1. Role of Steel Service Centres in the Automotive Supply Chain
Abraham Stephanos
Chief Operating Officer
Tata Steel Processing & Distribution Limited
Indian Steel Markets 2011 Conference
15-16 March, 2011, Delhi

2. What do service centres do?
Inventory Holding
Processing
Distribution & Logistics
Inventory Management Services
Indian Steel Markets 2011 Conference
15-16 March, 2011, Delhi

3. Producers of Steel Service Centres provide this expertise
Value Addition Need in Intermediate Services
Supply Chain Mgt Procurement
Strategic Alliances Technical Services
Stocking Processing
Customization Just - In - Time Delivery
Direct to Consumer
Special Packaging
Kan-Ban systems
Final Consumer
Indian Steel Markets 2011 Conference
15-16 March, 2011, Delhi
DL_INO451_5(Service centres).ppt

4. The need to unlock value from the supply chain …
From the Steel Mill’s Perspective
Need for Steel Mills to focus on Core businesses and business processes.
Greater attention to Logistics and Supply Chain Management
Focus on Value Chain costs and efficiencies
From the Customer’s Perspective
Traditional ‘Cutters’ provide limited value:
No inventory holding
Usually low end processing
Very old / reconditioned equipment
Quality depends on customer’s inspection
Highly fragmented
Mostly small shops with informal labor
Need to remove costs from the supply chain
Need to improve service levels in the supply chain
Indian Steel Markets 2011 Conference
15-16 March, 2011, Delhi

5. …led to the emergence of the organised service centre industry
Growth of Auto & White Goods Segment
Entry of MNC’s
Stringent Quality Requirements
Tight Delivery Commitments
Expectation of Professional Service
Focus on supply chain efficiencies
Indian Steel Markets 2011 Conference
15-16 March, 2011, Delhi

6. Indian Steel Markets 2011 Conference
The automotive industry has been the main catalyst for the growth of service centres
1990s
G Williams, Allied
1990s
Howrah ,Belur,Shalimar cutters;
BMW
2000 – 2005
Tata Ryerson
2000 – 2005
TRF ,Tata Ryerson
2005 – 2010
Pos IDPC , Essar ,
Steelium D’tors , TSPDL
2005 – 2010
BMW ( exp)
Steelium Distributors -
Sumitomo , Pos IDPC ( Exp) -
Essar
1990s
Taloja cutters, Ampil, MSSCL, Tata Ryerson
1990s
Manali Cutters , Ramanasekhar Industries
2000 – 2005
Hemnil, Loha Ispat
2000 – 2005
Pos Hyundai , Toyota Tsusho
2005 – 2010
Pos IPPC , Essar , ARK
Steelium D’tors , Posh , MSSCL
2005 – 2010
Hyundai Hysco , Steelium D’tors
Essar, JSW -
Pos IPPC II , Essar- Indore ,
Loha Ispat -
Pos ICPC , Toyota Tsusho (Exp) ,
Pos Dighe , Kawarin
Indian Steel Markets 2011 Conference
15-16 March, 2011, Delhi

7. Indian Steel Markets 2011 Conference
Today we have a wide gamut of service centres … from ‘cutters’ to ‘high end’ …
Cutters
Low end
Mid End
High End
Indian Steel Markets 2011 Conference
15-16 March, 2011, Delhi

8. …with a variety of ownership models
Independent
SMPC
Loha Ispat
Ranka
Steel Mill Promoted
TSPDL
POSCO
Essar
Jindal
OEM Promoted
Toyota
Tsusho
Honda Trading
Hyundai Hysco
Metal Trading House Promoted
Sumitomo
Caparo Marubeni
MSSCL Metalone
Indian Steel Markets 2011 Conference
15-16 March, 2011, Delhi

9. The typical automotive steel supply chain:
Steel Mill
Mother Coils
OEM Coil Store
Slitting/ Blanking Lines
Slit coils
Rectangular /Trapezoidal blanks
Profile blanks
Stamping Lines
Body Panels
Assembly Lines
Body –in-white
Customer
FinishedCars
Service Centres
Tier 1 Auto Vendors
Indian Steel Markets 2011 Conference
15-16 March, 2011, Delhi

10. Service Centres can be categorised into Stage 1 & Stage2/3 processors:
Value Creation
Technical Sophistication of Operations
Body in While
Assembly / Welding
Large Parts Stamping
Small Parts Stamping, Plate Fabrication
Press Blanking, TWB, Sheet Fabrication,
Inventory Mgt, IT Support, Technical Services
Slitting, P&0, Precision Levellling
CTL, Shearing
Warehousing & Debulking
Automotive Tier 1 Supplier
Stage 2 / 3 Processor
Auto
Stage 1 Processor
Home Appliance
Logistics Provider
Source: Mitsui
Indian Steel Markets 2011 Conference
15-16 March, 2011, Delhi
SHA-RYT pages for Stephan 10 10

11. Typical Stage 1 processing output:
Indian Steel Markets 2011 Conference
15-16 March, 2011, Delhi

12. Typical Stage 2/3 products:
Indian Steel Markets 2011 Conference
15-16 March, 2011, Delhi

13. While Stage 1 processing demand is growing in leaps and bounds …
2007
Steel Mills
2012
2 Mn
Service Centres (Tolling)
3.5 Mn
Stockyards
‘Traders’
1.25 Mn
Service Centres (Distribution)
3.5 Mn
Customers
Customers
Customers
Processors & ‘Cutters’
3 Mn
4 Mn
Indian Steel Markets 2011 Conference
15-16 March, 2011, Delhi
SHA-RYT pages for Stephan 13

14. Stage 2/3 Service Centres (Tolling)
… Stage 2/3 processing is still primarily carried out by Tier 1 vendors, but new sophisticated service centres have entered the fray
2007
2012
Steel Mills
Stage 2/3 Service Centres (Tolling)
Stockyards
‘Traders’
2.3 Mn
Tier 1/ Tier 2 / Tier 3 vendors
5.1 Mn
1.9 Mn
OEM
OEM
OEM
2.4 Mn
Stage 2/3 service centres
0.2 Mn
0.6 Mn
Indian Steel Markets 2011 Conference
15-16 March, 2011, Delhi
SHA-RYT pages for Stephan 14

15. Stage 2/3 customer expectations are distinctly different from those of Stage 1
Product Quality
Commercial Aspects
Customer Expectations
Order Execution
Customer
Care
Management
Source: TSPDL research
Indian Steel Markets 2011 Conference
15-16 March, 2011, Delhi

16. Customer Expectations – Product Quality
Dimension
Tolerance
Complaint
Resolution
Yield
Reports
Material
Reconciliation
APQP/
PPAP/
FMEA
Process
Delivered
Quality in
PPM
Internal
Plan for
Every Part
(PFEP)
STAGE II
STAGE I
PRODUCT
QUALITY
Source: TSPDL research
Indian Steel Markets 2011 Conference
15-16 March, 2011, Delhi

17. Indian Steel Markets 2011 Conference
Customer Expectations – Order Execution
Delivery
Compliance
Lead
Time
Inventory
Holding
VIVO
STAGE I
STAGE II
Forecast
Based
Planning
“KIT”
Deliveries
KANBAN
Pull-Trigger
System
Process
Control
&
Capabilities
ORDER
EXECUTION
Source: TSPDL research
Indian Steel Markets 2011 Conference
15-16 March, 2011, Delhi

18. Indian Steel Markets 2011 Conference
Customer Expectations – Commercial
Price
Stability
Competitive
Pricing
Availability of
Credit
STAGE I
STAGE II
VA / VE
Savings
Cost of Poor
Quality (COPQ)
Long Term
Pricing
(YOY Cost
Reduction)
COMMERCIAL
ASPECTS
Source: TSPDL research
Indian Steel Markets 2011 Conference
15-16 March, 2011, Delhi

19. Indian Steel Markets 2011 Conference
Customer Expectations – Customer Care
STAGE II
Growth
Aligned
With
OEM
VA / VE
Projects
JIS Delivery
EVI
Accessibility
Of Concerned
Person
Timely
Resolution
Of Complaints
Advance
Intimation
Of Supplies
Commitment on
Supplies
STAGE I
CUSTOMER
CARE
Source: TSPDL research
Indian Steel Markets 2011 Conference
15-16 March, 2011, Delhi

20. Five Major Trends impacting Global Auto Supply Chain:
Flexible Manufacturing
VW produces 7 models on 3 line
BMW produces 4 Models 2 lines
Build to Order
BMW more than 80% of production done according to orders received from customers. SSCs/ vendors assist by providing delivery of more than 85% of orders on promised day and 95% in the same week
Risk Sharing
Investment by SSCs/ vendors in development (R&D) & expansion plans for new products
Outsourcing of Manufacturing
To reduce investment & fixed cost, globally automakers are increasing outsourcing manufacturing - related activities to specialist companies, especially in Press & body shops operations
Renault – Oxford Automotive supplies stampings & welded sub assemblies
Daimler – tailored blanks for C class are supplied by ThyssenKrupp
BMW – Tower & Magna for welded sub assemblies
Outsourcing Logistics
All major global auto manufacturers rely heavily on outsourced logistics suppliers (TNT logistics, LGI, Dana Brazil, Exel etc.)
Source: Metal One
Indian Steel Markets 2011 Conference
15-16 March, 2011, Delhi

21. Indian Steel Markets 2011 Conference
Indian auto sector is expected to shift towards higher usage of Cold Rolled and High-Strength steels
Steel Consumption in Auto
(Mn MT)
Grade-wise usage
2003
CAGR: 13.2%
Advanced High strength, 3%
Ultra High strength, 1%
5.2
High Strength, 34%
CAGR: 12.5%
Mild, 62%
2.8
2015
Ultra High strength, 10%
CAGR: 13.6%
Mild, 24%
Advanced High strength, 30%
High Strength, 36%
Cold rolled (CR)
Hot rolled (HR)
Indian Steel Markets 2011 Conference
15-16 March, 2011, Delhi
Source: Essar Steel presentation at Indian steel conference May 2010

22. Indian Steel Markets 2011 Conference
What is New in Steel?
The steel vehicle of the future will use several new steels and manufacturing technologies:
Conventional Stamping
Laser Welded Blank
Tailor Rolled Blank
High Frequency Induction Welded Hydroformed Tubes
Laser Welded Hydroformed Tubes
Tailor Rolled Hydroformed Tubes
Hot Stamping (Direct & In-Direct)
Laser Welded Blank Quench Steel
Tailor rolled Blank Quench Steel
Roll Forming
Laser Welded Coil roll Formed
Tailor rolled Blank Roll Formed
Roll Form with Quench
Multi Walled Hydroformed Tubes
Multi Walled Tubes
Laser Welded Finalized Tubes
Laser Welded Tube Profiled Sections
Indian Steel Markets 2011 Conference
15-16 March, 2011, Delhi
Source : Tata Steel 22

23. Indian Steel Markets 2011 Conference
Service centres will become an integral part of the automotive supply chain in India
‘Availability’ is still the key issue in India
High concentration in steel industry
Limited availability of grades outside general engineering and construction
Going forward (next 5 – 10 years)
Shift in focus from ‘Availability’ to ‘Service’
More Service Centres will enter Stage 2/3 processing area
Not all service centres would be able to successfully meet the customer expectations in Stage 2/3 processing
Macro trends in automotive industry such as flexible manufacturing, outsourced logistics, use of new materials and technologies will see emergence of dedicated automotive service centres that are closely aligned with OEMs
Indian Steel Markets 2011 Conference
15-16 March, 2011, Delhi

24. Thank You