Project Report on Total Quality Management At Steel Authority of India (SAIL)

Submitted to -: Prof. Pranay Verma

Submitted By Chandan Kumar FT-10-842 PGDM 10-12

CONTENTS

Sr No. 1 2 3 4 5 6 7 8

Topic SAIL Introduction History of SAIL Vision & CREDO Company Policies Techniques of TQM JIT(Just in Time) Six Sigma Achievements & Recent Developments

Pg No. 2 5 7 8 9 9 13 16

Steel Authority of India Limited (SAIL)

Steel Authority of India Limited (SAIL) is the leading steel-making company in India. It is a fully integrated iron and steel maker, producing both basic and special steels for

domestic construction, engineering, power, the country's Central Public Sector Enterprises.

railway,

automotive

and defence

industries and for sale in export markets. SAIL is also among the four Maharatnas of

SAIL manufactures and sells a broad range of steel products, including hot and cold rolled sheets and coils, galvanised sheets, electrical sheets, structurals, railway products, plates, bars and rods, stainless steel and other alloy steels. SAIL produces iron and steel at five integrated plants and three special steel plants, located principally in the eastern and central regions of India and situated close to domestic sources of raw materials, including the Company's iron ore, limestone and dolomite mines. The company has the distinction of being Indias second largest producer of iron ore and of having the countrys second largest mines network. This gives SAIL a competitive edge in terms of captive availability of iron ore, limestone, and dolomite which are inputs for steel making. SAIL's wide range of long and flat steel products which are much in demand in the domestic as well as the international market. This vital responsibility is carried out by SAIL's own Central Marketing Organisation (CMO) that transacts business through its network of 37 Branch Sales Offices spread across the four regions, 25 Departmental Warehouses, 42 Consignment Agents and 27 Customer Contact Offices. CMOs domestic marketing effort is supplemented by its ever widening network of rural dealers who meet the demands of the smallest customers in the remotest corners of the country. With the total number of dealers over 2000, SAIL's wide marketing spread ensures availability of quality steel in virtually all the districts of the country. SAIL has a well-equipped Research and Development Centre for Iron and Steel (RDCIS) at Ranchi which helps to produce quality steel and develop new technologies for the steel industry. Besides, SAIL has its own in-house Centre for Engineering and Technology (CET), Management Training Institute (MTI) and Safety Organisation at Ranchi. Our captive mines are under the control of the Raw Materials Division in Kolkata. The Environment Management Division and Growth Division of SAIL operate from their headquarters in Kolkata. Almost all our plants and major units are ISO Certified.

History of Steel Authority of India Ltd.

1954 - Hindustan Steel Ltd. was created to oversee the Rourkela Steel Plant 1960 - The Alloys steel plant was installed at Durgapur in W. Bengal with Japanese assistance.Special steels were produced such as armour plate, grade steel & many special grade alloys to meet vital and strategic needs of country in areas of nuclear energy, defence, space. 1968 - SAIL took over the management of Maharashtra Elektrosmelt Ltd. a small compact company, at Chandrapur, Maharashtra for utilising some of its facilities for R&D works as well as maximising its production of ferro manganese for use in SAIL plants. The unit produces several goods of special steels. The Company proposed to diversify into manufacture of ferro alloys, low carbon pig iron etc. 1973 - Pursuant to a decision taken by Government of India in January the Steel Authority of India, limited was formed on 24th January, as a holding Comp. for Steel & Associated input industries. 1974 - SAIL International Ltd., was incorporated to coordinate the export & import business. 1976 - Durgapur Mishra Ispat Ltd., Bhiali Ispat Ltd., an Rourkela Ispat Ltd., were formed as fully owned subsidiaries of SAIL for taking over the running business of Alloy Steels Plants, Bhilai steel Plant & Rourkela Steel Plant on tranfer from HSL. 1982 - The Salem Steel Plant was inagurated at Salem in Tamil Nadu in March. It represents the dispersal of industries & balance regional development bringing the latest sophistication in cold rolling. The products find application in major industries viz., nuclear, petroleum, chemicals, fertilisers, food processing, Pharmaceuticals, dairy, household appliances, cutlery etc. 1988 - The Visvesvaraya Irons and Steel Co. limited became a subsidiary of SAIL with SAIL acquiring 60% of shares of Company. The Bhilai Steel Plant set up a blast furnace bell-less top charging system. 1993 - The Comp. undertook to float a joint venture Comp. in collaboration with USX Engineers and Consultants Inc., Pittsburg, USA for development & execution of technology & system integration for computer applications in basic industries such as those engaged in steel mining & metallurgy. 1995 - SAIL has ventured into setting up a power project at Bhilai in joint venture with

M/s. Larsen and Toubro & CEA, USA Inc. 1999 - The Steel Authority of India Ltd [SAILs] has forged a marketing tieup with Tyazpromexport [TPEs] of Russia to sell the entire range of castings & pig iron produced by Kulti Works, a division of Indian Iron & Steel Comp. 2000 - Private sector steel majors Tisco, Kalyani Steel & the public sector Steel Authority of India are all set to form a three-way joint venture for undertaking ecommerce activities in the steel sector. Steel Authority of India Ltd., Tata Steel & Kalyani Steels limited entered into an agreement for creation of an Internet-based global, independent B2B Steel Market place. Steel Authority of India Ltd & the National Thermal Power Corp. are set to begin for a joint venture for three captive power plants & associated units of SAIL. 2003 - SAILs output surpasses ten MT of saleable steel. 2005 -GAIL ties up with SAIL 2008 -Steel Authority of India Ltd [SAILs] has informed that the Comp. on February 21, 2008 has signed a Joint Venture Agreement with M/s. Jaiprakash Associates Limited [JALs] for formation of Joint Venture Comp. [JVCs] to set up a cement plant for producing 2 million tonnes of Cement at Bokaro [Jharkhands] by using slag generated at Bokaro Steel Plant of SAIL. Steel Authority of India Limited & Larsen & Toubro Limited [L&Ts] has signed a Memorandum of Understanding [MoUs] to jointly set up, develop, manage & own captive/independent power plants at suitable location/s to meet future power requirements of SAIL. 2009 - SAIL signed a Joint Venture Agreement with Coal India Ltd, Rashtriya Ispat Nigam Ltd, NMDC Ltd and NTPC Ltd for setting up of a Special Purpose Vehicle i.e. International Coal Ventures Pvt. Ltd (ICVL) for acquisition of coal mines/block overseas for securing coal supplies. 2010 The Govt. Of India has accorded the status of Maharatna. Vision To be a respected world class corporation and the leader in Indian Business in

Quality, Productivity, Profitability & Customer Satisfaction. CREDO SAIL attach highest value to human life. SAIL follows a well drawn policy to ensure safety of human beings and equipment so as to ensure an accident free work environment. They build lasting relationships with customers based on trust and mutual benefit. They uphold highest ethical standards in conduct of our business. They create and nurture a culture that supports flexibility, learning and is proactive to change. They chart a challenging career for employees with opportunities for advancement and rewards. They value the opportunity and responsibility to make a meaningful difference in people's lives.

Company Policies
Quality Policy According to SAIL they say :We shall build and sustain a world class organization, where Quality is the hallmark of every process and activity with the involvement and dedication of our human resource. We are committed to achieve satisfaction of all our stakeholders, through innovation and continual improvement. Corporate Social Responsibility Policy SAIL recognizes that its business activities have direct and indirect impact on the society. The Company strives to integrate its business values and operations in an ethical and transparent manner to demonstrate its commitment to sustainable development and to meet the interests of its stakeholders. The Company is committed to continuously improving its social responsibilities,

environment and economic practices to make positive impact on the society. Safety Policy Safety of its employees and the people associated with it including those living in the neighbourhood of its plants, mines and units. Pursue safety efforts in a sustained and consistent way by establishing safety goals, demanding accountability for safety performance and providing resources to make safety programmes work. Corporate Environmental Policy The steel authority of India Limited (SAIL), manufacture various products of iron and steel. The company owns and operates five integrated steel plants at Bhilai, Durgapur, Rourkela, Bokaro and Burnpur and three special steel plants at Salem, Durgapur and Bhadrawati along with captive mines for iron ore, limestone, dolomite, and coal and has a subsidiary, MEL at Chandrapur. SAIL also have an extensive marketing network spread across the length and breadth of the country. SAIL reaffirms its commitment to contributing towards a clean and sustainable environment and continually enhancing its environmental performance as an integral part of its business philosophy and values. Human Resource Policy SAIL ensure competent and committed team engaged in building a culture of learning to achieve excellence in performance and employee satisfaction through innovation and continual improvement.

Techniques of TQM in SAIL

JIT (Just In Time) Six Sigma The ISO 9001:2000 Quality Assurance System CSR JIT (Just In Time): Just-in-time is an inventory strategy that strives to improve a businesss return on investment by reducing in process inventory and associated carrying cost. JIT can dramatically improve a manufacturing organizations return on investment, quality and efficiency. The major competitive dimensions that form the competitive position of a company include the following. Cost Make it cheap Within every industry, there is usually a segment of the market that buys solely on the basis of low cost. To successfully compete in this niche, a firm must be the low cost producer, but even doing this does not always guarantee profitability and success.

Product quality and reliability Make it good. Quality can be divided into two categories: product quality and process quality. The level of quality in a products design will vary with the market segment at which it is aimed. Process quality is critical because it relates directly to the reliability of the product. Delivery speedMake it fast. In some markets, a companys ability to delivery more quickly than its competitors may be critical. Delivery reliabilityDeliver it when promised. This dimension relates to the ability of the firm to supply the product or service on or before a promised delivery due date. Coping with changes in demand Change its volume. In many markets, a companys ability to respond to increases and a decrease in demand is an important factor in its ability to compete. It is well known that a company with increasing demand can do little wrong. When demand is strong and increasing, costs are continuously reduced due to economics of scale, and investments in new technologies can be easily justified. But scaling back when demand decreases may require many difficult decisions relating to laying off employees and related reductions in assets. The ability to effectively deal with dynamic market demand over the loan term is an essential element of operations strategies. Flexibility and new product introduction speedChange it. Flexibility, from a strategic perspective refers to the ability of a company to offer a wide variety of products to its customers. An important element of this ability to offer different products is the time required for a company to develop a new product and to convert its processes to offer the new product. According to a report published in Times of India (2007) SAIL had received excellent rating for achieving targets set in the MOU with the Government for the year 200506. Considering the sustained growth demonstrated by the company during 2006-07, a similar rating is expected this year as well. During 2005-06, while maintaining capacity utilisation at 104%, the company focused on the production of finished steel, lower energy consumption and reduction in coke rate, increased production through the continuous cast (CC) route and improved the product mix during 2006-07. Effective strategies of SAIL to attain competitive advantage Techno-economic parameters Cost Effectiveness

Economic Times states that the thrust on improving efficiency of cost management launched by SAIL during the year 2005. New schemes were identified and existing schemes reviewed and revised to offset the impact of the sharp rise in input prices, particularly in the case of coking coal, Ferro alloys, etc., during the year, resulting in savings of about Rs. 130 crore. SAILs cost management endeavours once again received recognition at the national level. The Institute of Cost & Works Accountants of India adjudged SAIL as being the second best company in the public sector in India during 2005 in this parameter and presented the company its National Award for Excellence in Cost Management. Human Resource Management SAILs total manpower at the end of the year thus stood at around 127,000, showing a reduction of about 48,000 since 1998. The companys labour productivity grew by 4% to 142 tones/man/year in 2006-07. To equip employees with higher technical skills, SAIL has signed an agreement with Tata-Corus/UK and CAI/Austria for provision of specialised training. Research & Development The development measures at SAIL projects at SAIL focus on process improvement, cost competitiveness, product quality, product development and basic research for improvement in techno-economic parameters to increase capacity utilization. Environment Management SAIL is committed to providing a healthy environment in and around its steel plants. Over 2 lakhs trees planted added further substance to the companys efforts in this direction. Around 13 million trees have been planted so far by SAIL at different plant/unit/mine locations. The SAIL plants/units maintained their thrust on controlling pollution during the year. Some of them even received awards for excellence in pollution control measures. Public Relations To reinforce employee morale, internal communication activities were further strengthened. A planned approach yielded excellent results, with appreciative feedback from employees at all levels on the initiatives taken and themes selected to motivate, inform and instill pride in the workforce. Wide and focused communication through both print and electronic media strengthened the image of the organisation amongst the companys stakeholders and general public. Revival of the television ad campaign Theres a little bit of SAIL in everybodys life in the later part of the year,

re-in forced the companys image as the industry leader in viewers minds due to its excellent recall value. Other campaigns such as the one highlighting SAILs turnaround as the most impressive in Indian industry, Steel Green and Steel in Need, SAIL in Deed were well received by the target audiences. A radio jingle in Hindi, Safety pin se flyover..., also generated popular response. Cost competitiveness The following cost reduction measures are adopted in SAIL to gain competitive advantage:Reduction in fixed cost through volume growth, reduction in manpower cost and financial charges; Reduction in variable cost through technological interventions like elimination of ingot steel route, 100% Basic Oxygen Furnace and Continuous Casting, coke rate reduction via CDI/auxiliary fuel injection, and higher levels of process control computerization/automation, leading to enhancement of operating efficiency; and By business process improvements such as streamlining of supplies of key inputs of steel making through higher utilisation of e-commerce, centralized procurement for select items, etc. Quality competitiveness: SAIL also emphasize on technology & input quality improvement across value chain; thrust on special quality steel and new products; improvement in process consistency and metal treatment; advanced online testing and quality control facilities; standardization/automation/process control & IT. Corporate Plan-2012 has considered the market growth projections assuming overall steel consumption at about 8% per annum. However, the growth trends and macro-economic indicators could lead to higher growth potential. Therefore, depending on the market growth, strategies of competitors, global economic scenario, government policies and resource availability, SAILs plans may be revised from time to time, and further growth in terms of volume, products, etc., may be aimed through Greenfield investments, acquisitions/mergers etc. The current plan provides the broad direction for SAIL to move forward and would be reviewed periodically. Market Development SAIL has valued customers group in identifying their specific needs specific to that group thus segmenting and developing market segment for our products. Major

product modifications are done as per their specific needs of the Market segment thereby creating product differentiation packages. JIT Delivery JIT Delivery means just in time delivery. SAIL is able to make delivery just in time because it works in pre-planned manner; it takes order only after consulting the production units. So that the products car be delivered in right time. Production According To Market Needs SAIL is always in touch in market and tries to produce according to market needs. SAIL tries to produce quality products / new products which full fill the need of market. Benefits of JIT Set up times are significantly reduced in the factory. The flow of goods from warehouse to shelves improves. Employees who possess multiple skills are used more efficiently. JIT provides better scheduling and work hour consistency. There is an increased emphasis on supplier relationship. The ISO 9001:2000 Quality Assurance System: Total Quality Management is an integral part of the day to day activities of the company. The ISO 9001:2000 Quality Assurance System is being maintained since its accreditation, which covers all the sections of the plant. Six Sigma Six Sigma seeks to improve the quality of process outputs by identifying and removing the causes of defects and variability in manufacturing and business processes. Each Six Sigma project carried out within an organization follows a defined sequence of steps and has quantified financial targets (cost reduction or profit increase). A six sigma process is one in which 99.99966% of the products manufactured are statistically expected to be free of defects (3.4 defects per million).

Sigma level Sigma Level 1 2 3 4 5 6 7 691,462 308,532 66,807 6,210 233 3.4 0.019 69% 31% 6.7% 0.62% 0.023% 0.00034% 0.0000019% 93.3% 99.38% 99.977% 99.99966% 99.9999981 % 31% DPMO %Defective %Yield

The Six Sigma Methodology The Six Sigma includes two key methodologies: DMAIC and DMADV. DMAIC is used for an existing process. DMADV is used when creating a new product or process. Using DMADV for new projects usually results in a more predictable process and ultimately higher quality product. DMAIC There are 5 important steps included in DMAIC. They are: D Define goals to improve the overall process between the companys strategy and the customers demands (can also refer to the group or individuals being supported) M Measure the current processes. Collect relevant data on the current processes and then use this data as a baseline for future comparisons. A Analyze your relationship within the process. It is important to understand the relationship to determine factors that can ensure that the companys strategy is in line with customer demands. I Improve the process. It is important to constantly improve and optimize the process with analysis and other techniques. One technique that is often used is

Design of Experiments. This is a technique that uses acceptable experimental design to help test a hypothesis. C Control. It is important to ensure that any variances can be controlled and corrected in order to avoid possible costly defects and loss of quality. Pilot runs are often set up to study process capability and production transition. These pilot runs can help fine tune or add additional control mechanisms. DMADV There are 5 important steps included in DMADV. They are: D Define goals that are consistent between the business strategy and customer demands. M Measure CTOs (Critical To Qualities). CTOs consist of production process, capabilities producing a product, a products capability, and any risk assessments. A Analyze and evaluate many different designs and choose the best design for its overall qualities. D Design details. It is important not only to design a product, but to optimize the design features. In order to fully optimize a design feature, it may be necessary to create multiple designs or simulations. V Verify the design. Important steps to verifying a design include setting up pilot runs and running a short production. This step also requires that the design be handed over to process owners There are numerous benefits of six sigma, as a way to address issues and problems. Among the benefits of six sigma is the decrease in defects that are allowed to reach the customer. Other benefits of six sigma include: Focus on customers. Improved customer loyalty. Reduced cycle time Less waste. Data based decisions.

Time management Sustained gains and improvements Systematic problem solving. Employee motivation. Data analysis before decision making. Faster to market. Team building. Improved customer relations. Assure strategic planning.. Reductions of incidents. Measure value according to the customer. Better safety performance. Understanding of processes. Effective supply chain management. Design and redesign products/services. Knowledge of competition, competitors . Develop leadership skills. Breakdown barriers between departments and functions. Management training. Improve presentation skills. Integration of products, services and distribution. Use of standard operating procedures. Better decision making.

Improving project management skills. Sustained improvements. Alignment with strategy vision, and values. Increased margins. Greater market share. Supervisor training. Lower costs to provide goods and services. Fewer customer complaints. Achievements SAIL was featured in the 2010 list of Forbes Global 2000 companies at position 582. National Institute of Personnel Management conferred the National Award on SAIL for Best HR Practices 2008. SAIL was adjudged as the top Indian company under the Iron & Steel Sector for the Dun & Bradstreet Rolta Corporate Awards 2008. Golden Peacock Award for Combating Climate Change 2008 for BSP, Occupational Health & Safety 2008 for BSL. The highest number of Vishwakarma Award 2007 among both public and private sectors has been bagged by SAIL employees: out of 28 awards, 15 awards went to the SAIL employees (54%). 52 SAIL employees have received the Prime Minister's Shram Awards 2010. Recent developments of SAIL The merger between Maharashtra Elektrosmelt Limited (MEL) and Steel Authority of India Limited (SAIL) is to take six more months. All the formalities are slated to be completed by then. Steel Authority of India (SAIL) has achieved a step forward in the deadlock over Chiria iron ore mines. In the last few years, Jharkhand government's refusal for

renewing the mining leases, had thrown the race for Chiria open to global steel majors including ArcelorMittal.