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The steel industry globally has held out from being slotted into the traditional sector. It has been stretching its markets, products, service and operations in innovative ways to emerge a winner in the knowledge era.
Tata Steel too has remained ever youthful to newer ways of thinking — in the use of its raw materials, product offerings and mix, business processes, production technologies, and even knowledge management.
According to managing director B Muthuraman, the secret that keeps a company fresh in its approach, lies in the questions the senior management asks the employees. "If you talk only about issues like targets, bottom line and price, there will be no creative thinking. If you ask about the why and the how instead of simply the what you will have innovation," he says.
Mr Muthuraman is not in favour of 'managing' innovation. Instead, he would prefer to nurture innovation. He says, "The word 'manage' connotes system, structure, procedure, hierarchy and departments. Each one of these is in opposition to innovation. Instead, you should manage the ambience, the surroundings, the culture and the relationships."
This is why Tata Steel does not shy away from the maverick thinkers in the company. It encourages people to have and exercise their own take on innovation.
Here are some ways of thinking inside Tata Steel and some of the results they have created.
Take one
Innovation = (Invention + exploitation) n and n varies between 2 and 3 — Amit Chatterjee, chief technology officer
"The exploitation of an innovation for the benefit of mankind is far more important than the invention itself," says Mr Chatterjee, who was involved with setting up the first sponge iron plant in the country.
Tata Sponge uses an indigenous technology called the Tisco Direct Reduction Process. The iron is called so because under a microscope it reveals pockmarks left after the oxygen is removed in the reactor.
Mr Chatterjee recalls that in 1982 when the plant was set up, India’s production of sponge iron, which retains its solid state instead of becoming liquid after reduction, as it would in blast furnaces, was almost non-existent. He recalls that there were only lush green paddy fields on the site in Orissa when the team went there for the first time. "It was reminiscent of the way our predecessors located the steel plant site in the middle of nowhere many years ago. The only difference is that while they went on horseback, we went by car," says Mr Chatterjee.
"Today, we have two kilns and a third is on its way. We may put up at least another three," Mr Chatterjee says. And India has now become the world capital for sponge iron that yields higher productivity in the blast furnace and provides an alternative metallic source for steel making.
Mr Chatterjee also feels that the way in which one goes about doing something new requires innovation. Tata Steel's biggest innovation in this light is the fact that it went in for modernisation in stages instead of risking the 15,000–20,000 crore in one go. "To take it in steps at that time was in itself an innovation," he says.
After adopting oxygen steel making under its modernisation programme, Tata Steel added a hard-earned feather of a process innovation in its cap by producing low phosphorous steel. It pursued the level of phosphorous in its steel from .040 all the way down to .012 per cent.
One of the company’s biggest competitive advantages is its captive iron ore. But this raw material has phosphorus content at .080 per cent. Earlier, this did not make a difference. But when Tata Steel started supplying to the automobiles, white goods, computer, and the brown goods industry, it discovered that its customers wanted a maximum of .025 per cent and some of them even wanted .010 per cent. "We could get around this by giving up our competitive advantage of indigenous captive ore," says Mr Chatterjee. "But we didn’t. We innovated in such a way that we could retain our advantage," he adds.
By changing the converter blowing regime, bottom injection practice, and the lance geometry, Tata Steel took the level down in stages. It is now on the last lap and is working on taking the percentage down from .012 to .010. It has been able to take care of 95 per cent of the demand of the automakers and is now targeting the remaining five per cent.
For a product innovation involving Tiscon bars, Tata Steel created an example of how a known technique can be adapted under Indian and Tata Steel’s conditions through creative efforts.
Tiscon, the company’s product for housing concrete, was being cold twisted — literally, being held at one end and physically twisted at the other — to increase its strength. This also made it prone to corrosion. By putting in micro alloy elements the problem with corrosion could get taken care off without twisting but its cost would then suffer.
"This was not a problem unique to us. So, we looked into available technology and came across reams of literature that said people were using controlled cooling by water spraying on the bars when they are red-hot. We readied ourselves with gumboots and paraded fire engines right into the merchant mills. We sprayed the metal to prove that we don’t need to cold twist or use an alloying element. With water spraying, the strength of the steel develops because of certain phase transformations. We were the first ones to have brought this technology into India," says Mr Chatterjee.
Take two
Innovation is deployment of invention — C Mishra, chief, mechanical technology group
Mr Mishra believes the maintenance group’s job is not merely to maintain the status quo of the process equipment and infrastructure assets but also to release more importantly, releasing the plant’s hidden capacity for production beyond the slated limit.
Tata Steel's approach to maintenance of the plant is innovative in that it is closely guided by market and delivery requirements. It entails the highest level of output (plant availability, equipment reliability, and the rate of process and quality) with the lowest input (cost of labour, material and maintenance time) over the entire life cycle of the machines.
Even if the plant has high overall capacity but is down at a crucial time, the customer will be dissatisfied. To deal with this the department requires foresight. Tata Steel has developed sophisticated predictive maintenance technology for this purpose. This facility is unique to the company in that it goes beyond the usual practice of monitoring the health of equipment using only one parameter.
"When we go to a hospital, the doctor subjects us to four or five different tests to find out exactly what is wrong. Similarly, for our purpose we monitor temperature, thermal profile, vibration, condition of lubricants or particle size count and then synthesise all the information for an accurate diagnosis," he says. The department feeds the data online to get not only a list of possible problems but also the probability of their occurrence. This makes the maintenance planning very cost effective.
Take three
Innovation is about using the best there is available in ways that are most profitable to the enterprise — Varun Jha, chief information officer
Tata Steel has received the Nasscom and ET award for the best usage of IT in 2003. It has used technology in a many-pronged manner across many domains.
"Our greatest innovation is in the area of warehousing and mining of data," says Mr Jha. By helping correlate product properties with process parameters through statistical techniques, the company has been able to not only improve the product but also reduce wastage. Data mining helps discover hitherto unknown patterns in the relationship between the two and creates new insights. It has also helped enhance individual performance by providing related pieces of information on a subject to create knowledge," he says.
According to Mr Jha, innovation is also about the way in which technology is adopted and spread. Tata Steel has used video conferencing, video streaming and telephone communications innovatively for two-way communication with its mines and collieries. Employees in all locations are able to hear the managing director’s (MD) views and pose their questions to him through the monthly event called MD Online. Again, while the IT department hosts the intranet, various business units and departments develop and manage their own content on it.
Tata Steel has also used SAP to optimise its business processes. As some plant-specific requirements are not supported by commercially available software the company uses custom-built versions. "Each system is adapted or created keeping in mind the unique requirement of the specific units," says Mr Jha.
The steel industry has been compelled to respond to the ever-shrinking levels of service. For instance, the modern assembly line has to cater to varying specifics. Steel, as its prime feature, has to respond nimbly and flexibly to this. To this end, the company has developed slitting optimisation software that enables it to cut or split coils with the least wastage.
IT has also been used to provide suppliers and key customers visibility across the entire supply-chain. Under Tata Steel’s e-procurement system, all vendors are connected and able to access information. Earlier, these vendors would have to visit the Accounts or Purchase department in person.
However, Mr Jha has a vision that goes beyond just efficiency. "Manufacturing industries have yet to use IT to transform themselves in the same way as financial services. Imagine a future where houses are built of prefabricated parts and customers can design their dream house on the internet and place an order immediately," he says.
Take four
Innovation comes in small measures — PK Sikdar, chief, automation
Tata Steel has a special group of people whose mandate is to take the company to the cutting edge of technology by automating the plant. The team has been scrutinising many operations to bring about incremental changes that go a long way.
In the new coke plant, instead of cables to connect the oven machines and the control rooms, the department used wireless data communication. To take the benefits of automation far into the company’s captive mines as well, the department adapted global positioning systems (GPS) and wireless technology to monitor the equipment deployed on the site.
That it kept its eye on details is evident in the camera used to view the stock inside the blast furnace. To prevent the dust deposits on its lens, the department came up with a simple idea. They made a pinhole aperture!
Also, the old system of using a winch to get an accurate reading of the stock was replaced by a radar-based level measurement system. In India, this has been done for the first time.
The hot metal detectors and crop cut optimisation system used in the mills have been developed in-house and are even being commercialised. This has resulted in substantial savings for the company. Says Mr Muthuraman, "Innovations can happen by the hundreds every year and add up to a few crores for the company." The time to innovate is ripe right now because as head of R&D. Bhattacharjee says, "Environment legislations, cost, and competition from alternative materials such as aluminium have been driving the industry to innovate". So, with the minds of its most crucial resource – its people - buzzing with ideas, it is no surprise that Tata Steel is already prepared to take on the world.
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