Procurement Journey to Excellence Stakeholders Management

NEVI, June 2013Kees Gerretse

CPO Tata Steel Group

Roadmap to Procurement Functional Excellence

Agenda

─ Tata and Tata Steel Group─ Procurement overview─ The journey ; Benchmark

Vision and principlesOperating model and stakeholdersRoadmap and projects

─ Achievements─ Next challenges

Total transformation project of Procurement Function

3

Tata Group is one of the world’s fastest-growing and most reputable corporations

Tata Group

• Tata businesses span 7 major industry sectors

• India’s largest private sector employer, with over 425,000 employees worldwide

• Operations in more than 80 countries• Total revenue in 2011-12: $83.3 billion• International revenues (from outside India) grew from

$3.2 billion in 2003-04 to $48.3 billion in 2011-12 (= 58% of Group revenues)

• Tata ranked the world’s 45th most valuable brand in 2012 at $16.34 billion (Brand Finance)

• Rated the world’s 11th most reputable company in 2009 (Reputation Institute)

4

Tata Steel is one of Tata’s largest companies

Largest companies

• Tata Steel• Tata Motors• Tata Consultancy Services• Tata Power• Tata Chemicals• Tata Global Beverages• Tata Communications• Indian Hotels

5

Tata Steel Group is a top 12 steel producerand a Fortune 500 company

• 2007: Tata Steel acquired Corus

• 2010: Corus rebranded to Tata Steel

• Tata Steel Group:• Annual crude steel capacity

of 27 million tonnes• Around 81,000 employees• Manufacturing operations in

26 countries across 5 continents• Present in both mature to emerging markets• Serving customers all across the globe • Turnover 2011-12: $26.13 billion

(2010-11: $26.6 billion)

66

Steel making operations

Distribution and downstream assets

Mining assets and projects

NML Canada(iron ore)North America

WesternEurope

Scandinavia

CIS

WesternAfrica

Ivory Coast(iron ore)

South Africa

Latin America Mozambique

(coal)

Turkey

CEE

China Japan

Australia(coal)

INDIA

Jharkhand

Oman(limestone)

Hong Kong

New Zealand

Sales and commercial centres

SE Asia

Tata Steel is present in both mature anddeveloping markets worldwide

What did we buy?

7

ORE

COAL

SCRAPSTEEL & EXTERNAL PROD. 

PROCESSING

TRANSPORTMAINTENANCE SERVICES

RAW MATERIALS

MRO ‐ GOODS

ENERGY & UTILITIES

CAPITAL INVESTMENT

ALLOYS

REFRACTORIES

SITE & FACILITY SERVICES

PRODUCTION SERVICES

CORPORATE SERVICESMETALS

INDUSTRIAL MIN & FLUXES

CHEMICALSPAINT & COATINGS

IT SOFTWARE, HARDWARE AND TELECOM

INDUSTRIAL GASES ROLLS PACKAGING LEGISLATIVE & DISCRETIONARY SPENDCOKE

#

Total = £11bn

Who spend how much?

8

0

500.000.000

1.000.000.000

1.500.000.000

2.000.000.000

2.500.000.000

3.000.000.000

3.500.000.000

TS India TS UK TS MLE TS Raw Material TS Thailand Natsteel Singapore

TSG Spend 2013/14£GBP

Total = £11bn

Tata Steel Procurement journey

The integration and evolution of the procurement function continues to drive value creation through SRM

Mining acquisition

and partnerships

9

Procurement Operating Model

Information Exchange

Synergy Achieved> $100m

Synergy Targets

Lead Buyers Appointed

Value CreationIn hubs >$100m

H2 move beyond network

organisation?

H2 include NatSteel & TSTh

effectively?

H2 create global structure to

support TSG?

2007 2009

Vision & principles

Central and lead buying

2008 2010 2012

SRM

Category lead

organisation

ProcurementOperating

Model

Regional integration

2014

Tactical Strategic

Group IT strategy

deployment

Capability impr / proc academy

10

Procurement Global Operating Model

Operational Processes

1 ‐ Strategy & Direction1.1Procurement

Strategy & Vision

1.2Principles, Standards & Policies

1.3Targets Setting & 

Measures

2 ‐Managing Procurement2.1

Capability & Capacity Planning

2.2Roles & 

Responsibilities

2.3Procurement Roadmap

2.4Procurement & 

Business Planning

6 ‐ Supplier Relationship Mgmt6.1Supplier Value 

Creation

6.2Supplier 

Relationship &Performance

Supp

liers

4 ‐ Internal Customer Management4.1

Business Engagement Strategy

4.2Stakeholder Management

4.3Compliance Management

Day to Day

Group

Businesses & Functions

3 ‐Managing Categories3.1Category Strategy & 

Target Setting

12 3

3.2Category Approach Activity Definition

1 2 33.3Hub & End User Involvement

Categories

Strategic Execution

Category /  Hub Level

7 ‐ Transactional Systems & Procedures7.1

Business Spend 

Commitment

7.2Order 

Placement & fulfilment

7.3Supplier Payments

7.4Benefit 

Tracking & Realisation

7.5Master Data

7.6Spot Buying 

7.7Short Term Demand Planning

Hub Led5 – Managing Spend and Benefit Realisation

5.1Source To Contract

5.2Spend & 

Compliance Reporting

5.3Commercial Risk Management

5.4Contract Execution 

Management

5.5Strategic Supplier 

Management

Category Led

Procurement Integration and functional excellenceFocus on:

• Governance

• People and processes

• Supplier- and end user engagement, SRM/TCO/SVM

• Enablers, e.g. IT roadmap

In order to make the function more effective and efficient

Overview of Strategy Development - Procurement

Global external benchmarking

Tata Steel Group

Tata Steel India

Tata Steel Europe

NatSteel

Asia

Tata Steel

Thailand

McKinsey & Company 5

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Printed 04/10/2010 10:44:34

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? Mindsets andaspirations

? Strategic value chain impact

… With the GPE score improving for many sites since 2006/8

Drivers

Average

SOURCE: GPE Team of McKinsey

? Strategic alignment and posture

? Talent management

? Category purchasingprocesses

? Organizational structure

? Cross-functional collaboration

? Knowledge and information mgmt

? Performance management

? Category value-creation strategies

Capabilities and culture

Category management and execution

Structure and systems

Strategic alignment & posture

Top quartileMetals

3.3

4.1

4.0

3.7

3.1

3.7

3.2

3.3

4.0

4.1

3.6

Overall Summary

Central & Global(n1=8)

3.2

3.5

3.1

3.8

2.9

3.2

3.4

3.0

3.6

4.0

3.4

2008 results:3.2 Corus3.3. TSI

Areas of relative strength

Tata Steel UK(n1=7)

3.0

2.9

2.8

3.4

3.4

3.0

3.4

3.0

3.3

2.3

2.7

Tata Steel India(n1=4)

3.3

3.5

3.6

3.5

3.7

2.8

3.1

3.0

3.5

4.1

3.4

Tata Steel NL(n1=5)

3.7

2.8

3.3

3.7

2.9

3.4

3.5

3.3

3.0

4.2

3.4

Tata Steel Thailand(n1=5)

2.7

3.3

2.5

2.3

2.0

2.0

2.4

2.0

2.8

3.7

2.6

NatSteel(n1=3)

3.3

2.5

2.0

2.8

2.6

2.3

3.0

3.7

2.0

3.3

2.8

1 Number of interviews

TSG 2010 weighted averagescore of 3.3Feeds used to

develop the procurement

strategy

Raw Materials

Bulk ShippingAlloys

ScrapRefractories

EnergyMetals

MineralsRolls

Paint

MRO Goods

Services

CorporateServices

CapitalSteel

OtherTransport

Categories & Markets

Global best practice & trends

Tata Steel Corporate & Business objectives

1McKinsey & Company 5

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raft -Last Modified 04/10/2010 10:53:02

Printed 04/10/2010 10:44:34

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? Mindsets andaspirations

? Strategic value chain impact

… With the GPE score improving for many sites since 2006/8

Drivers

Average

SOURCE: GPE Team of McKinsey

? Strategic alignment and posture

? Talent management

? Category purchasingprocesses

? Organizational structure

? Cross-functional collaboration

? Knowledge and information mgmt

? Performance management

? Category value-creation strategies

Capabilities and culture

Category management and execution

Structure and systems

Strategic alignment & posture

Top quartileMetals

3.3

4.1

4.0

3.7

3.1

3.7

3.2

3.3

4.0

4.1

3.6

Overall Summary

Central & Global(n1=8)

3.2

3.5

3.1

3.8

2.9

3.2

3.4

3.0

3.6

4.0

3.4

2008 results:3.2 Corus3.3. TSI

Areas of relative strength

Tata Steel UK(n1=7)

3.0

2.9

2.8

3.4

3.4

3.0

3.4

3.0

3.3

2.3

2.7

Tata Steel India(n1=4)

3.3

3.5

3.6

3.5

3.7

2.8

3.1

3.0

3.5

4.1

3.4

Tata Steel NL(n1=5)

3.7

2.8

3.3

3.7

2.9

3.4

3.5

3.3

3.0

4.2

3.4

Tata Steel Thailand(n1=5)

2.7

3.3

2.5

2.3

2.0

2.0

2.4

2.0

2.8

3.7

2.6

NatSteel(n1=3)

3.3

2.5

2.0

2.8

2.6

2.3

3.0

3.7

2.0

3.3

2.8

1 Number of interviews

TSG 2010 weighted averagescore of 3.3

Stakeholders

Governance

Procurement Roadmap

Processes Systems/ToolsManaging the Spend

Year #1 Year #2 Year #3

Vision

SavingsReconfirm savings rules

100% visibility: Common definition of spend

100% visibility: Master data/sourcing codes

Maverick Buying : Define term and est. as is

Savings : Agree process for target settingRisk Mgmt

: Fit with group policies

Inventory : Define SMT view & options

Savings : Deploy common savings report tool

Capital Spend : Agree group policy

Maverick buying : Utilise approp tools

OP model L1 : Refresh Operating Model

Share & Learn : Define best practice approach

OP model L2 : Develop & roll out

End User Engmt : Define overall framework

Contract Mgmt : Define as is

SRM : Define scope & tools & approach

Contract Mgmt : Dev. framework of models

SRM : Provide module rollout

ISO : survey of network & action plan

SAP : Finalise UK implementation

Eproc : Map as is and define best practice

IT needs : define proc governance

SAP : Dev global repoting template /tool

IT needs : Create portfolio of proc needs

SAP : Clarify rollout at smaller sites

ISO : Review objective of accreditation

TBEM : Define as is and action plans

Lead buyers to identify network

SMT to confirm lead buy network & support implementation

Comms plan to stakeholders incl op model implications

Central group –Define competence & job descriptions

Central group –Define & roll out competence model

Define review process and coverage of people

Identify critical positions and succession approach

Ensure models for development etc for non central team

Succession planning & Mgmt Dev linked to wider group

Deployment of policy to non central team

Dev comms plan for procurement as career

International talent mgt policy from HR

Deploy Comms plan for procurement as career

TSG compliance guidelines (CSR,CoC etc)

Describe & confirm process, rules & respons of lead/local/central

Review corp authority policies

KPI tree & review process defined

OP Model updated

Agree corporate proc policies

I will ask Inge to schedule a meeting to review the slides which I will then address in the GPMT.

2012-13 2013-14 2014-15

Strategy Development -

Supplier Relationship Management and End User Engagement

People and Organisation

Systems Strategy

Deploy common toolkit and database

Deploy standards for supplier performance measurement

Deliver solutions to identified information needs

Develop Supplier Award programme

Value creation activity with suppliers and end users in all hubs

= GPMT Review

Develop GPMT kpis and monitors

Implement Procurement Academy Talent development programmes progressed through Procurement Academy

Create and embed sharing and learning programmes – KEGs, secondments, etc.

Programme to encourage innovation – e.g. GPMT-sponsored submissions to Innovista and TSE CEO Awards

Standardise job specificationsCapability assessment of analysis requirements

Establish common tools to support efficient sourcingConvergence strategy for regional ERP systems to drive towards a common best P2P process

Deploy GPMT governance to implement IT Roadmap

Determine information needs at Group level (spend, supplier, master data) and programme to deliver

Develop Group master data capability for process efficiency – systems and organisation

Embed Lead Buying approach across existing categories Review Lead Buying portfolio and extend where appropriate

Develop and deliver Rightsizing activities

Develop tools and systems to support effective and efficient Procurement

Drive Supplier Plan coverage (by spend) across Group

Deploy Responsible Procurement policy

3 year roadmap to excellence

15

Objective Goal CommentsEnsure that Group

Procurement is a safe and healthy place to

work

Zero LTA and sickness rate of 2% in function

Health & Safety remains a critical priority. Whilst risks are lower than operations, there are risks nonetheless that we need to manage

To source responsibly 100% compliance to Responsible Procurement Policy

With the launch of the Responsible Procurement Policy, the activities here will support the realisation of this policy and will include audits, surveys and increasing consideration of sustainability in sourcing decisions

Ensure best value from supplier relationships

Defined relationships with suppliers cover more than 80% of

the spend base

The SRM toolkits have been tested and deployed; the emphasis now will be actions and measures that demonstrate the value creation opportunities that exist with the supplier base.

To deliver Group savings target

Group Target (TSE from CEO; TSL/TSTh/ NatSteel from MD

TSL)

Savings may not be the absolute driver for the function, but they remain a constant feature. Each team and hub will have targets to achieve and plans behind these in category strategies and sourcing plans.

Ensure security of supply whilst optimising stocks

of raw materials

Risk Management tools ensure no disruption events to production

supply chains

Commodity price volatility and supply chain shocks are real issues for all producers; the Procurement teams need to deploy multiple strategies to deal with differing objectives in hubs and the state of various commodity markets.

Create global functional excellence

Top quartile of McKinsey benchmark for all parts of TSG

Procurement (score of 3.6)

The development of the Operating Model, the use of the Procurement Academy for training, Management Development platforms and the implementation of best practice in all processes must be constantly worked on if the function is to realise the value creation targets it has been set.

To have world class systems to support global procurement

Common global infrastructure to cover ERP & e-sourcing

Moving to category management drives sourcing as the main activity, not purchase to pay. Therefore systems need to be in place to make sourcing efficient as well as effective. A global approach will be used with SAP as the primary platform for the whole source to pay process.

Common global infrastructure to cover reporting, information

management and MDM

To ensure the sourcing process is faster, more effective and results measured, the approach to data quality and reporting has to be stepped up and the use of BI and MDM exploited for the organisation.

Annual Plan Objectives – OGSM Procurement & Transport Annual Plan 2012-13

SRM will be at the heart of Procurement’s objectives and activities

17

Top management engagement

End user engagement

Change leadership

Supplier engagement

Spend analytics

Category strategies

Procurement Academy

Performance management

Across these Operating Model sections TSG’s SRM approach creates the right focus in managing supplier relationships

TSG’S SRM PROCESSES AND TOOLS

Note that a category strategy is a key pre-requisite for the entire SRM process, and that the SRM process may itself generate inputs to category strategies

Pre-screening Segmentation KPI setting Value management

1. 2. 3. 4. Tools Detail Regular

supplierKey

supplierStrategic partner

Potential partner

Supplier Relationship matrix

Which TSG contacts involved in relationship?Which senior managers involved?How are KPIs governed?

If plan to develop

to strategic partner; treat as

partner, if not treat

as regular supplier

Risk mitigation plan Is there a risk plan either in the category strategy or through the contract sourcing processes? If not we will direct to existing tools.

Value creation process

Standardized process to identify and deliver value creation projects

Managing exit checklist

A checklist for managing the exit process of a supplier

Value recovery process

Tools Detail Regular supplier

Key supplier

Strategic partner

Potential partner

Supplier Relationship matrix

Which TSG contacts involved in relationship?Which senior managers involved?How are KPIs governed?

If plan to develop

to strategic partner; treat as

partner, if not treat

as regular supplier

Risk mitigation plan Is there a risk plan either in the category strategy or through the contract sourcing processes? If not we will direct to existing tools.

Value creation process

Standardized process to identify and deliver value creation projects

Managing exit checklist

A checklist for managing the exit process of a supplier

Value recovery process

0.

Category preparation

• Select part of category to apply SRM to

• N/aSRM tools

Activities

TSG’s approach to Strategic Supplier Management

• Select suppliers for segmentation exercise

• Pre-screen tool

• Execute segmentation

• Segmentation tool

• Set KPIs for suppliers in all segments

• KPI model• Set KPIs process

• Create supplier plans • Define value management

per segmented supplier

• Value management toolbox – Supplier relationship matrix– Processes for value

creation & recovery– Exit management checklist

Transformation KPI’s

• Double saving opportunities, transparent in benefit tracking System; Link to P&L

• # TCO/SVM projects part of SRM roll out

• Contract coverage, spend segmentation, # strategic suppliers

• Cost of the function (cost and FTE); 20% efficiency improvement

• Competence/skill assessment. Split strategic and transactional sourcing

• Tata Steel Group Procurement Academy

• Compliance procurement operating model

• Working Capital stores and Raw Material

18

Decision tree for degree of centralisation of purchasingDecision criteria:

1) Procurementvolume

2) Business/sitecommonality

3) Supplier common-ality across commo-dity categories 4) Usage mix

1

2

3

4

4

3

Low

High

Cross-business coordination needs

Structural mechanism

• Centralized purchasing

• Local purchasing

Product/service items/groups within a natural supply market*

Large

Small

Multiple site/BU

Single site/BU

Common suppliers

Unique suppliers

Common suppliers

Unique suppliers

Even dis-tribution among users

Even dis-tribution

Majority user

Incr

easi

ng c

oord

inat

ion

requ

irem

ents

Majority users

* Local, regional or globalSource: McKinsey

Reference: Building a world-class purchasing organization and superior sourcing capabilities; Khosro Ezaz-Nikpay

• Lead buyer

Principles for Category Management

Category Management Overview

21

Category Approach in Organisation Procurement ApproachOre TSG Central Buying

Coal TSG Central Buying

Coke TSG Central Buying

IT TSG Central Buying

Inbound Shipping TSG Central buying

Outbound Shipping TSG Lead Buying (Central in TSE)

Logistics & Transport TSG Lead buying(Central in TSE)

Alloys TSG Lead buying(Central in TSE )

Metals TSG Lead buying (central in TSE)

Industrial Gases TSG Lead buying (central in TSE)

Refractories TSG Lead buying

Rolls TSG Lead buying (central in TSE)

Scrap Hub Lead buying

Minerals Hub Co-ordinated

Energy Hub Co-ordinated (central in TSE)

MRO Goods Hub Co-ordinated

Services Hub Co-ordinated

Corporate Services Hub Co-ordinated

Paint Hub Co-ordinated (central in TSE)

Procurement Organisation

22

IT (Lead Buying)

Group Director, Shipping & Logistics Operations

Amitabh Panda

Director Raw Material & Process Consumables

Anthony Farrand

Director Procurement Development

Dennis Houdijk

Director Procurement UKKen Milne

Director Procurement Mainland EuropeJacob Gerkema

Chief Procurement Tata Steel LimitedAmitava Bakshi

Head, Corporate Supply Chain Mgt, NatSteelMiss Tan Man Ee

Vice President Procurement Tata Steel Thailand

Kuhn Paytoon

MD Tata SteelHM Nerurkar

Group Director ProcurementKees Gerretse

Supported by offices in Shanghai, Prague and New York. Linked to Tata Steel International.

CEO Tata Steel EuropeK Kohler

Manning AP-FY13-TSE 388- TSL 95- SEA 80- other 35

598

Functional excellence & world class performance

• Regular benchmarking to evaluate performance and opportunities to improve

• Established multi year excellence and IT roadmap

• Functional excellence projects for Tata Steel Group procurement led by central procurement development team and supported by local proc dev community

23

• Established a truly global community with a culture open for ambition and change

• Local presence engaging with hub stakeholders

McKinsey & Company 5

Working D

raft -Last Modified 04/10/2010 10:53:02

Printed 04/10/2010 10:44:34

|

? Mindsets andaspirations

? Strategic value chain impact

… With the GPE score improving for many sites since 2006/8

Drivers

Average

SOURCE: GPE Team of McKinsey

? Strategic alignment and posture

? Talent management

? Category purchasingprocesses

? Organizational structure

? Cross-functional collaboration

? Knowledge and information mgmt

? Performance management

? Category value-creation strategies

Capabilities and culture

Category management and execution

Structure and systems

Strategic alignment & posture

Top quartileMetals

3.3

4.1

4.0

3.7

3.1

3.7

3.2

3.3

4.0

4.1

3.6

Overall Summary

Central & Global(n1=8)

3.2

3.5

3.1

3.8

2.9

3.2

3.4

3.0

3.6

4.0

3.4

2008 results:3.2 Corus3.3. TSI

Areas of relative strength

Tata Steel UK(n1=7)

3.0

2.9

2.8

3.4

3.4

3.0

3.4

3.0

3.3

2.3

2.7

Tata Steel India(n1=4)

3.3

3.5

3.6

3.5

3.7

2.8

3.1

3.0

3.5

4.1

3.4

Tata Steel NL(n1=5)

3.7

2.8

3.3

3.7

2.9

3.4

3.5

3.3

3.0

4.2

3.4

Tata Steel Thailand(n1=5)

2.7

3.3

2.5

2.3

2.0

2.0

2.4

2.0

2.8

3.7

2.6

NatSteel(n1=3)

3.3

2.5

2.0

2.8

2.6

2.3

3.0

3.7

2.0

3.3

2.8

1 Number of interviews

TSG 2010 weighted averagescore of 3.3

What are we doing to face this challenge?

• Major projects

Regional integration (EPP, PRIDE)

SRM deployment

Procurement Academy

Responsible Procurement

Procurement Operating Model

Data Quality & Reporting

Performance Management

CSR deployment in procurement

Communications & Profiling

24

Projects – Procurement Academy

Procurement Academy

• Improving the functional skills of the function through identifying skill gaps and offering training to close these gaps

• Sponsor: Elly Oude Elferink (H. vdHoogen)

• Skills matrix developed for Procurement skills + Generic Business skills.

• Now validation phase: jobs are plotted by working group members

• Roll out to be completed by end of FY14

25

Stakeholders network ; Connection

To communicate and challenge stakeholders

─ Central – and leadbuying on different locations─ Sharing and learning in the function─ Global, regional and local suppliers─ Local end users ─ Finance, supplychain,sales and marketing , executives─ etc

Projects – Communications & Profiling

Communications & Profiling

• Value creation through improved communication within the function, to Tata Steel stakeholders and to wider supply base via clear and consistent messages.

• Owner: D Houdijk(R Keeble/A Little)

• First Group Procurement messages to go live in May and June 2013

• Further communication channels to be implemented throughout 2013

27

Achieved in 2 years transformation process

• One fully integrated procurement organisation ; centre led function manage on executive level

• One global operating model

• Full global category management (70 % central/lead buying)

• Professional SRM introduced , split transactional and strategic sourcing ; set up shared service in India and downstream

• Improve end user engagement/ cross functional working

• Established global spend visibility

Resulted in :

• More then doubling savings/TCO in last 3 years (300 m$ to 700M$.

• Reduced cost of the function with 15% , next year 10% again.

• Reduced spare part WC with 25% and Raw Material WC with 33%

Next phase; step change

Crisis still not over and continues in steel

─ Cash / spend management─ Procurement to challenge more─ Have the right people to be able to do this; competence

management─ Further efficiency ; Pan European integration of new categories,

also in India and SEA─ Split further transactional; and strategic sourcing. ─ IT landscape; automation & integration supplychains, improve

planning; more offshoring and SSC

Thank you

Back up

Procurement financial benefits FY13

32

impact in m£ EBITDA1 Cost mitigation Cash Total realized

RM & PC-EU 101 1 102RM & PC-Asia2

Scrap-Asia2

Scrap-EU2

Shipping & Logistics – EU 49 5 54Shipping & Logistics – Asia2

UK 64 32 11 107MLE 31 18 5 54India 31 n.a. 31TSTH 7 n.a. 7Natsteel 25 n.a. 25IT (Group) 2 n.a.

Total 338 17 355

1EU EBITDA savings tracked in OGSM refer to baseline FCII-FY112 Savings not reported separately in FY13

Price Focus

Development

Valu

e C

reat

ion

As we focus on value Our users, functions and suppliers work more closely

Proc User

Suppliers

Proc User

User

The source of value has changed …

Changing Procurement Objectives

33

• The shift from price to value has been underway for some time & Procurement teams have adopted new methods of working

• It is now the dominant method to drive improvement

• This has implications for resources in both Procurement and businesses

ProcurementProcessFocus

ProcUser ValueFocus

Group Procurement OGSM Benefits & Free cash2

20

30

0

11

60

5

1

24

1

5

20

1

2

10

11

74

2

42

4

3

30

97

0

139

6

68

12

9

7

5

020406080

100120140

160180200220240260280300

PUKOwned

PUKBusiness

PMEOwned

PMEBusiness

S&LoBusiness

S&LoOwned

RM&PCBusiness

RM&PCOwned

Total

DoH1

DoH4

DoH2

DoH5

DoH3

Annual plan target 205 m£ business owned, 111 procurement owned282

2 Total of OSGM strategies with EBITDA impact and Free cash

Procurement & Transport Annual Plan 2012-13

Responsible Procurement Policy

Launched in 2011, this will guide the approach to procurement in 5 key areas that represent greater responsibility in sourcing, namely

• Fair Business Practice • Environment • Human Rights • Local Community Development • Health & Safety

Allocation of Headcount to Activity 2013/14

Servicing area / aActivity

Group Procurem

ent

MLE2 UK (inclDownstr

eam Ops)

MLE Downstream Operations

India Thailand Singapore Total

Group Director 3 3

RM & PC 30 1 31Shipping & Logistics 32 32

Procurement UK3 159 159

Procurement MLE1,4 87 31 118

Development 5 5

Kalzip 17 17

India 88 88

TSTH 51 51

Natsteel 24 24

IT 12 12

Total 82 87 159 48 89 51 24 5411 Procurement MLE includes 2.5 FTE UK energy3 5 FTE for EPP not included4 MLE numbers are FTEs instead of headcount

Projects – European Procurement Programme (EPP)

European Procurement Programme

• The European Procurement Programme is an 18 month programme which is designed to integrate the processes, systems and organisation of Procurement across Tata Steel in Europe, aligned to the principles of category management.

• Owner: Ken Milne

• Work streams are being set up covering European Category Management, Organisation Design, Capability, Processes and IT. A Programme Management Office has been established under a steering Group that includes the key leaders of the Procurement organisation across Europe.

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Projects – P.R.I.D.E

Project PRIDE – includes integration of KPO

• Project P.R.I.D.E. is a journey towards a best in class procurement organization entailing three key focus areas processes, systems and organisation of Procurement across Tata Steel in India – including the integration of KPO.

• Owner: Amitava Bakshi

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Plant warehousing

structure & design

Organization& Governance

redesign

Procurementprocess

excellence

Best in class Procurement Organization

• Demands on procurement function significantly increased, driven by increasing business complexity at Tata Steel. The project will address processes, organization and plant warehousing

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Projects – SEA integration feasibility study

SEA integration feasibility study

• Following the global integration initiatives in Europe and India a feasibility study is planned to to identify the potential value of integrating category management cross SEA.

• Owner: K. Paitoon and Tan Man Ee

• A charter for the feasibility study is drafted and it is expected to complete the study by June/July 2013

Projects – Global SourcingStreamline Global Sourcing activities in order to boost Value Creation & GS savings

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• Dedicated teams in China and Eastern Europe to support procurement hubs

• A number of challenges did not support increasing GS spend• Now commitment of GPMT & end-users on GS• Through dedicated & trained teams embed GS processes in TS

organisation (hubs and GS regions).

Together we make the difference