Change Management II

Ispat Industries Limited
An Integrated Approach for Linking

Individual PMS to Enable
Achievement of Company’s Business
Objectives – Developing the
Operational Vision
Top Management Workshop

Corporate Strategy Group
June 2007
1
Key
Objectives
 Develop an Approach for integrating Ispat’s business objectives with individual objectives
of all executives in order to provide the Company a platform for profitable growth in the
next 3-5 years time-frame
 Develop a plan for extending the Approach developed for Dolvi to cover Kalmeshwar also.
Implement “Fast Track” capital

Minimise quality and cost
projects that will ensure
penalty as compared to well
significant cost reduction and
run global steel companies by:
 Bringing in a business
improve profitability in the short-
to medium term
process focus for defining
the individual PMS of
executives Develop a comprehensive action
 Creating a customer focused program that will shape
organisation by aligning the fundamental change in Ispat and the
PMS of individuals around way the Company will be run going
the business processes forward
2
The Nature of Change
The success of any change journey depends primarily on how well individuals
embrace the change
Need to integrate organisational

and individual goals for
sustainable change
Sustainable
Change
6
Rewards Integration
Business & 5
Measurement
Operations
Strategy Structure 4
Processes 5
3
1 2 Comprehension &
Mastery
Organisational Business
Processes 4
Acceptance
3
Awareness 2 Trial
1
Knowledge
Individual
3
Why
Change
Factors influencing competitiveness Common characteristics in world class Steel pla

Performance parameters
 Productivity and Cost
Product and process design  Yield and efficiency
and technology  Quality at minimum cost
 On time delivery
Size, scale, product mix Plant characteristics

and global presence  Flexibility in charge mix
 Optimum capacity utilization
 Minimal unplanned downtime
 Appropriate level of automation
 Management of varieties
Process control along the

Supply chain and
supply chain
external relationships
 Consistent quality and plant
reliability
 Strict adherence to SOPs
 Timely order deliveries (> 98%)
 High level customer satisfaction
More People
sophisticated  High attrition rate
and demanding  Teamworking
Customers in
 SOPs and best practices
 Empowerment and accountability
various  Continuous improvement in a learning environmen
segments Environment, Health,
Safety focus including
reductions in
greenhouse gas
emissions 4
Why
Change
Our goal is to be “world class”…
Hence we are committing ourselves to achieving the following objectives
 Improve product quality by making the manufacturing

process consistent and reliable
 Reduce operating costs and in particular HRC
Cost/MT < $ 350
 Launch high-end value added products such as
Silicon, IF and Stainless Steel in the next 2 years in
order to enrich product mix and enhance average
contribution to > Rs 8000/MT
 Establish leadership position in Automotive,
Construction, API, LPG segments in the domestic
marketplace in the next 2-3 years
 Complete all planned capital projects within the
budgeted timeframe and costs
 Achieve an EBITDA margin of a minimum of Rs 2400
5
crores by FY2009 and Rs 3200 crores by FY2010.
Why
Change
Globalization Cost-effective
 Partnerships Innovation producer Supply chain
Integrated Logistics
 New competitors  Integrated Supply Chain
 New products/process technology
Work Practices Imperatives Organization Culture

 Organisation
 Processes
 Procedures (SOPs) for  Culture
 Values
 Key performance
indicators (KPIs)
change in  Style
 Continuous improvement Ispat 

Design
Recruitment
Technology
 Products
 Process Knowledge capital
 Systems  Information Capital
Consolidati World class  Skills up gradation Training
on quality
of steel
industry
6
Why Issues of Importance for Defining PMS in Ispa
Change
There is great urgency in the organization to bring about

fundamental changes
Ispat is currently organized according There is greater focus on volumes (MT)

to vertical functions and that has with limited/inadequate focus on
limited our ability to take a business
process view
quality of output
Q
C
Supply Chain is necessarily horizontal There is a great urgency to recognize
process-driven but Ispat is not the need to enhance the speed of
organized according to processes. This innovation and research. The need is to
does not allow us to monitor and launch at least TWO technologically
control the costs and delivery lead
times across our supply chain.
superior products every year.
D
There is a need to enhance the degree
of delegation and empowerment down
the line. This would instill a greater
The individual KPIs must be aligned to
reflect the achievement of corporate
objectives based on QCDDMS
D
sense of ownership and increased
motivation levels.
principles
Significant potential exists for improvements in

M
performance levels relating to Quality, Costs,
Design, Delivery, Management Systems and
Safety
S
7
Why
Change
Company must move quickly; those who lag will survive at best
— The Winners — — The Survivors — — The Losers —

 Far reaching, rapid  Sluggish, “me too”  No action;
improvements in improvement performance gap
servicing the customer leaves them far
 May be able to hold
capability behind
ground if they stay close
 Able to increase market enough to early movers  Market share gains of
share continuously early movers will be at
 Will lose some ground as
the expense of these
 Will be well positioned consolidation takes place manufacturers
during industry
consolidation phase  Consolidation/shakeout
will threaten survival
8
Why
Change
The implications Q
Increase Efficiency Put Quality First
Focus on Customer
Empower People Use Enabling Technology
Reduce Costs
X
X
Eliminate Non-Value Emphasise Continuous
Added Activities Improvement
Compress Time
Eliminate Waste
Develop End-to-End Solutions
Increase Productivity
9
Need for an Operational
Vision
The Operational Vision is the first step in our change journey towards achieving our objectives
Develop
implementatio
Identify gap
n plan setting
between Develop
Define our Assess current out time
Operational solutions to
goals situation frames,
Vision and As bridge the gap
resources,
Is Status
responsibilities
, and costs
Operationa As Is Gap To Be Master

l Vision Status Analysis Models Plan
10
Vision
An Operational Vision ...
Provides a
vivid picture
of focus areas
Provides Provides
criteria for direction and
decision drives the
making organisation
Operational
Vision
Empowers
employees
with Encourages
motivation, continuous
authority and improvement
enablement
11
Vision
Enterprise Transformation Requires a Holistic

Approach
Refocussing • Value propositions

• Core competencies
Strategic
• Target outcomes
Intent/Response
• Core activity • Core job/role clusters

clusters Reinventing Reshaping • Target outcomes
• Technology Processes Behaviour • Cross-team relationships
platforms
• Cross-process
linkages Reconfiguring Reorienting • Recruitment/Selection
• Applications Rebuilding • Training and development
• Software/hardware Organisation HRM
Information • Measurement/appraisal
• User interfaces Architecture Architecture
Architecture • Compensation and rewards
• Career pathing
• Authority structures
• Management systems
• Physical resources
• Business partnerships
Areas to be
targeted for
Change
12
Operational Vision Definition
An Operational Vision Is a Statement of Intent...
Translation of our strategic

objectives into actionable
elements (Operational
Vision)
Identification of key
performance indicators
(KPIs)
Definition of target levels

of performance (KPI
metrics)
Identification of milestones
to guide us on the change
journey (Timelines)
13
Definiti
Operational Vision Definition
on
 A framework defining
how we wish to
OPERATE
 Includes operational Strategy

norms for key
elements of the
business
 Encompasses the
entire organization People Technology
 Does not take into
account current level • Structure Business Integration
of performance on • Roles • Accuracy and timeliness
each parameter • Responsibilities of information
• Skills Process • Degree of integration
• Motivation
 Forms the basis for
review of current
processes to identify
gaps vis-a-vis vision • Decision making
• Planning
• Operational flow
• Monitoring and control
Areas to be
targeted for
Change 14
Approa
Operational Vision ch
Analysis of
the Business
Performance
Organizing
Inputs from
Business
Management
Plans
Operational
Vision
Experience of Best
other Steel Practices and
Companies Benchmarks
15
The Extended Supply Chain
An “end-to-end” process extending beyond the boundaries of one organisation
Supply Chain
Plan
Suppliers Design
Customers
Source Make Deliver Service Sell
Information Technology
Enablers: Human Resources
Finance
The supply chain is the business process combining the material and
information flow required to source, make, and deliver goods and services
to the end customer.
16
Alignment of Business
The Operational Vision Framework
Components
The operational vision should guide our efforts in aligning the process, people and
technology components of the business with our strategy to bridge the gap
between current and target performance levels
•Organization structure
•Technology applied to
is process driven
Strategy enable dramatic
•There is complete improvements in
clarity on roles and business operations
responsibilities
•Improved
People Business Technology
•Employees are Integration communication across
empowered organisational
boundaries both
•Job requirements are
internal and external
matched with necessary Process
skills /tools •Instantaneous sharing
of information
•There is clear linkage
between strategic •Processes are aligned to meet •Supports new ways of
objectives, success strategic objectives doing business
factors and KPIs
•Processes ensure that each
•The HR policies support activity undertaken adds
reward based on value to the products as
achievement against perceived by our customers
KPIs
•Process orientation facilitates
quick response at lower costs
and improved17 quality
Moving from Functional to Process
Orientation
STAGE 1 STAGE 2 STAGE 3

As Is Transition Stage Desired Stage
M M
A
E A
GENERATE DEMAND
M E
N N M N
F A N
U G F A U
I R F I R F
G
I I FULFILL DEMAND
N K A N K A
N N
A E C A E C
T
E N T T
E
N T E
U E C I U
C I R DEVELOP PRODUCTS & PROCESSES
R R E N R
E N I G I
I
I N
G N N
N G
G G
G MANAGE ENTERPRISE
Functions Drive Functions Continue to Dominate Processes

Business Activity but Processes are recognised Drive the
Business
Enterprise-wide process managers may be the most valued positions in the

organisations of the future.
18
Supportive organization
Company Background Leading Practice Implemented Business Benefits

 Xerox is world’s leader in  Xerox reorganized itself into business In 1996, Xerox recorded
copier business divisions and cross-functional following improvements over
business teams tied to specific 1995:
 In 1992, the company realized
markets  Improvement in customer
that improving customer
satisfaction was necessary to  Cross functional teams were service response times
strengthen their competitive responsible for their own strategy  15 % improvement in
advantage  Xerox eliminated a number of customer satisfaction
 In 1992, Xerox began its centralized corporate functions and  10 % increase in sales
transition from a traditional increased involvement in the lower
 11 % increase in employee
functional organization (see layers of the organization
satisfaction
below) to a customer focused  The final reorganization was
organization  8 % increase in employment
completed in 1995 with Xerox having
M M
more employees with more authority
A A working directly with customers
R N
K A E
E G N Service Delivery
T E G
I M G. Customer Satisfaction
N E
G N Product Development
T
19
Supportive organization
Organizing around customer type is the emerging trend
Product
Marketing Sales Service Development
Customer Customer Customer
Needs
Customer
Customer Management
Segment 1
Product B
Product B
Product C
Product A
Product B
Product C
Product B
Product C
Product C
Product A
Product A
Product A
Needs
Customer
Segment 2
Customer
Needs
Segment 3
Traditional Traditional Traditional Traditional

Product Sales Service Product
Marketing Force Organization Development
20
Orientation
Advantages of a Process Driven Organization
Introduces External Focus

 Facilitates customer orientation
 Puts strong competitive pressures to perform
 Increases customer-employee interaction
 Facilitates single point of contact
 Logically extends into supply base
Brings about improvements in the workplace

 Facilitates end-to-end ownership
 Reduces compartmentalization
 Eliminates fragmentation of work
 Eliminates hand-offs
 Facilitates management to customer focussed outcomes
 Streamlined workflows
21
Orientation
Advantages of a Process Driven Organization (...contd)
Improves Decision Making

 Decisions are made at the point of work
 Increased responsiveness to change and to customers
 Flattens the organisation structure
Increases Employee Satisfaction

 Utilises collective talents of workforce
 Enhances employee involvement and commitment
 Increases job satisfaction
22
Approa
Operational Vision ch
 Prepared a “Process Map” for Ispat’s operations; classified operations into 4 “Core
Processes”
 M1 : Develop Products and Processes
 M2 : Generate Demand
 M3 : Fulfill Demand
 M4 : Plan and Manage the Enterprise
 Identified Sub-Processes upto the 2nd level for each of the above core processes;
for example, “Generate Demand” was broken down further as:
 M2 : Generate Demand
M-2.01 : Manage Customer Relationship
 M-2.02 : Create Market
 M-2.03 : Capture Market
23
Business Process
Model
Core Processes for Steel Manufacturer
M-1 Develop Products / Processes M-2 Generate Demand M-3 Fulfill Demand
Manage
Conduct Manage Supply
M-1.01 M-2.01 Customer M-3.01
Research Sourcing
Relationship
M-1.02 Define Product M-2.02 Create Market M-3.02 Produce
Design Products
M-1.03 M-2.03 Capture Orders M-3.03 Fulfill Orders
/ Processes
Deliver Service
M-3.04 and Support
Manage
M-3.05 Logistics
Network
M-4 Plan and Manage the Enterprise

Manage
Manage
M-4.01 M-4.02 Plan Enterprise M-4.03 Financial
Information
Operations
Manage
Manage Human Implement Relations with
M-4.04 M-4.05 M-4.06
Resources Capital Projects Stakeholders
24
M1 : Develop Products and
Processes
Develop Product and Processes
Conduct Research Define Products Design Products and Processes
Potential for
Characteristics of World Improvement in
Class Companies Ispat
 Products co-engineered with suppliers (IF, DP, Stainless etc) High

 Products are developed based on a documented methodology (example 8-Gate Approach) High
 Product development objectives aligned with overall market strategy High
 Concurrent engineering achieved through cross-functional teams High

 Research portfolio balanced between breakthrough, platform and derivative products
 Performance measures include life cycle costs, time to market, etc High
25
M2 : Generate
Demand
Generate Demand
Manage Customer Relationships Capture Orders

Create Market Demand
Potential for
Improvement in
Characteristics of World Ispat
Class Companies
 Full supply chain integration with seamless information flow High
 Field sales “Knowledge Workers” empowered to cover breadth of relationship High
 Sales management tools track product mix margin and contributions High
High
 Tightly integrated marketing, business, research and operations plans
 Iterative plan development tools perform “what if” analysis on market strategies High
 Pricing capabilities established based on “true” cost of product/service High
26
M3 : Fulfill
Demand
Fulfill
DemandDeliver Service and Support
Produce
Manage Supply Sourcing

Fulfill Orders Manage Logistics Network
Potential for
Improvement in
Class Companies
 Production schedules integrated with supplier sourcing plan High
 Customer specific performance goals and automatic tracking with exception reporting High
 Advanced bar-coding and EDI for cross-docking /flow through distribution High
 Target inventory levels based on total supply chain variability at the SKU level High
 Replenishment schedules configured based on true market demand High
27
M4 : Plan and Manage the
Enterprise
Plan and Manage the Enterprise
Manage Information Plan Enterprise Manage Financial Operations
Manage Human Resources Implement Capital Projects Manage Stakeholder Relations
Potential for
Improvement in
Class Companies
 Common systems infrastructure; single data repository High

 Continuous KPI “flash” reporting to provide current exception based feedback High
 Multiple and flexible reporting views such as SBU, product line, customer, etc High
 Comprehensive competency development curriculums with KPI monitoring High
 Standardised jobs and codes; assign benefits based on category; shared service High
28
Business Processes -
The Ispat Operational Vision Level 2
M-1.01 : Conduct
Research
M-1 .01 Conduct Research
Set General Set Specific

M-1.0101 M-1.0102
Objectives Objectives
Integrate
Define Research
M-1 M-2
Develop Products / Processes Generate Demand M-3 Fulfill Demand M-1.0103 M-1.0104 Strategic
Scope
M-1.01
Conduct
Research
M-2.01
Manage
Customer M-3.01
Manage Supply
Sourcing
Partners
Relationship
Define Product Create Market Produce

Conduct
M-1.02 M-2.02 M-3.02
Conduct Basic
M-1.0105 M-1.0106 Advanced
Design
M-1.03 Products / M-2.03 Capture Orders M-3.03 Fulfill Orders
Processes
Research
M-3.04
Deliver Service Research
and Support
Manage Logistics
M-3.05
Network
M-4 Plan and Manage the Enterprise M-1.0107 Integrate Results M-1.0108 Apply Results
Manage
M-4.01 Manage M-4.02 Plan Enterprise M-4.03 Financial
Information Operations
M-4.04 Manage Human M-4.05 Implement M-4.06

Manage
Relations with Manage
Resources Capital Projects
Stakeholders
Track
M-1.0109 Intellectual M-1.0110
Performance
Property
29
M-1.02 : Define
Product
M-1.02 Define Product
Conduct Market Develop Product

M-1.0201 M-1.0202
Research Objectives
Identify
Identify Channel
M-1 M-2
Develop Products / Processes Generate Demand M-3 Fulfill Demand M-1.0203 Manufacturing M-1.0204
Strategies
M-1.01
Conduct
Research
M-2.01
Manage
Customer M-3.01
Manage Supply
Sourcing
Strategies
Relationship
Define Product Specify Product

M-1.0205 M-1.0206
Design
Processes
Requirements Concept
Deliver Service
M-3.04
and Support
Manage Logistics
M-3.05
Network
Establish Base Identify Potential

M-1.0207 M-1.0208
Manage
Manage Price Partners
Manage
M-4.04 Manage Human M-4.05 Implement M-4.06 Relations with
Stakeholders
Establish Project Track
M-1.0209 M-1.0210
Schedule Performance
30
Business Processes - Level 2
The Ispat Operational Vision M-1.03 : Design Products and
Processes
M-1.03 Design Products and Processes
M-1.0301 Design Product M-1.0302 Design Process
Analyse Manage Design

M-1 M-2
Develop Products / Processes Generate Demand M-3 Fulfill Demand M-1.0303 M-1.0304
Manage
Manage Supply
Feasibility Change
Conduct
M-1.01 M-2.01 Customer M-3.01
Research Sourcing
Relationship

Enable
M-1.02 M-2.02 M-3.02
M-1.0305 Production M-1.0306 Trial Product

Design
Processes
M-3.04
Deliver Service Support
and Support
Manage Logistics
M-3.05
Network
Trial Heat
M-1.0307 M-1.0308 Test Customers
Manage
Manage Production
Manage
Stakeholders
Manage Product Track
M-1.0309 M-1.0310
traits Performance
31
The Ispat Operational Vision M-2.01 : Manage Customer
Relations
M-2.01 Manage Customer Relations
Identify Potential Maintain

M-2.0101 M-2.0102
Customers Relationships
Manage
Capture
M-1 M-2
Develop Products / Processes Generate Demand M-3 Fulfill Demand M-2.0103 Customer M-2.0104
Feedback
M-1.01
Conduct
Research
M-2.01
Manage
Customer M-3.01
Manage Supply
Sourcing
Inquiries
Relationship
Design
Processes
Deliver Service
M-3.04
and Support
Manage Logistics
M-3.05
Network

Manage
Manage
Stakeholders
32
M-2.02 : Create
Market
M-2.02 Create Market
Track Market Plan Marketing

M-2.0201 M-2.0202
Information Campaign
Execute
Introduce New
M-1 M-2
Develop Products / Processes Generate Demand M-3 Fulfill Demand M-2.0203 Marketing M-2.0204
Products
M-1.01
Conduct
Research
M-2.01
Manage
Customer M-3.01
Manage Supply
Sourcing
Campaign
Relationship
Educate Sales
M-2.0205
Design
Processes
/Customers
Deliver Service
M-3.04
and Support
Manage Logistics
M-3.05
Network

Manage
Manage
Stakeholders
33
Business Process -
M-2.03 : Capture
Orders
M-2.03 Capture Orders
Prepare Negotiate
M-2.0301 M-2.0302
Proposal/Quote Terms
Take/Close
M-1 M-2
Develop Products / Processes Generate Demand M-3 Fulfill Demand M-2.0303
Manage
Manage Supply
Order/Contract
Conduct
M-1.01 M-2.01 Customer M-3.01
Research Sourcing
Relationship
Design
Processes
Deliver Service
M-3.04
and Support
Manage Logistics
M-3.05
Network

Manage
Manage
Stakeholders
34
M-3.01 : Manage Supply
Sourcing
M-3.01 Manage Supply Sourcing
Establish
M-3.0101 Approve Supplier M-3.0102
Contract
Manage
M-1 M-2
Develop Products / Processes Generate Demand M-3 Fulfill Demand M-3.0103 M-3.0104 Purchase
Manage
Manage Supply
Partnership
Conduct
M-1.01 M-2.01 Customer M-3.01
Research Sourcing
Relationship

Manage
M-1.02 M-2.02 M-3.02
Track
M-3.0105 Accounts M-3.0106
Design
Processes
Performance
M-3.04
Deliver Service Payable
and Support
Manage Logistics
M-3.05
Network

Manage
Manage
Stakeholders
35
M-3.02 : Produce
M-3.02 Produce
Develop
M-3.0201 M-3.0202 Model Resources
Demand Plan
Develop Schedule
M-1 M-2
Manage
Manage Supply
Production Plan Production
Conduct
M-1.01 M-2.01 Customer M-3.01
Research Sourcing
Relationship

Plan and
M-1.02 M-2.02 M-3.02
Prepare for
M-3.0205 Reserve M-3.0206
Design
Processes
Production
M-3.04
Deliver Service Resource
and Support
Manage Logistics
M-3.05
Network
Produce Quality Test

M-3.0207 M-3.0208
Manage
Manage Products Products
Manage
Stakeholders
Maintain Track
M-3.0209 M-3.0210
Equipment Performance
36
M-3.03 : Fulfill Orders
M-3.02 Fulfill Orders
Manage Stock
M-3.0301 Creating Stock M-3.0302
Manage Despatch
M-1 M-2
Manage
Manage Supply
Order Products
Conduct
M-1.01 M-2.01 Customer M-3.01
Research Sourcing
Relationship
Prepare
M-3.0305 M-3.0306 Bill Customers
Design
Processes
Invoices
Deliver Service
M-3.04
and Support
Manage Logistics
M-3.05
Network Manage Manage
M-4 Plan and Manage the Enterprise M-3.0307 Claims & M-3.0308 Accounts
Returns Receivable
Manage
Manage
Stakeholders
Track
M-3.0309
Performance
37
M-3.04 : After Sales
Support
M-3.04 Deliver After Sales Support

Manage
Post Sales Manage
M-3.0401 M-3.0402
Actives Quality Claims
Manage Provide
M-1 M-2
Develop Products / Processes Generate Demand M-3 Fulfill Demand M-3.0403 Complaint M-3.0404 Services &
M-1.01
Conduct
Research
M-2.01
Manage
Customer M-3.01
Manage Supply
Sourcing
redressal Support
Centre
Relationship
Design
Track
M-3.0405
Processes
M-3.04
Deliver Service
and Support
Performance
Manage Logistics
M-3.05
Network

Manage
Manage
Stakeholders
38
Business Processes - Level
The Ispat Operational Vision 2
M-3.05 : Manage Logistics
Network
M-3.05 Manage Logistics Network
Manage Material Orchestrate

M-3.0501 M-3.0502
Inventories Movements
Schedule
M-1 M-2
Develop Products / Processes Generate Demand M-3 Fulfill Demand
M-3.0503 M-3.0504 Receive Material
M-1.01
Conduct
Research
M-2.01
Manage
Customer M-3.01
Manage Supply
Sourcing
Receipts
Relationship
Design Maintain
M-1.03 Products /
Processes
M-2.03 Capture Orders M-3.03 Fulfill Orders
M-3.0505 Inventory M-3.0506 Schedule
M-3.04
Deliver Service
and Support Accuracy Dispatches
Manage Logistics
M-3.05
Network
Track
M-3.0507
M-4.01 Manage
Information
M-4.02 Plan Enterprise M-4.03
Manage
Financial
Operations
Performance
Manage
Stakeholders
39
M-4.01 : Manage
Information
M-4.01 Manage Information

Develop
Manage Physical
Information
M-4.0101 M-4.0102 Processing and
Strategy and
Network Assets
Plans
Define /Manage Manage System
M-1 M-2
Develop Products / Processes Generate Demand M-3 Fulfill Demand M-4.0103 Group-Wide Data M-4.0104 Development
M-1.01
Conduct
Research
M-2.01
Manage
Customer M-3.01
Manage Supply
Sourcing
Standards and Maintenance
Relationship
Maintain Existing
M-4.0105
Design
Processes
Applications
Deliver Service
M-3.04
and Support
Manage Logistics
M-3.05
Network

Manage
Manage
Stakeholders
40
M-4.02 : Plan
Enterprise
M-4.02 Plan Enterprise

Monitor the
Develop Mission
M-4.0201 External M-4.0202
and Vision
Environment
Design Design
M-1 M-2
Develop Products / Processes Generate Demand M-3 Fulfill Demand M-4.0203 organisation M-4.0204 Relationships
M-1.01
Conduct
Research
M-2.01
Manage
Customer M-3.01
Manage Supply
Sourcing
structure Between Units
Relationship

Develop
M-1.02 M-2.02 M-3.02
Develop
M-4.0205 Organisational M-4.0206
Design
Processes
Strategic Plans
M-3.04
Deliver Service Goals
and Support
Manage Logistics
M-3.05
Network Develop Develop
M-4 Plan and Manage the Enterprise M-4.0207 Operational M-4.0208 Contingency
Plans Plans
Manage
Manage
Stakeholders
41
The Ispat Operational Vision M-4.03 : Manage Financial
Operations
M-4.03 Manage Financial Operations

Manage Process Finance
M-4.0301 Financial M-4.0302 and Accounting
Resources Transactions
Report Conduct Internal

M-1 M-2
Manage
Manage Supply
Information Audits
Conduct
M-1.01 M-2.01 Customer M-3.01
Research Sourcing
Relationship
Manage the Tax Manage Physical

M-4.0305 M-4.0306
Design
Processes
Function Resources
Deliver Service
M-3.04
and Support
Manage Logistics
M-3.05
Network
Manage
M-4.0307 Support Costing M-4.0308
Manage
Manage Investments
Manage
Stakeholders
42
Business Processes - Level
The Ispat Operational Vision 2
M-4.04 : Manage Human
Resources
M-4.04 Manage Human Resources

Create and
Cascade
Manage Human
M-4.0401 M-4.0402 Strategy to Work
Resources
Level
Strategy
Manage
Develop and
M-1 M-2
Develop Products / Processes Generate Demand M-3 Fulfill Demand M-4.0403 Deployment of M-4.0404
Train Employees
M-1.01
Conduct
Research
M-2.01
Manage
Customer M-3.01
Manage Supply
Sourcing
Personnel
Relationship
M-1.02 Define Product M-2.02 Create Market M-3.02 Produce Manage Ensure
Employee Employee Well-
M-4.0405 M-4.0406
Design
Processes
Reward and Being and
M-3.04
Deliver Service
and Support Recognition Satisfaction
Manage Logistics
M-3.05
Network Ensure Manage Labour
M-4 Plan and Manage the Enterprise M-4.0407 Employee M-4.0408 Management
Involvement Relationships
Manage
M-4.04 Manage Human

Resources
M-4.05 Implement
Capital Projects
M-4.06
Manage
Relations with
Stakeholders
Develop Human
M-4.0409 Resource Info
Systems (HRIS)
43
The Ispat Operational Vision M-4.05 : Implement Capital
Projects
M-4.05 Implement Capital Projects

Formulate a
Obtain approval
M-4.0501 Capital Budget M-4.0502 from Board
Plan
Formulate time Make Funds

M-1 M-2
Develop Products / Processes Generate Demand M-3 Fulfill Demand M-4.0503 bound action M-4.0504 available for
Conduct
Manage
Customer
Manage Supply plan Capital
M-1.01 M-2.01 M-3.01
Expenditure
Research Sourcing
Relationship
M-1.03
Design
Products /
Processes
M-2.03 Capture Orders M-3.03 Fulfill Orders Report Status 60
Deliver Service
M-4.0505 against action
M-3.04
and Support
plan
Manage Logistics
M-3.05
Network

Manage
Manage
Stakeholders
44
The Ispat Operational Vision M-4.05 : Manage Relations with
Stakeholders
M-4.05 Manage Relations with Stakeholders

Communicate Manage
M-4.0601 with M-4.0602 Government
Shareholders Relationships
Develop Public
Build Lender
M-1 M-2
Develop Products / Processes Generate Demand M-3 Fulfill Demand M-4.0603 M-4.0604 Relationship
Relationships
M-1.01
Conduct
Research
M-2.01
Manage
Customer M-3.01
Manage Supply
Sourcing
Programmes
Relationship

Interface with Develop
M-1.02 M-2.02 M-3.02
M-4.0605 Board of M-4.0606 Community

Design
Processes
M-3.04
Deliver Service Directors Relations
and Support
Manage Logistics
M-3.05
Network Manage Legal
M-4 Plan and Manage the Enterprise M-4.0607 and Ethical
Issues
Manage
Manage
Stakeholders
45
Operational Vision
The Ispat Operational Vision M-1.01: Conduct
Research
Operational Potential approaches to

Vision getting there
 Establish long term competitive advantage by  Define strategy for family of grades with quantifiable
developing new Grades in anticipation of future goals
market conditions  Develop research projects based on business and
plans for each family of grades, align R & D budget
 Set aside a research budget of a minimum of
with the priorities of each family of grades
around 1-2% of turnover
 Link R&D activities to market research including
 Bring about following improvements: customer requirements based on new applications
 A 50% increase in the yield rate of new concepts
 Clearly define the core competencies and focus R & D
 A 10% reduction in cost per new concept
on these. If a non-core technology needs to be
developed, source the activity outside the
organization
 Define envelopes of research activity based on
Q = Yield rate of ideas
C = R&D budget heads business plans, market analysis, etc.
D = Involvement of  Have an “Idea Bank" to hold concepts that might not
Objective of this sub-process partners and
be needed or are not commercially feasible yet
agencies
Generate new product D = Affecting Changes  Have an understanding of what competition is doing
in Product Line in product and process technology. Develop a
concepts efficiently and with and ahead of
database and update it periodically
a high “hit rate” of competition
M = Standard  Understand legislation directions affecting
successful concepts while procedures, specification in advanced markets
minimizing research cost Continuous
improvement
S = Turnover,
qualification of
staff
46
Operational
Vision
The Ispat Operational Vision
M-1.02: Define
Product
 Use 8-Gate Approach for developing products and  Co-engineer the product with the customer
achieve :  Use product line plans developed by only cross-
 A 25% reduction in definition/design lead time functional teams
 100% increase in customer satisfaction
 Assign responsibility for customer satisfaction and
 Improve product profitability by a minimum of product cost to the same cross-functional team
25%
 Set up market aligned product development
 Launch at least 2 new products every year teams where one person from each team is
 Ensure 100% adherence to schedule and budgets responsible for the performance of that market
segment
 Gather inputs from marketing, manufacturing,
Q = Completeness of
intermediaries and suppliers
definition  Begin next generation product development
C = Cost to deliver
during current generation product cycle
Objective of this sub-process quality
D = Involvement of  Develop cost, contribution and NSR targets up
partners
front
Define products and D = To design product
within specified Plan total product life cycle
processes that meet time limits

company’s and growth M = Standard

objectives for a family of procedures,
Continuous
grades (cost, quality, improvement
schedule, specification and S = Turnover
qualification of
end-user application) staff
47
Operational Vision
The Ispat Operational Vision M-1.03: Design Products and
Processes

 Ensure a globally optimised detailed specification that  Create and co-locate multifunctional design teams
considers manufacturability, reliability, disposal,  Design products and processes concurrently
quality and environmental compatibility, resulting in :
 No Technical Delivery Condition (TDC) modification post
 Pursue shorter product life cycles to adjust more
launch frequently to customer needs
 Zero Quality Claims by FY 2010  Use a total quality and value management system as
 % of projects with full-time resources (>80%) an umbrella for the development process
 Number of new products introduced per year (=2)  Follow the 8-Gate product development methodology
with predefined targets and requirements
 % of customized products (50%)
 Manage customer requirements through
 Adherence to schedule and budget documentation, allocation and cross-referencing
 Simulate with software to the the extent possible
 Trial for concept and customer validation
 Review (in a closed loop) feedback from production
and customers
Q = Achievement of
targets at launch  Test product on field and customer
C = Cost to launch
Objective of this sub-process D = Level of functional
involvement
D = Achievement of all
Generate designs that exceed time limits
specified
customer and company M = Standard
expectations with regard to procedures,
cost, Specification, quality, Continuous
improvement
and profitability S = Turnover,
qualification of 48
staff
Operational Vision
The Ispat Operational Vision M-2.01:Manage Customer
Relations
Operational
Vision Potential approaches to
getting there
 Identify potential customers for ensuring
deeper penetration and enhanced market
 Create segment wise identification teams for potential
customer and its inquiry generation
share in the following segments:
 Automotive: 45% by FY’08
 Ensure higher usage of information technology for
capturing customers’ product requirements and
 API : 54% by FY’08
feedback on existing products; Implement mySAP CRM
 Construction: 11%by FY’08
 Single point inquiry redressal for greater customer
 LPG: 45%by FY’08
convenience and satisfaction
 Reach out to the last-mile customer by  Reducing the lead time gap between customer inquiry
moving up the value chain: and responding to the inquiry
 Automotive Segment: Increase by 25% YOY  Increase in repeat orders and customer loyalty
basis from existing 9 OEM customers
 Construction Segment: Increase by 100% YOY
basis from the existing 1 customer
 Ensure robust Customer Relationship
Management (CRM)
 Ensure much greater focus on capturing Q = Achievement of
customer feedback on existing product Objective of this sub-process targets
C = Cost to marketing
performance in order to improve and D = Level of functional
customize our products against customers’ involvement
specific requirements Wider customer base along D = Achievement of all
time limit targets
with higher level of Customer M = Standard
 Reduce dependency on cold rollers by
reducing supplies by 25%yoy basis Relationship Management and procedures,
Continuous
Customer Satisfaction improvement
S = Qualification of
staff
49
Operational
Vision
e Company Operational Vision
M-2.02: Create
Market
Operational
Vision Potential approaches to
getting there
 Develop 100% reliable plans for marketing campaigns  Ensure regular tracking of segment-wise market
that would impact the market share in quantitative terms information (products, customer requirements,
and establish the Ispat brand competitors, changing technology, changing features
 Execute the marketing campaign effectively within and applications etc) with clear identification of
optimum cost and create the impact in the market responsibilities
 Ensure cost reduction by 5% YOY basis in the  Work closely with Technical Cell, Product Development
execution process and Operations teams to ensure effective
 Ensure 25% increase in contribution margin by implementation of marketing strategies
selecting the right new product/grade  Develop and launch new products with defined timelines
 Ensure highly successful launch of new high-end value for widening the product mix/portfolio
added products with customized applications meeting  Participate and actively contribute in product
customer specific requirements:
development teams particularly in Gates 1, 2 and 3 of
 Replace a few of the existing grades with new
the 8-Gate Approach.
grades such as DP600, HR60, ST54AM, CT40, CR01,
MC55 and IF by FY010  Educate existing and potential customers on steel
 Launch APIX70 14.3mm, 17.2mm for normal
application and specific benefits from our material
application and APIX65 for Sour Gas application
 Develop P310/P355 (LPG grades) for export
oriented units (EOU)
Q = Achievement of
 Conduct at least one customer meet every quarter in targets
order to educate existing and potential customers on C = Cost to campaign
steel applications and substitution for other materials D = Level of functional
involvement
D = Achievement of all
time limits
Create market for Ispat’s specified
M = Standard
Objective of this sub-process products such that the procedures,
planned topline is achieved in Continuous
improvement
50
a cost-effective manner S = Turnover,
he Company Operational Vision Operational Vision
M-2.03: Capture
Orders

 Ensure higher sales to achieve at least 3.0  Error free preparation of proposals and quotes
MT during FY 2008, 3.3 MT by FY 2009 and within specified time line
3.5 MT by 2010
 Following negotiating guidelines and working under
 Achieve an incremental contribution of Rs the specified timelines
250 crores by FY 2009 with greater focus on  Religiously following the timeline of customer
Auto, API, Construction segments and schedules already communicated to the customer
launching new products such as API grades,
IF Steel, Silicon Steel, Stainless Steel etc
 Reduce 50% of the time taken in preparing
proposals and quotations with zero errors
 Establish standard negotiating terms with
approved fluctuations
 10% reduction in approved price fluctuations
on YOY basis Objective of this sub-process
Q = Achievement of
targets
 On time initiation and closure of the Maximum order captured from C = Cost to process
contracts with no deviation high value added segment cycle
D = Level of functional
with minimum deviation in involvement
negotiating terms and time D = Achievement of all
time limits
lines specified
M = Standard
procedures,
Continuous
improvement
51 S = Qualification of
staff
Operational Vision
The Ispat Operational Vision M-3.01 : Manage Supply
Sourcing

 Rationalise supplier base  Rationalize supplier base by considering a number of
factors as history of supply, volumes, relationship,
 Develop long-term strategic partnership with reliability, price competitiveness etc
IBRM, Coke, Ferro Alloys, Coal suppliers (5  Develop supplier partnerships to improve service levels
new partnerships every year) in terms of quality, timely delivery and cost
 Lower cost of procurement  Assist suppliers with detailed specification and
managerial inputs on capabilities such as QA, cost
 Raw Material cost (3-5% on year on year basis) reduction and information technology
 Reduce purchasing overhead expenses (by 5-  Purchase and monitor supplier performance based on
10% on year on year basis) "Least Total Delivered Cost" concept at given quality
 Improve supplier performance (Cost,  Establish purchasing as a “profit centre” with
Delivery, Quality parameters) appropriate performance measures
 Compress lead times for the indent to receipt cycle
 Standardize items to the extent feasible and evaluate
global sourcing options
Q = Incoming quality  Implement and effectively use enablers such as EDI and
Objective of this sub-process levels
integrated materials management system
C = Procured quality
at minimum total
To determine and manage cost
D = Number of
supply of materials and supplier
services at the appropriate development
teams
cost, quality and reliability D = On-time
performance,
right quality at
right price
M = Continuous
52
improvement
Operational
Vision
M-3.02
Produce
 Achieve the following  Make manufacturing and maintenance personnel
 Hot Metal Production: > 5000 MT/day consistently
accountable for planning, execution, plant
 HM Cost: < $ 325 by FY 2009 and around $300 by FY reliability, process reliability and consistency, and
2010
plant uptime
 SMS Production: > 48 heats/day consistently
 SMS Yield: > 87% consistently  Undertake comprehensive Maintenance Audit of
 Caster 1 Speed: 5.7 meters/minute by FY 2009 and 6.2 the Dolvi plant and draw up a comprehensive time-
meters/minute by FY 2010 bound action plan ensuring 95% reliability.
 Hot Mill Production: 280,000 MT/month consistently Implement and follow the SOPs for each
 MTBC: 2.50 minutes by FY 2009 equipment/process and ensure strict discipline and
 HRC Cost: $ 425 by FY 2009 and $ 400 by FY 2010 all round highly professional work culture
 DRI Production: 180,000 MT/month by FY 2009  Analyze product costs (value-added grades versus
 Plant reliability: >95% non-value-added grades) and determine why
 Unplanned Downtime: < 5% contribution/MT of certain value added grades is
 Maintenance Cost: within $ 100/MT lower in conjunction with Marketing team
 MTBF > 100 Days by FY 2009  Upgrade and fix problems in Level 1 to ensure L2
and L3 systems are effective. Produce strictly
Q = Meet TDC
consistently according to the schedule generated by PPMS
C = Produce quality at system
minimum total
Objective of this sub- cost
 Focus on preventive and preemptive maintenance
process
Determine manufacturing D = Process capability,  Empower operations teams to prioritize
availability
requirements and produce D = Delivery schedule preventative and emergency maintenance
high-quality products in a adherence
M = Continuous
manner that is cost effective improvement
and on schedule S = Qualification of
staff 53
Operational
Vision
M-3.03 Fulfill
Orders
 Ensure 95% of deliveries are made to customers within the  Ensure clearly identified “owners” for various
original committed date elements of inventory
 Compress order to delivery lead time to ## days  Integrate credit check at order processing time
 Restrict accounts receivables to ## days
 Ensure allocation of responsibilities to ensure
high service levels are clearly defined and well
understood by all involved
 Integrate order processing system with
manufacturing, sales and financial systems
 Use appropriate key performance measures to
track performance
Q = % on-time to
specification,
C = Deliver quality at
Objective of this sub- total minimum
cost
process D = Reduced order
processing costs
D = % on time
Efficiently manage the M = Standard
procedures,
complete customer order to Continuous
cash cycle improvement
S = Turnover,
qualification of
staff
54
Operational Vision
The Ispat Operational Vision M-3.04 After Sales
Support

 Quality Claims as a percentage of Sales reduced to  Implement cross-functional customer service teams that
## % by FY 2009 and ##% by FY 2010 are accountable for all aspects of customer service and
 Percentage of Quality Complaints answered within customer account maintenance
target time: 98% by FY 20##  Encourage customers to give feedback about the quality
 Ratio of customer complaints to customer of service they receive, then analyse this feedback for
compliments to be reduced to ## by FY 20## improvement and to identify new/better services that
can be provided
 Time lag from identification of customer problem to
satisfactory action on problems to be reduced ##  Institute a feedback "loop" in place between After Sales
support and Design / Development departments
 Institute mechanisms to ensure that the after sales
support staff takes ownership of customer problems
Q = Lead time to  Provide the after sales support centre with the authority
response time to bind other parts of the organisation in order to
C = Quality Claims respond appropriately to an inquiry
Objective of this sub-process Cost
D = Lead time to clear,  Ensure that throughout the customer complaint process
response time the customer has one point of contact
D = Availability of
Provide value beyond the after sales support
product and a level of M = Standard
service, technical support, or procedures,
Continuous
information which supports improvement
customer requirements S = Turnover,
qualification of
staff
55
Operational Vision
The Ispat Operational Vision M-3.05 Manage Logistics
Network

 Improve logistics performance  Develop partnership with transporters providing value
 Compress variability of inbound transportation time to less added services
than 50% of current levels
 Encourage RM suppliers to setup storage centers near/at
 Reduce truck turnaround time by 50% of current time
the plant
 Ensure 100% of dispatches without any damage
 Share schedules with suppliers and restrict variation to a
 Minimize storage, handling and movement: pre-determined agreed percentage
 Excess Inventory levels to be reduced to their norm level  Track material through the despatch from supplier, receipt,
 Slow moving/non-moving and obsolete inventory reduced storage and issue cycle in order to minimize handling
by 90% by FY 2009 losses and pilferages
 Streamline systems and procedures to enable current  Evaluate focused storage options within Dolvi
manpower to handle higher volumes  Streamline slow moving/non-moving/obsolete inventory
identification and disposal mechanisms
 Implement and effectively use enablers such as material
handling equipments, bar-coding and integrated materials
management system
Q = No of stock outs
Objective of this sub-process below agreed
level
C = Storage and
distribution costs
Provide efficient and timely D = Simplification of
delivery of materials and network
minimise inventory, delivery D = Right time and
right place
and storage costs M = Continuous
improvement
S = Turnover,
qualification of
staff
56
Operational Vision
The Ispat Operational Vision M-4.01: Manage
Information

 Continuous focus on usage of IT to build and  Spread IT awareness in a concerted fashion
sustain competitive advantage. across all levels within the company
 Leverage on available technologies for  Report progress against the long term IT strategy
applications, networking, office automation and with periodic updates based on the changing
customer interface achieving the following : information technology scenario
 A ##% accuracy in data  Implement mySAP Business Suite of applications
 ## %of personnel having on-line access to
in order to :
computerized data
 Ensure data integrity with minimal need for parallel
 A ##% reduction in the number of different entities
records and reconciliation activity
involved in managing the same data
 Facilitate quick and integrated response to sudden
changes in key requirements
 Implement end-user operated on-line information
Q = Accuracy &
systems in all operating and support functions
Objective of this sub-process consistency of  Ensure common infrastructure, remote network
data
C = IT Budget
support, single data repository and move towards
D = Ease of access to the IT “factory” concept
To align information
information
technology developments D = Time taken to
 Develop a robust plans for implementation and
with business strategy deliver user maintenance of systems and information security
requirements
M = Continuous
improvement
S = Turnover,
qualification of
staff
57
Operational Vision
The Ispat Operational Vision M-4.02: Plan the
Enterprise

 A clearly spelt out vision and mission for the  Identify internal/external advisors to re-confirm
organization which is well understood by all mission and vision statements
 Evolve credible change management programs to
 A strong strategic planning function which
communicate and share the organizational vision for
shapes the future strategy. Thereafter, rally the immediate-, medium- and long-term to facilitate
around the plan in a collective manner for its buy-in and support for change
successful and speedy implementation  Ensure adequate business focus in each
 Operational plans that are in line with function/department to meet the planned objectives
strategic plans and exhibit (at best) a 10%  Focus on skill building by accessing global best
variation between Sales and Production practices and exposure to international markets
plans. All plans must be met at least 90%.  If actual achievements against plans vary more than
10%, then there is need to :
 An organization structure that ensures clear
 Revisit assumptions and hypotheses made in
job responsibility and reporting relationships developing the plan
Q = Number of people  Speedily implement the actions that will justify the
owning assumptions and hypotheses
Objective of this sub-process responsibility  Strictly avoid developing theoretical plans to
C = Performance make the plan look good and comforting
Ensure strategic and against Budget  Ensure that company’s credibility is raised with
D = Synchronicity credible plans that are always achieved
operational plans are geared within the various
towards achieving the long plans
D = Time taken to
term objectives of the freeze Sales and
company Production plans
M = Continuous
improvement
S = Turnover,
58
qualification of
Operational Vision
The Ispat Operational Vision M-4.03: Manage Financial
Operations

 Move towards a world class organisation setup,  Implement all the features of SAP Finance module
supported by on-line, end-user operated systems  Provide on-line information
across a networked organisation, employing best  Set up flexible, user friendly financial reporting
practices for financial management  Provide drill down facility for Financial Statements
 Reduce interest and finance charges by 10% by FY  Utilize company balance sheet strengths
2009 and 20% by FY 2010
 Provide centralized cash management to facilitate
 Raise US $ 500 million capital for funding the key
monitoring and transferring of cash across locations
capital projects such as Coke Oven battery, Pellet
plant, Desulphurization plant, RH Vacuum Degasser, 2nd  Maintain progressive, proactive investment policies
BF, Material Handling equipments and cranes etc  Use financial parameter based KPIs across all processes
 Comply with all statutory requirements of the country and management levels
for financial reporting  Improve service levels by :
 Reducing the cycle time for production of the general ledger
and closing of books
 Performing account analysis during the month, minimising
month-end effort
 Sending reports electronically to users
Q = Accuracy
Objective of this sub-process C = Finance function
cost
Provide line management with D = Ease of processing
& budgeting
information and analysis that D = Processing and
ensures the short and long term budgeting time
M = Continuous
liquidity and viability of the improvement
organisation S = Qualification of
staff
59
Operational Vision
The Ispat Operational Vision M-4.04: Manage Human
Resources

 Build a culture unique to Company, focusing on  Undertake manpower planning on a formal basis factoring
customer orientation, continuous improvement, team in the growth plans of the company
building, openness, commitment, passion and  Redefine PMS of individuals around processes which
discipline. Within 1-2 years : measure outcomes
 Increase Employee Engagement to 80%
 Realign the organization structure around processes to
 Reduce Attrition within 10-12%
support achievement of business objectives
 Ensure participative and outcome-oriented style of
management:  Establish linkage between rewards (including non
 Introduce concept of problem solving groups monetary modes) and performance appraisal
 Ensure greater number of people having cross  Create emphasis on building relevant skills through
functional skills appropriate training and in inculcating high degree of
 Ensure all round increase in morale, motivation customer service orientation
levels with greater autonomy to perform
 Balance job rotation for building cross-functional skills with
 Support recognition of business process and align the need to retain specialization
organization structure around processes
 Develop a formal succession planning process
 Ensure effective and transparent HR Policies
supporting the transformation of the company.
Q = Employee turnover
C = Personnel costs
D = Consonance between Attract, retain and develop
employees’ aspirations highly motivated talent both
and Company’s needs
D = Training days per new
Objective of this sub-process at entry level and in
hire specialized/ critical functions
M = Continuous 60
improvement
Operational Vision
The Ispat Operational Vision M-4.05: Implement Capital
Projects

 Monitor and implement Capital projects plan  The Capital Projects Plan must take inputs from user
in a time-bound manner for achieving the groups like Marketing, Production , New product
development, Quality Assurance, Maintenance
strategic objectives. Strict monthly review of functions and priorities of various projects must be
progress required collectively decided.
 Execute each project within budgeted costs  Every project must have a formally documented
and stipulated timelines. Cost and time “Business case” outlining the costs and benefits,
payback period, ROI, Risks and Mitigation plans
overrun should be limited to 3-5% at best
 Every project must have time-bound action plan
 Ensure fulfillment of key objectives set out (based on PERT/CPM technique) outlining the
in the business case. timeframes, resources required, precedence
relationship, and phased cash outflow plan
 Finance function to ensure availability of appropriate
Q = Accuracy of funds based on specific milestones for implementing
Objective of this sub-process budget and the plan
timeline
C = Cost of
 Regular reporting of project status would be required
Execution of the Capital implementation in order to avoid cost and time overrun.
D = Incorporation of
Projects in stipulated time user suggestions
and budgets so as to achieve and ideas for
strategic and operational complete buy in
after
objectives implementation
D=Time taken to
implement capital
project against
plan
M = Accurate Status
reporting 61
Operational Vision
The Ispat Operational Vision M-4.06: Manage Relations with
Stakeholders

 Conformance to deadlines for reporting  Use financial repositories for operational and
information to stakeholders financial data linked with reporting tools to
develop standardised reporting packages in
 Accuracy in information reported to them order to provide :
 Service levels of :  A single source of data
 Investor satisfaction  Paperless environment
 Government compliance  Improved development time
 Set service levels for :
 Addressing investor queries
 Timely transfer of shares, warrants etc
 Implement consistent dividend policies
Q = Number of  Ensure timely and complete reporting of
Objective of this sub-process stakeholder information required for Government
complaints
C = Cost of
Compliance
Provide external compliance  Facilitate quarterly closing and publications of
D = Ease of
stakeholders (like the statutory accounts
accessibility for
government, regulatory stakeholder
agencies and investors etc) D = Time taken to
redress complaint
with information they need satisfactorily
M = Continuous
improvement
S = Turnover,
qualification of
staff
62
Key Performance
Indicators
Representative KPIs M-1.01 Conduct
Research
Q
Cos Qualit
t Reduce Costs y Put Quality First
Cost per concept developed per time period
  Improvement in quality / reliability on account
Cost savings on account of new concepts incorporated

of new products / processes
 Research budget as a percentage of total budget
 Ideas researched that are incorporated into
designs per year (yield rate)
Cycle Interface
Time Compress Time
Service Focus on Customer
 Percentage of R &D time spent gathering data  Number of project failures due to the
 Cycle time reduction on account of new implementation of unproven technologies
products / processes  Percentage of R&D data gathered from a central
cross-functional enterprise wide repository
 Number of new product offerings made possible
by internal R&D efforts
63
Key Performance
Indicators
Representative KPIs M-1.02 Define
Product
Q
Cos Qualit
 Product line sales  Customer product satisfaction ratings
 Return on investment made in research
 % of revenue generated from products
introduced in the last 2 years
Cycle Interface
Time Compress Time Service Focus on Customer
 Time from initiation to release to development  Number of new product introductions per year
(design/definition lead time)  Bill of Material Accuracy
 Break Even Time (BET); the time from when the  Adherence to schedule and budget
initial product specifications are frozen until the
product shows a profit  Average change orders to original Bill of
Material
64
Key Performance Indicators
Representative KPIs M-1.03 Design Products and
Processes
Q
Cos Qualit
 Percent cost of defective design  Percent of design completed electronically
 Cost of defective design as a percent of net  Percent of design simulated electronically
revenue/sales  Average number of production defects in new
products
Cycle
Time Compress Time
 % of product development time spent in

meetings, looking for data and other non-value Interface
added activities
 Cycle time to develop/implement a new version
of an existing product  Number of Design Modification Requests
(changes required by Manufacturing )
 Cycle time to develop/implement a new product
or technology  % of projects with full-time resources
 Time to transfer/launch product in  Number of new products introduced per year
Manufacturing  % of customized products
 Standard production cycle time  % of reconfigurable products
 Time to market  Adherence to schedule and budget
 Average manufacturing cycle time decrease
over time following a product release
65
Representative KPIs M-2.01 Manage Customer
Relationship
Q
Cos Qualit
 Cost in identification of potential customer  Quality Customer (taking Value added grades
and having long term contract)
 Optimization of relationship maintenance cost
 Percentage of handling customer inquiry
electronically and through e-sites
 Quality of Personnel handling the Customer
inquiry
Cycle
Time Compress Time
 % of time spent in meetings, looking for data

and other non-value added activities Interface
 Delay in customer inquiry response Service Focus on Customer
 Shorten the time taken in capturing the  Number of manual activities involved in
feedback managing customer inquiries
 Number of potential customers added per year
66
Key Performance
Representative KPIs Indicators
M-2.02 Create Market
Q
Cos Qualit
 Cost of introduction of new product development  Percent of market information collected
 Cost of execution of marketing campaign electronically
 Percent of education provided to the customer
on application of steel
 Average number of production defects in new
product
Cycle
Time Compress Time
 Cycle time to track market information and the

time to act upon it Interface
 Cycle time to develop/implement a new version Service Focus on Customer
of an existing product
 % increase in the plan reliability of marketing
 Cycle time to develop/implement a new product
or technology  Number of new products introduced per year
 % of customized products
 % of reconfigurable products
 Adherence to schedule and budget
67
Key Performance
Indicators
Representative KPIs M-2.03 Capture
Orders
Q
Cos Qualit
 Percent cost of error in negotiating terms  Percent of proposals and Quotes on e-sites
 Cost of increased cycle time  Average number of defects in proposals
/Quote /Negotiate terms
Cycle
Time Compress Time
 Cycle time to finalize error free negotiating Interface

terms Service Focus on Customer
 Standard cycle time from proposal to closing  Number of Modification Requests in proposals
contract and negotiating terms
 Adherence to schedule and budget
68
Key Performance
Indicators
Representative KPIs M-3.01 : Manage Supply
Sourcing
Q
Cos Qualit
 Material Cost/Sales  Lost production due to material non-availability
 % change in material cost annually  % of all active suppliers that are approved
 Purchasing overhead expense as a % of total  % of material not confirming to specifications
purchase value  % of Qty returned to supplier
 Number of active suppliers (for A/B/C materials)
Cycle Interface
Time Compress Time
 % of on-time deliveries (ordinary and rush)

 Average supplier days lead time  % of time spent on supplier development activity
 % of POs released within full supplier lead time  Time spent by Purchase in new product/item
 Purchase order cycle time development
 Average time to negotiate a contract  Number of partnerships entered into per year
 % of items received beyond PO receipt date  Supplier training hours / Total training hours
 No of POs amended  % of POs requiring multiple approvals
 No. of rush orders/total No. of orders  Fill rate (% of orders accepted by supplier)
 Average accounts payable over credit period
69
Key Performance
M-3.02 : Produce
Q
Cos Qualit
t y
Reduce Costs Put Quality First
 % annual change in controllable plant costs  % quality runs
 Conversion cost / Sales  % of process lines using computerised process
 Inventory levels of WIP and stock of finished control
material  Preventative maintenance hours/total
 Maintenance cost/estimated replacement costs maintenance hours
 Investment in safety-related facility  Preventative maintenance schedule adherence
improvements/total plant operating costs rate
 No. of days/hours without accidents  Rejection rate %
 Lost production due to unscheduled maintenance :  Defects per million
lost production due to scheduled maintenance
 Total rejection cost /total sales
 Cost Per MT/ per employee
 % of product wise complaints/ total sales
 Maintenance cost/controllable plant costs
 Number of plant/line shutdowns due to quality
 Quality Claims Cost/ Sales (or COGS)
problems
 Supervisory span of control (supervisor : workers)
 Mean time between equipment failure
 Capacity utilisation
 MT of output per unit of labour input
70
Key Performance
M-3.02 : Produce
Cycle Interface
Time Compress Time
Service
Focus on Customer
 Manufacturing lead time  Adherence to production plans
 Qty of Material waiting despatch  % of employees cross-trained
 Number of changes to production plans  % of workforce participating in self-directed
 Average lead time to prepare production for teams
new product  % variation in production from plans
 Set-up time  Number of changes to the Master Schedule
 Physical distance a product moves through the  Backlog
factory  % of worker time spent moving materials
 % of orders delivered on time as per the Master  Carry forward orders as a % of total orders
Schedule
 Ratio of delivery time offered to customers to
 Work-to-wait ratio actual manufacturing time
 Plant performance units of output per hour
71
Key Performance
Indicators
Representative KPIs M-3.03 : Fulfill
Orders
Q
Cos Qualit
t y
Reduce Costs Put Quality First
 Average delivery expenses per MT  Percentage of electronically accepted /paperless
 Average order processing expenses per MT orders
 Order processing expenses/total sales
 % advanced shipment notices that match order
 Late delivery penalties/total shipping expenses
 % on-time delivery of rush orders
 Average insurance cost per value of shipment
 % of bills accurately prepared
 Average shipping and handling cost
 Rupee value of merchandise shipped with quality
problems/total rupee value shipped
 Accounts Receivable (value and days cover)
 % of units shipped with quality problems
 Value of discounts given
 % of claims audited
 Account write-offs/total sales
72
Key Performance
Indicators
Representative KPIs M-3.03 : Fulfill
Orders
Cycle Interface
Time Compress Time
Service
Focus on Customer
 Order fulfillment cycle time  Frequency of adherence to ordering methodology

 Order to shipment lead time  Percentage of backorders in orders
 No. of authorisations required per order  Average backorder wait length
 No. of deliveries extended because finished  % products requested but not offered
product unavailable/total no. of deliveries  % of incorrect orders taken
 Average time to process a claim /return  No. of shipments shipped past the promised
 On-time delivery rate delivery date or cancel date/total no. of shipments
 No. of delayed billing cycle runs/total no. of billing
cycle runs
 No. of bill corrections/total no. of bills processed
 No. of A/R Accounts reaching credit limits/total no.
of A/R accounts
73
Key Performance
Indicators
Representative KPIs M-3.04 : After Sales
Support
Q
Cos Qualit
 Complaint Claims / Sales  Customer suggestion adoption rate
 Average complaint claim cost per unit sold  % of customer complaints resolved
 Average cost per customer inquiry or call  % of Quality Complains answered within target
time
 Field service expense/total sales
 % of customer complaints or inquiries resolved
 No of customer complaints/No of customer
compliments
 Average system downtime during business
hours
Cycle
 % of customers receiving sales follow-up calls
Time Compress Time
 % late customer complaint redressal
 Time lag from identification of customer
problem to satisfactory action on problem
 Customer service lead time
 Mean time to repair product
74
M-3.05 : Manage Logistics
Representative KPIs Network
Q
Cos Qualit
 Logistics costs/total material cost  % of variations in schedules given to suppliers
 Logistics transaction processing cost/total logistics cost  Delivery frequency from suppliers
 Material handling costs/total logistics cost  % of receipts received on time
 Material movement costs/total logistics cost
 % of receipts at “point of usage”
 % consumption above normative level
 % of deliveries bar coded
 Inventory carrying cost/total material cost
 Storage cost /total inventory carrying costs
 Inventory record accuracy by category/item
 Inventory insurance cost/total inventory carrying costs  Number of material shortages
 Obsolete /slow moving /non moving inventory cost (value,  % of unplanned material movements
insurance and warehouse space occupied)
 Number of transporters used
 Number of receipts and issues handled
 Average time for receiving/inspection process

 Vehicle turnaround time
Cycle  Time to resolve unmatched inventory items
Time Compress Time  Time to dispose non-moving/obsolete inventory or scrap
75
Key Performance
Indicators
The Ispat Operational Vision M-4.01 Manage
Information
Q
Cos Qualit
 IT budget as a % of total budget  Accuracy of data
 Consistency in data
 Number of entities managing the same data
Cycle Interface
 Time taken by the department to deliver user  % of employees having access to on-line
requirements computerised data
 % of departments having access to on-line
computerised data
76
Key Performance
Indicators
Representative KPIs M-4.02 Plan the
Enterprise
Q
Cos Qualit
 Performance against budget  Number of processes with multiple owners
 Number of instances of multiple reporting
relationships
 Number of processes without owners
Cycle Interface
 Time between actual and targetted dates of  Percentage variation in plans prepared by
freezing of the Sales plans Sales/Exports and APC
 Time between actual and targetted dates of  Percentage variation in plans prepared
freezing of the Production plans  Number of different entities involved in the
planning process
 Number of changes to plans prepared by
Sales/Marketing, Exports, PPIC, Corporate
Strategy etc
77
Representative KPIs M-4.03 Manage Financial
Operations
Q
Cos Qualit
 Cost of the Finance function as a % of total income
 Reporting accuracy
 Cost of capital  Number of reconciliations required between G/L
 Interest expenses
and subsidiary ledgers
 Write-offs on company assets
 Variation in foreign exchange exposure
compared to policy
 Costs of providing management reporting
 Return on investments made
 Accuracy of cash budgets (ie actual vs budgets)
 Man-hours spent on keying / re-keying entries
on account of inadequate system integration
due to Excel spreadsheets usage
Cycle
Time Compress Time Interface
 Number of days for year-end, quarterly and Service Focus on Customer
monthly closing
 Time taken for budgeting exercise
 Number of collections processed per person
 Time between collections and posting of
collections
 % of real time journal entry postings,
validations, approvals, balancing and error
 Time taken to process and despatch payments correction
 Duration of the capital planning process  Variation between actual and desired values
 Man-hours spent on manual account analysis taken by financial ratios
78
Key Performance
Indicators
Representative KPIs M-4.04 Manage Human
Resources
Q
Cos Qualit
 Personnel costs  Number of employees with quality certification
 Overtime paid  Percentage of workforce participating in
 Absenteeism problem-solving groups
 Man-hours per vehicle
 Number of temporary workmen
 Replacement costs per employee grade
 Employee turnover
 Supervisory  New recruit turnover
 Managerial
 Executive
Cycle Interface
Time Compress Time
 Suggestions submitted per employee
 Average number of days between receipt of job
requisition and date of new hire  Employee suggestion adoption rate
 Interviewing time and testing time per new  No of benchmarking studies conducted in last n
candidate periods
 Training days per new hire  % of appraisee feedback incorporated in final
evaluations
 % of employees possessing cross-functional
skills
79
Representative KPIs M-4.05 Implement Capital
Projects
Q
Cos Qualit
 Cost overruns against budgets  Incidence of time overruns
 Opportunity loss due to delay in implementing  Incidence of budget overruns
Cycle Interface
 Time taken for implementation  Accuracy of Status reporting
 Delays in reporting information  Time taken for generating status report
 Acceptance of projects proposals
80
Representative KPIs M-4.06 Manage Relations with
Stakeholders
Q
Cos Qualit
 Cost of compliance  Number of government audits
 Number of stakeholder enquiries
 Number of compliance problems
 Number of compliance inquiries
Cycle Interface
 Time taken to prepare information needs of  Service level for investor satisfaction
stakeholders  Dividend paid to investors
 Delays in reporting information  Service level for government compliance
81
Reasons for
Cascading the Vision Cascading
To clearly define the role and expected contribution

of each person to enable Company achieve the
result-orientation amongst employees by targets set out for the vision elements
which are critical for Company’s success

to ensure measurement of parameters
To increase accountability and ensure
establishing appropriate performance
To establish and/or refine processes

measurement indicators
Why
Cascade?
To enable establish formal monitoring and

reporting mechanisms to track performance and
periodically measure the extent of improvement
achieved as against the set out targets
82
Cascading the Vision Approaches to Cascadin
 The Operational Vision for each process

could be cascaded through one of the
following two methods :
 Top - Down Approach
 Bottom - Up Approach
TOP-DOWN APPROACH BOTTOM-UP APPROACH
Level 1 ED (M)
target Level 1 ED (M) target
(eg Marketing Dept) (eg Marketing Dept)
Level 2 President Level 2 President Level 2 President Level 2 President Level 2 President Level 2 President
(eg Domestic Mkt.) (eg Mkt. Strategy) (eg Exports) target (eg Domestic Mkt.) (eg Mkt. Strategy) (eg Exports)
target
Level 3 V P Level 3 V P Level 3 G M Level 3 V P Level 3 V P Level 3 G M
eg (Customer Servicing) (eg NPD) (eg Market Research) eg (Customer Servicing) (eg NPD) (eg Market Research)
target
Level 4 Sr. Manager Level 4 Sr. Manager Level 4 Sr. Manager Level 4 Sr. Manager Level 4 Sr. Manager Level 4 Sr. Manager
(eg V AG) (eg Cold Rolling) (eg Break Through) (eg V AG) (eg Cold Rolling) (eg Break Through) target
 Each level sets targets for the levels  Each level sets its own targets based on
below it, :
keeping in view the overall target  Knowledge about its own
capability/processes
 Aggregating targets set by levels below
83 it
Approaches to
Cascading the Vision Cascading
Description of Approach
TOP-DOWN APPROACH  Set target levels for the vision elements at the
lowest operating levels
 Aggregate targets one level up at a time till the
Description of Approach level at which the vision target has been set is
reached
 Break up the vision target to relevant and
meaningful targets for one level below  Compare the aggregated target with the vision
 Repeat the process of splitting targets till targets
target set out
are set at the lowest possible operating level  Review and iterate the operating level targets
 Agree targets at each level with concerned till the aggregated value matches the vision
people target
Pre-requisites Pre-requisites
 Managers need to be willing to set ambitious but  Operating personnel need to be willing and
achievable targets for their juniors capable of setting ambitious but achievable
Advantages targets for themselves
 Lower number of iterations required Advantages
 The focus on the end result is never lost  Greater acceptance at the operating levels
Challenges Challenges
 Possible difficulty in gaining acceptance for such  Iterative process could be time-consuming
targets at the lower levels  Level of computational effort is higher
BOTTOM-UP APPROACH
84
Cascading the Vision Top - Down Approach
1. Identify entities at all 4. Measure

3. Establish / streamline
levels (eg Blast furnace, 2. Identify person(s) at current
mechanisms to
SMS, Marketing) who each level who need to be performance
measure levels of
contribute towards the made responsible in order levels of the
performance of the
value set as the target to achieve the vision target vision element at
vision elements
for the vision element the lowest level
(eg WIP) 5. Aggregate current
performance levels till
Refer Appendix for an
example to illustrate the level at which the
the approach vision element has
been set
N
9. Finalise targets,
time frames, Y
information flow and 6. Determine target
responsibilities performance levels one rung
7. Confirm with below the level at which the
8. Determine time operating mangers at target vision is set; continue
frames and each level that targets to set targets one level at a
responsibilities for set are feasible and time for all levels
targets achievable
85
Cascading the Vision Bottom - Up Approach
1. Identify entities at all 4. Measure

3. Establish (or
levels (eg Blast furnace, 2. Identify person(s) at current
streamline existing)
SMS,Marketing) who each level who need to be performance
mechanisms to measure
contribute towards the made responsible in order levels of the
performance levels of
value taken by the to achieve the vision target vision element at
the vision element
vision element the lowest level
5. Determine
Refer Appendix for an (stretch) target
example to illustrate performance levels
the approach
at the lowest
operating levels
9. Finalise targets, N
time frames,
information flow and Y
responsibilities 6. Aggregate current and
7. Check if target levels of
8. Determine time aggregated target performance till the
frames and for vision element performance measure for
responsibilities for equals desired the vision element is
targets value obtained
86
Cascading the Vision Issues in Cascading
e following parameters influence the ease of cascading a vision element
Definition Data Ease of Ease of

Problems Diffi AvailabilitDiffic Measurement
Diffi Aggregation
as y
Diffi
Eas y cu lt Easy ul t Eas y c ul t E c ult
y
Material cost / Yield rate of After Sales Cost per Cost of Customer Inventory Adherence to
Sales new concepts Support new concept procurement satisfaction levels (M3.5) schedules and
(M3.1) (M1.1) expenses (M1.1) (M3.1) levels (M1.2) budgets
(M3.2) (M1.2)
Number of Level of Determining

Entities External Responsibilit
InvolvedDiff Interaction y D
icult Easy ifficu
Easy D lt
Easy Needed ifficult
Variability of Conversion Conversion Reduce Truck Product
truck Cost within 1 cost within 1 product turnaround Profitability
transportation year (M3.2) year (M3.2) complaints time (M3.5) (M1.2)
time (M3.5) (M3.2)
Parameters which influence the ease of cascading
Sample vision element to illustrate the ease/difficulty in cascading
Cascading efforts could vary significantly

from one vision element to another.....
87
Cascading the Vision Issues in Cascading
ading efforts could vary significantly from one vision element to another..... consequen
ollowing could vary across vision elements
Success in
Cascading
Approach to Timeframes for

Cascading Cascading
88
Issues in Cascading
Cascading the Vision M1: Develop Products and Processes
Business Process Vision Element Vision Direction to be Difficulty Level in Cascading

Target taken by vision (High/ Medium/ Low)
element
1 2 3 4 5 6 7
Conduct Research Research budget as a % of turnover 1-2% Low Low Low Low Medium High High
Yield rate of new concept 50%  High High High High Medium High High
Cost per new concept 10%  High High High High Medium High High
Define Product Design lead time 25%  Medium High Medium Medium Medium High High
Customer satisfaction levels 100%  High High High High High High High
Product profitability 25%  Medium High Medium Medium High High High
New products per year 2 Medium Medium Medium Low Medium High High
Adherence to schedule and budgets 100% Low High Low Medium Medium High High
Design Products and Number of Design Modification 0 Low Medium Low Medium High High High
Processes Requests after a launch
Cost of customer claims 100%  Low High Medium Medium Medium High High
Manufacturing lead time in the 2 years 25%  Medium Medium Medium Medium High High High
following a new product release
1 : Definition Problems
2 : Current Data Availability
3 : Ease of Measurement
4 : Ease of Aggregation
5 : Number of Entities Involved
6 : Determining Responsibility Centres
7 : Level of External Interaction
Likelihood of difficulties in cascading the vision
due to poor data availability, inadequate
measurement mechanisms and dependence on a
large number of external agencies
89
Issues in Cascading
Cascading the Vision M3.2: Produce
Vision Element Vision Target Direction Difficulty Level in Cascading
to be (High/ Medium/ Low)
taken by
vision
element
1 2 3 4 5 6 7
Hot metal production >5000 MT/day  Low Low Low Medium High Medium Low
Hot Metal Cost $275/MT by FY2010  Medium Low High High High Medium Low
SMS Production >48Heats /Day  High Low High Medium High Medium Low
SMS Yield >87%  Low Low High Medium Medium Medium Low
Caster 1 speed 6.2 meters/Minute by  Low Low High High High High Low
FY 2010
Mill production 2.5 Lacs per month  Medium Low High Medium High High Low
MTBC 3.2minutes by FY 2010  Medium Medium High High Medium High Medium
HRC Cost $ 350/ MT by FY 2010  Low High High Medium High High Low
DRI Production 1.8 lacs tonnes by  Low High High High High High Medium
Plant Reliability 2009
>95%  Low High High High High High Medium
Unplanned downtime <5%  Low Low High High Medium High Medium
Maintainence cost $ 100/MT  Low Medium High Medium High High Low
Cascading the vision could be difficult on account 6 : Determining Responsibility Centres
of the 7 : Level of External Interaction
number of entities involved and identifying
responsibilities for activities
90
Issues in Cascading
Cascading the Vision M3.5: Manage Logistics Network
Vision Element Vision Direction to be Difficulty Level in Cascading

Target taken by vision (High/ Medium/ Low)
element
1 2 3 4 5 6 7
Variability of in-bound transportation 50%  Medium High High Medium Low High Medium
times
Truck turnaround time 50%  Low High Low Low Low Low Medium
Despatch without any damage 100% Low Medium Low Medium Medium Medium High
Inventory levels as per Medium Medium Low Low High Low Medium
norm
Slow-moving/ non-moving and obsolete 90%  High Low Medium Low Medium Medium Low
inventory 2009
Increase in volumes by current TBD  High Medium High High Low Low Low
manpower
6 : Determining Responsibility Centres
7 : Level of External Interaction
Cascading the vision should be the

feasible provided data is made available
and responsibility centres are assigned
91
Monitoring Mechanisms Monitoring Requirements
 Why do we need to monitor ?

 What’s been done so far ?
 What were the results ? PERFORMANCE ON VISION ELEMENT
Vision element Target for Actuals for Target for Actuals for Target for
 What further needs to be done ?
previous previous current current next period
 Who will do it ? period period period period
 When will it be done ?

 How will it be done ?
 What inputs are needed from various persons ?
WORK PLAN FOR THE NEXT 15 DAYS

Step to betaken Responsibility Start Date End Date Resources
KEY ISSUES REQUIRING ATTENTION

Area Issue Steps already taken Inputs needed to Timeframe
resolveissue
92
Monitoring Mechanisms Monitoring Levels
 Monitoring mechanisms would need to be established at all levels

Examples of personnel who
would be monitoring the
vision element
“Caster & Mill yield of 99.70%
& 98.52% ”*
MD
EDIC
Dolvi
Formal Process Owner
mechanisms
Process Owner, “Fulfil
needed at these
Demand” (M3.)
4 levels
Sub-Process Owner
Process Owner,
“Produce ” (M3.02)
Vision Element Owner
Process Owner, “HSM ”
(M3.02.xx)
Sections contributing to the Vision
Specific people from LF ,Caster,
Element
Mill,
etc
Individuals contributing to the Vision
Element
Need to establish owners

for each vision element
* from M3.1 - Manage Supply Sourcing
93
Monitoring Mechanisms Monitoring Frequency
 Formal periodic monitoring would be necessary at four levels as per the following
schedule :
MD Quarterly
Process Owner Monthly
Sub-Process Owner Fortnig

htly
Vision Element Owner Weekly
Sections contributing to the Vision

Element
Individuals contributing to the Vision
Element
Need to establish
monitoring
schedules for
each vision
element
94
Monitoring Mechanisms Summary of Reporting Mechanisms
What do they
report
Who reports to whom
 Performance in the current period against
 Various individuals and sections contributing to targets
vision element to the vision element owner
 Steps taken towards meeting targets
 Vision element owner to sub-process owner
 Results of successfully executed steps
 Sub-process owner to process owner
 Process owner to MD
 Issues faced on unsuccessfully executed steps
and means planned/taken to resolve them
 Workplan to meet vision element targets (steps
to be undertaken, timeframes and
responsibilities)
 Issues requiring attention/intervention
When and how do they Actions to be taken by

report recipient
 In accordance with pre-determined
schedules
 Discuss and understand contents of
report
 In standard customised formats
developed
 Decide on means of resolving issues
which have been identified by the
person preparing the report
 Co-ordinate with the required agencies
and resolve issues
95
Monitoring Levels : Vision Element Lev
Monitoring Mechanisms “Caster & Mill yield of 99.70% & 98.52%
Vision Element Owner,

(Caster & Mill yield of 99.51% & 98.70% )
Material Level
Performance
on Vision Element
LF Caster Mill Elec Maint. Utilities Mech. Maint
Performance on vision elements would be

reported
by individuals / sections directly responsible
for its achievement
to the vision element owner every fortnight
96
Monitoring Levels : Sub-Process Leve
Monitoring Mechanisms An Example : Hot Strip Mil
Sub-Process Owner,
Hot Strip Mill
Vision Element
Level Performance
Fuel consumption Average melting power

Average Heat size Caster & Mill yield of Average sequence length
Avg.50 heats/ day in Tunnel furnace consumption
193 MT/TLS 99.51% & 98.70% L+12
@ 10.25 ltr/t @ 254 kwh / ton
Material Level Performance
LF Caster Mill Elec.Maint Utilities Mech.Maint
Sections /individuals who contribute to

the vision element
Performance on vision elements would be

reported
by the vision element owners to the sub-
process owner every month
97
Monitoring Levels : Process Level
Monitoring Mechanisms An Example : Fulfil Demand
Process Owner
Fulfil Demand
Sub- Process
level Performance
Manage Supply Deliver Services & Manage Logistics

Produce Fulfil Orders
Sourcing Support Network
VE VE VE VE VE VE VE VE VE VE VE VE VE VE VE
1 2 n 1 2 n 1 2 n 1 2 n 1 2 n
V Vision element
E
Sub-process level performance on vision elements

would
be reported by the sub-process owners to the
process owner every month
98
Monitoring Levels : Process Level
Monitoring Mechanisms An Example : Fulfil Demand
Managing Director
Process
Level Performance
M1 M2 M3 M4
Develop Products Generate Demand Fulfil Demand Plan and Manage
and Processes the Enterprise
M1 M1 M1 M2 M2 M2 M3 M3 M3 M4 M4 M4
.1 .2 .3 .1 .2 .4 VE
.1
VE VE
.2 .5 .1 .2 .5
VE VE VE VE VE VE VE VE VE VE VE VE VE VE VE VE VE VE
VE VE VE VE VE VE VE VE VE 1 2 n VE VE VE
1 1 1 2 n 1 1 2 n 1 2 n 1 2 n 1 2 n VE VE VE
1 2 n 2 n 2 n 2 n 1 2 n
1 2 n
Process level performance on vision elements

would be reported
by the process owners to the Managing
Director every quarter
99
Integrated Performance
Architecting the Change Measurement
To focus the entire company on achieving the Operational Vision, we must rethink the
way we measure and reward behaviour
• Measure the ability to

satisfy customer
requirements
• Measure company-wide
bottom line impact
• Measure the impact of the

supply chain on other
customers/suppliers in the
value chain
• Measure “cross functional”

performance to achieve
100
total business process
Architecting the Change Integrated Performance Measuremen
Performance metrics can be defined around three basic elements of

performance. Cost, quality and time provide the foundation for
complete competitive performance.
- Performance Elements and Illustrative Metrics -
 Customer Satisfaction
 Return on Assets
 Employee
Satisfaction...
Value Servic
e
Cost Quality Time
 Units per Employee  Order Quality  On-time Delivery

 Activity Based  Fill Rate  Order to Collect Cycle
Cost...  Invoice Time
Quality...  Inquiry Response Time...
101
Effective performance metrics have a number of key characteristics
Business
Objectives  Metrics are linked to business
objectives and critical success
factors
 Metrics are process-focused,
Success focusing on business outcomes as
Factors opposed to functional viewpoints
Supply  Suite of metrics are balanced,
Chain supporting simultaneous
optimisation of cost, quality and
Dolvi Plant Performance
time
Metrics
 Process owner controls
Process
achievement of metrics
 Lower levels of metrics are
Sub-process telescoped into higher levels (ie
are consistent with and support the
Group higher levels)
 Metrics are integrated into
Individual incentive programs and reward
structures
102
Management plays a critical role in effective performance

measurement.
- Sponsorship Actions -
 Establish performance measurement
approach and improvement goals
 Actively sponsor measurement and other
improvement programs
 Assign responsibility for measurement to
Program Executive standards
Management Leadership  Lead efforts to integrate metrics and targets
into incentive and reward programs
 Collaborate with stakeholders to set
Enablement aggressive yet achievable targets
Business
• People Ownership  Actively monitor metrics, improvements and
• Process improvement programs
• Technology  Recognize successes and challenge and
support areas of shortcoming
 Lead organizational behaviour changes that
result in consistently managing to address
critical success factors and better meeting
improvement goals
103
Managing Change
Architecting the Change Our Approach to Change
Management
• Communicate often throughout the change process - at all levels

Constant
• Educate all personnel; cover new concepts and skills
Reinforcement
• Develop action plans to support implementation of “master plan”
• Get commitment to support a learning curve

Migration
• Have measurable performance objectives - for the project and the process
Path
• Involve end users right from the start - create a team focus
• Conduct phased implementations; build a success story

Change• Have at least one “champion” to act as a change agent for each program
Vision
• Develop and implement a reward system which supports performance objectives
• Structure the organisation and the jobs to support the process
Sense of• Make sure change support resources are available after implementation
Urgency
• Build consensus and commitment to change; start at the top
104
Architecting the Change Managing Change
Framework for Managing Change
A useful change management framework

identifies four key components that need to be
managed
Planning for and managing the move from Sponsorship of change by key executives,
the “as is” organisation to the desired illustrating to the entire organisation
“to be” state management’s commitment to the change
effort
Program Executive
Managemen Leadership
t
Enablemen Business
Critical products developed that t Ownership Ownership and commitment to change
provide individuals and the organisation Projects experienced by all individuals throughout
with knowledge, skills, tools, frameworks the organisation
and support to perform their work successfully
105
Architecting the Change The Recipe for Success
 Make it the #1 priority

 Champion the effort at the very top
 Identify “stretch” goals and
measurements
 Prepare for resistance
 Challenge everything
 Address each dimension of the operation

 Facilitate
Prepare forcross-functional participation &
constructive conflict
buy-in
 Empower change agents
 Use an integrated approach
 Commit the necessary resources
 Cut through organization boundaries
 Communicate, communicate,
communicate!!!
 Celebrate and reward
success!!!
The good news is that success is very achievable. Hundreds of companies
have achieved dramatic results by applying proven business
transformation approaches, tools and techniques
106
Potential
Benefits
The Transformed Environment
From To
Jobs Narrow Multi-dimensional
Organization Hierarchy Team
Orientation Function Process
Customer Inconvenience Reason for existence
Front Line Employee Manual labourer Mission critical
Manager Supervisor resource
Executive Bookkeeper Coach
Priority Activity Leader
Measures Financial Result
Focus Internal Operational
Values Protective Customer
Productive
The end result of an effective business transformation initiative is a business unit
whose people, processes and technology are working together to meet the
organization's strategic objectives
107
Next
Steps
Finalise the Operational Vision for processes not depicted

 Identify process owners for the identified business processes and they must be
validated by them taking into account the PMS of individuals defined by the EVA team
 Need to finalize the following :
 The vision elements for the sub-processes under them
 Stretch goals/metrics indicating levels of performance to be achieved on the vision elements
 The key performance indicators (KPI) for each sub-process, either slightly modified or new
vision elements added to the existing set
Cascade each vision element

 Identify responsibility to ensure successful cascading
 At the process owner level
 At lower operating levels
contd...
108
Cascading the Vision Next Steps
Cascade each vision element (...contd)

 Finalise the following for cascading :
 Approach (Top-Down or Bottom-Up Approach) to be adopted
 Timeframes (start date and end date)
 Detailed activities/action steps
 Responsibilities and resources to be made available for each activity
 Interim targets and checks to be set up
 Mechanisms to ensure adherence to schedule
 Identify changes which need to be made to existing processes to improve the
following :
 Systems to capture information regarding performance on selected KPIs/vision elements
 Mechanisms to collate data to enable periodic review by process owners
Finalize monitoring mechanisms for each vision element

 Determine mechanisms for reporting information on the extent of progress against the
set out vision targets, specifically the following :
 Nature of information to be communicated
 Sources for details on the above data
 Parties to whom information would be communicated to
 Frequency at which information would be provided
 Formats to be used for communications
109

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Ispat Industries Limited

An Integrated Approach for Linking

Top Management Workshop

Implement “Fast Track” capital

Need to integrate organisational

Factors influencing competitiveness Common characteristics in world class Steel pla

Size, scale, product mix Plant characteristics

Process control along the

 Improve product quality by making the manufacturing

Work Practices Imperatives Organization Culture

There is great urgency in the organization to bring about

Ispat is currently organized according There is greater focus on volumes (MT)

Significant potential exists for improvements in

— The Winners — — The Survivors — — The Losers —

Increase Efficiency Put Quality First

Operationa As Is Gap To Be Master

An Operational Vision ...

Enterprise Transformation Requires a Holistic

Refocussing • Value propositions

• Core activity • Core job/role clusters

An Operational Vision Is a Statement of Intent...

Translation of our strategic

Definition of target levels

 Includes operational Strategy

An “end-to-end” process extending beyond the boundaries of one organisation

Enablers: Human Resources

STAGE 1 STAGE 2 STAGE 3

Functions Drive Functions Continue to Dominate Processes

Enterprise-wide process managers may be the most valued positions in the

Company Background Leading Practice Implemented Business Benefits

Organizing around customer type is the emerging trend

Traditional Traditional Traditional Traditional

Advantages of a Process Driven Organization

Introduces External Focus

Brings about improvements in the workplace

Advantages of a Process Driven Organization (...contd)

Improves Decision Making

Increases Employee Satisfaction

 M-2.03 : Capture Market

Core Processes for Steel Manufacturer

M-1.02 Define Product M-2.02 Create Market M-3.02 Produce

M-4 Plan and Manage the Enterprise

Develop Product and Processes

Conduct Research Define Products Design Products and Processes

 Products co-engineered with suppliers (IF, DP, Stainless etc) High

 Concurrent engineering achieved through cross-functional teams High

Manage Customer Relationships Capture Orders

 Full supply chain integration with seamless information flow High

 Field sales “Knowledge Workers” empowered to cover breadth of relationship High

 Pricing capabilities established based on “true” cost of product/service High

Manage Supply Sourcing

 Production schedules integrated with supplier sourcing plan High

 Replenishment schedules configured based on true market demand High

Plan and Manage the Enterprise

Manage Information Plan Enterprise Manage Financial Operations

Manage Human Resources Implement Capital Projects Manage Stakeholder Relations

 Common systems infrastructure; single data repository High

M-1 .01 Conduct Research

Set General Set Specific

Define Product Create Market Produce

M-4.04 Manage Human M-4.05 Implement M-4.06

M-1.02 Define Product