ESSAR STEEL INTRODUCTION

Founded in 1998
Chairman- Mr. Ravi
CEO- Dilip Oomen
It has a significant global presence in steel
and an international portfolio of Iron Ore
and Coal Mines
Current capacity of 14 million tones per
annum

VISION
We will be a respected global entrepreneur
through power of positive action.

MISSION
We are committed to innovative growth through our
personal passion, re enforced by a professional mind
set, creating value for all those we touch.

WHAT IS ERP ?

ERP integrates the information across functions , and

provides a set of tools for planning and monitoring the
various functions and processes and ensuring progress
towards a common purpose

A business management system that integrates all

facets of the business , including planning ,
manufacturing , sales , and marketing

ERP helps business managers to implement ERP in

business activities such as inventory control , order
tracking , customer service , finance and human
resources.

REASONS FOR ADOPTING ERP

Integrate financial information and customer order

information

Standardize and speed up operations processes

Reduce inventory

Standardize human resources information

Common database

Update one module , automatically updates others

Provide company wide visibility

Helpful in managing globally dispersed enterprise

companies better

The company is able to react better to any unforeseen

problem or situation

Reduction of paperwork

ERP DIAGRAM

LIMITATIONS OF ERP

High cost of implementation and maintenance

High employee training cost

No quality guarantee

Increases the risk of information misuse

No protection against information theft.

Time consuming

Additional indirect costs like new IT infrastructure

Single vendor lock-in for further upgrades ,

customization .

THE CASE STUDY

If theres one thing Essar Steel knows wellapart from steel, that isits
how to push the envelope. Its, for example, the first steel company to set up an
end-user distribution chain for steel products. Its the worlds largest steel retail
chain with a network of over 375 retail outlets. It also owns Indias largest steel
processing and distribution facilities with an annual capacity of 4 million tons.

That retail strategy, however, took a big bite out of the companys efficiency. On
any given day, Essar receives a lot of specific, custom ordersacross a wide
range of products, from automobile body parts and ship building and from
boilers to heavy engineering structures. For example, a girder, one of its many
products, could have multiple variants depending on chemical composition,
physical attributes or surface treatment.

Every material has to be defined in terms of many

characteristics which can be as high as 25 and needing a
quality plan which needs derivation of at least 250
characteristics. Most orders are specific, and require a high
degree of process customization, says Suneel Aradhye, CIO,
Essar Steel.
In

2006, when orders hit 35,000-a-month levels, each

customized order was still being processed manually. That
took a toll given the complexity of steel manufacturing; raw
material is subjugated to numerous specific treatments for a
certain chemical composition, mechanical properties, and
dimensional tolerances.

The way Essar dealt with the problem was to attach a code,
called material code, to each new product it created, a list
that got longer by the day. In 2006, the number of material
codes in the companys SAP system had already hit 100,000.

Because it was so complexand the costs of being wrong

were highsales staff lacked the confidence to complete
orders by themselves. Orders were finalized only when a
staffer with metallurgical knowledge, preferably someone
from the quality department, was involved in decisionmaking. That slowed the decision making.
Due to the confusing three-way interaction between sales,
quality, and production planning, it could take up to three to
four weeks to book and finalize orders, says Aradhye.

Things only got more complex when the worlds only verticallyintegrated steel company (it has businesses from mining to
retailing) disclosed plans to increase its production capacity
by 40 percent within a year. Aradhye saw a thin line drawn
between Superman and a deep abyssand he was walking on
it.
But as luck would have it, Essar was considering a SAP reimplementation at about the same time. We were running on
an older version of SAP, which was due for an update. I
decided to ask the guys at SAP if they had a solution to my
problem, says Aradhye. SAP consultants advised Aradhye to
look at SAPs Variant Configuration (VC) tool.
Thus began the course of evaluating Essars internal processes.
Earlier, SAP ordering happened when a salesperson input
market demand into the system. Orders were then processed
by the quality department over an offline database with
appropriate characteristics and metallurgical knowledge. The
two databases were not in sync, says Aradhye. That was a
problem the VC tool could help fix.

Implementing the VC tool meant that all variants had to be

reflected across every integrated system involved in
processing an order. This was akin to converting the
systems metallurgical brain into rules decipherable by
machines. A small error meant tons of incorrect products
and a threat to the plants physical wellness.

The dice was loaded against Aradhye. Essar isnt the only
Indian business that deals with extremely customized
orders, but few had attempted to use the VC tool. Worse,
the reference cases he came across seemed to have ended
in failure, a fact his management brought up. To top it all,
he wanted to make changes to the core of a running
business. We met with serious apprehension from the
business when we proposed changes to process design
principles. It called for separate efforts on change
management. References to failed efforts in the past were
also a challenge in our bid to win the confidence of the
business community, he says.

Undeterred, Aradhye forged on. During the initial

implementation, variants were calculated and evaluated (in
Excel) for each process and sub-process. While the plants
capability based on inputs from quality and production
planning were mapped, Aradhyes team also ran checks
against 10-year-old order book to build a robust prototype.
Business plans in terms of plans to manufacture new grades of
steel for next two to three years were also considered.

The Solution
It was a lot of work, but, in the end, worth it. Today, the
VC tool has become an indispensable part of Essar
Steels daily operations. It trimmed material master
data from 90,000 to about 260 configurable materials
belonging to 450 different products. If we had not
implemented the tool, by now Essars system would
have generated 500,000 unique material codesa
picture of chaos! says Minesh Mohile, GM and chief
solution architect-IT at Essar Steel.

By simplifying the system, Aradhye also shrunk opportunityloss by cutting sales order processing time by a factor of
seven. Today, the sales team makes a data entry, prints out
the contract, gets it signed, and finalizes order sitting right
across the client. The whole order process is completed in
three days flat, says Aradhye.
There are other benefits as well. The project helps improve
customer service by achieving the pre-agreed time lines and
lowering cycle time. It also curtailed data entry errors and
saved about 3,000 man-hours a year in supply chain
management.

Sometimes, all it takes to be different is steely resolve.

SAP- VC TOOL FEATURES

It is a tool which helps to simplify the complex manufacturing of final product
with more varieties and variation of the input material.
This is used if these situations prevail in your company:

If your company manufactures or sell products that are available in

different varieties.

To reduce your work load and storage cost.

To enable you to maintain every possible product variants.

These things can be done fast if you use the SAP system for variant
configuration:

Whether the required variant can be produced?

What price can you quote for the product?

Whether the customers specifications can be covered from the stock

available?

For configuring a material to suit for the SAP R/3 software we have
to do the following:

The configurable attribute is defined along with some additional planning

and control data at material master.

Characteristics and values must be created in the classification system

and collected in variant classes

Control data for configuration process and result is contained in the

configuration profile.

A super directory (bill of materials BOM) is to be created which should

contain all standard components and all possible variable components, as
well as assemblies that are required to configure a variant product.

A super task list is to be created that includes all operations, sub

operations, sequences and production resources and tools required to
manufacture all possible variants.

Pricing condition records must be created for pricing the configurable

material.

Object dependencies provide the rules or logic for the configuration

process.

BIBLIOGRAPHY
http://en.wikipedia.org/wiki/First_Information_Report
http://www.humanrightsinitiative.org/publications/police/fir.pdf
http://bhopal.net/wp-content/uploads/2012/01/FIR-Jehangirabad.pd
f
http://www.fixindia.org/fir.php#1
http://www.ichangemycity.com/how_to/how_file_fir_first_informatio
n_report
http://ncrb.nic.in/IIF.pdf

Thank You