Using product segmentation to improve supply chain management in Tata Steel
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Using product segmentation to improve supply chain management in Tata Steel John Albiston* and Ian Cross Tata Steel Strip Products UK, Port Talbot Works, Port Talbot, SA13 2NG, UK. E-mails: [email protected]; [email protected] *Corresponding author.
Abstract
The steel making operations of Tata Steel in Europe are moving to a new operating model with common processes adopted at all sites. Two of the major initiatives underlying this new model are Customer First and Supply Chain Transformation. Collectively, these initiatives aim at making a step change in the company’s offering to customers with a focus on improving delivery on time, reducing leadtime and reducing work in progress. Improving the flow of material through the business is critical in achieving these objectives. The ORteam has been involved in standardising a common process for product segmentation. The team has taken a data-driven approach and this article outlines the methods used in creating the output necessary to ensure supply chain improvements. OR Insight (2012) 25, 150–164. doi:10.1057/ori.2012.6; published online 18 July 2012
Keywords: supply chain; ABC; fulfilment strategies; manufacturing Received 25 May 2012; accepted 28 May 2012
Introduction Tata Steel is a global steel maker with manufacturing sites around the world. Tata Steel Strip Products UK (SPUK) is based in South Wales and produces & 2012 Operational Research Society Ltd 0953-5543 OR Insight www.palgrave-journals.com/ori/
Vol. 25, 3, 150–164
Using product segmentation to improve supply chain management
4.5 million tonnes of steel a year. The ORteam provides an internal service for SPUK. The aim of the team is to help decision makers make more informed decisions and so help improve the bottom line of the business. As such, the activities of the ORteam can be explained in terms of the Data Triangle shown in Figure 1. Most of the activities of the ORteam are about turning data into information and knowledge with the aim of adding to the understanding of the company’s business processes, that is, aim to have more wisdom. The activities are centred on four main areas: data mining, simulation, optimisation (linear programming) and business intelligence. Many of the ORteam’s projects incorporate several of these skills sets. The projects cover operations, tactics and strategy. Tata Steel in Europe has moved to a new operating model with common processes being adopted on all sites. The organisation has been reconfigured to have one face to the customer rather than each business unit selling its own products. Two major in-company initiatives are aiding this: Customer First and Supply Chain Transformation. The manufacturing sites are now part of one integrated supply chain and the old business unit boundaries are being removed. The aim of these transformational projects is to change the way the company interacts with its customers and improve the company’s offering in terms of lead times and delivery on time while increasing the efficiency of the process so that an o
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