill Demand
Business Processes - Level
2
M-4.04 : Manage Human
Resources
Create and
Manage Human
Resources
Strategy
M-4.0401
Manage
Deployment of
Personnel
M-4.0403
Manage
Employee
Reward and
Recognition
M-4.0405
Cascade
Strategy to Work
Level
M-4.0402
Develop and
Train Employees
M-4.0404
Ensure
Employee Well-
Being and
Satisfaction
M-4.0406
M-4.04 Manage Human Resources
Ensure
Employee
Involvement
M-4.0407
Manage Labour
Management
Relationships
M-4.0408
Develop Human
Resource Info
Systems (HRIS)
M-4.0409
The Ispat Operational Vision
M-4.01
Manage
Financial
Operations
M-4.03 Plan Enterprise M-4.02
Manage Human
Resources
M-4.04
Manage
Relations with
Stakeholders
M-4.06
M-4 Plan and Manage the Enterprise
Implement
Capital Projects
M-4.05
Manage
Information
44
Manage
Customer
Relationship
M-2.01
Create Market M-2.02
Capture Orders M-2.03
M-2 Generate Demand
Conduct
Research
M-1.01
Define Product M-1.02
Design
Products /
Processes
M-1.03
M-1 Develop Products / Processes
Manage Supply
Sourcing
M-3.01
Produce M-3.02
Fulfill Orders M-3.03
Deliver Service
and Support
M-3.04
Manage Logistics
Network
M-3.05
M-3 Fulfill Demand
Business Processes - Level 2
M-4.05 : Implement Capital
Projects
60
Formulate a
Capital Budget
Plan
M-4.0501
Formulate time
bound action
plan
M-4.0503
Obtain approval
from Board
M-4.0502
Make Funds
available for
Capital
Expenditure
M-4.0504
M-4.05 Implement Capital Projects
The Ispat Operational Vision
M-4.01
Manage
Financial
Operations
M-4.03 Plan Enterprise M-4.02
Manage Human
Resources
M-4.04
Manage
Relations with
Stakeholders
M-4.06
M-4 Plan and Manage the Enterprise
Implement
Capital Projects
M-4.05
Manage
Information
Report Status
against action
plan
M-4.0505
45
Manage
Customer
Relationship
M-2.01
Create Market M-2.02
Capture Orders M-2.03
M-2 Generate Demand
Conduct
Research
M-1.01
Define Product M-1.02
Design
Products /
Processes
M-1.03
M-1 Develop Products / Processes
Manage Supply
Sourcing
M-3.01
Produce M-3.02
Fulfill Orders M-3.03
Deliver Service
and Support
M-3.04
Manage Logistics
Network
M-3.05
M-3 Fulfill Demand
Business Processes - Level 2
M-4.05 : Manage Relations with
Stakeholders
Communicate
with
Shareholders
M-4.0601
Build Lender
Relationships
M-4.0603
Interface with
Board of
Directors
M-4.0605
Manage
Government
Relationships
M-4.0602
Develop Public
Relationship
Programmes
M-4.0604
Develop
Community
Relations
M-4.0606
M-4.05 Manage Relations with Stakeholders
Manage Legal
and Ethical
Issues
M-4.0607
The Ispat Operational Vision
M-4.01
Manage
Financial
Operations
M-4.03 Plan Enterprise M-4.02
Manage Human
Resources
M-4.04
Manage
Relations with
Stakeholders
M-4.06
M-4 Plan and Manage the Enterprise
Implement
Capital Projects
M-4.05
Manage
Information
46
Operational Vision
M-1.01: Conduct
Research
Q
Establish long term competitive advantage by
developing new Grades in anticipation of future
market conditions
Q
Set aside a research budget of a minimum of
around 1-2% of turnover
Q
Bring about following improvements:
C
A 50% increase in the yield rate of new concepts
C
A 10% reduction in cost per new concept
Q
Define strategy for family of grades with quantifiable
goals
Q
Develop research projects based on business and
plans for each family of grades, align R & D budget
with the priorities of each family of grades
Q
Link R&D activities to market research including
customer requirements based on new applications
Q
Clearly define the core competencies and focus R & D
on these. If a non-core technology needs to be
developed, source the activity outside the
organization
Q
Define envelopes of research activity based on
business plans, market analysis, etc.
Q
Have an “Idea Bank" to hold concepts that might not
be needed or are not commercially feasible yet
Q
Have an understanding of what competition is doing
in product and process technology. Develop a
database and update it periodically
Q
Understand legislation directions affecting
specification in advanced markets
Generate new product
concepts efficiently and with
a high “hit rate” of
successful concepts while
minimizing research cost
Operational
Vision
Potential approaches to
getting there
Objective of this sub-process
The Ispat Operational Vision
Q = Yield rate of ideas
C = R&D budget heads
D = Involvement of
partners and
agencies
D = Affecting Changes
in Product Line
and ahead of
competition
M = Standard
procedures,
Continuous
improvement
S = Turnover,
qualification of
staff
47
Operational
Vision
M-1.02: Define
Product
Q
Use 8-Gate Approach for developing products and
achieve :
C
A 25% reduction in definition/design lead time
C
100% increase in customer satisfaction
Q
Improve product profitability by a minimum of
25%
Q
Launch at least 2 new products every year
Q
Ensure 100% adherence to schedule and budgets
Q
Co-engineer the product with the customer
Q
Use product line plans developed by only cross-
functional teams
Q
Assign responsibility for customer satisfaction and
product cost to the same cross-functional team
Q
Set up market aligned product development
teams where one person from each team is
responsible for the performance of that market
segment
Q
Gather inputs from marketing, manufacturing,
intermediaries and suppliers
Q
Begin next generation product development
during current generation product cycle
Q
Develop cost, contribution and NSR targets up
front
Q
Plan total product life cycle
Define products and
processes that meet
company’s and growth
objectives for a family of
grades (cost, quality,
schedule, specification and
end-user application)
Operational
Vision
Potential approaches to
getting there
Objective of this sub-process
The Ispat Operational Vision
Q = Completeness of
definition
C = Cost to deliver
quality
D = Involvement of
partners
D = To design product
within specified
time limits
M = Standard
procedures,
Continuous
improvement
S = Turnover
qualification of
staff
48
Operational Vision
M-1.03: Design Products and
Processes
Q
Ensure a globally optimised detailed specification that
considers manufacturability, reliability, disposal,
quality and environmental compatibility, resulting in :
C No Technical Delivery Condition (TDC) modification post
launch
C Zero Quality Claims by FY 2010
Q
% of projects with full-time resources (>80%)
Q
Number of new products introduced per year (=2)
Q
% of customized products (50%)
Q
Adherence to schedule and budget
Q
Create and co-locate multifunctional design teams
Q
Design products and processes concurrently
Q
Pursue shorter product life cycles to adjust more
frequently to customer needs
Q
Use a total quality and value management system as
an umbrella for the development process
Q
Follow the 8-Gate product development methodology
with predefined targets and requirements
Q
Manage customer requirements through
documentation, allocation and cross-referencing
Q
Simulate with software to the the extent possible
Q
Trial for concept and customer validation
Q
Review (in a closed loop) feedback from production
and customers
Q
Test product on field and customer
Generate designs that exceed
customer and company
expectations with regard to
cost, Specification, quality,
and profitability
Operational
Vision
Potential approaches to
getting there
Objective of this sub-process
The Ispat Operational Vision
Q = Achievement of
targets at launch
C = Cost to launch
D = Level of functional
involvement
D = Achievement of all
time limits
specified
M = Standard
procedures,
Continuous
improvement
S = Turnover,
qualification of
staff
49
Operational Vision
M-2.01:Manage Customer
Relations
Q
Identify potential customers for ensuring
deeper penetration and enhanced market
share in the following segments:
C
Automotive: 45% by FY’08
C
API : 54% by FY’08
C
Construction: 11%by FY’08
C
LPG: 45%by FY’08
Q
Reach out to the last-mile customer by
moving up the value chain:
C
Automotive Segment: Increase by 25% YOY
basis from existing 9 OEM customers
C
Construction Segment: Increase by 100% YOY
basis from the existing 1 customer
Q
Ensure robust Customer Relationship
Management (CRM)
Q
Ensure much greater focus on capturing
customer feedback on existing product
performance in order to improve and
customize our products against customers’
specific requirements
Q
Reduce dependency on cold rollers by
reducing supplies by 25%yoy basis
Q Create segment wise identification teams for potential
customer and its inquiry generation
Q Ensure higher usage of information technology for
capturing customers’ product requirements and
feedback on existing products; Implement mySAP CRM
Q Single point inquiry redressal for greater customer
convenience and satisfaction
Q Reducing the lead time gap between customer inquiry
and responding to the inquiry
Q Increase in repeat orders and customer loyalty
Wider customer base along
with higher level of Customer
Relationship Management and
Customer Satisfaction
Operational
Vision
Potential approaches to
getting there
Objective of this sub-process
The Ispat Operational Vision
Q = Achievement of
targets
C = Cost to marketing
D = Level of functional
involvement
D = Achievement of all
time limit targets
M = Standard
procedures,
Continuous
improvement
S = Qualification of
staff
50
Operational
Vision
M-2.02: Create
Market
Q
Develop 100% reliable plans for marketing campaigns
that would impact the market share in quantitative terms
and establish the Ispat brand
Q
Execute the marketing campaign effectively within
optimum cost and create the impact in the market
C
Ensure cost reduction by 5% YOY basis in the
execution process
C
Ensure 25% increase in contribution margin by
selecting the right new product/grade
Q
Ensure highly successful launch of new high-end value
added products with customized applications meeting
customer specific requirements:
C
Replace a few of the existing grades with new
grades such as DP600, HR60, ST54AM, CT40, CR01,
MC55 and IF by FY010
C
Launch APIX70 14.3mm, 17.2mm for normal
application and APIX65 for Sour Gas application
C
Develop P310/P355 (LPG grades) for export
oriented units (EOU)
Q
Conduct at least one customer meet every quarter in
order to educate existing and potential customers on
steel applications and substitution for other materials
Q Ensure regular tracking of segment-wise market
information (products, customer requirements,
competitors, changing technology, changing features
and applications etc) with clear identification of
responsibilities
Q Work closely with Technical Cell, Product Development
and Operations teams to ensure effective
implementation of marketing strategies
Q Develop and launch new products with defined timelines
for widening the product mix/portfolio
Q Participate and actively contribute in product
development teams particularly in Gates 1, 2 and 3 of
the 8-Gate Approach.
Q Educate existing and potential customers on steel
application and specific benefits from our material
Create market for Ispat’s
products such that the
planned topline is achieved in
a cost-effective manner
Operational
Vision
Potential approaches to
getting there
Objective of this sub-process
The Company Operational Vision
Q = Achievement of
targets
C = Cost to campaign
D = Level of functional
involvement
D = Achievement of all
time limits
specified
M = Standard
procedures,
Continuous
improvement
S = Turnover,
qualification of
staff
51
Operational Vision
M-2.03: Capture
Orders
Q
Ensure higher sales to achieve at least 3.0
MT during FY 2008, 3.3 MT by FY 2009 and
3.5 MT by 2010
Q
Achieve an incremental contribution of Rs
250 crores by FY 2009 with greater focus on
Auto, API, Construction segments and
launching new products such as API grades,
IF Steel, Silicon Steel, Stainless Steel etc
Q
Reduce 50% of the time taken in preparing
proposals and quotations with zero errors
Q
Establish standard negotiating terms with
approved fluctuations
C
10% reduction in approved price fluctuations
on YOY basis
Q
On time initiation and closure of the
contracts with no deviation
Q
Error free preparation of proposals and quotes
within specified time line
Q
Following negotiating guidelines and working under
the specified timelines
Q
Religiously following the timeline of customer
schedules already communicated to the customer
Maximum order captured from
high value added segment
with minimum deviation in
negotiating terms and time
lines
Operational
Vision
Potential approaches to
getting there
Objective of this sub-process
The Company Operational Vision
Q = Achievement of
targets
C = Cost to process
cycle
D = Level of functional
involvement
D = Achievement of all
time limits
specified
M = Standard
procedures,
Continuous
improvement
S = Qualification of
staff
52
Q
Rationalise supplier base
Q
Develop long-term strategic partnership with
IBRM, Coke, Ferro Alloys, Coal suppliers (5
new partnerships every year)
Q
Lower cost of procurement
C
Raw Material cost (3-5% on year on year basis)
C
Reduce purchasing overhead expenses (by 5-
10% on year on year basis)
Q
Improve supplier performance (Cost,
Delivery, Quality parameters)
Operational Vision
M-3.01 : Manage Supply
Sourcing
Q Rationalize supplier base by considering a number of
factors as history of supply, volumes, relationship,
reliability, price competitiveness etc
Q Develop supplier partnerships to improve service levels
in terms of quality, timely delivery and cost
Q Assist suppliers with detailed specification and
managerial inputs on capabilities such as QA, cost
reduction and information technology
Q Purchase and monitor supplier performance based on
"Least Total Delivered Cost" concept at given quality
Q Establish purchasing as a “profit centre” with
appropriate performance measures
Q Compress lead times for the indent to receipt cycle
Q Standardize items to the extent feasible and evaluate
global sourcing options
Q Implement and effectively use enablers such as EDI and
integrated materials management system
To determine and manage
supply of materials and
services at the appropriate
cost, quality and reliability
Operational
Vision
Potential approaches to
getting there
Objective of this sub-process
The Ispat Operational Vision
Q = Incoming quality
levels
C = Procured quality
at minimum total
cost
D = Number of
supplier
development
teams
D = On-time
performance,
right quality at
right price
M = Continuous
improvement
S = Qualification of
staff
53
Operational
Vision
M-3.02
Produce
Q
Achieve the following
C
Hot Metal Production: > 5000 MT/day consistently
C
HM Cost: < $ 325 by FY 2009 and around $300 by FY
2010
C
SMS Production: > 48 heats/day consistently
C
SMS Yield: > 87% consistently
C
Caster 1 Speed: 5.7 meters/minute by FY 2009 and 6.2
meters/minute by FY 2010
C
Hot Mill Production: 280,000 MT/month consistently
C
MTBC: 2.50 minutes by FY 2009
C
HRC Cost: $ 425 by FY 2009 and $ 400 by FY 2010
C
DRI Production: 180,000 MT/month by FY 2009
Q
Plant reliability: >95%
C
Unplanned Downtime: < 5%
C
Maintenance Cost: within $ 100/MT
C
MTBF > 100 Days by FY 2009
Q
Make manufacturing and maintenance personnel
accountable for planning, execution, plant
reliability, process reliability and consistency, and
plant uptime
Q
Undertake comprehensive Maintenance Audit of
the Dolvi plant and draw up a comprehensive time-
bound action plan ensuring 95% reliability.
Implement and follow the SOPs for each
equipment/process and ensure strict discipline and
all round highly professional work culture
Q
Analyze product costs (value-added grades versus
non-value-added grades) and determine why
contribution/MT of certain value added grades is
lower in conjunction with Marketing team
Q
Upgrade and fix problems in Level 1 to ensure L2
and L3 systems are effective. Produce strictly
according to the schedule generated by PPMS
system
Q
Focus on preventive and preemptive maintenance
Q
Empower operations teams to prioritize
preventative and emergency maintenance
Determine manufacturing
requirements and produce
high-quality products in a
manner that is cost effective
and on schedule
Operational
Vision
Potential approaches to
getting there
Objective of this sub-
process
The Ispat Operational Vision
Q = Meet TDC
consistently
C = Produce quality at
minimum total
cost
D = Process capability,
availability
D = Delivery schedule
adherence
M = Continuous
improvement
S = Qualification of
staff
54
Operational
Vision
M-3.03 Fulfill
Orders
Q Ensure 95% of deliveries are made to customers within the
original committed date
Q Compress order to delivery lead time to ## days
Q Restrict accounts receivables to ## days
Q
Ensure clearly identified “owners” for various
elements of inventory
Q
Integrate credit check at order processing time
Q
Ensure allocation of responsibilities to ensure
high service levels are clearly defined and well
understood by all involved
Q
Integrate order processing system with
manufacturing, sales and financial systems
Q
Use appropriate key performance measures to
track performance
Efficiently manage the
complete customer order to
cash cycle
Operational
Vision
Potential approaches to
getting there
Objective of this sub-
process
The Ispat Operational Vision
Q = % on-time to
specification,
C = Deliver quality at
total minimum
cost
D = Reduced order
processing costs
D = % on time
M = Standard
procedures,
Continuous
improvement
S = Turnover,
qualification of
staff
55
Operational Vision
M-3.04 After Sales
Support
Q
Quality Claims as a percentage of Sales reduced to
## % by FY 2009 and ##% by FY 2010
Q
Percentage of Quality Complaints answered within
target time: 98% by FY 20##
Q
Ratio of customer complaints to customer
compliments to be reduced to ## by FY 20##
Q
Time lag from identification of customer problem to
satisfactory action on problems to be reduced ##
Q
Implement cross-functional customer service teams that
are accountable for all aspects of customer service and
customer account maintenance
Q
Encourage customers to give feedback about the quality
of service they receive, then analyse this feedback for
improvement and to identify new/better services that
can be provided
Q
Institute a feedback "loop" in place between After Sales
support and Design / Development departments
Q
Institute mechanisms to ensure that the after sales
support staff takes ownership of customer problems
Q
Provide the after sales support centre with the authority
to bind other parts of the organisation in order to
respond appropriately to an inquiry
Q
Ensure that throughout the customer complaint process
the customer has one point of contact
Provide value beyond the
product and a level of
service, technical support, or
information which supports
customer requirements
Operational
Vision
Potential approaches to
getting there
Objective of this sub-process
The Ispat Operational Vision
Q = Lead time to
response time
C = Quality Claims
Cost
D = Lead time to clear,
response time
D = Availability of
after sales support
M = Standard
procedures,
Continuous
improvement
S = Turnover,
qualification of
staff
56
Operational Vision
M-3.05 Manage Logistics
Network
Q
Improve logistics performance
C
Compress variability of inbound transportation time to less
than 50% of current levels
C
Reduce truck turnaround time by 50% of current time
C
Ensure 100% of dispatches without any damage
Q
Minimize storage, handling and movement:
C
Excess Inventory levels to be reduced to their norm level
C
Slow moving/non-moving and obsolete inventory reduced
by 90% by FY 2009
Q
Streamline systems and procedures to enable current
manpower to handle higher volumes
Q Develop partnership with transporters providing value
added services
Q Encourage RM suppliers to setup storage centers near/at
the plant
Q Share schedules with suppliers and restrict variation to a
pre-determined agreed percentage
Q Track material through the despatch from supplier, receipt,
storage and issue cycle in order to minimize handling
losses and pilferages
Q Evaluate focused storage options within Dolvi
Q Streamline slow moving/non-moving/obsolete inventory
identification and disposal mechanisms
Q Implement and effectively use enablers such as material
handling equipments, bar-coding and integrated materials
management system
Provide efficient and timely
delivery of materials and
minimise inventory, delivery
and storage costs
Operational
Vision
Potential approaches to
getting there
Objective of this sub-process
The Ispat Operational Vision
Q = No of stock outs
below agreed
level
C = Storage and
distribution costs
D = Simplification of
network
D = Right time and
right place
M = Continuous
improvement
S = Turnover,
qualification of
staff
57
Operational Vision
M-4.01: Manage
Information
Q
Continuous focus on usage of IT to build and
sustain competitive advantage.
Q
Leverage on available technologies for
applications, networking, office automation and
customer interface achieving the following :
C
A ##% accuracy in data
C
## %of personnel having on-line access to
computerized data
C
A ##% reduction in the number of different entities
involved in managing the same data
Q
Spread IT awareness in a concerted fashion
across all levels within the company
Q
Report progress against the long term IT strategy
with periodic updates based on the changing
information technology scenario
Q
Implement mySAP Business Suite of applications
in order to :
C
Ensure data integrity with minimal need for parallel
records and reconciliation activity
C
Facilitate quick and integrated response to sudden
changes in key requirements
Q
Implement end-user operated on-line information
systems in all operating and support functions
Q
Ensure common infrastructure, remote network
support, single data repository and move towards
the IT “factory” concept
Q
Develop a robust plans for implementation and
maintenance of systems and information security
To align information
technology developments
with business strategy
Operational
Vision
Potential approaches to
getting there
Objective of this sub-process
The Ispat Operational Vision
Q = Accuracy &
consistency of
data
C = IT Budget
D = Ease of access to
information
D = Time taken to
deliver user
requirements
M = Continuous
improvement
S = Turnover,
qualification of
staff
58
Operational Vision
M-4.02: Plan the
Enterprise
Q
A clearly spelt out vision and mission for the
organization which is well understood by all
Q
A strong strategic planning function which
shapes the future strategy. Thereafter, rally
around the plan in a collective manner for its
successful and speedy implementation
Q
Operational plans that are in line with
strategic plans and exhibit (at best) a 10%
variation between Sales and Production
plans. All plans must be met at least 90%.
Q
An organization structure that ensures clear
job responsibility and reporting relationships
Q
Identify internal/external advisors to re-confirm
mission and vision statements
Q
Evolve credible change management programs to
communicate and share the organizational vision for
the immediate-, medium- and long-term to facilitate
buy-in and support for change
Q
Ensure adequate business focus in each
function/department to meet the planned objectives
Q
Focus on skill building by accessing global best
practices and exposure to international markets
Q
If actual achievements against plans vary more than
10%, then there is need to :
C
Revisit assumptions and hypotheses made in
developing the plan
C
Speedily implement the actions that will justify the
assumptions and hypotheses
C
Strictly avoid developing theoretical plans to
make the plan look good and comforting
C
Ensure that company’s credibility is raised with
credible plans that are always achieved
Ensure strategic and
operational plans are geared
towards achieving the long
term objectives of the
company
Operational
Vision
Potential approaches to
getting there
Objective of this sub-process
The Ispat Operational Vision
Q = Number of people
owning
responsibility
C = Performance
against Budget
D = Synchronicity
within the various
plans
D = Time taken to
freeze Sales and
Production plans
M = Continuous
improvement
S = Turnover,
qualification of
staff
59
Operational Vision
M-4.03: Manage Financial
Operations
Q
Move towards a world class organisation setup,
supported by on-line, end-user operated systems
across a networked organisation, employing best
practices for financial management
Q
Reduce interest and finance charges by 10% by FY
2009 and 20% by FY 2010
Q
Raise US $ 500 million capital for funding the key
capital projects such as Coke Oven battery, Pellet
plant, Desulphurization plant, RH Vacuum Degasser, 2
nd

BF, Material Handling equipments and cranes etc
Q
Comply with all statutory requirements of the country
for financial reporting
Q
Implement all the features of SAP Finance module
Q
Provide on-line information
C Set up flexible, user friendly financial reporting
C Provide drill down facility for Financial Statements
Q
Utilize company balance sheet strengths
Q
Provide centralized cash management to facilitate
monitoring and transferring of cash across locations
Q
Maintain progressive, proactive investment policies
Q
Use financial parameter based KPIs across all processes
and management levels
Q
Improve service levels by :
C Reducing the cycle time for production of the general ledger
and closing of books
C Performing account analysis during the month, minimising
month-end effort
C Sending reports electronically to users
Provide line management with
information and analysis that
ensures the short and long term
liquidity and viability of the
organisation
Operational
Vision
Potential approaches to
getting there
Objective of this sub-process
The Ispat Operational Vision
Q = Accuracy
C = Finance function
cost
D = Ease of processing
& budgeting
D = Processing and
budgeting time
M = Continuous
improvement
S = Qualification of
staff
60
Operational Vision
M-4.04: Manage Human
Resources
Q
Build a culture unique to Company, focusing on
customer orientation, continuous improvement, team
building, openness, commitment, passion and
discipline. Within 1-2 years :
C Increase Employee Engagement to 80%
C Reduce Attrition within 10-12%
C Ensure participative and outcome-oriented style of
management:
¨ Introduce concept of problem solving groups
¨ Ensure greater number of people having cross
functional skills
¨ Ensure all round increase in morale, motivation
levels with greater autonomy to perform
Q
Support recognition of business process and align
organization structure around processes
Q
Ensure effective and transparent HR Policies
supporting the transformation of the company.
Q Undertake manpower planning on a formal basis factoring
in the growth plans of the company
Q Redefine PMS of individuals around processes which
measure outcomes
Q Realign the organization structure around processes to
support achievement of business objectives
Q Establish linkage between rewards (including non
monetary modes) and performance appraisal
Q Create emphasis on building relevant skills through
appropriate training and in inculcating high degree of
customer service orientation
Q Balance job rotation for building cross-functional skills with
the need to retain specialization
Q Develop a formal succession planning process
Attract, retain and develop
highly motivated talent both
at entry level and in
specialized/ critical functions
Operational
Vision
Potential approaches to
getting there
Objective of this sub-process
The Ispat Operational Vision
Q = Employee turnover
C = Personnel costs
D = Consonance between
employees’ aspirations
and Company’s needs
D = Training days per new
hire
M = Continuous
improvement
S = Qualification of staff
61
Operational Vision
M-4.05: Implement Capital
Projects
Q
Monitor and implement Capital projects plan
in a time-bound manner for achieving the
strategic objectives. Strict monthly review of
progress required
Q
Execute each project within budgeted costs
and stipulated timelines. Cost and time
overrun should be limited to 3-5% at best
Q
Ensure fulfillment of key objectives set out
in the business case.
Q
The Capital Projects Plan must take inputs from user
groups like Marketing, Production , New product
development, Quality Assurance, Maintenance
functions and priorities of various projects must be
collectively decided.
Q
Every project must have a formally documented
“Business case” outlining the costs and benefits,
payback period, ROI, Risks and Mitigation plans
Q
Every project must have time-bound action plan
(based on PERT/CPM technique) outlining the
timeframes, resources required, precedence
relationship, and phased cash outflow plan
Q
Finance function to ensure availability of appropriate
funds based on specific milestones for implementing
the plan
Q
Regular reporting of project status would be required
in order to avoid cost and time overrun.
Execution of the Capital
Projects in stipulated time
and budgets so as to achieve
strategic and operational
objectives
Operational
Vision
Potential approaches to
getting there
Objective of this sub-process
The Ispat Operational Vision
Q = Accuracy of
budget and
timeline
C = Cost of
implementation
D = Incorporation of
user suggestions
and ideas for
complete buy in
after
implementation
D=Time taken to
implement capital
project against
plan
M = Accurate Status
reporting
S = Turnover,
qualification of
staff
62
Operational Vision
M-4.06: Manage Relations with
Stakeholders
Q
Conformance to deadlines for reporting
information to stakeholders
Q
Accuracy in information reported to them
Q
Service levels of :
C
Investor satisfaction
C
Government compliance
Q
Use financial repositories for operational and
financial data linked with reporting tools to
develop standardised reporting packages in
order to provide :
C
A single source of data
C
Paperless environment
C
Improved development time
Q
Set service levels for :
C
Addressing investor queries
C
Timely transfer of shares, warrants etc
Q
Implement consistent dividend policies
Q
Ensure timely and complete reporting of
information required for Government
Compliance
Q
Facilitate quarterly closing and publications of
statutory accounts
Provide external
stakeholders (like the
government, regulatory
agencies and investors etc)
with information they need
Operational
Vision
Potential approaches to
getting there
Objective of this sub-process
The Ispat Operational Vision
Q = Number of
stakeholder
complaints
C = Cost of
compliance
D = Ease of
accessibility for
stakeholder
D = Time taken to
redress complaint
satisfactorily
M = Continuous
improvement
S = Turnover,
qualification of
staff
63
Key Performance
Indicators
M-1.01 Conduct
Research
+ Cost per concept developed per time period
+ Cost savings on account of new concepts incorporated
+ Research budget as a percentage of total budget
Cos
t
Interface
Service
Cycle
Time
Qualit
y
+
Number of project failures due to the
implementation of unproven technologies
+
Percentage of R&D data gathered from a central
cross-functional enterprise wide repository
+
Number of new product offerings made possible
by internal R&D efforts
+
Percentage of R &D time spent gathering data
+
Cycle time reduction on account of new
products / processes
+
Improvement in quality / reliability on account
of new products / processes
+
Ideas researched that are incorporated into
designs per year (yield rate)
Q
Put Quality First Reduce Costs
Compress Time
Focus on Customer
Representative KPIs
64
Key Performance
Indicators
M-1.02 Define
Product
+
Product line sales
+
Return on investment made in research
+
% of revenue generated from products
introduced in the last 2 years
Cos
t
Cycle
Time
Qualit
y
+
Time from initiation to release to development
(design/definition lead time)
+
Break Even Time (BET); the time from when the
initial product specifications are frozen until the
product shows a profit
+
Customer product satisfaction ratings
Q
Put Quality First Reduce Costs
Compress Time
Interface
Service
+
Number of new product introductions per year
+
Bill of Material Accuracy
+
Adherence to schedule and budget
+
Average change orders to original Bill of
Material
Focus on Customer
Representative KPIs
65
Key Performance Indicators
M-1.03 Design Products and
Processes
+
Percent cost of defective design
+
Cost of defective design as a percent of net
revenue/sales
Cos
t
Interface
Service
Cycle
Time
Qualit
y
+
Number of Design Modification Requests
(changes required by Manufacturing )
+
% of projects with full-time resources
+
Number of new products introduced per year
+
% of customized products
+
% of reconfigurable products
+
Adherence to schedule and budget
+
% of product development time spent in
meetings, looking for data and other non-value
added activities
+
Cycle time to develop/implement a new version
of an existing product
+
Cycle time to develop/implement a new product
or technology
+
Time to transfer/launch product in
Manufacturing
+
Standard production cycle time
+
Time to market
+
Average manufacturing cycle time decrease
over time following a product release
+
Percent of design completed electronically
+
Percent of design simulated electronically
+
Average number of production defects in new
products
Q
Put Quality First Reduce Costs
Compress Time
Focus on Customer
Representative KPIs
66
Key Performance Indicators
M-2.01 Manage Customer
Relationship
+
Cost in identification of potential customer
+
Optimization of relationship maintenance cost
Cos
t
Interface
Service
Cycle
Time
Qualit
y
+
Number of manual activities involved in
managing customer inquiries
+
Number of potential customers added per year
+
% of time spent in meetings, looking for data
and other non-value added activities
+
Delay in customer inquiry response
+
Shorten the time taken in capturing the
feedback
+
Quality Customer (taking Value added grades
and having long term contract)
+
Percentage of handling customer inquiry
electronically and through e-sites
+
Quality of Personnel handling the Customer
inquiry
Q
Put Quality First Reduce Costs
Compress Time
Focus on Customer
Representative KPIs
67
Key Performance
Indicators
M-2.02 Create Market
+ Cost of introduction of new product development
+ Cost of execution of marketing campaign
Cos
t
Interface
Service
Cycle
Time
Qualit
y
+
% increase in the plan reliability of marketing
+
Number of new products introduced per year
+
% of customized products
+
% of reconfigurable products
+
Adherence to schedule and budget
+
Cycle time to track market information and the
time to act upon it
+
Cycle time to develop/implement a new version
of an existing product
+
Cycle time to develop/implement a new product
or technology
+
Percent of market information collected
electronically
+
Percent of education provided to the customer
on application of steel
+
Average number of production defects in new
product
Q
Put Quality First Reduce Costs
Compress Time
Focus on Customer
Representative KPIs
68
Key Performance
Indicators
M-2.03 Capture
Orders
+
Percent cost of error in negotiating terms
+
Cost of increased cycle time
Cos
t
Interface
Service
Cycle
Time
Qualit
y
+
Number of Modification Requests in proposals
and negotiating terms
+
Adherence to schedule and budget
+
Cycle time to finalize error free negotiating
terms
+
Standard cycle time from proposal to closing
contract
+
Percent of proposals and Quotes on e-sites
+
Average number of defects in proposals
/Quote /Negotiate terms
Q
Put Quality First Reduce Costs
Compress Time
Focus on Customer
Representative KPIs
69
Key Performance
Indicators
M-3.01 : Manage Supply
Sourcing
+
Material Cost/Sales
+
% change in material cost annually
+
Purchasing overhead expense as a % of total
purchase value
+
Number of active suppliers (for A/B/C materials)
Cos
t
Interface
Service
Cycle
Time
Qualit
y
+
% of time spent on supplier development activity
+
Time spent by Purchase in new product/item
development
+
Number of partnerships entered into per year
+
Supplier training hours / Total training hours
+
% of POs requiring multiple approvals
+
Fill rate (% of orders accepted by supplier)
+
Average accounts payable over credit period
+
% of on-time deliveries (ordinary and rush)
+
Average supplier days lead time
+
% of POs released within full supplier lead time
+
Purchase order cycle time
+
Average time to negotiate a contract
+
% of items received beyond PO receipt date
+
No of POs amended
+
No. of rush orders/total No. of orders
+
Lost production due to material non-availability
+
% of all active suppliers that are approved
+
% of material not confirming to specifications
+
% of Qty returned to supplier
Q
Put Quality First
Reduce Costs
Compress Time
Focus on Customer
Representative KPIs
70
+
% quality runs
+
% of process lines using computerised process
control
+
Preventative maintenance hours/total
maintenance hours
+
Preventative maintenance schedule adherence
rate
+
Rejection rate %
+
Defects per million
+
Total rejection cost /total sales
+
% of product wise complaints/ total sales
+
Number of plant/line shutdowns due to quality
problems
Key Performance
Indicators
M-3.02 : Produce
+
% annual change in controllable plant costs
+
Conversion cost / Sales
+
Inventory levels of WIP and stock of finished
material
+
Maintenance cost/estimated replacement costs
+
Investment in safety-related facility
improvements/total plant operating costs
+
No. of days/hours without accidents
+
Lost production due to unscheduled maintenance :
lost production due to scheduled maintenance
+
Cost Per MT/ per employee
+
Maintenance cost/controllable plant costs
+
Quality Claims Cost/ Sales (or COGS)
+
Supervisory span of control (supervisor : workers)
+
Mean time between equipment failure
+
Capacity utilisation
+
MT of output per unit of labour input
Cos
t
Qualit
y
Q
Put Quality First Reduce Costs
Representative KPIs
71
Key Performance
Indicators
M-3.02 : Produce
+
Adherence to production plans
+
% of employees cross-trained
+
% of workforce participating in self-directed
teams
+
% variation in production from plans
+
Number of changes to the Master Schedule
+
Backlog
+
% of worker time spent moving materials
+
Carry forward orders as a % of total orders
+
Ratio of delivery time offered to customers to
actual manufacturing time
+
Manufacturing lead time
+
Qty of Material waiting despatch
+
Number of changes to production plans
+
Average lead time to prepare production for
new product
+
Set-up time
+
Physical distance a product moves through the
factory
+
% of orders delivered on time as per the Master
Schedule
+
Work-to-wait ratio
+
Plant performance units of output per hour
Cycle
Time
Compress Time
Interface
Service
Focus on Customer
Representative KPIs
72
Key Performance
Indicators
M-3.03 : Fulfill
Orders
+
Average delivery expenses per MT
+
Average order processing expenses per MT
+
Order processing expenses/total sales
+
Late delivery penalties/total shipping expenses
+
Average insurance cost per value of shipment
+
Average shipping and handling cost
+
Accounts Receivable (value and days cover)
+
Value of discounts given
+
Account write-offs/total sales
Cos
t
Qualit
y
+
Percentage of electronically accepted /paperless
orders
+
% advanced shipment notices that match order
+
% on-time delivery of rush orders
+
% of bills accurately prepared
+
Rupee value of merchandise shipped with quality
problems/total rupee value shipped
+
% of units shipped with quality problems
+
% of claims audited
Q
Put Quality First Reduce Costs
Representative KPIs
73
Key Performance
Indicators
M-3.03 : Fulfill
Orders
+
Frequency of adherence to ordering methodology
+
Percentage of backorders in orders
+
Average backorder wait length
+
% products requested but not offered
+
% of incorrect orders taken
+
No. of shipments shipped past the promised
delivery date or cancel date/total no. of shipments
+
No. of delayed billing cycle runs/total no. of billing
cycle runs
+
No. of bill corrections/total no. of bills processed
+
No. of A/R Accounts reaching credit limits/total no.
of A/R accounts
+
Order fulfillment cycle time
+
Order to shipment lead time
+
No. of authorisations required per order
+
No. of deliveries extended because finished
product unavailable/total no. of deliveries
+
Average time to process a claim /return
+
On-time delivery rate
Cycle
Time
Compress Time
Interface
Service
Focus on Customer
Representative KPIs
74
+
Customer suggestion adoption rate
+
% of customer complaints resolved
+
% of Quality Complains answered within target
time
+
% of customer complaints or inquiries resolved
+
No of customer complaints/No of customer
compliments
+
Average system downtime during business
hours
+
% of customers receiving sales follow-up calls
+
% late customer complaint redressal
Key Performance
Indicators
M-3.04 : After Sales
Support
+
Complaint Claims / Sales
+
Average complaint claim cost per unit sold
+
Average cost per customer inquiry or call
+
Field service expense/total sales
Cos
t
Cycle
Time
Qualit
y
+
Time lag from identification of customer
problem to satisfactory action on problem
+
Customer service lead time
+
Mean time to repair product
Q
Put Quality First Reduce Costs
Compress Time
Representative KPIs
75
Key Performance Indicators
M-3.05 : Manage Logistics
Network
+
Logistics costs/total material cost
+
Logistics transaction processing cost/total logistics cost
+
Material handling costs/total logistics cost
+
Material movement costs/total logistics cost
+
% consumption above normative level
+
Inventory carrying cost/total material cost
+
Storage cost /total inventory carrying costs
+
Inventory insurance cost/total inventory carrying costs
+
Obsolete /slow moving /non moving inventory cost (value,
insurance and warehouse space occupied)
+
Number of transporters used
+
Number of receipts and issues handled
Cos
t
Cycle
Time
Qualit
y
+
Average time for receiving/inspection process
+
Vehicle turnaround time
+
Time to resolve unmatched inventory items
+
Time to dispose non-moving/obsolete inventory or scrap
+
% of variations in schedules given to suppliers
+
Delivery frequency from suppliers
+
% of receipts received on time
+
% of receipts at “point of usage”
+
% of deliveries bar coded
+
Inventory record accuracy by category/item
+
Number of material shortages
+
% of unplanned material movements
Q
Put Quality First Reduce Costs
Compress Time
Representative KPIs
76
Key Performance
Indicators
M-4.01 Manage
Information
+
IT budget as a % of total budget
Cos
t
Cycle
Time
Qualit
y
+
Time taken by the department to deliver user
requirements
+
Accuracy of data
+
Consistency in data
+
Number of entities managing the same data
Q
Put Quality First Reduce Costs
Compress Time
Interface
Service
+
% of employees having access to on-line
computerised data
+
% of departments having access to on-line
computerised data
Focus on Customer
The Ispat Operational Vision
77
Key Performance
Indicators
M-4.02 Plan the
Enterprise
+
Performance against budget
Cos
t
Cycle
Time
Qualit
y
+
Time between actual and targetted dates of
freezing of the Sales plans
+
Time between actual and targetted dates of
freezing of the Production plans
+
Number of processes with multiple owners
+
Number of instances of multiple reporting
relationships
+
Number of processes without owners
Q
Put Quality First Reduce Costs
Compress Time
Interface
Service
+
Percentage variation in plans prepared by
Sales/Exports and APC
+
Percentage variation in plans prepared
+
Number of different entities involved in the
planning process
+
Number of changes to plans prepared by
Sales/Marketing, Exports, PPIC, Corporate
Strategy etc
Focus on Customer
Representative KPIs
78
Key Performance Indicators
M-4.03 Manage Financial
Operations
+
Cost of the Finance function as a % of total income
+
Cost of capital
+
Interest expenses
+
Write-offs on company assets
+
Costs of providing management reporting
+
Return on investments made
Cos
t
Interface
Service
Cycle
Time
Qualit
y
+
Number of collections processed per person
+
% of real time journal entry postings,
validations, approvals, balancing and error
correction
+
Variation between actual and desired values
taken by financial ratios
+
Number of days for year-end, quarterly and
monthly closing
+
Time taken for budgeting exercise
+
Time between collections and posting of
collections
+
Time taken to process and despatch payments
+
Duration of the capital planning process
+
Man-hours spent on manual account analysis
+
Reporting accuracy
+
Number of reconciliations required between G/L
and subsidiary ledgers
+
Variation in foreign exchange exposure
compared to policy
+
Accuracy of cash budgets (ie actual vs budgets)
+
Man-hours spent on keying / re-keying entries
on account of inadequate system integration
due to Excel spreadsheets usage
Q
Put Quality First Reduce Costs
Compress Time
Focus on Customer
Representative KPIs
79
Key Performance
Indicators
M-4.04 Manage Human
Resources
+
Personnel costs
+
Overtime paid
+
Absenteeism
+
Man-hours per vehicle
+
Replacement costs per employee grade
C
Supervisory
C
Managerial
C
Executive
Cos
t
Qualit
y
+
Number of employees with quality certification
+
Percentage of workforce participating in
problem-solving groups
+
Number of temporary workmen
+
Employee turnover
+
New recruit turnover
Q
Put Quality First Reduce Costs
Interface
Service
+
Suggestions submitted per employee
+
Employee suggestion adoption rate
+
No of benchmarking studies conducted in last n
periods
+
% of appraisee feedback incorporated in final
evaluations
+
% of employees possessing cross-functional
skills
Focus on Customer
Cycle
Time
+
Average number of days between receipt of job
requisition and date of new hire
+
Interviewing time and testing time per new
candidate
+
Training days per new hire
Compress Time
Representative KPIs
80
Key Performance Indicators
M-4.05 Implement Capital
Projects
+
Cost overruns against budgets
+
Opportunity loss due to delay in implementing
Cos
t
Cycle
Time
Qualit
y
+
Time taken for implementation
+
Delays in reporting information
+
Incidence of time overruns
+
Incidence of budget overruns
Q
Put Quality First Reduce Costs
Compress Time
Interface
Service
+
Accuracy of Status reporting
+
Time taken for generating status report
^
Acceptance of projects proposals
Focus on Customer
Representative KPIs
81
Key Performance Indicators
M-4.06 Manage Relations with
Stakeholders
+
Cost of compliance
Cos
t
Cycle
Time
Qualit
y
+
Time taken to prepare information needs of
stakeholders
+
Delays in reporting information
+
Number of government audits
+
Number of stakeholder enquiries
+
Number of compliance problems
+
Number of compliance inquiries
Q
Put Quality First Reduce Costs
Compress Time
Interface
Service
+
Service level for investor satisfaction
+
Dividend paid to investors
+
Service level for government compliance
Focus on Customer
Representative KPIs
82
Why
Cascade?
To clearly define the role and expected contribution
of each person to enable Company achieve the
targets set out for the vision elements
T
o

e
s
t
a
b
l
i
s
h

a
n
d
/
o
r

r
e
f
i
n
e

p
r
o
c
e
s
s
e
s

t
o

e
n
s
u
r
e

m
e
a
s
u
r
e
m
e
n
t

o
f

p
a
r
a
m
e
t
e
r
s
w
h
i
c
h

a
r
e

c
r
i
t
i
c
a
l

f
o
r

C
o
m
p
a
n
y

s

s
u
c
c
e
s
s
To enable establish formal monitoring and
reporting mechanisms to track performance and
periodically measure the extent of improvement
achieved as against the set out targets
T
o

i
n
c
r
e
a
s
e

a
c
c
o
u
n
t
a
b
i
l
i
t
y

a
n
d

e
n
s
u
r
e
r
e
s
u
l
t
-
o
r
i
e
n
t
a
t
i
o
n

a
m
o
n
g
s
t

e
m
p
l
o
y
e
e
s

b
y

e
s
t
a
b
l
i
s
h
i
n
g

a
p
p
r
o
p
r
i
a
t
e

p
e
r
f
o
r
m
a
n
c
e

m
e
a
s
u
r
e
m
e
n
t


i
n
d
i
c
a
t
o
r
s
Reasons for
Cascading
Cascading the Vision
83
Approaches to Cascading
Q
The Operational Vision for each process
could be cascaded through one of the
following two methods :
C
Top - Down Approach
C
Bottom - Up Approach
Cascading the Vision
BOTTOM-UP APPROACH TOP-DOWN APPROACH
target
target
target
target
target
target
Q
Each level sets its own targets based on
:
C
Knowledge about its own
capability/processes
C
Aggregating targets set by levels below
it
Q
Each level sets targets for the levels
below it,
keeping in view the overall target
Level 1 ED (M)
(eg Marketing Dept)
Level 2 President
(eg Domestic Mkt.)
Level 2 President
(eg Mkt. Strategy)
Level 2 President
(eg Exports)
Level 3 V P
eg (Customer Servicing)
Level 3 V P
(eg NPD)
Level 3 G M
(eg Market Research)
Level 4 Sr. Manager
(eg V AG)
Level 4 Sr. Manager
(eg Cold Rolling)
Level 4 Sr. Manager
(eg Break Through)
Level 1 ED (M)
(eg Marketing Dept)
Level 2 President
(eg Domestic Mkt.)
Level 2 President
(eg Mkt. Strategy)
Level 2 President
(eg Exports)
Level 3 V P
eg (Customer Servicing)
Level 3 V P
(eg NPD)
Level 3 G M
(eg Market Research)
Level 4 Sr. Manager
(eg V AG)
Level 4 Sr. Manager
(eg Cold Rolling)
Level 4 Sr. Manager
(eg Break Through)
84
Description of Approach
Q
Set target levels for the vision elements at the
lowest operating levels
Q
Aggregate targets one level up at a time till the
level at which the vision target has been set is
reached
Q
Compare the aggregated target with the vision
target set out
Q
Review and iterate the operating level targets
till the aggregated value matches the vision
target
Pre-requisites
Q
Operating personnel need to be willing and
capable of setting ambitious but achievable
targets for themselves
Advantages
Q
Greater acceptance at the operating levels
Challenges
Q
Iterative process could be time-consuming
Q
Level of computational effort is higher
Approaches to
Cascading
BOTTOM-UP APPROACH
TOP-DOWN APPROACH
Cascading the Vision
Description of Approach
Q
Break up the vision target to relevant and
meaningful targets for one level below
Q
Repeat the process of splitting targets till targets
are set at the lowest possible operating level
Q
Agree targets at each level with concerned
people
Pre-requisites
Q
Managers need to be willing to set ambitious but
achievable targets for their juniors
Advantages
Q
Lower number of iterations required
Q
The focus on the end result is never lost
Challenges
Q
Possible difficulty in gaining acceptance for such
targets at the lower levels
85
2. Identify person(s) at
each level who need to be
made responsible in order
to achieve the vision target
3. Establish / streamline
mechanisms to
measure levels of
performance of the
vision elements
4. Measure
current
performance
levels of the
vision element at
the lowest level
8. Determine time
frames and
responsibilities for
targets
Y
N
Top - Down Approach
5. Aggregate current
performance levels till
the level at which the
vision element has
been set
6. Determine target
performance levels one rung
below the level at which the
target vision is set; continue
to set targets one level at a
time for all levels
7. Confirm with
operating mangers at
each level that targets
set are feasible and
achievable
Cascading the Vision
1. Identify entities at all
levels (eg Blast furnace,
SMS, Marketing) who
contribute towards the
value set as the target
for the vision element
(eg WIP)
9. Finalise targets,
time frames,
information flow and
responsibilities
Refer Appendix for an
example to illustrate
the approach
86
1. Identify entities at all
levels (eg Blast furnace,
SMS,Marketing) who
contribute towards the
value taken by the
vision element
2. Identify person(s) at
each level who need to be
made responsible in order
to achieve the vision target
3. Establish (or
streamline existing)
mechanisms to measure
performance levels of
the vision element
5. Determine
(stretch) target
performance levels
at the lowest
operating levels
6. Aggregate current and
target levels of
performance till the
performance measure for
the vision element is
obtained
7. Check if
aggregated target
for vision element
equals desired
value
8. Determine time
frames and
responsibilities for
targets
9. Finalise targets,
time frames,
information flow and
responsibilities
Y
N
Bottom - Up Approach
Cascading the Vision
4. Measure
current
performance
levels of the
vision element at
the lowest level
Refer Appendix for an
example to illustrate
the approach
87
Issues in Cascading
Definition
Problems
Material cost /
Sales
(M3.1)
Yield rate of
new concepts
(M1.1)
Easy
D
ifficu
lt
Data
Availabilit
y
After Sales
Support
expenses
(M3.2)
Cost per
new concept
(M1.1)
Easy
D
ifficu
lt
The following parameters influence the ease of cascading a vision element
Cascading the Vision
Ease of
Measurement
Cost of
procurement
(M3.1)
Customer
satisfaction
levels (M1.2)
Easy
D
ifficu
lt
Ease of
Aggregation
Inventory
levels (M3.5)
Adherence to
schedules and
budgets
(M1.2)
Easy
D
ifficu
lt
Number of
Entities
Involved
Variability of
truck
transportation
time (M3.5)
Conversion
Cost within 1
year (M3.2)
Easy
D
ifficu
lt
Determining
Responsibilit
y
Product
Profitability
(M1.2)
Truck
turnaround
time (M3.5)
Easy
D
ifficu
lt
Level of
External
Interaction
Needed
Conversion
cost within 1
year (M3.2)
Reduce
product
complaints
(M3.2)
Easy
D
ifficu
lt
Cascading efforts could vary significantly
from one vision element to another.....
Parameters which influence the ease of cascading
Sample vision element to illustrate the ease/difficulty in cascading
88
Issues in Cascading Cascading the Vision
Cascading efforts could vary significantly from one vision element to another..... consequently
the following could vary across vision elements
Approach to
Cascading
Timeframes for
Cascading
Success in
Cascading
89
Issues in Cascading
M1: Develop Products and Processes
Likelihood of difficulties in cascading the vision
due to poor data availability, inadequate
measurement mechanisms and dependence on a
large number of external agencies
Cascading the Vision
1 : Definition Problems
2 : Current Data Availability
3 : Ease of Measurement
4 : Ease of Aggregation
5 : Number of Entities Involved
6 : Determining Responsibility Centres
7 : Level of External Interaction
Business Process Vision Element Vision
Target
Direction to be
taken by vision
element
Difficulty Level in Cascading
(High/ Medium/ Low)
1 2 3 4 5 6 7
Conduct Research Research budget as a % of turnover 1-2% Low Low Low Low Medium High High
Yield rate of new concept 50% + High High High High Medium High High
Cost per new concept 10% + High High High High Medium High High
Define Product Design lead time 25% + Medium High Medium Medium Medium High High
Customer satisfaction levels 100% + High High High High High High High
Product profitability 25% + Medium High Medium Medium High High High
New products per year 2 Medium Medium Medium Low Medium High High
Adherence to schedule and budgets 100% Low High Low Medium Medium High High
Design Products and
Processes
Number of Design Modification
Requests after a launch
0 Low Medium Low Medium High High High
Cost of customer claims 100% + Low High Medium Medium Medium High High
Manufacturing lead time in the 2 years
following a new product release
25% + Medium Medium Medium Medium High High High
90
Issues in Cascading
M3.2: Produce
Cascading the Vision
Cascading the vision could be difficult on account
of the
number of entities involved and identifying
responsibilities for activities
1 : Definition Problems
2 : Current Data Availability
3 : Ease of Measurement
4 : Ease of Aggregation
5 : Number of Entities Involved
6 : Determining Responsibility Centres
7 : Level of External Interaction
Vision Element Vision Target Direction
to be
taken by
vision
element
Difficulty Level in Cascading
(High/ Medium/ Low)
1 2 3 4 5 6 7
Hot metal production >5000 MT/day + Low Low Low Medium High Medium Low
Hot Metal Cost $275/MT by FY2010 + Medium Low High High High Medium Low
SMS Production >48Heats /Day + High Low High Medium High Medium Low
SMS Yield >87% + Low Low High Medium Medium Medium Low
Caster 1 speed 6.2 meters/Minute by
FY 2010
+ Low Low High High High High Low
Mill production 2.5 Lacs per month + Medium Low High Medium High High Low
MTBC 3.2minutes by FY 2010 + Medium Medium High High Medium High Medium
HRC Cost $ 350/ MT by FY 2010 + Low High High Medium High High Low
DRI Production 1.8 lacs tonnes by
2009
+ Low High High High High High Medium
Plant Reliability >95% + Low High High High High High Medium
Unplanned downtime <5% + Low Low High High Medium High Medium
Maintainence cost $ 100/MT + Low Medium High Medium High High Low
91
Issues in Cascading
M3.5: Manage Logistics Network
Cascading the Vision
Cascading the vision should be the
feasible provided data is made available
and responsibility centres are assigned
1 : Definition Problems
2 : Current Data Availability
3 : Ease of Measurement
4 : Ease of Aggregation
5 : Number of Entities Involved
6 : Determining Responsibility Centres
7 : Level of External Interaction
Vision Element Vision
Target
Direction to be
taken by vision
element
Difficulty Level in Cascading
(High/ Medium/ Low)
1 2 3 4 5 6 7
Variability of in-bound transportation
times
50% + Medium High High Medium Low High Medium
Truck turnaround time 50% + Low High Low Low Low Low Medium
Despatch without any damage 100% Low Medium Low Medium Medium Medium High
Inventory levels as per
norm
Medium Medium Low Low High Low Medium
Slow-moving/ non-moving and obsolete
inventory 2009
90% + High Low Medium Low Medium Medium Low
Increase in volumes by current
manpower
TBD + High Medium High High Low Low Low
92
Q
Why do we need to monitor ?
Q
What’s been done so far ?
Q
What were the results ?
Q
What further needs to be done ?
Q
Who will do it ?
Q
When will it be done ?
Q
How will it be done ?
Q
What inputs are needed from various persons ?
Monitoring Requirements Monitoring Mechanisms
WORK PLAN FOR THE NEXT 15 DAYS
Step to betaken Responsibility Start Date End Date Resources
PERFORMANCE ON VISION ELEMENT
Vision element Target for
previous
period
Actuals for
previous
period
Target for
current
period
Actuals for
current
period
Target for
next period
KEY ISSUES REQUIRING ATTENTION
Area Issue Steps already taken Inputs needed to
resolveissue
Timeframe
93
Q
Monitoring mechanisms would need to be established at all levels
Monitoring Levels Monitoring Mechanisms
Sub-Process Owner
Vision Element Owner
Sections contributing to the Vision
Element
Process Owner
Individuals contributing to the Vision
Element
MD
Examples of personnel who
would be monitoring the
vision element
“Caster & Mill yield of 99.70%
& 98.52% ”*
Process Owner, “HSM ”
(M3.02.xx)
Process Owner,
“Produce ” (M3.02)
Process Owner, “Fulfil
Demand” (M3.)
EDIC
Dolvi
Specific people from LF ,Caster,
Mill,
etc
Need to establish owners
for each vision element
Formal
mechanisms
needed at these
4 levels
* from M3.1 - Manage Supply Sourcing
94
Q
Formal periodic monitoring would be necessary at four levels as per the following
schedule :
Monitoring Frequency Monitoring Mechanisms
Sub-Process Owner
Vision Element Owner
Sections contributing to the Vision
Element
Process Owner
Individuals contributing to the Vision
Element
MD
Fortnig
htly
Weekly
Monthly
Quarterly
Need to establish
monitoring
schedules for
each vision
element
95
Monitoring Mechanisms
Who reports to whom
Q Various individuals and sections contributing to
vision element to the vision element owner
Q Vision element owner to sub-process owner
Q Sub-process owner to process owner
Q Process owner to MD
Q
Performance in the current period against
targets
Q
Steps taken towards meeting targets
Q
Results of successfully executed steps
Q
Issues faced on unsuccessfully executed steps
and means planned/taken to resolve them
Q
Workplan to meet vision element targets (steps
to be undertaken, timeframes and
responsibilities)
Q
Issues requiring attention/intervention
Q
In accordance with pre-determined
schedules
Q
In standard customised formats
developed
What do they
report
When and how do they
report
Q
Discuss and understand contents of
report
Q
Decide on means of resolving issues
which have been identified by the
person preparing the report
Q
Co-ordinate with the required agencies
and resolve issues
Actions to be taken by
recipient
Summary of Reporting Mechanisms
96
Vision Element Owner,
(Caster & Mill yield of 99.51% & 98.70% )
LF
Caster Mill Utilities Mech. Maint
Material Level
Performance
on Vision Element
Elec Maint.
Monitoring Mechanisms
Monitoring Levels : Vision Element Level
“Caster & Mill yield of 99.70% & 98.52%”
Performance on vision elements would be
reported
by individuals / sections directly responsible
for its achievement
to the vision element owner every fortnight
97
Sub-Process Owner,
Hot Strip Mill
Average Heat size
193 MT/TLS
Avg.50 heats/ day
Caster & Mill yield of
99.51% & 98.70%
Fuel consumption
in Tunnel furnace
@ 10.25 ltr/t
Average melting power
consumption
@ 254 kwh / ton
Mill Utilities
Vision Element
Level Performance
Average sequence length
L+12
LF Caster Elec.Maint
Monitoring Mechanisms
Monitoring Levels : Sub-Process Level
An Example : Hot Strip Mill
Mech.Maint
Sections /individuals who contribute to
the vision element
Material Level Performance
Performance on vision elements would be
reported
by the vision element owners to the sub-
process owner every month
98
Sub-process level performance on vision elements
would
be reported by the sub-process owners to the
process owner every month
Process Owner
Fulfil Demand
Deliver Services &
Support
Manage Logistics
Network
Sub- Process
level Performance
Monitoring Mechanisms
Monitoring Levels : Process Level
An Example : Fulfil Demand
VE
1
VE
2
VE
n
VE
1
VE
2
VE
n
VE
1
VE
2
VE
n
VE
1
VE
2
VE
n
Fulfil Orders Produce
Manage Supply
Sourcing
VE
1
VE
2
VE
n
V
E
Vision element
99
Process level performance on vision elements
would be reported
by the process owners to the Managing
Director every quarter
Managing Director
M4
Plan and Manage
the Enterprise
Process
Level Performance
Monitoring Mechanisms
Monitoring Levels : Process Level
An Example : Fulfil Demand
M3
.1
M3
.2
M3
.5
M2
.1
M2
.2
M2
.4
M3
Fulfil Demand
M2
Generate Demand
M1
Develop Products
and Processes
M4
.1
M4
.2
M4
.5
M1
.2
M1
.3
M1
.1
VE
1
VE
2
VE
n
VE
1
VE
2
VE
n
VE
1
VE
2
VE
n
VE
1
VE
2
VE
n
VE
1
VE
2
VE
n
VE
1
VE
2
VE
n
VE
1
VE
2
VE
n
VE
1
VE
2
VE
n
VE
1
VE
2
VE
n
VE
1
VE
2
VE
n VE
1
VE
2
VE
n
VE
1
VE
2
VE
n
100
Integrated Performance
Measurement
To focus the entire company on achieving the Operational Vision, we must rethink the
way we measure and reward behaviour
• Measure the ability to
satisfy customer
requirements
• Measure company-wide
bottom line impact
• Measure the impact of the
supply chain on other
customers/suppliers in the
value chain
• Measure “cross functional”
performance to achieve
total business process
effectiveness
Architecting the Change
101
Performance metrics can be defined around three basic elements of
performance. Cost, quality and time provide the foundation for
complete competitive performance.
Integrated Performance Measurement
º
Units per Employee
º
Activity Based
Cost...
º
Customer Satisfaction
º
Return on Assets
º
Employee
Satisfaction...
º
On-time Delivery
º
Order to Collect Cycle
Time
º
Inquiry Response Time...
Cost Time Quality
Servic
e
Value
º
Order Quality
º
Fill Rate
º
Invoice
Quality...
- Performance Elements and Illustrative Metrics -
Architecting the Change
102
Performance
Metrics
Success
Factors
Business
Objectives
Effective performance metrics have a number of key characteristics
E
Metrics are linked to business
objectives and critical success
factors
E
Metrics are process-focused,
focusing on business outcomes as
opposed to functional viewpoints
E
Suite of metrics are balanced,
supporting simultaneous
optimisation of cost, quality and
time
E
Process owner controls
achievement of metrics
E
Lower levels of metrics are
telescoped into higher levels (ie
are consistent with and support the
higher levels)
E
Metrics are integrated into
incentive programs and reward
structures
Integrated Performance Measurement
Process
Sub-process
Group
Dolvi Plant
Individual
Supply
Chain
Architecting the Change
103
Management plays a critical role in effective performance
measurement.
E
Establish performance measurement
approach and improvement goals
E
Actively sponsor measurement and other
improvement programs
E
Assign responsibility for measurement to
standards
E
Lead efforts to integrate metrics and targets
into incentive and reward programs
E
Collaborate with stakeholders to set
aggressive yet achievable targets
E
Actively monitor metrics, improvements and
improvement programs
E
Recognize successes and challenge and
support areas of shortcoming
E
Lead organizational behaviour changes that
result in consistently managing to address
critical success factors and better meeting
improvement goals
- Sponsorship Actions -
Integrated Performance Measurement
Program
Management
Executive
Leadership
Enablement Business
Ownership
• People
• Process
• Technology
Architecting the Change
104
Managing Change
Our Approach to Change
Management
•Communicate often throughout the change process - at all levels
•Educate all personnel; cover new concepts and skills
•Develop action plans to support implementation of “master plan”
•Get commitment to support a learning curve
•Have measurable performance objectives - for the project and the process
•Involve end users right from the start - create a team focus
•Conduct phased implementations; build a success story
•Have at least one “champion” to act as a change agent for each program
•Develop and implement a reward system which supports performance objectives
•Structure the organisation and the jobs to support the process
•Make sure change support resources are available after implementation
•Build consensus and commitment to change; start at the top
Constant
Reinforcement
Migration
Path
Change
Vision
Sense of
Urgency
Architecting the Change
105
A useful change management framework
identifies four key components that need to be
managed
Business
Ownership
Enablemen
t
Projects
Executive
Leadership
Program
Managemen
t
Sponsorship of change by key executives,
illustrating to the entire organisation
management’s commitment to the change
effort
Ownership and commitment to change
experienced by all individuals throughout
the organisation
Planning for and managing the move from
the “as is” organisation to the desired
“to be” state
Critical products developed that
provide individuals and the organisation
with knowledge, skills, tools, frameworks
and support to perform their work successfully
Managing Change
Framework for Managing Change
Architecting the Change
106
M
Prepare for constructive conflict
M
Empower change agents
M
Use an integrated approach
M
Commit the necessary resources
M
Cut through organization boundaries
M
Communicate, communicate,
communicate!!!
M
Celebrate and reward
success!!!
M
Make it the #1 priority
M
Champion the effort at the very top
M
Identify “stretch” goals and
measurements
M
Prepare for resistance
M
Challenge everything
M
Address each dimension of the operation
M
Facilitate cross-functional participation &
buy-in
The good news is that success is very achievable. Hundreds of companies
have achieved dramatic results by applying proven business
transformation approaches, tools and techniques
The Recipe for Success
Architecting the Change
107
The Transformed Environment
Jobs
Organization
Orientation
Customer
Front Line Employee
Manager
Executive
Priority
Measures
Focus
Values
From To
Narrow
Hierarchy
Function
Inconvenience
Manual labourer
Supervisor
Bookkeeper
Activity
Financial
Internal
Protective
Multi-dimensional
Team
Process
Reason for existence
Mission critical
resource
Coach
Leader
Result
Operational
Customer
Productive
The end result of an effective business transformation initiative is a business unit
whose people, processes and technology are working together to meet the
organization's strategic objectives
Potential
Benefits
108
Next
Steps
Finalise the Operational Vision for processes not depicted
Q
Identify process owners for the identified business processes and they must be
validated by them taking into account the PMS of individuals defined by the EVA team
Q
Need to finalize the following :
C
The vision elements for the sub-processes under them
C
Stretch goals/metrics indicating levels of performance to be achieved on the vision elements
C
The key performance indicators (KPI) for each sub-process, either slightly modified or new
vision elements added to the existing set
Cascade each vision element
Q
Identify responsibility to ensure successful cascading
C
At the process owner level
C
At lower operating levels
contd...
109
Cascading the Vision
Next Steps
Cascade each vision element (...contd)
Q
Finalise the following for cascading :
C
Approach (Top-Down or Bottom-Up Approach) to be adopted
C
Timeframes (start date and end date)
C
Detailed activities/action steps
C
Responsibilities and resources to be made available for each activity
C
Interim targets and checks to be set up
C
Mechanisms to ensure adherence to schedule
Q
Identify changes which need to be made to existing processes to improve the
following :
C
Systems to capture information regarding performance on selected KPIs/vision elements
C
Mechanisms to collate data to enable periodic review by process owners
Finalize monitoring mechanisms for each vision element
Q
Determine mechanisms for reporting information on the extent of progress against the
set out vision targets, specifically the following :
C
Nature of information to be communicated
C
Sources for details on the above data
C
Parties to whom information would be communicated to
C
Frequency at which information would be provided
C
Formats to be used for communications

Key Objectives

Develop an Approach for integrating Ispat’s business objectives with individual objectives of all executives in order to provide the Company a platform for profitable growth in the next 3-5 years time-frame Develop a plan for extending the Approach developed for Dolvi to cover Kalmeshwar also.

Minimise quality and cost penalty as compared to well run global steel companies by:  Bringing in a business process focus for defining the individual PMS of executives  Creating a customer focused organisation by aligning the PMS of individuals around the business processes

Implement “Fast Track” capital projects that will ensure significant cost reduction and improve profitability in the shortto medium term Develop a comprehensive action program that will shape fundamental change in Ispat and the way the Company will be run going forward

2

The Nature of Change
The success of any change journey depends primarily on how well individuals embrace the change
Need to integrate organisational and individual goals for sustainable change Sustainable Change 6 Integration

Rewards Business & Operations Strategy 1 Organisational Business Processes 3 Awareness 1 Individual 2 Knowledge
3

Measurement Processes 2 Structure 3 4

5 5

Comprehension & Mastery 4 Acceptance Trial

Safety focus including reductions in greenhouse gas emissions  High attrition rate Teamworking SOPs and best practices Empowerment and accountability Continuous improvement in a learning environmen 4 .Why Change Factors influencing competitiveness Product and process design and technology Size. product mix and global presence Performance parameters     Common characteristics in world class Steel pla Productivity and Cost Yield and efficiency Quality at minimum cost On time delivery Plant characteristics      Flexibility in charge mix Optimum capacity utilization Minimal unplanned downtime Appropriate level of automation Management of varieties Supply chain and external relationships Process control along the supply chain     Consistent quality and plant reliability Strict adherence to SOPs Timely order deliveries (> 98%) High level customer satisfaction More sophisticated and demanding Customers in various segments People     Environment. scale. Health.

LPG segments in the domestic marketplace in the next 2-3 years Complete all planned capital projects within the budgeted timeframe and costs Achieve an EBITDA margin of a minimum of Rs 2400 5 crores by FY2009 and Rs 3200 crores by FY2010. . Construction. API. IF and Stainless Steel in the next 2 years in order to enrich product mix and enhance average contribution to > Rs 8000/MT Establish leadership position in Automotive.Why Change Our goal is to be “world class”… Hence we are committing ourselves to achieving the following objectives       Improve product quality by making the manufacturing process consistent and reliable Reduce operating costs and in particular HRC Cost/MT < $ 350 Launch high-end value added products such as Silicon.

Why Change Cost-effective producer Supply chain   Globalization    Innovation Partnerships New competitors New products/process technology Integrated Logistics Integrated Supply Chain Work Practices     Processes Procedures (SOPs) Key performance indicators (KPIs) Continuous improvement Imperatives for change in Ispat Organization Culture       Organisation Culture Values Style Design Recruitment Technology    Products Process Systems Knowledge capital  Consolidati on of steel industry World class quality  Information Capital Skills up gradation Training 6 .

Why Change Issues of Importance for Defining PMS in Ispa There is great urgency in the organization to bring about fundamental changes Ispat is currently organized according to vertical functions and that has limited our ability to take a business process view Supply Chain is necessarily horizontal process-driven but Ispat is not organized according to processes. There is a need to enhance the degree of delegation and empowerment down the line. Design. This does not allow us to monitor and control the costs and delivery lead times across our supply chain. Costs. Delivery. Management Systems and Safety 7 Q C D D M S . This would instill a greater sense of ownership and increased motivation levels. The need is to launch at least TWO technologically superior products every year. The individual KPIs must be aligned to reflect the achievement of corporate objectives based on QCDDMS principles Significant potential exists for improvements in performance levels relating to Quality. There is greater focus on volumes (MT) with limited/inadequate focus on quality of output There is a great urgency to recognize the need to enhance the speed of innovation and research.

rapid improvements in servicing the customer capability  Able to increase market share continuously  Will be well positioned during industry consolidation phase — The Survivors —  Sluggish.Why Change Company must move quickly. performance gap leaves them far behind  Market share gains of early movers will be at the expense of these manufacturers  Consolidation/shakeout will threaten survival 8 . “me too” improvement  May be able to hold ground if they stay close enough to early movers  Will lose some ground as consolidation takes place — The Losers —  No action. those who lag will survive at best — The Winners —  Far reaching.

Why Change The implications Increase Efficiency Q Put Quality First Focus on Customer Empower People Reduce Costs Use Enabling Technology Eliminate Non-Value Added Activities Compress Time X X Emphasise Continuous Improvement Increase Productivity Develop End-to-End Solutions Eliminate Waste 9 .

Need for an Operational Vision
The Operational Vision is the first step in our change journey towards achieving our objectives

Define our goals

Assess current situation

Identify gap between Operational Vision and As Is Status

Develop solutions to bridge the gap

Develop implementatio n plan setting out time frames, resources, responsibilities , and costs

Operationa l Vision

As Is Status

Gap Analysis

To Be Models

Master Plan

10

Need for an Operational Vision An Operational Vision ...

Provides a vivid picture of focus areas Provides criteria for decision making Provides direction and drives the organisation

Operational Vision

Empowers employees with motivation, authority and enablement
11

Encourages continuous improvement

Need for an Operational Vision

Enterprise Transformation Requires a Holistic Approach
• Value propositions Refocussing • Core competencies Strategic • Target outcomes Intent/Response

• Core activity clusters • Technology platforms • Cross-process linkages • Applications
• Software/hardware • User interfaces

Reinventing Processes

Reshaping Behaviour

• Core job/role clusters • Target outcomes • Cross-team relationships
• • • • • Recruitment/Selection Training and development Measurement/appraisal Compensation and rewards Career pathing

Rebuilding Information Architecture

Reconfiguring Organisation Architecture

Reorienting HRM Architecture

• • • •
Areas to be targeted for Change

Authority structures Management systems Physical resources Business partnerships

12

Definition Translation of our strategic objectives into actionable elements (Operational Vision) Identification of key performance indicators (KPIs) Definition of target levels of performance (KPI metrics) Identification of milestones to guide us on the change journey (Timelines) 13 ..Operational Vision An Operational Vision Is a Statement of Intent..

Operational Vision Definiti Definition on  A framework defining how we wish to OPERATE Includes operational norms for key elements of the business Encompasses the entire organization Does not take into account current level of performance on each parameter Forms the basis for review of current processes to identify gaps vis-a-vis vision  Strategy  People • • • • • Structure Roles Responsibilities Skills Motivation Technology Business Integration  Process • Accuracy and timeliness of information • Degree of integration  • • • • Decision making Planning Operational flow Monitoring and control Areas to be targeted for Change 14 .

Operational Vision Approa ch Analysis of the Business Performance Organizing Business Plans Operational Vision Inputs from Management Experience of other Steel Companies Best Practices and Benchmarks 15 .

The Extended Supply Chain An “end-to-end” process extending beyond the boundaries of one organisation Supply Chain Plan Suppliers Design Source Make Deliver Service Sell Customers Information Technology Enablers: Human Resources Finance The supply chain is the business process combining the material and information flow required to source. and deliver goods and services to the end customer. make. 16 .

The Operational Vision Framework

Alignment of Business Components

The operational vision should guide our efforts in aligning the process, people and technology components of the business with our strategy to bridge the gap between current and target performance levels

•Organization structure is process driven •There is complete clarity on roles and responsibilities •Employees are empowered •Job requirements are matched with necessary skills /tools •There is clear linkage between strategic objectives, success factors and KPIs •The HR policies support reward based on achievement against KPIs

Strategy

•Technology applied to enable dramatic improvements in business operations Technology •Improved communication across organisational boundaries both internal and external •Instantaneous sharing of information

People

Business Integration

Process

•Processes are aligned to meet strategic objectives •Processes ensure that each activity undertaken adds value to the products as perceived by our customers •Process orientation facilitates quick response at lower costs 17 and improved quality

•Supports new ways of doing business

The Operational Vision Framework

Moving from Functional to Process Orientation

STAGE 1 As Is
M A N U F A C T U R I N G

STAGE 2 Transition Stage
E N G I N E E R I N G
M A N U F A C T U R I N G

STAGE 3 Desired Stage
GENERATE DEMAND E N G I N E E R I N G

F I N A N C E

M A R K E T I N G

F I N A N C E

M A R K E T I N G

FULFILL DEMAND

DEVELOP PRODUCTS & PROCESSES

MANAGE ENTERPRISE

Functions Drive Business Activity

Functions Continue to Dominate but Processes are recognised

Processes Drive the Business

Enterprise-wide process managers may be the most valued positions in the organisations of the future.
18

Supportive organization
Company Background
 Xerox is world’s leader in copier business  In 1992, the company realized that improving customer satisfaction was necessary to strengthen their competitive advantage  In 1992, Xerox began its transition from a traditional functional organization (see below) to a customer focused organization
M A R K E T I N G M A N A G E M E N T

Leading Practice Implemented
 Xerox reorganized itself into business divisions and cross-functional business teams tied to specific markets  Cross functional teams were responsible for their own strategy  Xerox eliminated a number of centralized corporate functions and increased involvement in the lower layers of the organization  The final reorganization was completed in 1995 with Xerox having more employees with more authority working directly with customers

Business Benefits
In 1996, Xerox recorded following improvements over 1995:  Improvement in customer service response times  15 % improvement in customer satisfaction  10 % increase in sales  11 % increase in employee satisfaction  8 % increase in employment

E N G G.

Service Delivery Customer Satisfaction Product Development
19

Supportive organization Organizing around customer type is the emerging trend Product Development Marketing Customer Customer Customer Needs Needs Needs Sales Service Product B Product A Product B Product C Product B Product C Product C Product B Customer Segment 1 Product A Product A Customer Management Customer Segment 2 Customer Segment 3 Traditional Product Marketing Traditional Sales Force 20 Traditional Service Organization Traditional Product Development Product A Product C .

The Operational Vision Framework Moving from Functional to Process Orientation Advantages of a Process Driven Organization Introduces External Focus      Facilitates customer orientation Puts strong competitive pressures to perform Increases customer-employee interaction Facilitates single point of contact Logically extends into supply base Brings about improvements in the workplace       Facilitates end-to-end ownership Reduces compartmentalization Eliminates fragmentation of work Eliminates hand-offs Facilitates management to customer focussed outcomes Streamlined workflows 21 .

The Operational Vision Framework Moving from Functional to Process Orientation Advantages of a Process Driven Organization (.contd) Improves Decision Making    Decisions are made at the point of work Increased responsiveness to change and to customers Flattens the organisation structure Increases Employee Satisfaction    Utilises collective talents of workforce Enhances employee involvement and commitment Increases job satisfaction 22 ...

classified operations into 4 “Core Processes”     M1 M2 M3 M4 : : : : Develop Products and Processes Generate Demand Fulfill Demand Plan and Manage the Enterprise  Identified Sub-Processes upto the 2nd level for each of the above core processes.Operational Vision  Approa ch Prepared a “Process Map” for Ispat’s operations.03 : Capture Market 23 .01 : Manage Customer Relationship  M-2.02 : Create Market  M-2. “Generate Demand” was broken down further as:  M2 : Generate Demand M-2. for example.

04 M-4.03 Fulfill Orders Deliver Service and Support Manage Logistics Network M-3.01 M-1.05 Implement Capital Projects M-4.02 Define Product Design Products / Processes M-2.The Operational Vision Framework Business Process Model Core Processes for Steel Manufacturer M-1 Develop Products / Processes M-2 Conduct Research Generate Demand Manage Customer Relationship Create Market M-3 Fulfill Demand M-3.04 M-3.02 M-3.02 Produce M-1.06 24 .01 M-2.03 M-2.01 Manage Supply Sourcing M-1.03 Manage Financial Operations Manage Relations with Stakeholders M-4.05 M-4 Plan and Manage the Enterprise M-4.02 Plan Enterprise M-4.03 Capture Orders M-3.01 Manage Information Manage Human Resources M-4.

The Operational Vision Framework M1 : Develop Products and Processes Develop Product and Processes Conduct Research Define Products Design Products and Processes Characteristics of World Class Companies Potential for Improvement in Ispat       Products co-engineered with suppliers (IF. platform and derivative products Performance measures include life cycle costs. DP. Stainless etc) Products are developed based on a documented methodology (example 8-Gate Approach) Product development objectives aligned with overall market strategy Concurrent engineering achieved through cross-functional teams Research portfolio balanced between breakthrough. time to market. etc High High High High High 25 .

The Operational Vision Framework M2 : Generate Demand Generate Demand Manage Customer Relationships Create Market Demand Capture Orders Characteristics of World Class Companies       Potential for Improvement in Ispat Full supply chain integration with seamless information flow Field sales “Knowledge Workers” empowered to cover breadth of relationship Sales management tools track product mix margin and contributions Tightly integrated marketing. research and operations plans Iterative plan development tools perform “what if” analysis on market strategies Pricing capabilities established based on “true” cost of product/service High High High High High High 26 . business.

The Operational Vision Framework M3 : Fulfill Demand Produce Manage Supply Sourcing Fulfill Demand Deliver Service and Support Manage Logistics Network Potential for Improvement in Ispat Fulfill Orders Characteristics of World Class Companies      Production schedules integrated with supplier sourcing plan Customer specific performance goals and automatic tracking with exception reporting Advanced bar-coding and EDI for cross-docking /flow through distribution Target inventory levels based on total supply chain variability at the SKU level Replenishment schedules configured based on true market demand High High High High High 27 .

The Operational Vision Framework M4 : Plan and Manage the Enterprise Plan and Manage the Enterprise Manage Information Plan Enterprise Manage Financial Operations Manage Human Resources Implement Capital Projects Manage Stakeholder Relations Potential for Improvement in Ispat Characteristics of World Class Companies      Common systems infrastructure. shared service High High High High High 28 . product line. single data repository Continuous KPI “flash” reporting to provide current exception based feedback Multiple and flexible reporting views such as SBU. customer. assign benefits based on category. etc Comprehensive competency development curriculums with KPI monitoring Standardised jobs and codes.

The Ispat Operational Vision Business Processes Level 2 M-1.0103 Define Research Scope M-1.02 Define Product Design Products / Processes M-2.0106 M-3.03 Capture Orders M-3.01 M-1.03 M-1.02 Produce M-1.03 M-2.02 Create Market M-3.01 Conduct Research Set General Objectives M-1.0101 M-1 M-2 Develop Products / Processes Conduct Research Generate Demand Manage Customer Relationship M-3 Fulfill Demand M-3.01 Manage Supply Sourcing M-1.02 Plan Enterprise M-4.03 Fulfill Orders M-1.0105 Conduct Basic Research M-1.01 : Conduct Research M-1 .05 Implement Capital Projects M-4.0108 Apply Results M-4.0102 Set Specific Objectives Integrate Strategic Partners Conduct Advanced Research M-1.0109 Manage Intellectual Property M-1.0107 Manage Financial Operations Integrate Results M-1.04 Deliver Service and Support Manage Logistics Network M-3.0110 Track Performance 29 .05 M-4 Plan and Manage the Enterprise M-4.01 M-2.01 Manage Information M-4.06 Manage Relations with Stakeholders M-1.0104 M-1.04 Manage Human Resources M-4.

03 Fulfill Orders M-1.03 M-1.04 Deliver Service and Support Manage Logistics Network M-3.01 Manage Information M-4.0207 Manage Financial Operations Establish Base Price M-1.02 Produce M-1.01 M-1.03 Capture Orders M-3.0204 Identify Channel Strategies M-1.05 Implement Capital Projects M-4.0210 Track Performance 30 .06 Manage Relations with Stakeholders M-1.0206 Specify Product Concept M-3.02 Create Market M-3.0205 M-1.0209 Establish Project Schedule M-1.04 Manage Human Resources M-4.0208 Identify Potential Partners M-4.02 M-1.01 Manage Supply Sourcing M-1.01 M-2.0203 M-1.03 M-2.0201 Define Product Conduct Market Research Identify Manufacturing Strategies Define Product Requirements M-1.05 M-4 Plan and Manage the Enterprise M-4.The Ispat Operational Vision Business Processes Level 2 M-1.0202 Develop Product Objectives M-1 M-2 Develop Products / Processes Conduct Research Generate Demand Manage Customer Relationship M-3 Fulfill Demand M-3.02 : Define Product M-1.02 Define Product Design Products / Processes M-2.02 Plan Enterprise M-4.

04 Deliver Service and Support Manage Logistics Network M-3.0310 Track Performance 31 .0306 Trial Product M-3.02 Create Market M-3.0301 M-1 M-2 Develop Products / Processes Conduct Research Generate Demand Manage Customer Relationship M-3 Fulfill Demand M-3.06 Manage Relations with Stakeholders M-1.03 Capture Orders M-3.The Ispat Operational Vision Business Processes .02 Plan Enterprise M-4.0308 Test Customers M-4.0304 Manage Design Change M-1.05 Implement Capital Projects M-4.0303 Analyse Feasibility Enable Production Support Trial Heat Production M-1.0309 Manage Product traits M-1.0305 M-1.03 M-2.01 M-2.02 Define Product Design Products / Processes M-2.01 M-1.01 Manage Supply Sourcing M-1.02 Produce M-1.04 Manage Human Resources M-4.03 Design Products and Processes Design Product M-1.03 Fulfill Orders M-1.01 Manage Information M-4.0307 Manage Financial Operations M-1.Level 2 M-1.03 : Design Products and Processes M-1.03 M-1.05 M-4 Plan and Manage the Enterprise M-4.0302 Design Process M-1.

03 M-2.0104 Capture Feedback M-1.01 Manage Supply Sourcing M-2.02 Produce M-1.01 M-2.The Ispat Operational Vision Business Processes .01 Manage Information M-4.0101 M-1 M-2 Develop Products / Processes Conduct Research Generate Demand Manage Customer Relationship M-3 Fulfill Demand M-3.03 Capture Orders M-3.03 Manage Financial Operations M-4.04 Deliver Service and Support Manage Logistics Network M-3.Level 2 M-2.01 : Manage Customer Relations M-2.06 Manage Relations with Stakeholders 32 .02 Define Product Design Products / Processes M-2.01 Manage Customer Relations Identify Potential Customers Manage Customer Inquiries M-2.0103 M-2.05 Implement Capital Projects M-4.03 Fulfill Orders M-3.02 Create Market M-3.0102 Maintain Relationships M-2.05 M-4 Plan and Manage the Enterprise M-4.01 M-1.04 Manage Human Resources M-4.02 Plan Enterprise M-4.

01 Manage Information M-4.05 M-4 Plan and Manage the Enterprise M-4.The Ispat Operational Vision Business Processes Level 2 M-2.02 : Create Market M-2.0203 M-2.0204 Introduce New Products M-1.03 Fulfill Orders M-2.02 Create Market Track Market Information Execute Marketing Campaign Educate Sales /Customers M-2.02 Create Market M-3.05 Implement Capital Projects M-4.01 M-1.02 Produce M-1.06 Manage Relations with Stakeholders 33 .0205 M-3.03 Capture Orders M-3.02 Plan Enterprise M-4.04 Manage Human Resources M-4.03 Manage Financial Operations M-4.04 Deliver Service and Support Manage Logistics Network M-3.02 Define Product Design Products / Processes M-2.0201 M-1 M-2 Develop Products / Processes Conduct Research Generate Demand Manage Customer Relationship M-3 Fulfill Demand M-3.03 M-2.01 M-2.0202 Plan Marketing Campaign M-2.01 Manage Supply Sourcing M-2.

06 Manage Relations with Stakeholders 34 .03 Capture Orders M-2.02 Plan Enterprise M-4.03 M-2.03 Capture Orders M-3.01 M-1.05 M-4 Plan and Manage the Enterprise M-4.03 : Capture Orders M-2.04 Manage Human Resources M-4.The Ispat Operational Vision Business Process Level 2 M-2.01 Manage Supply Sourcing M-2.03 Manage Financial Operations M-4.0302 Negotiate Terms M-1 M-2 Develop Products / Processes Conduct Research Generate Demand Manage Customer Relationship M-3 Fulfill Demand M-3.01 Manage Information M-4.0303 Take/Close Order/Contract M-1.01 M-2.02 Create Market M-3.02 Produce M-1.0301 Prepare Proposal/Quote M-2.04 Deliver Service and Support Manage Logistics Network M-3.05 Implement Capital Projects M-4.03 Fulfill Orders M-3.02 Define Product Design Products / Processes M-2.

04 Deliver Service and Support Manage Logistics Network M-3.0104 Purchase M-1.03 M-2.02 Produce M-1.01 : Manage Supply Sourcing M-3.0103 Manage Partnership Manage Accounts Payable M-3.05 Implement Capital Projects M-4.02 Create Market M-3.The Ispat Operational Vision Business Processes Level 2 M-3.06 Manage Relations with Stakeholders 35 .03 Fulfill Orders M-3.01 Manage Supply Sourcing M-3.03 Manage Financial Operations M-4.01 Manage Supply Sourcing Approve Supplier M-3.0102 Establish Contract M-3.0101 M-1 M-2 Develop Products / Processes Conduct Research Generate Demand Manage Customer Relationship M-3 Fulfill Demand M-3.0105 M-3.05 M-4 Plan and Manage the Enterprise M-4.01 M-2.04 Manage Human Resources M-4.02 Define Product Design Products / Processes M-2.01 M-1.02 Plan Enterprise M-4.01 Manage Information M-4.0106 Track Performance M-3.03 Capture Orders M-3.

0207 Manage Financial Operations M-3.0204 Schedule Production M-1.02 Define Product Design Products / Processes M-2.01 M-2.04 Deliver Service and Support Manage Logistics Network M-3.01 Manage Information M-4.03 M-3.The Ispat Operational Vision Business Processes Level 2 M-3.02 : Produce M-3.05 M-4 Plan and Manage the Enterprise M-4.03 Fulfill Orders M-3.01 Manage Supply Sourcing M-3.0201 Produce Develop Demand Plan M-3.02 M-3.05 Implement Capital Projects M-4.0209 Maintain Equipment M-3.01 M-1.06 Manage Relations with Stakeholders M-3.02 Plan Enterprise M-4.0203 Develop Production Plan Plan and Reserve Resource Produce Products M-3.03 M-2.0210 Track Performance 36 .03 Capture Orders M-3.0205 M-3.0202 Model Resources M-1 M-2 Develop Products / Processes Conduct Research Generate Demand Manage Customer Relationship M-3 Fulfill Demand M-3.0206 Prepare for Production M-3.04 Manage Human Resources M-4.02 Create Market M-3.0208 Quality Test Products M-4.02 Produce M-1.

0305 Prepare Invoices Manage Claims & Returns Track Performance M-3.0307 Manage Financial Operations M-3.0309 37 .02 Define Product Design Products / Processes M-2.02 Create Market M-3.03 Capture Orders M-3.0302 Manage Stock M-1 M-2 Develop Products / Processes Conduct Research Generate Demand Manage Customer Relationship M-3 Fulfill Demand M-3.01 M-1.0306 Bill Customers M-3.01 M-2.02 M-3.04 Deliver Service and Support Manage Logistics Network M-3.03 Fulfill Orders M-3.02 Produce M-1.05 Implement Capital Projects M-4.06 Manage Relations with Stakeholders M-3.04 Manage Human Resources M-4.03 : Fulfill Orders M-3.02 Plan Enterprise M-4.01 Manage Information M-4.The Ispat Operational Vision Business Processes Level 2 M-3.0301 Fulfill Orders Creating Stock M-3.0308 Manage Accounts Receivable M-4.0304 Despatch Products M-1.03 M-2.05 M-4 Plan and Manage the Enterprise M-4.01 Manage Supply Sourcing M-3.0303 Manage Order M-3.03 M-3.

02 Define Product Design Products / Processes M-2.0404 M-1.04 Deliver Service and Support Manage Logistics Network M-3.02 Plan Enterprise M-4.04 Manage Human Resources M-4.0402 Manage Quality Claims Provide Services & Support M-3.0403 M-3.02 Create Market M-3.0401 M-1 M-2 Develop Products / Processes Conduct Research Generate Demand Manage Customer Relationship M-3 Fulfill Demand M-3.01 Manage Information M-4.04 : After Sales Support M-3.03 Capture Orders M-3.01 M-2.06 Manage Relations with Stakeholders 38 .0405 M-3.04 Deliver After Sales Support Manage Post Sales Actives Manage Complaint redressal Centre Track Performance M-3.03 Manage Financial Operations M-4.03 Fulfill Orders M-3.05 Implement Capital Projects M-4.02 Produce M-1.The Ispat Operational Vision Business Processes Level 2 M-3.03 M-2.05 M-4 Plan and Manage the Enterprise M-4.01 Manage Supply Sourcing M-3.01 M-1.

02 Plan Enterprise M-4.The Ispat Operational Vision Business Processes .0504 Receive Material M-1.0502 Orchestrate Movements M-1 M-2 Develop Products / Processes Conduct Research Generate Demand Manage Customer Relationship M-3 Fulfill Demand M-3.0506 M-3.02 Define Product Design Products / Processes M-2.04 Deliver Service and Support Manage Logistics Network Schedule Dispatches M-3.05 Implement Capital Projects M-4.Level 2 M-3.01 Manage Information M-4.01 Schedule Receipts Maintain Inventory Accuracy Track Performance M-3.03 M-2.03 Capture Orders M-3.05 : Manage Logistics Network M-3.06 Manage Relations with Stakeholders 39 .05 M-4 Plan and Manage the Enterprise M-4.03 Fulfill Orders M-3.03 Manage Financial Operations M-3.0505 M-3.02 Produce M-1.02 Create Market M-3.0503 M-1.0507 M-4.01 Manage Supply Sourcing M-3.0501 Manage Material Inventories M-3.04 Manage Human Resources M-4.05 Manage Logistics Network M-3.01 M-2.

01 Manage Information M-4.0103 M-4.03 M-2.02 Produce M-1.01 M-1.0102 Manage Physical Processing and Network Assets Manage System Development and Maintenance M-4.03 Manage Financial Operations M-4.04 Manage Human Resources M-4.02 Create Market M-3.05 Implement Capital Projects M-4.01 : Manage Information M-4.02 Define Product Design Products / Processes M-2.01 Manage Supply Sourcing M-4.01 Manage Information Develop Information Strategy and Plans Define /Manage Group-Wide Data Standards Maintain Existing Applications M-4.06 Manage Relations with Stakeholders 40 .04 Deliver Service and Support Manage Logistics Network M-3.01 M-2.02 Plan Enterprise M-4.03 Fulfill Orders M-4.03 Capture Orders M-3.0101 M-1 M-2 Develop Products / Processes Conduct Research Generate Demand Manage Customer Relationship M-3 Fulfill Demand M-3.0105 M-3.0104 M-1.The Ispat Operational Vision Business Processes Level 2 M-4.05 M-4 Plan and Manage the Enterprise M-4.

0207 Manage Financial Operations M-4.The Ispat Operational Vision Business Processes Level 2 M-4.01 M-1.01 Manage Supply Sourcing M-4.0204 M-1.0202 Develop Mission and Vision Design Relationships Between Units Develop Strategic Plans Develop Contingency Plans M-4.01 M-2.0203 M-4.05 Implement Capital Projects M-4.03 Fulfill Orders M-4.02 Plan Enterprise Monitor the External Environment Design organisation structure Develop Organisational Goals Develop Operational Plans M-4.03 M-4.06 Manage Relations with Stakeholders 41 .04 Deliver Service and Support Manage Logistics Network M-3.02 Create Market M-3.02 Produce M-1.01 Manage Information M-4.04 Manage Human Resources M-4.05 M-4 Plan and Manage the Enterprise M-4.03 M-2.02 Plan Enterprise M-4.02 : Plan Enterprise M-4.0205 M-4.0201 M-1 M-2 Develop Products / Processes Conduct Research Generate Demand Manage Customer Relationship M-3 Fulfill Demand M-3.0208 M-4.02 Define Product Design Products / Processes M-2.0206 M-3.03 Capture Orders M-3.

01 M-2.01 M-1.02 Create Market M-3.0304 M-1.0306 Manage Physical Resources M-3.05 M-4 Plan and Manage the Enterprise M-4.01 Manage Information M-4.06 Manage Relations with Stakeholders 42 .03 : Manage Financial Operations M-4.0302 Process Finance and Accounting Transactions Conduct Internal Audits M-4.01 Manage Supply Sourcing M-4.The Ispat Operational Vision Business Processes .Level 2 M-4.05 Implement Capital Projects M-4.03 M-2.02 Plan Enterprise M-4.03 Manage Financial Operations Manage Financial Resources Report Information M-4.0307 Manage Financial Operations Support Costing M-4.0301 M-1 M-2 Develop Products / Processes Conduct Research Generate Demand Manage Customer Relationship M-3 Fulfill Demand M-3.03 Fulfill Orders M-4.04 Manage Human Resources M-4.03 Capture Orders M-3.0303 M-4.0308 Manage Investments M-4.04 Deliver Service and Support Manage Logistics Network M-3.02 Produce M-1.03 M-4.0305 Manage the Tax Function M-4.02 Define Product Design Products / Processes M-2.

0409 43 .04 Manage Human Resources M-4.0402 Cascade Strategy to Work Level Develop and Train Employees Ensure Employee WellBeing and Satisfaction Manage Labour Management Relationships M-1 M-2 Develop Products / Processes Conduct Research Generate Demand Manage Customer Relationship M-3 Fulfill Demand M-3.0403 M-4.0401 Create and Manage Human Resources Strategy Manage Deployment of Personnel Manage Employee Reward and Recognition Ensure Employee Involvement Develop Human Resource Info Systems (HRIS) M-4.04 Manage Human Resources M-4.0406 M-3.02 Produce M-1.01 Manage Information M-4.03 Fulfill Orders M-4.0408 M-4.05 Implement Capital Projects M-4.Level 2 M-4.01 M-1.02 Define Product Design Products / Processes M-2.01 M-2.02 Create Market M-3.03 M-2.03 M-4.01 Manage Supply Sourcing M-4.0404 M-1.04 : Manage Human Resources M-4.02 Plan Enterprise M-4.05 M-4 Plan and Manage the Enterprise M-4.The Ispat Operational Vision Business Processes .06 Manage Relations with Stakeholders M-4.0407 Manage Financial Operations M-4.03 Capture Orders M-3.04 Deliver Service and Support Manage Logistics Network M-3.0405 M-4.

0502 Obtain approval from Board Make Funds available for Capital Expenditure M-4.03 M-2.0503 M-4.0504 M-1.02 Create Market M-3.01 M-2.03 Capture Orders M-3.03 Manage Financial Operations M-4.0501 M-1 M-2 Develop Products / Processes Conduct Research Generate Demand Manage Customer Relationship M-3 Fulfill Demand M-3.02 Define Product Design Products / Processes M-2.The Ispat Operational Vision Business Processes .06 Manage Relations with Stakeholders 44 .04 Manage Human Resources M-4.01 Manage Information M-4.01 M-1.05 Implement Capital Projects M-4.05 M-4 Plan and Manage the Enterprise M-4.05 : Implement Capital Projects M-4.04 Deliver Service and Support Manage Logistics Network M-4.Level 2 M-4.02 Plan Enterprise M-4.01 Manage Supply Sourcing M-4.03 Fulfill Orders M-3.0505 60 M-3.02 Produce M-1.05 Implement Capital Projects Formulate a Capital Budget Plan Formulate time bound action plan Report Status against action plan M-4.

0603 M-4.06 Manage Relations with Stakeholders 45 .01 Manage Information M-4.05 : Manage Relations with Stakeholders M-4.01 Manage Supply Sourcing M-4.0605 M-4.05 Manage Relations with Stakeholders Communicate with Shareholders Build Lender Relationships Interface with Board of Directors Manage Legal and Ethical Issues M-4.The Ispat Operational Vision Business Processes .02 Create Market M-3.03 M-4.0601 M-1 M-2 Develop Products / Processes Conduct Research Generate Demand Manage Customer Relationship M-3 Fulfill Demand M-3.04 Manage Human Resources M-4.02 Define Product Design Products / Processes M-2.04 Deliver Service and Support Manage Logistics Network M-3.05 M-4 Plan and Manage the Enterprise M-4.Level 2 M-4.0606 M-3.0604 M-1.02 Plan Enterprise M-4.03 M-2.03 Capture Orders M-3.0607 Manage Financial Operations M-4.02 Produce M-1.0602 Manage Government Relationships Develop Public Relationship Programmes Develop Community Relations M-4.05 Implement Capital Projects M-4.01 M-2.01 M-1.03 Fulfill Orders M-4.

01: Conduct Research Potential approaches to getting there  Establish long term competitive advantage by developing new Grades in anticipation of future market conditions Set aside a research budget of a minimum of around 1-2% of turnover Bring about following improvements:   Define strategy for family of grades with quantifiable goals Develop research projects based on business and plans for each family of grades. Continuous improvement S = Turnover. market analysis. If a non-core technology needs to be developed. qualification of staff 46     . Develop a database and update it periodically Understand legislation directions affecting specification in advanced markets     A 50% increase in the yield rate of new concepts A 10% reduction in cost per new concept  Objective of this sub-process Generate new product concepts efficiently and with a high “hit rate” of successful concepts while minimizing research cost Q = Yield rate of ideas C = R&D budget heads D = Involvement of partners and agencies D = Affecting Changes in Product Line and ahead of competition M = Standard procedures.The Ispat Operational Vision Operational Vision  Operational Vision M-1. source the activity outside the organization Define envelopes of research activity based on business plans. etc. align R & D budget with the priorities of each family of grades Link R&D activities to market research including customer requirements based on new applications Clearly define the core competencies and focus R & D on these. Have an “Idea Bank" to hold concepts that might not be needed or are not commercially feasible yet Have an understanding of what competition is doing in product and process technology.

02: Define Product Potential approaches to getting there   Use 8-Gate Approach for developing products and achieve :   Co-engineer the product with the customer Use product line plans developed by only crossfunctional teams Assign responsibility for customer satisfaction and product cost to the same cross-functional team Set up market aligned product development teams where one person from each team is responsible for the performance of that market segment Gather inputs from marketing. schedule. contribution and NSR targets up front Plan total product life cycle A 25% reduction in definition/design lead time 100% increase in customer satisfaction  Improve product profitability by a minimum of 25% Launch at least 2 new products every year Ensure 100% adherence to schedule and budgets      Objective of this sub-process Define products and processes that meet company’s and growth objectives for a family of grades (cost.The Ispat Operational Vision Operational Vision  Operational Vision M-1. quality. specification and end-user application) Q = Completeness of definition C = Cost to deliver quality D = Involvement of partners D = To design product within specified time limits M = Standard procedures. intermediaries and suppliers Begin next generation product development during current generation product cycle Develop cost. Continuous improvement S = Turnover qualification of staff 47    . manufacturing.

reliability. Specification. allocation and cross-referencing Simulate with software to the the extent possible Trial for concept and customer validation Review (in a closed loop) feedback from production and customers Test product on field and customer  No Technical Delivery Condition (TDC) modification post launch Zero Quality Claims by FY 2010      % of projects with full-time resources (>80%) Number of new products introduced per year (=2) % of customized products (50%) Adherence to schedule and budget      Objective of this sub-process Generate designs that exceed customer and company expectations with regard to cost. quality. resulting in :  Create and co-locate multifunctional design teams Design products and processes concurrently Pursue shorter product life cycles to adjust more frequently to customer needs Use a total quality and value management system as an umbrella for the development process Follow the 8-Gate product development methodology with predefined targets and requirements Manage customer requirements through documentation. Continuous improvement S = Turnover. qualification of 48 staff . disposal. and profitability Q = Achievement of  targets at launch C = Cost to launch D = Level of functional involvement D = Achievement of all time limits specified M = Standard procedures.03: Design Products and Processes Potential approaches to getting there    Ensure a globally optimised detailed specification that considers manufacturability. quality and environmental compatibility.The Ispat Operational Vision Operational Vision  Operational Vision M-1.

The Ispat Operational Vision Operational Vision  Operational Vision M-2.01:Manage Customer Relations Potential approaches to getting there  Identify potential customers for ensuring deeper penetration and enhanced market share in the following segments:     Create segment wise identification teams for potential customer and its inquiry generation Ensure higher usage of information technology for capturing customers’ product requirements and feedback on existing products. Implement mySAP CRM Single point inquiry redressal for greater customer convenience and satisfaction Reducing the lead time gap between customer inquiry and responding to the inquiry Increase in repeat orders and customer loyalty Automotive: 45% by FY’08 API : 54% by FY’08 Construction: 11%by FY’08 LPG: 45%by FY’08    Reach out to the last-mile customer by moving up the value chain:    Automotive Segment: Increase by 25% YOY basis from existing 9 OEM customers Construction Segment: Increase by 100% YOY basis from the existing 1 customer   Ensure robust Customer Relationship Management (CRM) Ensure much greater focus on capturing customer feedback on existing product performance in order to improve and customize our products against customers’ specific requirements Reduce dependency on cold rollers by reducing supplies by 25%yoy basis  Objective of this sub-process Wider customer base along with higher level of Customer Relationship Management and Customer Satisfaction 49  Q = Achievement of targets C = Cost to marketing D = Level of functional involvement D = Achievement of all time limit targets M = Standard procedures. Continuous improvement S = Qualification of staff .

Product Development and Operations teams to ensure effective implementation of marketing strategies Develop and launch new products with defined timelines for widening the product mix/portfolio Participate and actively contribute in product development teams particularly in Gates 1. MC55 and IF by FY010  Launch APIX70 14.02: Create Market Potential approaches to getting there  Develop 100% reliable plans for marketing campaigns that would impact the market share in quantitative terms and establish the Ispat brand Execute the marketing campaign effectively within optimum cost and create the impact in the market  Ensure cost reduction by 5% YOY basis in the execution process  Ensure 25% increase in contribution margin by selecting the right new product/grade Ensure highly successful launch of new high-end value added products with customized applications meeting customer specific requirements:  Replace a few of the existing grades with new grades such as DP600. 17. 2 and 3 of the 8-Gate Approach. . Continuous improvement S = Turnover.2mm for normal application and APIX65 for Sour Gas application  Develop P310/P355 (LPG grades) for export oriented units (EOU) Conduct at least one customer meet every quarter in order to educate existing and potential customers on steel applications and substitution for other materials  Ensure regular tracking of segment-wise market information (products. changing features and applications etc) with clear identification of responsibilities Work closely with Technical Cell. HR60. changing technology. CR01.e Company Operational Vision Operational Vision  Operational Vision M-2. CT40. competitors. ST54AM. Educate existing and potential customers on steel application and specific benefits from our material       Create market for Ispat’s products such that the Objective of this sub-process planned topline is achieved in a cost-effective manner 50 Q = Achievement of targets C = Cost to campaign D = Level of functional involvement D = Achievement of all time limits specified M = Standard procedures.3mm. customer requirements.

Construction segments and launching new products such as API grades.3 MT by FY 2009 and 3.5 MT by 2010 Achieve an incremental contribution of Rs 250 crores by FY 2009 with greater focus on Auto. 3. IF Steel.03: Capture Orders Potential approaches to getting there  Operational Vision  Ensure higher sales to achieve at least 3. API. Continuous improvement S = Qualification of staff . Stainless Steel etc Reduce 50% of the time taken in preparing proposals and quotations with zero errors Establish standard negotiating terms with approved fluctuations  Error free preparation of proposals and quotes within specified time line Following negotiating guidelines and working under the specified timelines Religiously following the timeline of customer schedules already communicated to the customer      10% reduction in approved price fluctuations on YOY basis Objective of this sub-process Maximum order captured from high value added segment with minimum deviation in negotiating terms and time lines  On time initiation and closure of the contracts with no deviation 51 Q = Achievement of targets C = Cost to process cycle D = Level of functional involvement D = Achievement of all time limits specified M = Standard procedures.he Company Operational Vision Operational Vision M-2.0 MT during FY 2008. Silicon Steel.

cost reduction and information technology Purchase and monitor supplier performance based on "Least Total Delivered Cost" concept at given quality Establish purchasing as a “profit centre” with appropriate performance measures Compress lead times for the indent to receipt cycle Standardize items to the extent feasible and evaluate global sourcing options Implement and effectively use enablers such as EDI and integrated materials management system    Raw Material cost (3-5% on year on year basis) Reduce purchasing overhead expenses (by 510% on year on year basis)   Improve supplier performance (Cost. price competitiveness etc Develop supplier partnerships to improve service levels in terms of quality. Coal suppliers (5 new partnerships every year) Lower cost of procurement   Rationalize supplier base by considering a number of factors as history of supply.01 : Manage Supply Sourcing Potential approaches to getting there  Rationalise supplier base Develop long-term strategic partnership with IBRM. reliability.The Ispat Operational Vision Operational Vision   Operational Vision M-3. quality and reliability Q = Incoming quality levels C = Procured quality at minimum total cost D = Number of supplier development teams D = On-time performance. Ferro Alloys. timely delivery and cost Assist suppliers with detailed specification and managerial inputs on capabilities such as QA. Coke. right quality at right price M = Continuous 52 improvement  . Delivery. volumes. Quality parameters)    Objective of this sub-process To determine and manage supply of materials and services at the appropriate cost. relationship.

The Ispat Operational Vision Operational Vision  Operational Vision M-3. process reliability and consistency. availability D = Delivery schedule adherence M = Continuous improvement S = Qualification of 53 staff Make manufacturing and maintenance personnel accountable for planning.50 minutes by FY 2009 HRC Cost: $ 425 by FY 2009 and $ 400 by FY 2010 DRI Production: 180.2 meters/minute by FY 2010 Hot Mill Production: 280.02 Produce Potential approaches to getting there  Achieve the following          Hot Metal Production: > 5000 MT/day consistently HM Cost: < $ 325 by FY 2009 and around $300 by FY 2010 SMS Production: > 48 heats/day consistently SMS Yield: > 87% consistently Caster 1 Speed: 5.000 MT/month consistently MTBC: 2.7 meters/minute by FY 2009 and 6.000 MT/month by FY 2009 Unplanned Downtime: < 5% Maintenance Cost: within $ 100/MT MTBF > 100 Days by FY 2009 Q = Meet TDC consistently C = Produce quality at minimum total cost D = Process capability. execution. and plant uptime Undertake comprehensive Maintenance Audit of the Dolvi plant and draw up a comprehensive timebound action plan ensuring 95% reliability. plant reliability. Implement and follow the SOPs for each equipment/process and ensure strict discipline and all round highly professional work culture Analyze product costs (value-added grades versus non-value-added grades) and determine why contribution/MT of certain value added grades is lower in conjunction with Marketing team Upgrade and fix problems in Level 1 to ensure L2 and L3 systems are effective. Produce strictly according to the schedule generated by PPMS system Focus on preventive and preemptive maintenance Empower operations teams to prioritize preventative and emergency maintenance    Plant reliability: >95%     Objective of this subDetermine process manufacturing   requirements and produce high-quality products in a manner that is cost effective and on schedule .

The Ispat Operational Vision Operational Vision  Operational Vision M-3.03 Fulfill Orders Potential approaches to getting there  Ensure 95% of deliveries are made to customers within the original committed date Compress order to delivery lead time to ## days Restrict accounts receivables to ## days Ensure clearly identified “owners” for various elements of inventory Integrate credit check at order processing time Ensure allocation of responsibilities to ensure high service levels are clearly defined and well understood by all involved Integrate order processing system with manufacturing. Continuous improvement S = Turnover. C = Deliver quality at total minimum cost D = Reduced order processing costs D = % on time M = Standard procedures. qualification of staff 54 . sales and financial systems Use appropriate key performance measures to track performance       Objective of this subprocess Efficiently manage the complete customer order to cash cycle Q = % on-time to specification.

then analyse this feedback for improvement and to identify new/better services that can be provided Institute a feedback "loop" in place between After Sales support and Design / Development departments Institute mechanisms to ensure that the after sales support staff takes ownership of customer problems Provide the after sales support centre with the authority to bind other parts of the organisation in order to respond appropriately to an inquiry Ensure that throughout the customer complaint process the customer has one point of contact      Objective of this sub-process Provide value beyond the product and a level of service. Continuous improvement S = Turnover. response time D = Availability of after sales support M = Standard procedures.The Ispat Operational Vision Operational Vision  Operational Vision M-3. technical support.04 After Sales Support Potential approaches to getting there  Quality Claims as a percentage of Sales reduced to ## % by FY 2009 and ##% by FY 2010 Percentage of Quality Complaints answered within target time: 98% by FY 20## Ratio of customer complaints to customer compliments to be reduced to ## by FY 20## Time lag from identification of customer problem to satisfactory action on problems to be reduced ##  Implement cross-functional customer service teams that are accountable for all aspects of customer service and customer account maintenance Encourage customers to give feedback about the quality of service they receive. qualification of staff   55 . or information which supports customer requirements Q = Lead time to response time C = Quality Claims Cost D = Lead time to clear.

delivery and storage costs Q = No of stock outs below agreed level C = Storage and distribution costs D = Simplification of network D = Right time and right place M = Continuous improvement S = Turnover. handling and movement:      Streamline systems and procedures to enable current manpower to handle higher volumes    Objective of this sub-process Provide efficient and timely delivery of materials and minimise inventory. bar-coding and integrated materials management system   Minimize storage. qualification of staff 56 .05 Manage Logistics Network Potential approaches to getting there  Improve logistics performance    Compress variability of inbound transportation time to less than 50% of current levels Reduce truck turnaround time by 50% of current time Ensure 100% of dispatches without any damage Excess Inventory levels to be reduced to their norm level Slow moving/non-moving and obsolete inventory reduced by 90% by FY 2009 Develop partnership with transporters providing value added services Encourage RM suppliers to setup storage centers near/at the plant Share schedules with suppliers and restrict variation to a pre-determined agreed percentage Track material through the despatch from supplier. receipt.The Ispat Operational Vision Operational Vision  Operational Vision M-3. storage and issue cycle in order to minimize handling losses and pilferages Evaluate focused storage options within Dolvi Streamline slow moving/non-moving/obsolete inventory identification and disposal mechanisms Implement and effectively use enablers such as material handling equipments.

01: Manage Information Potential approaches to getting there  Continuous focus on usage of IT to build and sustain competitive advantage. remote network support. single data repository and move towards the IT “factory” concept Develop a robust plans for implementation and maintenance of systems and information security   .The Ispat Operational Vision Operational Vision  Operational Vision M-4. qualification of staff 57 Implement end-user operated on-line information systems in all operating and support functions Ensure common infrastructure. office automation and customer interface achieving the following :   Spread IT awareness in a concerted fashion across all levels within the company Report progress against the long term IT strategy with periodic updates based on the changing information technology scenario Implement mySAP Business Suite of applications in order to :     A ##% accuracy in data ## %of personnel having on-line access to computerized data A ##% reduction in the number of different entities involved in managing the same data   Ensure data integrity with minimal need for parallel records and reconciliation activity Facilitate quick and integrated response to sudden changes in key requirements  Objective of this sub-process To align information technology developments with business strategy Q = Accuracy & consistency of data C = IT Budget D = Ease of access to information D = Time taken to deliver user requirements M = Continuous improvement S = Turnover. Leverage on available technologies for applications. networking.

All plans must be met at least 90%. rally around the plan in a collective manner for its successful and speedy implementation Operational plans that are in line with strategic plans and exhibit (at best) a 10% variation between Sales and Production plans. Thereafter. An organization structure that ensures clear job responsibility and reporting relationships Q = Number of people owning responsibility C = Performance against Budget D = Synchronicity within the various plans D = Time taken to freeze Sales and Production plans M = Continuous improvement S = Turnover.02: Plan the Enterprise Potential approaches to getting there  A clearly spelt out vision and mission for the organization which is well understood by all A strong strategic planning function which shapes the future strategy.and long-term to facilitate buy-in and support for change Ensure adequate business focus in each function/department to meet the planned objectives Focus on skill building by accessing global best practices and exposure to international markets If actual achievements against plans vary more than 10%. then there is need to :          Objective of this sub-process Ensure strategic and operational plans are geared towards achieving the long term objectives of the company   Revisit assumptions and hypotheses made in developing the plan Speedily implement the actions that will justify the assumptions and hypotheses Strictly avoid developing theoretical plans to make the plan look good and comforting Ensure that company’s credibility is raised with credible plans that are always achieved .The Ispat Operational Vision Operational Vision  Operational Vision M-4. 58 qualification of Identify internal/external advisors to re-confirm mission and vision statements Evolve credible change management programs to communicate and share the organizational vision for the immediate-. medium.

2nd BF.03: Manage Financial Operations Potential approaches to getting there      Move towards a world class organisation setup. Material Handling equipments and cranes etc Comply with all statutory requirements of the country for financial reporting Implement all the features of SAP Finance module Provide on-line information   Set up flexible. employing best practices for financial management Reduce interest and finance charges by 10% by FY 2009 and 20% by FY 2010 Raise US $ 500 million capital for funding the key capital projects such as Coke Oven battery. RH Vacuum Degasser. end-user operated systems across a networked organisation. supported by on-line. proactive investment policies Use financial parameter based KPIs across all processes and management levels Improve service levels by :       Objective of this sub-process Provide line management with information and analysis that ensures the short and long term liquidity and viability of the organisation Q = Accuracy C = Finance function cost D = Ease of processing & budgeting D = Processing and budgeting time M = Continuous improvement S = Qualification of staff 59 Reducing the cycle time for production of the general ledger and closing of books Performing account analysis during the month. user friendly financial reporting Provide drill down facility for Financial Statements   Utilize company balance sheet strengths Provide centralized cash management to facilitate monitoring and transferring of cash across locations Maintain progressive. Desulphurization plant. minimising month-end effort Sending reports electronically to users . Pellet plant.The Ispat Operational Vision Operational Vision  Operational Vision M-4.

continuous improvement. focusing on customer orientation.The Ispat Operational Vision Operational Vision  Operational Vision M-4.    Q = Employee turnover C = Personnel costs D = Consonance between employees’ aspirations and Company’s needs D = Training days per new hire M = Continuous improvement Attract.04: Manage Human Resources Potential approaches to getting there  Build a culture unique to Company. team building. Within 1-2 years :    Undertake manpower planning on a formal basis factoring in the growth plans of the company Redefine PMS of individuals around processes which measure outcomes Realign the organization structure around processes to support achievement of business objectives Establish linkage between rewards (including non monetary modes) and performance appraisal Create emphasis on building relevant skills through appropriate training and in inculcating high degree of customer service orientation Balance job rotation for building cross-functional skills with the need to retain specialization Develop a formal succession planning process  Increase Employee Engagement to 80% Reduce Attrition within 10-12% Ensure participative and outcome-oriented style of management:  Introduce concept of problem solving groups  Ensure greater number of people having cross functional skills  Ensure all round increase in morale. passion and discipline. commitment. openness. retain and develop highly motivated talent both Objective of this sub-process at entry level and in specialized/ critical functions 60 . motivation levels with greater autonomy to perform     Support recognition of business process and align organization structure around processes Ensure effective and transparent HR Policies supporting the transformation of the company.

New product development.      Objective of this sub-process Execution of the Capital Projects in stipulated time and budgets so as to achieve strategic and operational objectives Q = Accuracy of budget and timeline C = Cost of implementation D = Incorporation of user suggestions and ideas for complete buy in after implementation D=Time taken to implement capital project against plan M = Accurate Status reporting  61 .The Ispat Operational Vision Operational Vision  Operational Vision M-4. payback period. Production . resources required. ROI. Cost and time overrun should be limited to 3-5% at best Ensure fulfillment of key objectives set out in the business case. The Capital Projects Plan must take inputs from user groups like Marketing. Every project must have a formally documented “Business case” outlining the costs and benefits. and phased cash outflow plan Finance function to ensure availability of appropriate funds based on specific milestones for implementing the plan Regular reporting of project status would be required in order to avoid cost and time overrun. Strict monthly review of progress required Execute each project within budgeted costs and stipulated timelines. precedence relationship. Quality Assurance.05: Implement Capital Projects Potential approaches to getting there  Monitor and implement Capital projects plan in a time-bound manner for achieving the strategic objectives. Risks and Mitigation plans Every project must have time-bound action plan (based on PERT/CPM technique) outlining the timeframes. Maintenance functions and priorities of various projects must be collectively decided.

06: Manage Relations with Stakeholders Potential approaches to getting there  Conformance to deadlines for reporting information to stakeholders Accuracy in information reported to them Service levels of :     Use financial repositories for operational and financial data linked with reporting tools to develop standardised reporting packages in order to provide :    Investor satisfaction Government compliance  A single source of data Paperless environment Improved development time Addressing investor queries Timely transfer of shares. qualification of staff   62 . regulatory agencies and investors etc) with information they need Q = Number of stakeholder complaints C = Cost of compliance D = Ease of accessibility for stakeholder D = Time taken to redress complaint satisfactorily M = Continuous improvement S = Turnover.The Ispat Operational Vision Operational Vision  Operational Vision M-4. warrants etc Set service levels for :    Implement consistent dividend policies Ensure timely and complete reporting of information required for Government Compliance Facilitate quarterly closing and publications of statutory accounts Objective of this sub-process Provide external stakeholders (like the government.

Representative KPIs Key Performance Indicators M-1.01 Conduct Research Q Cos t    Reduce Costs Qualit y  Put Quality First Cost per concept developed per time period Cost savings on account of new concepts incorporated Research budget as a percentage of total budget Improvement in quality / reliability on account of new products / processes Ideas researched that are incorporated into designs per year (yield rate)  Cycle Time   Compress Time Interface Service  Percentage of R &D time spent gathering data Cycle time reduction on account of new products / processes Focus on Customer Number of project failures due to the implementation of unproven technologies Percentage of R&D data gathered from a central cross-functional enterprise wide repository Number of new product offerings made possible by internal R&D efforts   63 .

02 Define Product Q Reduce Costs Qualit y  Put Quality First Product line sales Return on investment made in research % of revenue generated from products introduced in the last 2 years Customer product satisfaction ratings Cycle Time  Compress Time Interface Service     Focus on Customer Time from initiation to release to development (design/definition lead time) Break Even Time (BET).Representative KPIs Cos t    Key Performance Indicators M-1. the time from when the initial product specifications are frozen until the product shows a profit Number of new product introductions per year Bill of Material Accuracy Adherence to schedule and budget Average change orders to original Bill of Material  64 .

03 Design Products and Processes Q Cos t   Reduce Costs Qualit y    Put Quality First Percent cost of defective design Cost of defective design as a percent of net revenue/sales Percent of design completed electronically Percent of design simulated electronically Average number of production defects in new products Cycle Time  Compress Time % of product development time spent in meetings.Representative KPIs Key Performance Indicators M-1. looking for data and other non-value added activities Cycle time to develop/implement a new version of an existing product Cycle time to develop/implement a new product or technology Time to transfer/launch product in Manufacturing Standard production cycle time Time to market Average manufacturing cycle time decrease over time following a product release Interface Service   Focus on Customer  Number of Design Modification Requests (changes required by Manufacturing ) % of projects with full-time resources Number of new products introduced per year % of customized products % of reconfigurable products Adherence to schedule and budget          65 .

Representative KPIs Key Performance Indicators M-2.01 Manage Customer Relationship Q Cos t   Reduce Costs Qualit y  Put Quality First Cost in identification of potential customer Optimization of relationship maintenance cost Quality Customer (taking Value added grades and having long term contract) Percentage of handling customer inquiry electronically and through e-sites Quality of Personnel handling the Customer inquiry   Cycle Time  Compress Time % of time spent in meetings. looking for data and other non-value added activities Delay in customer inquiry response Shorten the time taken in capturing the feedback   Interface Service  Focus on Customer Number of manual activities involved in managing customer inquiries Number of potential customers added per year  66 .

02 Create Market Q Cos t   Reduce Costs Qualit y  Put Quality First Cost of introduction of new product development Cost of execution of marketing campaign Percent of market information collected electronically Percent of education provided to the customer on application of steel Average number of production defects in new product   Cycle Time  Compress Time Cycle time to track market information and the time to act upon it Cycle time to develop/implement a new version of an existing product Cycle time to develop/implement a new product or technology  Interface Service      Focus on Customer  % increase in the plan reliability of marketing Number of new products introduced per year % of customized products % of reconfigurable products Adherence to schedule and budget 67 .Representative KPIs Key Performance Indicators M-2.

Representative KPIs Key Performance Indicators M-2.03 Capture Orders Q Cos t   Reduce Costs Qualit y   Put Quality First Percent cost of error in negotiating terms Cost of increased cycle time Percent of proposals and Quotes on e-sites Average number of defects in proposals /Quote /Negotiate terms Cycle Time  Compress Time Cycle time to finalize error free negotiating terms Standard cycle time from proposal to closing contract Interface Service  Focus on Customer  Number of Modification Requests in proposals and negotiating terms Adherence to schedule and budget  68 .

of orders        % of time spent on supplier development activity Time spent by Purchase in new product/item development Number of partnerships entered into per year Supplier training hours / Total training hours % of POs requiring multiple approvals Fill rate (% of orders accepted by supplier) Average accounts payable over credit period 69 .Representative KPIs Cos t    Key Performance Indicators M-3. of rush orders/total No.01 : Manage Supply Sourcing Q Reduce Costs Qualit y     Put Quality First Material Cost/Sales % change in material cost annually Purchasing overhead expense as a % of total purchase value Number of active suppliers (for A/B/C materials) Lost production due to material non-availability % of all active suppliers that are approved % of material not confirming to specifications % of Qty returned to supplier  Cycle Time         Compress Time Interface Service Focus on Customer % of on-time deliveries (ordinary and rush) Average supplier days lead time % of POs released within full supplier lead time Purchase order cycle time Average time to negotiate a contract % of items received beyond PO receipt date No of POs amended No.

Representative KPIs Cos t    Key Performance Indicators M-3. of days/hours without accidents Lost production due to unscheduled maintenance : lost production due to scheduled maintenance Cost Per MT/ per employee Maintenance cost/controllable plant costs Quality Claims Cost/ Sales (or COGS) Supervisory span of control (supervisor : workers) Mean time between equipment failure Capacity utilisation MT of output per unit of labour input % quality runs % of process lines using computerised process control Preventative maintenance hours/total maintenance hours Preventative maintenance schedule adherence rate Rejection rate % Defects per million Total rejection cost /total sales % of product wise complaints/ total sales Number of plant/line shutdowns due to quality problems                   70 .02 : Produce Q Reduce Costs Qualit y   Put Quality First % annual change in controllable plant costs Conversion cost / Sales Inventory levels of WIP and stock of finished material Maintenance cost/estimated replacement costs Investment in safety-related facility improvements/total plant operating costs No.

02 : Produce Interface Service    Compress Time Focus on Customer Manufacturing lead time Qty of Material waiting despatch Number of changes to production plans Average lead time to prepare production for new product Set-up time Physical distance a product moves through the factory % of orders delivered on time as per the Master Schedule Work-to-wait ratio Plant performance units of output per hour Adherence to production plans % of employees cross-trained % of workforce participating in self-directed teams % variation in production from plans Number of changes to the Master Schedule Backlog % of worker time spent moving materials Carry forward orders as a % of total orders Ratio of delivery time offered to customers to actual manufacturing time            71 .Representative KPIs Cycle Time     Key Performance Indicators M-3.

03 : Fulfill Orders Q Reduce Costs Qualit y  Put Quality First Average delivery expenses per MT Average order processing expenses per MT Order processing expenses/total sales Late delivery penalties/total shipping expenses Average insurance cost per value of shipment Average shipping and handling cost Accounts Receivable (value and days cover) Value of discounts given Account write-offs/total sales Percentage of electronically accepted /paperless orders % advanced shipment notices that match order % on-time delivery of rush orders % of bills accurately prepared Rupee value of merchandise shipped with quality problems/total rupee value shipped % of units shipped with quality problems % of claims audited       72 .Representative KPIs Cos t          Key Performance Indicators M-3.

of A/R accounts      73 .Representative KPIs Cycle Time     Key Performance Indicators M-3. of deliveries extended because finished product unavailable/total no. of delayed billing cycle runs/total no. of authorisations required per order No. of deliveries Average time to process a claim /return On-time delivery rate Frequency of adherence to ordering methodology Percentage of backorders in orders Average backorder wait length % products requested but not offered % of incorrect orders taken No. of bill corrections/total no. of A/R Accounts reaching credit limits/total no. of shipments shipped past the promised delivery date or cancel date/total no.03 : Fulfill Orders Interface Service       Compress Time Focus on Customer Order fulfillment cycle time Order to shipment lead time No. of shipments No. of billing cycle runs No. of bills processed No.

04 : After Sales Support Q Cos t     Reduce Costs Qualit y    Put Quality First Complaint Claims / Sales Average complaint claim cost per unit sold Average cost per customer inquiry or call Field service expense/total sales Customer suggestion adoption rate % of customer complaints resolved % of Quality Complains answered within target time % of customer complaints or inquiries resolved No of customer complaints/No of customer compliments Average system downtime during business hours % of customers receiving sales follow-up calls % late customer complaint redressal    Cycle Time   Compress Time  Time lag from identification of customer problem to satisfactory action on problem Customer service lead time Mean time to repair product   74 .Representative KPIs Key Performance Indicators M-3.

05 : Manage Logistics Network Q Reduce Costs Qualit y         Put Quality First Logistics costs/total material cost Logistics transaction processing cost/total logistics cost Material handling costs/total logistics cost Material movement costs/total logistics cost % consumption above normative level Inventory carrying cost/total material cost Storage cost /total inventory carrying costs Inventory insurance cost/total inventory carrying costs Obsolete /slow moving /non moving inventory cost (value.Representative KPIs Cos t          Key Performance Indicators M-3. insurance and warehouse space occupied) Number of transporters used Number of receipts and issues handled % of variations in schedules given to suppliers Delivery frequency from suppliers % of receipts received on time % of receipts at “point of usage” % of deliveries bar coded Inventory record accuracy by category/item Number of material shortages % of unplanned material movements     Average time for receiving/inspection process Vehicle turnaround time Time to resolve unmatched inventory items Time to dispose non-moving/obsolete inventory or scrap Cycle Time  Compress Time  75 .

01 Manage Information Q Reduce Costs Qualit y    Put Quality First IT budget as a % of total budget Accuracy of data Consistency in data Number of entities managing the same data Cycle Time  Compress Time Interface Service  Focus on Customer Time taken by the department to deliver user requirements % of employees having access to on-line computerised data % of departments having access to on-line computerised data  76 .The Ispat Operational Vision Cos t  Key Performance Indicators M-4.

02 Plan the Enterprise Q Reduce Costs Qualit y   Put Quality First Performance against budget Number of processes with multiple owners Number of instances of multiple reporting relationships Number of processes without owners  Cycle Time  Compress Time Interface Service  Focus on Customer Time between actual and targetted dates of freezing of the Sales plans Time between actual and targetted dates of freezing of the Production plans Percentage variation in plans prepared by Sales/Exports and APC Percentage variation in plans prepared Number of different entities involved in the planning process Number of changes to plans prepared by Sales/Marketing. Corporate Strategy etc     77 . Exports.Representative KPIs Cos t  Key Performance Indicators M-4. PPIC.

quarterly and monthly closing Time taken for budgeting exercise Time between collections and posting of collections Time taken to process and despatch payments Duration of the capital planning process Man-hours spent on manual account analysis Interface Service   Focus on Customer   Number of collections processed per person % of real time journal entry postings.03 Manage Financial Operations Q Cos t       Reduce Costs Qualit y   Put Quality First Cost of the Finance function as a % of total income Cost of capital Interest expenses Write-offs on company assets Costs of providing management reporting Return on investments made Reporting accuracy Number of reconciliations required between G/L and subsidiary ledgers Variation in foreign exchange exposure compared to policy Accuracy of cash budgets (ie actual vs budgets) Man-hours spent on keying / re-keying entries on account of inadequate system integration due to Excel spreadsheets usage    Cycle Time  Compress Time Number of days for year-end. approvals. balancing and error correction Variation between actual and desired values taken by financial ratios     78 . validations.Representative KPIs Key Performance Indicators M-4.

04 Manage Human Resources Q Reduce Costs Qualit y   Put Quality First Personnel costs Overtime paid Absenteeism Man-hours per vehicle Replacement costs per employee grade  Supervisory  Managerial  Executive Number of employees with quality certification Percentage of workforce participating in problem-solving groups Number of temporary workmen Employee turnover New recruit turnover    Cycle Time  Compress Time Interface Service    Focus on Customer Average number of days between receipt of job requisition and date of new hire Interviewing time and testing time per new candidate Training days per new hire Suggestions submitted per employee Employee suggestion adoption rate No of benchmarking studies conducted in last n periods % of appraisee feedback incorporated in final evaluations % of employees possessing cross-functional skills     79 .Representative KPIs Cos t      Key Performance Indicators M-4.

05 Implement Capital Projects Q Reduce Costs Qualit y   Put Quality First Cost overruns against budgets Opportunity loss due to delay in implementing Incidence of time overruns Incidence of budget overruns Cycle Time   Compress Time Interface Service    Focus on Customer Time taken for implementation Delays in reporting information Accuracy of Status reporting Time taken for generating status report Acceptance of projects proposals 80 .Representative KPIs Cos t   Key Performance Indicators M-4.

Representative KPIs Cos t  Key Performance Indicators M-4.06 Manage Relations with Stakeholders Q Reduce Costs Qualit y     Put Quality First Cost of compliance Number of government audits Number of stakeholder enquiries Number of compliance problems Number of compliance inquiries Cycle Time  Compress Time Interface Service    Focus on Customer Time taken to prepare information needs of stakeholders Delays in reporting information Service level for investor satisfaction Dividend paid to investors Service level for government compliance  81 .

Cascading the Vision Reasons for Cascading To increase accountability and ensure result-orientation amongst employees by establishing appropriate performance measurement indicators To clearly define the role and expected contribution of each person to enable Company achieve the targets set out for the vision elements To establish and/or refine processes to ensure measurement of parameters which are critical for Company’s success Why Cascade? To enable establish formal monitoring and reporting mechanisms to track performance and periodically measure the extent of improvement achieved as against the set out targets 82 .

Manager (eg Cold Rolling) Level 2 President (eg Exports) Level 3 G M (eg Market Research) Level 4 Sr.Down Approach Bottom . Manager (eg Break Through) target target target target eg (Customer Servicing) Level 4 Sr. Manager (eg V AG) Level 2 President (eg Mkt. Manager (eg V AG) target  Each level sets targets for the levels below it.Up Approach TOP-DOWN APPROACH BOTTOM-UP APPROACH Level 1 ED (M) (eg Marketing Dept) Level 2 President (eg Domestic Mkt.) Level 3 V P eg (Customer Servicing) Level 4 Sr.Cascading the Vision  Approaches to Cascadin The Operational Vision for each process could be cascaded through one of the following two methods :   Top .) Level 3 V P Level 1 ED (M) (eg Marketing Dept) Level 2 President (eg Mkt. Strategy) Level 3 V P (eg NPD) Level 4 Sr. Strategy) Level 3 V P (eg NPD) Level 4 Sr. Manager (eg Break Through) target Level 2 President (eg Domestic Mkt. keeping in view the overall target 83  Each level sets its own targets based on :   Knowledge about its own capability/processes Aggregating targets set by levels below it . Manager (eg Cold Rolling) Level 2 President (eg Exports) Level 3 G M (eg Market Research) Level 4 Sr.

Cascading the Vision TOP-DOWN APPROACH Approaches to Cascading Description of Approach  Set target levels for the vision elements at the lowest operating levels Aggregate targets one level up at a time till the level at which the vision target has been set is reached Compare the aggregated target with the vision target set out Review and iterate the operating level targets till the aggregated value matches the vision target Operating personnel need to be willing and capable of setting ambitious but achievable targets for themselves Greater acceptance at the operating levels Iterative process could be time-consuming Level of computational effort is higher  Description of Approach  Break up the vision target to relevant and meaningful targets for one level below Repeat the process of splitting targets till targets are set at the lowest possible operating level Agree targets at each level with concerned people Managers need to be willing to set ambitious but achievable targets for their juniors Lower number of iterations required The focus on the end result is never lost Possible difficulty in gaining acceptance for such targets at the lower levels     Pre-requisites  Pre-requisites  Advantages   Advantages  Challenges  Challenges   BOTTOM-UP APPROACH 84 .

Identify person(s) at each level who need to be made responsible in order to achieve the vision target 3. Identify entities at all levels (eg Blast furnace. Measure current performance levels of the vision element at the lowest level Refer Appendix for an example to illustrate the approach 5. time frames. Finalise targets. Marketing) who contribute towards the value set as the target for the vision element (eg WIP) 2. Determine time frames and responsibilities for targets N Y 7. Determine target performance levels one rung below the level at which the target vision is set. Confirm with operating mangers at each level that targets set are feasible and achievable 85 6. Aggregate current performance levels till the level at which the vision element has been set 9. SMS.Down Approach 1.Cascading the Vision Top . information flow and responsibilities 8. Establish / streamline mechanisms to measure levels of performance of the vision elements 4. continue to set targets one level at a time for all levels .

Measure current performance levels of the vision element at the lowest level Refer Appendix for an example to illustrate the approach 5.Marketing) who contribute towards the value taken by the vision element 2. information flow and responsibilities 8.Cascading the Vision Bottom . Determine (stretch) target performance levels at the lowest operating levels 9. Finalise targets. Establish (or streamline existing) mechanisms to measure performance levels of the vision element 4. Identify person(s) at each level who need to be made responsible in order to achieve the vision target 3. Check if aggregated target for vision element equals desired value 86 6. time frames. Aggregate current and target levels of performance till the performance measure for the vision element is obtained . Identify entities at all levels (eg Blast furnace. SMS.Up Approach 1. Determine time frames and responsibilities for targets N Y 7.

87 .5) Product Profitability (M1.2) Cost per new concept (M1.2) Inventory levels (M3.2) Level of External Interaction D Easy Needed ifficult Conversion cost within 1 year (M3.Cascading the Vision Issues in Cascading e following parameters influence the ease of cascading a vision element Definition Problems as y Data Availabilit iffic D Easy ul t y Ease of Measurementc Diffi as y Ease of Aggregationffic Di as y E Diffi cu lt E ul t E ult Material cost / Sales (M3.1) Customer satisfaction levels (M1.2) Parameters which influence the ease of cascading Sample vision element to illustrate the ease/difficulty in cascading Cascading efforts could vary significantly from one vision element to another..2) Easy Determining Responsibilit y D ifficu lt Truck turnaround time (M3.1) Cost of procurement (M3.2) Easy Number of Entities Involvedff Di icult Variability of truck transportation time (M3.1) Yield rate of new concepts (M1.2) Reduce product complaints (M3.1) After Sales Support expenses (M3.5) Adherence to schedules and budgets (M1....5) Conversion Cost within 1 year (M3.

.. consequen ollowing could vary across vision elements Success in Cascading Approach to Cascading Timeframes for Cascading 88 ..Cascading the Vision Issues in Cascading ading efforts could vary significantly from one vision element to another..

inadequate measurement mechanisms and dependence on a large number of external agencies 89 .Cascading the Vision Busine Proce ss ss Vision Ele nt me Vision Targe t Dire ction to be take by vision n e me le nt Issues in Cascading M1: Develop Products and Processes Difficulty Le l in Cascading ve (High/ Me dium/ Low) 1 Low High High 2 Low High High 3 Low High High 4 Low High High 5 Medium Medium Medium 6 High High High High High High High High High High High 7 High High High High High High High High High High High Conduct Research Research budget as a % of turnover Yield rate of new concept Cost per new concept Design lead time Customer satisfaction levels Product profitability New products per year Adherence to schedule and budgets Number of Design Modification Requests after a launch Cost of customer claims Manufacturing lead time in the 2 years following a new product release 1-2% 50% 10% 25% 100% 25% 2 100% 0 100% 25%      Define Product Medium High Medium Medium Medium High High High High High Medium High Medium Medium High Medium Medium Medium Low Medium Low High Low Medium Medium Low Medium Low Medium High Design Products and Processes   Low High Medium Medium Medium Medium Medium Medium Medium High 1 : Definition Problems 2 : Current Data Availability 3 : Ease of Measurement 4 : Ease of Aggregation 5 : Number of Entities Involved 6 : Determining Responsibility Centres 7 : Level of External Interaction Likelihood of difficulties in cascading the vision due to poor data availability.

Cascading the Vision Vision Ele nt me Vision Targe t Dire ction to be take by n vision e me le nt             1 Low Medium High Low Low Medium Low Low Low Low Low 2 Low Low Low Low Low Low High High High Low Medium Difficulty Le l in Cascading ve (High/ Me dium/ Low) Issues in Cascading M3.2: Produce Hot metal production Hot Metal Cost SMS Production SMS Yield Caster 1 speed Mill production MTBC HRC Cost DRI Production Plant Reliability Unplanned downtime Maintainence cost > 5000 MT/day $275/MT by FY2010 > 48Heats /Day >87% 6.2 meters/Minute by FY 2010 2.5 Lacs per month 3.2minutes by FY 2010 $ 350/ MT by FY 2010 1.8 lacs tonnes by 2009 > 95% < 5% $ 100/MT 3 Low High High High High High High High High High High High 4 Medium High Medium 5 High High High 6 Medium Medium Medium 7 Low Low Low Low Low Low Medium Low Medium Medium Medium Low Medium Medium Medium High High High Medium High Medium High High Medium High High High High High High High High High Medium Medium High High High Medium Medium High 1 : Definition Problems 2 : Current Data Availability 3 : Ease of Measurement 4 : Ease of Aggregation Cascading the vision could be difficult on account of the number of entities involved and identifying responsibilities for activities 90 5 : Number of Entities Involved 6 : Determining Responsibility Centres 7 : Level of External Interaction .

Cascading the Vision Issues in Cascading M3.5: Manage Logistics Network Vision Ele e t mn Vision Targ t e Dire ction to b e take b vision n y e mn le e t   Difficu Le l in Cascad lty ve ing (Hig Me ium Low) h/ d / 1 2 Medium High Low High Low Medium Medium Medium High High Low Medium 3 High Low Low Low Medium High 4 5 6 7 Medium Low High Medium Low Low Low Medium Medium Medium Medium High Low High Low Medium Low High Medium Medium Low Low Low Low Variability of in-bound transportation times turnaround tim Truck e Despatch without any dam e ag Inventory levels Slow-moving non-m / oving and obsolete inventory 2009 Increase in volum by current es m anpower 50% 50% 100% as per norm 90% TBD   1 : Definition Problems 2 : Current Data Availability 3 : Ease of Measurement 4 : Ease of Aggregation 5 : Number of Entities Involved 6 : Determining Responsibility Centres 7 : Level of External Interaction Cascading the vision should be the feasible provided data is made available and responsibility centres are assigned 91 .

Monitoring Mechanisms         Monitoring Requirements Why do we need to monitor ? What’s been done so far ? What were the results ? What further needs to be done ? Who will do it ? When will it be done ? How will it be done ? What inputs are needed from various persons ? WORK PLAN FOR THE NEXT 15 DAYS Ste to betake p n Re sponsibility Start Date End Date Re source s PERFORMANCE ON VISION ELEMENT Vision e me le nt Targ t for e pre vious pe riod Actuals for pre vious pe riod Targ t for e curre nt pe riod Actuals for curre nt pe riod Targ t for e ne pe xt riod KEY ISSUES REQUIRING ATTENTION Are a Issue Ste alre ps ady take n Inputs ne de to e d re solveissue Tim fram e e 92 .

Manage Supply Sourcing 93 .Caster.02) Vision Element Owner Sections contributing to the Vision Element Individuals contributing to the Vision Element Process Owner.70% & 98. Mill. “Produce ” (M3.) Monitoring mechanisms would need MD Formal mechanisms needed at these 4 levels Process Owner Sub-Process Owner Process Owner. “HSM ” (M3.Monitoring Mechanisms  Monitoring Levels to be established at all levels Examples of personnel who would be monitoring the vision element “Caster & Mill yield of 99. etc Need to establish owners for each vision element * from M3.52% ”* EDIC Dolvi Process Owner.xx) Specific people from LF .1 .02. “Fulfil Demand” (M3.

Monitoring Mechanisms  Monitoring Frequency Formal periodic monitoring would be necessary at four levels as per the following schedule : MD Process Owner Sub-Process Owner Vision Element Owner Sections contributing to the Vision Element Individuals contributing to the Vision Element Quarterly Monthly Fortnig htly Weekly Need to establish monitoring schedules for each vision element 94 .

timeframes and responsibilities) Issues requiring attention/intervention         When and how do they report  In accordance with pre-determined schedules In standard customised formats developed Actions to be taken by recipient   Discuss and understand contents of report Decide on means of resolving issues which have been identified by the person preparing the report Co-ordinate with the required agencies and resolve issues   95 .Monitoring Mechanisms Summary of Reporting Mechanisms What do they report  Who reports to whom  Various individuals and sections contributing to vision element to the vision element owner Vision element owner to sub-process owner Sub-process owner to process owner Process owner to MD Performance in the current period against targets Steps taken towards meeting targets Results of successfully executed steps Issues faced on unsuccessfully executed steps and means planned/taken to resolve them Workplan to meet vision element targets (steps to be undertaken.

Monitoring Mechanisms Monitoring Levels : Vision Element Lev “Caster & Mill yield of 99.52% Vision Element Owner. Utilities Mech.70% & 98.51% & 98.70% ) Material Level Performance on Vision Element LF Caster Mill Elec Maint. Maint Performance on vision elements would be reported by individuals / sections directly responsible for its achievement to the vision element owner every fortnight 96 . (Caster & Mill yield of 99.

50 heats/ day Caster & Mill yield of Average sequence length 99.25 ltr/t Average melting power consumption @ 254 kwh / ton Material Level Performance LF Caster Mill Elec. Hot Strip Mill Vision Element Level Performance Average Heat size 193 MT/TLS Avg.Maint Utilities Mech.70% L+12 Fuel consumption in Tunnel furnace @ 10.51% & 98.Maint Sections /individuals who contribute to the vision element Performance on vision elements would be reported by the vision element owners to the subprocess owner every month 97 .Monitoring Mechanisms Monitoring Levels : Sub-Process Leve An Example : Hot Strip Mil Sub-Process Owner.

Process level Performance Manage Supply Sourcing VE 1 VE 1 Produce Fulfil Orders Deliver Services & Manage Logistics Support Network VE 1 VE 1 VE 2 VE n VE 2 VE n VE 1 VE 2 VE n VE 2 VE n VE 2 VE n V E Vision element Sub-process level performance on vision elements would be reported by the sub-process owners to the process owner every month 98 .Monitoring Mechanisms Monitoring Levels : Process Level An Example : Fulfil Demand Process Owner Fulfil Demand Sub.

5 VE 2 VE n VE 1 M4 .2 VE 1 VE 2 VE n M4 .5 VE 1 VE 2 VE n Process level performance on vision elements would be reported by the process owners to the Managing Director every quarter 99 .1 VE 2 VE n VE 1 M3 .2 VE 2 VE n VE 1 M1 .1 VE 1 VE 2 VE n VE 1 M1 .2 VE 2 VE n VE 1 M3 .Monitoring Mechanisms Monitoring Levels : Process Level An Example : Fulfil Demand Managing Director Process Level Performance M1 Develop Products and Processes M2 Generate Demand M3 Fulfil Demand M4 Plan and Manage the Enterprise M1 .1 VE 2 VE n M4 .4 VE 2 VE n VE 1 M3 .2 VE 2 VE n VE 1 M2 .3 VE 2 VE n VE 1 M2 .1 VE 2 VE n VE 1 M2 .

Architecting the Change Integrated Performance Measurement To focus the entire company on achieving the Operational Vision. we must rethink the way we measure and reward behaviour • Measure the ability to satisfy customer requirements • Measure company-wide bottom line impact • Measure the impact of the supply chain on other customers/suppliers in the value chain • Measure “cross functional” performance to achieve total business process 100 .

. Cost..... Value Cost  Units per Employee  Activity Based Cost.. .. Quality  Order Quality  Fill Rate  Invoice Quality. quality and time provide the foundation for complete competitive performance.Performance Elements and Illustrative Metrics  Customer Satisfaction  Return on Assets  Employee Satisfaction.. 101 .Architecting the Change Integrated Performance Measuremen Performance metrics can be defined around three basic elements of performance. Servic e Time  On-time Delivery  Order to Collect Cycle Time  Inquiry Response Time.

quality and time Process owner controls achievement of metrics Lower levels of metrics are telescoped into higher levels (ie are consistent with and support the higher levels) Metrics are integrated into incentive programs and reward structures 102 . supporting simultaneous optimisation of cost.Architecting the Change Integrated Performance Measuremen Effective performance metrics have a number of key characteristics Business Objectives  Success Factors Supply Chain Dolvi Plant Process Sub-process Group   Performance Metrics    Individual Metrics are linked to business objectives and critical success factors Metrics are process-focused. focusing on business outcomes as opposed to functional viewpoints Suite of metrics are balanced.

Sponsorship Actions    Establish performance measurement approach and improvement goals Actively sponsor measurement and other improvement programs Assign responsibility for measurement to standards Lead efforts to integrate metrics and targets into incentive and reward programs Collaborate with stakeholders to set aggressive yet achievable targets Actively monitor metrics.Architecting the Change Integrated Performance Measuremen Management plays a critical role in effective performance measurement. . improvements and improvement programs Recognize successes and challenge and support areas of shortcoming Lead organizational behaviour changes that result in consistently managing to address critical success factors and better meeting improvement goals Executive Program Management Leadership   Enablement • People • Process • Technology Business Ownership    103 .

Architecting the Change Managing Change Our Approach to Change Management • Communicate often throughout the change process . build a success story Change Have at least one “champion” to act as a change agent for each program • Vision • Develop and implement a reward system which supports performance objectives • Structure the organisation and the jobs to support the process Sense of Make sure change support resources are available after implementation • Urgency • Build consensus and commitment to change.create a team focus • Conduct phased implementations.for the project and the process Path • Involve end users right from the start .at all levels Constant • Educate all personnel. start at the top 104 . cover new concepts and skills Reinforcement • Develop action plans to support implementation of “master plan” • Get commitment to support a learning curve Migration • Have measurable performance objectives .

illustrating to the entire organisation management’s commitment to the change effort Business Ownership Ownership and commitment to change with knowledge. frameworks and support to perform their work successfully experienced by all individuals throughout the organisation 105 . skills. tools.Architecting the Change Managing Change Framework for Managing Change A useful change management framework identifies four key components that need to be managed Planning for and managing the move from the “as is” organisation to the desired “to be” state Program Managemen t Enablemen Critical products developed that t provide individuals and the organisation Projects Executive Leadership Sponsorship of change by key executives.

Architecting the Change The Recipe for Success              Make it the #1 priority Champion the effort at the very top Identify “stretch” goals and measurements Prepare for resistance Challenge everything Address each dimension of the operation Facilitate cross-functional participation & Prepare for constructive conflict buy-in Empower change agents Use an integrated approach Commit the necessary resources Cut through organization boundaries Communicate. communicate. communicate!!!  Celebrate and reward success!!! The good news is that success is very achievable. tools and techniques 106 . Hundreds of companies have achieved dramatic results by applying proven business transformation approaches.

processes and technology are working together to meet the organization's strategic objectives 107 .Potential Benefits The Transformed Environment From Jobs Organization Orientation Customer Front Line Employee Manager Executive Priority Measures Focus Values Narrow Hierarchy Function Inconvenience Manual labourer Supervisor Bookkeeper Activity Financial Internal Protective To Multi-dimensional Team Process Reason for existence Mission critical resource Coach Leader Result Operational Customer Productive The end result of an effective business transformation initiative is a business unit whose people.

108 .Next Steps Finalise the Operational Vision for processes not depicted  Identify process owners for the identified business processes and they must be validated by them taking into account the PMS of individuals defined by the EVA team Need to finalize the following :     The vision elements for the sub-processes under them Stretch goals/metrics indicating levels of performance to be achieved on the vision elements The key performance indicators (KPI) for each sub-process. either slightly modified or new vision elements added to the existing set Cascade each vision element  Identify responsibility to ensure successful cascading   At the process owner level At lower operating levels contd...

Cascading the Vision Cascade each vision element (...contd)  Next Steps Finalise the following for cascading :       Approach (Top-Down or Bottom-Up Approach) to be adopted Timeframes (start date and end date) Detailed activities/action steps Responsibilities and resources to be made available for each activity Interim targets and checks to be set up Mechanisms to ensure adherence to schedule  Identify changes which need to be made to existing processes to improve the following :   Systems to capture information regarding performance on selected KPIs/vision elements Mechanisms to collate data to enable periodic review by process owners Finalize monitoring mechanisms for each vision element  Determine mechanisms for reporting information on the extent of progress against the set out vision targets. specifically the following :      Nature of information to be communicated Sources for details on the above data Parties to whom information would be communicated to Frequency at which information would be provided Formats to be used for communications 109 .