Presentation Transcript

1. Role of Steel Service Centresin the Automotive Supply Chain

   Abraham Stephanos Chief Operating Officer Tata Steel Processing & Distribution Limited Indian Steel Markets 2011 Conference 15-16 March, 2011, Delhi
2. What do service centres do? Inventory Holding Processing Distribution & Logistics Inventory Management Services Indian Steel Markets 2011 Conference 15-16 March, 2011, Delhi
3. Producers of Steel Service Centres provide this expertise Value Addition Need in Intermediate Services Supply Chain Mgt Procurement Strategic Alliances Technical Services Stocking Processing Customization Just - In - Time Delivery Direct to Consumer Final Consumer Indian Steel Markets 2011 Conference 15-16 March, 2011, Delhi
4. The need to unlock value from the supply chain … From the Customer’s Perspective Traditional ‘Cutters’ provide limited value: No inventory holding Usually low end processing Very old / reconditioned equipment Quality depends on customer’s inspection Highly fragmented Mostly small shops with informal labor Need to remove costs from the supply chain Need to improve service levels in the supply chain From the Steel Mill’s Perspective Need for Steel Mills to focus on Core businesses and business processes. Greater attention to Logistics and Supply Chain Management Focus on Value Chain costs and efficiencies Indian Steel Markets 2011 Conference 15-16 March, 2011, Delhi
5. …led to the emergence of the organised service centre industry Growth of Auto & White Goods Segment Entry of MNC’s Stringent Quality Requirements Tight Delivery Commitments Expectation of Professional Service Focus on supply chain efficiencies Indian Steel Markets 2011 Conference 15-16 March, 2011, Delhi
6. The automotive industry has been the main catalyst for the growth of service centres 1990s G Williams, Allied 1990s Howrah ,Belur,Shalimar cutters; BMW 2000 – 2005 Tata Ryerson 2000 – 2005 TRF ,Tata Ryerson 2005 – 2010 Pos IDPC , Essar , SteeliumD’tors , TSPDL 2005 – 2010 BMW ( exp) Steelium Distributors - Sumitomo , Pos IDPC ( Exp) - Essar 1990s Talojacutters, Ampil, MSSCL, Tata Ryerson 1990s Manali Cutters , Ramanasekhar Industries 2000 – 2005 Hemnil, LohaIspat 2000 – 2005 Pos Hyundai , Toyota Tsusho 2005 – 2010 Pos IPPC , Essar , ARK SteeliumD’tors , Posh , MSSCL 2005 – 2010 Hyundai Hysco , SteeliumD’tors Essar, JSW - Pos IPPC II , Essar- Indore , LohaIspat - Pos ICPC , Toyota Tsusho (Exp) , Pos Dighe , Kawarin Indian Steel Markets 2011 Conference 15-16 March, 2011, Delhi
7. Today we have a wide gamut of service centres … from ‘cutters’ to ‘high end’ … Indian Steel Markets 2011 Conference 15-16 March, 2011, Delhi
8. …with a variety of ownership models Independent SMPC LohaIspat Ranka Steel Mill Promoted TSPDL POSCO Essar Jindal OEM Promoted Toyota Tsusho Honda Trading Hyundai Hysco Metal Trading House Promoted Sumitomo Caparo Marubeni MSSCL Metalone Indian Steel Markets 2011 Conference 15-16 March, 2011, Delhi
9. The typical automotive steel supply chain: Service Centres Tier 1 Auto Vendors Indian Steel Markets 2011 Conference 15-16 March, 2011, Delhi
10. Body in While Assembly / Welding Large Parts Stamping Small Parts Stamping, Plate Fabrication Press Blanking, TWB, Sheet Fabrication, Inventory Mgt, IT Support, Technical Services Slitting, P&0, Precision Levellling CTL, Shearing Warehousing & Debulking Service Centres can be categorised into Stage 1 & Stage2/3 processors: Value Creation Technical Sophistication of Operations Automotive Tier 1 Supplier Stage 2 / 3 Processor Auto Stage 1 Processor Home Appliance Logistics Provider Source: Mitsui Indian Steel Markets 2011 Conference 15-16 March, 2011, Delhi
11. Typical Stage 1 processing output: Indian Steel Markets 2011 Conference 15-16 March, 2011, Delhi
12. Typical Stage 2/3 products: Indian Steel Markets 2011 Conference 15-16 March, 2011, Delhi
13. While Stage 1 processing demand is growing in leaps and bounds … 2012 2007 Steel Mills 2 Mn 3.5 Mn Service Centres (Tolling) Stockyards ‘Traders’ Service Centres (Distribution) 1.25 Mn 3.5 Mn Customers Customers Customers Processors & ‘Cutters’ 3 Mn 4 Mn Indian Steel Markets 2011 Conference 15-16 March, 2011, Delhi
14. … Stage 2/3 processing is still primarily carried out by Tier 1 vendors, but new sophisticated service centres have entered the fray 2012 2007 Steel Mills 0 0 Stage 2/3 Service Centres (Tolling) Stockyards ‘Traders’ Tier 1/ Tier 2 / Tier 3 vendors 2.3 Mn 5.1 Mn OEM OEM OEM 1.9 Mn 2.4 Mn Stage 2/3 service centres 0.2 Mn 0.6 Mn Indian Steel Markets 2011 Conference 15-16 March, 2011, Delhi
15. Stage 2/3 customer expectations are distinctly different from those of Stage 1 Product Quality Commercial Aspects Customer Expectations Order Execution Customer Care Management Indian Steel Markets 2011 Conference 15-16 March, 2011, Delhi Source: TSPDL research
16. Dimension Tolerance Delivered Quality in PPM STAGE II Yield Internal PPM Complaint Resolution APQP/ PPAP/ FMEA Process Reports Plan for Every Part (PFEP) Material Reconciliation Customer Expectations – Product Quality STAGE I PRODUCT QUALITY Source: TSPDL research Indian Steel Markets 2011 Conference 15-16 March, 2011, Delhi
17. Delivery Compliance KANBAN STAGE II STAGE I Pull-Trigger System Lead Time VIVO “KIT” Deliveries Inventory Holding Process Control & Process Capabilities Forecast Based Planning Customer Expectations – Order Execution ORDER EXECUTION Indian Steel Markets 2011 Conference 15-16 March, 2011, Delhi Source: TSPDL research
18. Price Stability Cost of Poor Quality (COPQ) STAGE I STAGE II Competitive Pricing VA / VE Savings Long Term Pricing (YOY Cost Reduction) Availability of Credit Customer Expectations – Commercial COMMERCIAL ASPECTS Indian Steel Markets 2011 Conference 15-16 March, 2011, Delhi Source: TSPDL research
19. VA / VE Projects Accessibility Of Concerned Person STAGE II STAGE I JIS Delivery Timely Resolution Of Complaints EVI Advance Intimation Of Supplies Growth Aligned With OEM Commitment on Supplies Customer Expectations – Customer Care CUSTOMER CARE Indian Steel Markets 2011 Conference 15-16 March, 2011, Delhi Source: TSPDL research
20. Five Major Trends impacting Global Auto Supply Chain: Flexible Manufacturing VW produces 7 models on 3 line BMW produces 4 Models 2 lines Build to Order BMW more than 80% of production done according to orders received from customers. SSCs/ vendors assist by providing delivery of more than 85% of orders on promised day and 95% in the same week Risk Sharing Investment by SSCs/ vendors in development (R&D) & expansion plans for new products Outsourcing of Manufacturing To reduce investment & fixed cost, globally automakers are increasing outsourcing manufacturing - related activities to specialist companies, especially in Press & body shops operations Renault – Oxford Automotive supplies stampings & welded sub assemblies Daimler – tailored blanks for C class are supplied by ThyssenKrupp BMW – Tower & Magna for welded sub assemblies Outsourcing Logistics All major global auto manufacturers rely heavily on outsourced logistics suppliers (TNT logistics, LGI, Dana Brazil, Exel etc.) Indian Steel Markets 2011 Conference 15-16 March, 2011, Delhi Source: Metal One
21. Indian auto sector is expected to shift towards higher usage of Cold Rolled and High-Strength steels Steel Consumption in Auto (Mn MT) Grade-wise usage 2003 CAGR: 13.2% Advanced High strength, 3% Ultra High strength, 1% 5.2 High Strength, 34% CAGR: 12.5% Mild, 62% 2.8 2015 Ultra High strength, 10% CAGR: 13.6% Mild, 24% Advanced High strength, 30% High Strength, 36% Cold rolled (CR) Hot rolled (HR) Indian Steel Markets 2011 Conference 15-16 March, 2011, Delhi Source: Essar Steel presentation at Indian steel conference May 2010
22. What is New in Steel? The steel vehicle of the future will use several new steels and manufacturing technologies: Conventional Stamping Laser Welded Blank Tailor Rolled Blank High Frequency Induction Welded Hydroformed Tubes Laser Welded Hydroformed Tubes Tailor Rolled Hydroformed Tubes Hot Stamping (Direct & In-Direct) Laser Welded Blank Quench Steel Tailor rolled Blank Quench Steel Roll Forming Laser Welded Coil roll Formed Tailor rolled Blank Roll Formed Roll Form with Quench Multi Walled Hydroformed Tubes Multi Walled Tubes Laser Welded Finalized Tubes Laser Welded Tube Profiled Sections Indian Steel Markets 2011 Conference 15-16 March, 2011, Delhi Source : Tata Steel
23. Service centres will become an integral part of the automotive supply chain in India ‘Availability’ is still the key issue in India High concentration in steel industry Limited availability of grades outside general engineering and construction Going forward (next 5 – 10 years) Shift in focus from ‘Availability’ to ‘Service’ More Service Centres will enter Stage 2/3 processing area Not all service centres would be able to successfully meet the customer expectations in Stage 2/3 processing Macro trends in automotive industry such as flexible manufacturing, outsourced logistics, use of new materials and technologies will see emergence of dedicated automotive service centres that are closely aligned with OEMs Indian Steel Markets 2011 Conference 15-16 March, 2011, Delhi

24. Thank You