Total Quality Management

A report on

Quality principles and control in TATA STEEL

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Tata Steel - Company Profile Tata Steel has always believed that the principle of mutual benefit - between countries, corporations, customers, employees and communities - is the most effective route to profitable and sustainable growth Established in 1907, Tata Steel is among the top ten global steel companies with an annual crude steel capacity of over 28 million tonnes per annum (mtpa). It is now one of the world's most geographically-diversified steel producers, with operations in 26 countries and a commercial presence in over 50 countries. The Tata Steel Group, with a turnover of US$ 22.8 billion in FY '10, has over 80,000 employees across five continents and is a Fortune 500 company. Tata Steels vision is to be the worlds steel industry benchmark through the excellence of its people, its innovative approach and overall conduct. Underpinning this vision is a performance culture committed to aspiration targets, safety and social responsibility, continuous improvement, openness and transparency. Tata Steels larger production facilities include those in India, the UK, the Netherlands, Thailand, Singapore, China and Australia. Operating companies within the Group include Tata Steel Limited (India), Tata Steel Europe Limited (formerly Corus), NatSteel, and Tata Steel Thailand (formerly Millennium Steel).

Founding Principles Since its formation by Jamsetji Tata in 1868, the Tata Group has consistently been run according to the principle that the wealth it creates should be returned to society. Jamsetji Tata believed that the health and welfare of the employees are the sure foundation of our prosperity. The Groups stated aim is to improve the quality of life of the communities we serve. This is demonstrated constantly by its businesses through their contributions to the communities of which they are part now in over 80 countries around the world. Two thirds of the equity of Tata Groups holding company, Tata Sons, is held by philanthropic trusts. Over the decades, these trusts have benefited a vast range of medical, academic, social and cultural projects and institutions. Tata Steel was one of the main foundations on which this pioneering industrial group has continued to grow around the world.

The Tata Group has always been driven by five core values:

Integrity. We must conduct our business fairly, with honesty and transparency. Everything we do must stand the test of public scrutiny. Understanding. We must be caring, show respect, compassion and humanity for our colleagues and customers around the world, and always work for the benefit of the communities we serve. Excellence. We must constantly strive to achieve the highest possible standards in our day-today work and in the quality of the goods and services we provide. Unity. We must work cohesively with our colleagues across the group and with our customers and partners around the world, building strong relationships based on tolerance, understanding and mutual cooperation. Responsibility. We must be responsible and responsive to the countries, communities and environments in which we work, always ensuring that what comes from the people goes back to the people many times over. TATA STEEL IN INDIA: Jamshedpur: It may not make sense to many in the steel industry to invest in various quality control drives during such a tough time, but for Tata Steel, pursuing such goals has been a passion and the very essence of its existence. The company has recently won the Deming Application Prize for its excellence in total quality management (TQM), the only steel company in the world outside Japan to bag the award. The steel major, which in earlier years had been saving around Rs 200-300 crore annually, would, aided by Deming this year (2008-09), target to save around Rs 600 crore. "This is not because of the effect of market prices or impact of raw material costs going up or down, it is purely internalfrom improvements in the work processes the company has brought about," said Avneesh Gupta, TQM chief of Tata Steel. The steel majors commitment to the best practices can be gauged by the remarks of Tata Steel managing director B Muthuraman recently: "In every walk of life, whether it is in running a business, in sports or education, if you take care of the processes, the results will take care of themselves." He was speaking at the JJ Irani award for excellence in education in Jamshedpur schools. Tata Steel, which expects to emerge strongly from the ongoing global recession, has already put in place a revised plan for the second half of 2008-09 (Oct onwards). The plan includes techniques/benefits learnt in Deming and the target has been set in crores. Various items, right from the raw material side to marketing & sales, several daily management items which could be done better while bringing about cost reduction, cost-cutting contributions from its Aspire projects (problem solving, Six Sigma application, etc), efforts from supply chain management by following inventory replenishment models (while ensuring that whatever the customer was wanting was readily available to him) have been listed.

"It (Deming) is a very robust and a very involving process in which you cannot escape the enlightenment at the end of it," Gupta told FE here recently. It is only the application of the steps involved in Deming and the consequent effects that emerged gives one the real insight into its working, he added. "Each key performance indicator (KPI) is being tracked by the company, like zinc consumption, coal rate, coke rate, etc, including whether any delays were taking place or not," Gupta said. Even the monthly performance improvement review of the companys TQM efforts by chief operating officer HM Nerurkar ensures that things were moving in the right direction.... Quality Control With stringent quality control procedures in place, Tata Steel Wire Rod is thoroughly tested and monitored throughout the steelmaking and rolling processes. Our quality systems satisfy ISO 9001:2000 and are audited consistently by Lloyds register. The Scunthorpe site is also approved to ISO 14001 Environmental standards. Each of the following measures that affect the quality of wire rod are strictly monitored and controlled.

Chemical composition Steel cleanness Control of segregation Surface quality Dimensions Decarburization Scale Mechanical properties Post-rolling care Highly trained and competent specialists conduct the testing in state of the art laboratory facilities.

THE DEMINGS 14 PRINCIPLE TATA FOLLOWING ARE PRINCIPLE 1 : "Create a constancy of purpose" Define the problems of today and the future Allocate resources for long-term planning Allocate resources for research and education Constantly improve design of product and service PRINCIPLE 2 : "Adopt the new philosophy" Quality costs less not more Superstitious learning The call for major change Stop looking at your competition and look at your customer instead PRINCIPLE 3 : "Cease dependence on inspection" Quality does not come from inspection Mass inspection is unreliable, costly, and ineffective Inspectors fail to agree with each other Inspection should be used to collect data for process control PRINCIPLE 4 : "Do not award business basedon price tag alone" Price alone has no meaning Change focus from lowest initial cost to lowest total cost Work toward a single source and long term relationship Establish a mutual confidence and aid between purchaser and vendor PRINCIPLE 5 : "Improve constantly the system of production and service" Quality starts with the intent of management Teamwork in design is fundamental Forever, continue to reduce waste and continue to improve Putting out fires is not improvement of the process PRINCIPLE 6 : "Institute training" Management must provide the setting where workers can be successful Management must remove the inhibitors to good work Management needs an appreciation of variation This is management's new role.

PRINCIPLE 7: "Adopt and institute leadership" MBO's Work standards Meet specifications Zero defects Appraisal of performance Replace with leadership Leaders must: Remove barriers to pride of workmanship Know the work they supervise Know the difference between special and common cause of variation Principle 8 : "Drive out fear" The common denominator of fear The fear of knowledge Performance appraisals Management by fear or numbers PRINCIPLE 9 : "Break barriers among staff areas" Know your internal suppliers and customers Promote team work PRINCIPLE 10 : "Eliminate slogans, exhortations,and targets They are directed at the wrong group They generate frustration and resentment Use posters that explain what management is doing to improve the work environment PRINCIPLE 11 :"Eliminate numerical quotas" They impede quality They reduce production A person's job becomes meeting a quota PRINCIPLE 12 : "Remove barriers" Performance appraisal systems Production rates Financial management systems Allow people to take pride in their workmanship PRINCIPLE 13 :"Institute a program of education and self-improvement" Commitment to lifelong employment Overtime and education Work with higher education of needs Develop team building skills in children

PRINCIPLE 14 : "Take action to accomplish thetransformation" Management must: Struggle over the fourteen points Take pride in the new philosophy Include the critical mass of people in the change Learn and use the Shewhart cycle TATA STEEL INDIA WINS THE DEMING APPLICATION PRIZE-2008 Tata Steel Indias Award of the Deming Application Prize-2008 for excellence in Total Quality Management was a first to an integrated steel company outside Japan. Mr. B. Muthuraman, Managing Director, Tata Steel, received the coveted medal from Mr. Fujio Mitarai, Chairman of the Deming Prize Committee, at a formal function in Tokyo, Japan. While accepting the award at the function, Mr. Muthuraman dedicated the award to the employees and workers of Tata Steel.He said in his speech, It is because we have taken the first steps, first firm and sure steps towards quality movement and because a large number of people in the entire organization are involved in that movement that we are being given this prestigious award. And he added, Our efforts to challenge the Deming Prize and the questions the Deming Examiners asked us made us humble and made us realize that we now have a tool and a system with which we can improve everything we do in a continuous and predictable basis, that our results would be based on our efforts and that we would be able to overcome any obstacles put on us by the external environment. During the assessment process, the Japanese examiners were not only impressed by the quality parameters followed at Tata Steel, but also by the social commitment of Tata Steel and its work done in the rural areas over the last 100 years. I believe that this prize is coming to us at the right time with the financial and economic crisis all round the world. We believe that our work and our efforts to get this prize and the work and the efforts that we will do to justify our winning this prize will make us succeed even in the midst of this crisis and make us a better organisation than what we are today, said Mr. Muthuraman while addressing the gathering in Tokyo.

Tata Steels leadership in sectors of economic, social and environmental significance brings a unique set of capabilities. The heritage of returning to society what the company earns evokes trust among all its stakeholders, including consumers, employees, shareholders, communities and government regulatory bodies. Because of its strong commitment to the cause of sustainable development, certification to environment management systems, quality standards, and the belief that better environmental management leads to superior business performance, the Company won a number of national and international awards and accolades during the year.