Project Report on

Total Quality Management

At

Steel Authority of India (SAIL)

Submitted to -: Submitted By

Prof. Pranay Verma Chandan Kumar FT-10-842 PGDM 10-12

CONTENTS

Sr No. Topic Pg No.

1 SAIL – Introduction 2

2 History of SAIL 5

3 Vision & CREDO 7

4 Company Policies 8

5 Techniques of TQM 9

6 JIT(Just in Time) 9

7 Six Sigma 13

8 Achievements & Recent Developments 16

Steel Authority of India Limited (SAIL)

Steel Authority of India Limited (SAIL) is the leading steel-making company in India. It is a fully integrated

iron and steel maker, producing both basic and special steels for domestic construction, engineering,

power, railway, automotive and defence industries and for sale in export markets. SAIL is also among the

four Maharatnas of the country's Central Public Sector Enterprises.

SAIL manufactures and sells a broad range of steel products, including hot and cold rolled sheets and coils,

galvanised sheets, electrical sheets, structural’s, railway products, plates, bars and rods, stainless steel and

other alloy steels. SAIL produces iron and steel at five integrated plants and three special steel plants,

located principally in the eastern and central regions of India and situated close to domestic sources of raw

materials, including the Company's iron ore, limestone and dolomite mines. The company has the

distinction of being India’s second largest producer of iron ore and of having the country’s second largest

mines network. This gives SAIL a competitive edge in terms of captive availability of iron ore, limestone,

and dolomite which are inputs for steel making.

SAIL's wide range of long and flat steel products which are much in demand in the domestic as well as the

international market. This vital responsibility is carried out by SAIL's own Central Marketing Organisation

(CMO) that transacts business through its network of 37 Branch Sales Offices spread across the four

regions, 25 Departmental Warehouses, 42 Consignment Agents and 27 Customer Contact Offices. CMO’s

domestic marketing effort is supplemented by its ever widening network of rural dealers who meet the

demands of the smallest customers in the remotest corners of the country. With the total number of

dealers over 2000, SAIL's wide marketing spread ensures availability of quality steel in virtually all the

districts of the country.

SAIL has a well-equipped Research and Development Centre for Iron and Steel (RDCIS) at Ranchi which

helps to produce quality steel and develop new technologies for the steel industry. Besides, SAIL has its

own in-house Centre for Engineering and Technology (CET), Management Training Institute (MTI) and

Safety Organisation at Ranchi. Our captive mines are under the control of the Raw Materials Division in

Kolkata. The Environment Management Division and Growth Division of SAIL operate from their

headquarters in Kolkata. Almost all our plants and major units are ISO Certified.

History of Steel Authority of India Ltd.

1954 - Hindustan Steel Ltd. was created to oversee the Rourkela Steel Plant

1960 - The Alloys steel plant was installed at Durgapur in W. Bengal with Japanese assistance.Special steels

were produced such as armour plate, grade steel & many special grade alloys to meet vital and strategic

needs of country in areas of nuclear energy, defence, space.

1968 - SAIL took over the management of Maharashtra Elektrosmelt Ltd. a small compact company, at

Chandrapur, Maharashtra for utilising some of its facilities for R&D works as well as maximising its

production of ferro manganese for use in SAIL plants. The unit produces several goods of special steels.

The Company proposed to diversify into manufacture of ferro alloys, low carbon pig iron etc.

1973 - Pursuant to a decision taken by Government of India in January the Steel Authority of India,

limited was formed on 24th January, as a holding Comp. for Steel & Associated input industries.

1974 - SAIL International Ltd., was incorporated to coordinate the export & import business.

1976 - Durgapur Mishra Ispat Ltd., Bhiali Ispat Ltd., an Rourkela Ispat Ltd., were formed as fully owned

subsidiaries of SAIL for taking over the running business of Alloy Steels Plants, Bhilai steel Plant & Rourkela

Steel Plant on tranfer from HSL.

1982 - The Salem Steel Plant was inagurated at Salem in Tamil Nadu in March. It represents the dispersal of

industries & balance regional development bringing the latest sophistication in cold rolling. The products

find application in major industries viz., nuclear, petroleum, chemicals, fertilisers, food processing,

Pharmaceuticals, dairy, household appliances, cutlery etc.

1988 - The Visvesvaraya Irons and Steel Co. limited became a subsidiary of SAIL with SAIL acquiring 60% of

shares of Company. The Bhilai Steel Plant set up a blast furnace bell-less top charging system.

1993 - The Comp. undertook to float a joint venture Comp. in collaboration with USX Engineers and

Consultants Inc., Pittsburg, USA for development & execution of technology & system integration for

computer applications in basic industries such as those engaged in steel mining & metallurgy.

1995 - SAIL has ventured into setting up a power project at Bhilai in joint venture with M/s. Larsen and

Toubro & CEA, USA Inc.

1999 - The Steel Authority of India Ltd [SAILs] has forged a marketing tieup with Tyazpromexport [TPEs] of

Russia to sell the entire range of castings & pig iron produced by Kulti Works, a division of Indian Iron &

Steel Comp.

2000 - Private sector steel majors Tisco, Kalyani Steel & the public sector Steel Authority of India are all set

to form a three-way joint venture for undertaking e-commerce activities in the steel sector.

Steel Authority of India Ltd., Tata Steel & Kalyani Steels limited entered into an agreement for creation of

an Internet-based global, independent B2B Steel Market place.

Steel Authority of India Ltd & the National Thermal Power Corp. are set to begin for a joint venture for

three captive power plants & associated units of SAIL.

2003 - SAIL’s output surpasses ten MT of saleable steel.

2005 -GAIL ties up with SAIL

2008 -Steel Authority of India Ltd [SAILs] has informed that the Comp. on February 21, 2008 has signed a

Joint Venture Agreement with M/s. Jaiprakash Associates Limited [JALs] for formation of Joint Venture

Comp. [JVCs] to set up a cement plant for producing 2 million tonnes of Cement at Bokaro [Jharkhands] by

using slag generated at Bokaro Steel Plant of SAIL.

Steel Authority of India Limited & Larsen & Toubro Limited [L&Ts] has signed a Memorandum of

Understanding [MoUs] to jointly set up, develop, manage & own captive/independent power plants at

suitable location/s to meet future power requirements of SAIL.

2009 - SAIL signed a Joint Venture Agreement with Coal India Ltd, Rashtriya Ispat Nigam Ltd, NMDC Ltd and

NTPC Ltd for setting up of a Special Purpose Vehicle i.e. International Coal Ventures Pvt. Ltd (ICVL) for

acquisition of coal mines/block overseas for securing coal supplies.

2010 – The Govt. Of India has accorded the status of “Maharatna”.

Vision

To be a respected world class corporation and the leader in Indian Business in

• Quality,

• Productivity,

• Profitability &

• Customer Satisfaction.

CREDO

SAIL attach highest value to human life. SAIL follows a well drawn policy to ensure safety of

human beings and equipment so as to ensure an accident free work environment.

• They build lasting relationships with customers based on trust and mutual benefit.

• They uphold highest ethical standards in conduct of our business.

• They create and nurture a culture that supports flexibility, learning and is proactive to change.

• They chart a challenging career for employees with opportunities for advancement and rewards.

They value the opportunity and responsibility to make a meaningful difference in people's lives.

Company Policies

Quality Policy

According to SAIL they say :-

“We shall build and sustain a world class organization, where Quality is the hallmark of every

process and activity with the involvement and dedication of our human resource. We are committed to

achieve satisfaction of all our stakeholders, through innovation and continual improvement.”

Corporate Social Responsibility Policy

SAIL recognizes that its business activities have direct and indirect impact on the society. The Company

strives to integrate its business values and operations in an ethical and transparent manner to

demonstrate its commitment to sustainable development and to meet the interests of its stakeholders.

The Company is committed to continuously improving its social responsibilities, environment and

economic practices to make positive impact on the society.

Safety Policy

Safety of its employees and the people associated with it including those living in the neighbourhood of its

plants, mines and units.

Pursue safety efforts in a sustained and consistent way by establishing safety goals, demanding

accountability for safety performance and providing resources to make safety programmes work.

Corporate Environmental Policy

The steel authority of India Limited (SAIL), manufacture various products of iron and steel. The company

owns and operates five integrated steel plants at Bhilai, Durgapur, Rourkela, Bokaro and Burnpur and three

special steel plants at Salem, Durgapur and Bhadrawati along with captive mines for iron ore, limestone,

dolomite, and coal and has a subsidiary, MEL at Chandrapur. SAIL also have an extensive marketing

network spread across the length and breadth of the country.

SAIL reaffirms its commitment to contributing towards a clean and sustainable environment and

continually enhancing its environmental performance as an integral part of its business philosophy and

values.

Human Resource Policy

SAIL ensure competent and committed team engaged in building a culture of learning to achieve

excellence in performance and employee satisfaction through innovation and continual improvement.

Techniques of TQM in SAIL

• JIT (Just In Time)

• Six Sigma

• The ISO 9001:2000 Quality Assurance System

• CSR

JIT (Just In Time):

Just-in-time is an inventory strategy that strives to improve a business’s return on investment by reducing

in process inventory and associated carrying cost.

JIT can dramatically improve a manufacturing organization’s return on investment, quality and efficiency.

The major competitive dimensions that form the competitive position of a company include the following.

Cost – “Make it cheap” Within every industry, there is usually a segment of the market that buys solely on

the basis of low cost. To successfully compete in this niche, a firm must be the low cost producer, but even

doing this does not always guarantee profitability and success.

Product quality and reliability – “Make it good”. Quality can be divided into two categories: product

quality and process quality. The level of quality in a product’s design will vary with the market segment at

which it is aimed. Process quality is critical because it relates directly to the reliability of the product.

Delivery speed—“Make it fast.” In some markets, a company’s ability to delivery more quickly than its

competitors may be critical.

Delivery reliability—“Deliver it when promised.” This dimension relates to the ability of the firm to supply

the product or service on or before a promised delivery due date.

Coping with changes in demand – “Change its volume.” In many markets, a company’s ability to respond

to increases and a decrease in demand is an important factor in its ability to compete. It is well known that

a company with increasing demand can do little wrong. When demand is strong and increasing, costs are

continuously reduced due to economics of scale, and investments in new technologies can be easily

justified. But scaling back when demand decreases may require many difficult decisions relating to laying

off employees and related reductions in assets. The ability to effectively deal with dynamic market demand

over the loan term is an essential element of operations strategies.

Flexibility and new product introduction speed—“Change it”. Flexibility, from a strategic perspective

refers to the ability of a company to offer a wide variety of products to its customers. An important

element of this ability to offer different products is the time required for a company to develop a new

product and to convert its processes to offer the new product.

According to a report published in Times of India (2007) SAIL had received ‘excellent’ rating for achieving

targets set in the MOU with the Government for the year 2005-06. Considering the sustained growth

demonstrated by the company during 2006-07, a similar rating is expected this year as well. During 2005-

06, while maintaining capacity utilisation at 104%, the company focused on the production of finished

steel, lower energy consumption and reduction in coke rate, increased production through the continuous

cast (CC) route and improved the product mix during 2006-07.

Effective strategies of SAIL to attain competitive advantage

Techno-economic parameters

Cost Effectiveness

Economic Times states that the thrust on improving efficiency of cost management launched by SAIL

during the year 2005. New schemes were identified and existing schemes reviewed and revised to offset

the impact of the sharp rise in input prices, particularly in the case of coking coal, Ferro alloys, etc., during

the year, resulting in savings of about Rs. 130 crore. SAIL’s cost management endeavours once again

received recognition at the national level. The Institute of Cost & Works Accountants of India adjudged

SAIL as being the second best company in the public sector in India during 2005 in this parameter and

presented the company its National Award for Excellence in Cost Management.

Human Resource Management

SAIL’s total manpower at the end of the year thus stood at around 127,000, showing a reduction of about

48,000 since 1998. The company’s labour productivity grew by 4% to 142 tones/man/year in 2006-07. To

equip employees with higher technical skills, SAIL has signed an agreement with Tata-Corus/UK and

CAI/Austria for provision of specialised training.

Research & Development

The development measures at SAIL projects at SAIL focus on process improvement, cost competitiveness,

product quality, product development and basic research for improvement in techno-economic

parameters to increase capacity utilization.

Environment Management

SAIL is committed to providing a healthy environment in and around its steel plants. Over 2 lakhs trees

planted added further substance to the company’s efforts in this direction. Around 13 million trees have

been planted so far by SAIL at different plant/unit/mine locations. The SAIL plants/units maintained their

thrust on controlling pollution during the year. Some of them even received awards for excellence in

pollution control measures.

Public Relations

To reinforce employee morale, internal communication activities were further strengthened. A planned

approach yielded excellent results, with appreciative feedback from employees at all levels on the

initiatives taken and themes selected to motivate, inform and instill pride in the workforce. Wide and

focused communication through both print and electronic media strengthened the image of the

organisation amongst the company’s stakeholders and general public. Revival of the television ad

campaign There’s a little bit of SAIL in everybody’s life in the later part of the year, re-in forced the

company’s image as the industry leader in viewer’s minds due to its excellent recall value. Other

campaigns such as the one highlighting SAIL’s turnaround as the most impressive in Indian industry, Steel

Green and Steel in Need, SAIL in Deed were well received by the target audiences. A radio jingle in Hindi,

Safety pin se flyover..., also generated popular response.

Cost competitiveness

The following cost reduction measures are adopted in SAIL to gain competitive advantage:-

• Reduction in fixed cost through volume growth, reduction in manpower cost and financial charges;

• Reduction in variable cost through technological interventions like elimination of ingot steel route,

100% Basic Oxygen Furnace and Continuous Casting, coke rate reduction via CDI/auxiliary fuel

injection, and higher levels of process control computerization/automation, leading to enhancement

of operating efficiency; and

• By business process improvements such as streamlining of supplies of key inputs of steel making

through higher utilisation of e-commerce, centralized procurement for select items, etc.

Quality competitiveness:

SAIL also emphasize on technology & input quality improvement across value chain; thrust on special

quality steel and new products; improvement in process consistency and metal treatment; advanced

online testing and quality control facilities; standardization/automation/process control & IT. Corporate

Plan-2012 has considered the market growth projections assuming overall steel consumption at about 8%

per annum. However, the growth trends and macro-economic indicators could lead to higher growth

potential. Therefore, depending on the market growth, strategies of competitors, global economic

scenario, government policies and resource availability, SAIL’s plans may be revised from time to time, and

further growth in terms of volume, products, etc., may be aimed through Greenfield investments,

acquisitions/mergers etc. The current plan provides the broad direction for SAIL to move forward and

would be reviewed periodically.

Market Development

SAIL has valued customers group in identifying their specific needs specific to that group thus segmenting

and developing market segment for our products. Major product modifications are done as per their

specific needs of the Market segment thereby creating product differentiation packages.

JIT Delivery

JIT Delivery means just in time delivery. SAIL is able to make delivery just in time because it works in pre-

planned manner; it takes order only after consulting the production units. So that the products car be

delivered in right time.

Production According To Market Needs

SAIL is always in touch in market and tries to produce according to market needs. SAIL tries to produce

quality products / new products which full fill the need of market.

Benefits of JIT

• Set up times are significantly reduced in the factory.

• The flow of goods from warehouse to shelves improves.

• Employees who possess multiple skills are used more efficiently.

• JIT provides better scheduling and work hour consistency.

• There is an increased emphasis on supplier relationship.

The ISO 9001:2000 Quality Assurance System:

Total Quality Management is an integral part of the day to day activities of the company. The ISO

9001:2000 Quality Assurance System is being maintained since its accreditation, which covers all the

sections of the plant.

Six Sigma

Six Sigma seeks to improve the quality of process outputs by identifying and removing the causes of

defects and variability in manufacturing and business processes. Each Six Sigma project carried out within

an organization follows a defined sequence of steps and has quantified financial targets (cost reduction or

profit increase).

A six sigma process is one in which 99.99966% of the products manufactured are statistically expected to

be free of defects (3.4 defects per million).

Sigma level

Sigma Level DPMO %Defective %Yield

1 691,462 69% 31%

2 308,532 31%

3 66,807 6.7% 93.3%

4 6,210 0.62% 99.38%

5 233 0.023% 99.977%

6 3.4 0.00034% 99.99966%

7 0.019 0.0000019% 99.9999981%

The Six Sigma Methodology

The Six Sigma includes two key methodologies: DMAIC and DMADV. DMAIC is used for an existing process.

DMADV is used when creating a new product or process. Using DMADV for new projects usually results in

a more predictable process and ultimately higher quality product.

DMAIC

There are 5 important steps included in DMAIC. They are:

• D – Define goals to improve the overall process between the company’s strategy and the

customer’s demands (can also refer to the group or individuals being supported)

• M – Measure the current processes. Collect relevant data on the current processes and then use

this data as a baseline for future comparisons.

• A – Analyze your relationship within the process. It is important to understand the relationship to

determine factors that can ensure that the company’s strategy is in line with customer demands.

• I – Improve the process. It is important to constantly improve and optimize the process with

analysis and other techniques. One technique that is often used is Design of Experiments. This is a

technique that uses acceptable experimental design to help test a hypothesis.

• C – Control. It is important to ensure that any variances can be controlled and corrected in order to

avoid possible costly defects and loss of quality. Pilot runs are often set up to study process

capability and production transition. These pilot runs can help fine tune or add additional control

mechanisms.

DMADV

There are 5 important steps included in DMADV. They are:

• D – Define goals that are consistent between the business strategy and customer demands.

• M – Measure CTOs (Critical To Qualities). CTOs consist of production process, capabilities

producing a product, a product’s capability, and any risk assessments.

• A – Analyze and evaluate many different designs and choose the best design for its overall

qualities.

• D – Design details. It is important not only to design a product, but to optimize the design features.

In order to fully optimize a design feature, it may be necessary to create multiple designs or

simulations.

• V – Verify the design. Important steps to verifying a design include setting up pilot runs and

running a short production. This step also requires that the design be handed over to process

owners

There are numerous benefits of six sigma, as a way to address issues and problems. Among the benefits

of six sigma is the decrease in defects that are allowed to reach the customer. Other benefits of six sigma

include:

• Focus on customers.

• Improved customer loyalty.

• Reduced cycle time

• Less waste.

• Data based decisions.

• Time management

• Sustained gains and improvements

• Systematic problem solving.

• Employee motivation.

• Data analysis before decision making.

• Faster to market.

• Team building.

• Improved customer relations.

• Assure strategic planning..

• Reductions of incidents.

• Measure value according to the customer.

• Better safety performance.

• Understanding of processes.

• Effective supply chain management.

• Design and redesign products/services.

• Knowledge of competition, competitors .

• Develop leadership skills.

• Breakdown barriers between departments and functions.

• Management training.

• Improve presentation skills.

• Integration of products, services and distribution.

• Use of standard operating procedures.

• Better decision making.

• Improving project management skills.

• Sustained improvements.

• Alignment with strategy vision, and values.

• Increased margins.

• Greater market share.

• Supervisor training.

• Lower costs to provide goods and services.

• Fewer customer complaints.

Achievements

• SAIL was featured in the 2010 list of Forbes Global 2000 companies at position 582.

• National Institute of Personnel Management conferred the National Award on SAIL for Best HR

Practices 2008.

• SAIL was adjudged as the top Indian company under the Iron & Steel Sector for the Dun &

Bradstreet – Rolta Corporate Awards 2008.

• Golden Peacock Award for Combating Climate Change – 2008 for BSP,

• Occupational Health & Safety – 2008 for BSL.

• The highest number of Vishwakarma Award 2007 among both public and private sectors has been

bagged by SAIL employees: out of 28 awards, 15 awards went to the SAIL employees (54%).

• 52 SAIL employees have received the Prime Minister's Shram Awards 2010.

Recent developments of SAIL

• The merger between Maharashtra Elektrosmelt Limited (MEL) and Steel Authority of India Limited

(SAIL) is to take six more months. All the formalities are slated to be completed by then.

• Steel Authority of India (SAIL) has achieved a step forward in the deadlock over Chiria iron ore

mines. In the last few years, Jharkhand government's refusal for renewing the mining leases, had

thrown the race for Chiria open to global steel majors including ArcelorMittal.