In 1999, a study by Tata on group performance highlighted some bad news:
the combined sales of 38 companies, which accounted for over 80 per cent of group turnover, declined more than 2.5 per cent in 1998-99, while net profits plummeted over 16 per cent. Their performance on the bourses was nothing to write home about either.

For the top brass at Bombay House, the group’s lacklustre showing in the nineties was no surprise. After decades of operating in a controlled environment – more importantly in a sellers’ market – the Tata blue chips were forced to compete in markets that had turned global almost overnight. But the hard numbers certainly made the Tata management sit up and consider the option of a radical overhaul.

The upshot of this was the introduction, two years ago, of the Tata Business Excellence Model (TBEM), under which group companies have to improve systems and processes. Based on the Malcom-Baldridge model on quality excellence, the important point about TBEM is that companies are judged not just on the basis of profitability or turnover, but on a wider set of parameters:
* leadership,
* strategic planning,
* customer and market focus,
* information and analysis,
* process management,
* human resource development,
* business results.

"Each criterion has points attached to it, with all the seven totalling 1,000. The eventual aim of each company is to reach a score of 600 over the next five-year period," explains Madhu Bhagwat, advisor to Tata Sons, and one of the key people driving the TBEM across group companies.

The TBEM has no set model on how a group company should be structured, or on the tools a company chooses to improve processes and how it uses them. "It is completely flexible and only outlines the broad guidelines that need to be followed in order to reach the excellence targets," Bhagwat says.

We take a look at how four companies approached this issue. The first two are in the commodities business where the customer has never quite been the focus – Tata Chemicals and sister company Rallis, which are into fertilisers and pesticides respectively, and Tata Steel. The other, Indian Hotels, is a traditional service company that is customer focussed by definition.

Tata Chemicals and Rallis
At the forefront in Tata Chemicals is the concept of Tata Kisan Kendra (TKK). TKK has already begun to show signs of such handsome returns that several rivals are planning to emulate the concept.

TKK is essentially a one-stop shop for farmers offering everything from advisory services to machinery, fertilisers to pesticides, and other facilities like farm credit and after-harvest marketing support (the latter two are currently being finalised).

While the concept of TKK was prepared in the mid-1990s, it stayed on the drawing board for years. Around two years ago, the company implemented a pilot project, which gathered momentum after TBEM was instituted in the group.

In less than two years, the pilot project has been extended to 230 outlets, of which 215 are franchisees, each of which cover around 60 villages. "This is merely the groundwork for expanding the opportunity at a later date when the fertiliser sector is decontrolled and the lowest cost producer will emerge as the biggest beneficiary. The eventual aim is to expand the number of TKKs to 800 over the next three to five years," says Kapil Mehan, vice president (marketing) at Tata Chemicals.

This is a significant shift from the way fertiliser has been marketed in India. "Urea-based fertilisers look the same no matter who the manufacturer is. So there was always little to differentiate one brand from another. The manner in which the Rs 1,521-crore Tata Chemicals has chosen to attract the customer is probably a better way of doing it," says a senior executive at a rival fertiliser company.

Each TKK houses a range of seeds, fertilisers and pesticides that are marketed and produced by Tata Chemicals and Rallis, and even that of some rival companies. The TTK also leases farm equipment, operates an R&D facility with a crop clinic, and even has godowns to store the harvest. The TKK also strives to set up what is called the Tata Kisan Parivar, basically a farmer’s brand loyalty programme, by offering education to women, family planning and even alternate sources of income for housewives.

But more unique is the use of digitised mapping to make effective production forecasts, soil fertility measures and the like. "We are using satellite imagery technology to determine diseases and pest attacks, and soil fertility mapping to find out the deficiencies and building a database on that. Any farmer in that region has only to mention his name and we can come out with every detail on his land, his problems and requirements," says Mehan.

What began in only one area across 72 villages is now being extended to 11 districts and 13,000 villages over the next six months, he adds. "There are four advantages that a programme of this nature has given the company: building brand equity, improving marketshare, gaining in visibility, and creating a platform for bigger business opportunities in the future," says Mehan.

The Rs 1,430-crore Rallis India, which has a close marketing alliance with Tata Chemicals, has adopted a similar approach, which it calls its "silent revolution". Says Ashok Shetty, vice president (marketing) at Rallis: "No agro-chemicals company has probably ever tried to be close to the customer. We realised we have to be the first in doing that."

Instead of going in for any big-bang promotions in rural India, Rallis chose a more personalised approach by marketing its brands through word-of-mouth. "You will not see any Rallis hoardings in most parts of rural India," says Shetty. "Silent Revolution" includes getting the local agriculturist involved as a dealer who, in turn, is to offer similar services that any TKK franchisee would offer. The company has worked out a carpet coverage plan across 55 key districts in the country where this strategy is being implemented.

There are some signs that the strategy is paying off. Rallis’s key fungicide brand, Contaf, has seen sales grow from 77 kl in 1997 to 400 kl last year. Contaf is now the largest agrichemical brand in the country with a turnover of Rs 65 crore, which Shetty says, would grow further with volumes rising to 1,400 kl by the end of next fiscal.

Tata Steel
In India, steel has been a business where branding has rarely been at a premium. As long as the Indian market was regulated, few steel companies suffered the lack. "Even 10 years ago, customers use to run after us wanting to buy steel. Unfortunately, the situation is quite the opposite today," says J J Irani, managing director of the Rs 6,890-crore Tata Steel, the country’s largest private sector steel company and the only profitable one.

Today, after deregulation, the steel sector has become a buyers’ market. The glut has also pulled prices down, affecting the profitability of all players. With several companies planning to impose anti-dumping duty on Indian steel, the export market is also shrinking. "This is why customer relations hold the key to selling steel in the changed environment," says Irani.

Despite this, the company has not tried to be a price warrior. Instead, the company focussed on developing two basic business models of what it calls customer intimacy and operational excellence using IT as an enabler. For instance, it has introduced "enterprise accounts" that focus on the company’s 180-odd major buyers. These buyers account for 27 per cent of sales, but less than one per cent of the customer base.

"This entire process of restructuring, with IT enabling our systems and emphasising customer focus has helped us remain the leader," says Irani. To do this, Tata Steel has completely dismantled its IT infrastructure and replaced it with the SAP R/3 enterprise resource planning solution, the better to monitor despatches and credit facilities extended to special customers.

In November last year, SAP was implemented in 50 locations at 26 cities in its most ambitious "big bang" implementation ever attempted before. This allows Tata Steel’s customers to log on to the company’s Internet site and view the most current information from order status to payment dues, test certifications, and other exclusively tailored reports.

"Some of the main customers are also now taken through the entire production process, in what we call the customer week, to familiarise them with our processes. Tata Steel employees who are involved with the initial process of production and never meet the end customer can also directly interact with customers and understand their specific requirements," Irani points out.

The company has also initiated a Manage Customer Account process which proactively defines and addresses the gaps in its product and service delivery vis-a-vis customer expectations, their needs and wants. Says Irani: "Finally, we have also adopted a system where our main customer rates us against every competitor. As a result of these initiatives, our customer satisfaction score, which has been constantly superior to competitors, has gone to an all time high."

Indian Hotels
Hotels are customer-oriented because of the very nature of their business. But over the past few years, the Rs 618-crore Indian Hotels, owner of the Taj group of hotels, has tried to carry this one step further. In 1997, the company’s top management changed. With the controversial exit of managing director Ajit Kerkar, close Ratan Tata associate R K Krishna Kumar took charge.

"Ever since I took over in early 1998, I have been working with the group chairman on what changes need to take place at the Taj group. What became apparent then was that our processes could be improved," Krishna Kumar recalls. Though the Taj was the top among hotel chains in terms of brand recall domestically, it never benchmarked itself against any international chain in terms of the services it offered. Neither was there any method to track what guests thought of the hotels’ services.

This is where the TBEM helped.
"The TBEM has guided us on the right road, and we began with improving our internal systems, processes and cycle time. We realised that what we offered had to be customer-driven quality," says H N Shrinivas, senior vice president (total quality management) at Indian Hotels.

As a starting point, Indian Hotels benchmarked itself against the Ritz Carlton, which is widely recognised as the best in the world, and instituted a Guest Satisfaction Tracking System monitored by IMRB.

The process was initiated only a year back in 15 of its best hotel properties, of which nine were luxury hotels, which accounted for around 75 per cent of the company’s revenues. "It involves standardising service across the best properties so that a Taj customer cannot differentiate between services in The Taj Mahal in Mumbai or a Taj luxury property in, say, Kerala," explains Krishna Kumar.

The process also meant that the preferences of regular guests were now tracked. "If a valued guest at Mumbai goes to a Taj property in Delhi, our employees there would know what precisely the guest’s requirements would be," adds Shrinivas. The company maintains a database on around 6,000 such repeat guests.

Improvements have also taken place in cutting down cycle time for any service and cross-functional cooperation improving services. "If we were taking a longer time to offer, say, morning tea to our customer, we have worked out to see the reasons the delay. (The delivery cycle is down from ten to four and a half minutes.) Accordingly, we have now managed to cut down on such cycle time as no guest would tolerate such delays," explains Krishna Kumar. Indian Hotels has also become, what it claims, is the first hotel company in the world to implement Total Productivity Maintenance to improve operations (though the Maurya group introduced a guest tracking system about a decade ago). The Guest Satisfaction Tracking System has been customised and is based on what the Ritz Carlton follows. "Over the last year, there are signs of significant improvement. The GSTS now shows that we have improved to 70, whereas the Ritz Carlton scores 99 out of 100," adds Shrinivas.

But whether these measures have begun to pay off financially has yet to be found out. "If the company’s recent financial results are any indication – sales and profits up 13 per cent and 20 per cent, respectively in Q3 – an upside is in sight. But how much of that is due to process changes is difficult to say," says a hotel sector analyst. But then, it is always difficult to put a value on an intangible, like service.

Though TBEM represents the most radical overhaul of the Tata group’s systems and process ever, it is clear that it cannot be an end in itself. As Bhagwat points out, "It is just the process that will set the house in order." The bigger role that Bhagwat and his team have to play is turning Tata into a learning organisation where the knowledge and best practices across companies are disseminated throughout the group.