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McKinsey to draw up Tata Chem recast
The Economic Times — December
24, 2001
It's all about steel finding a new chemistry. After a successful
brush with quality in Tata Steel, the Tatas have now roped
in consultants McKinsey to restructure the operations of its
chemicals business. Modelled on the quality improvement programme
that helped Tata Steel in staging a turnaround, Tata Chemicals
has kicked off a project at its Mithapur chemical complex
in Gujarat last week. This will be introduced in the company's
fertiliser plant in Babrala, Uttar Pradesh, once it gets integrated
into the operations at Mithapur.
Tata Chemicals has asked McKinsey to put in place a strategic
framework in six-eight months that will cover the entire gamut
of operations from manufacturing to customer service. McKinsey
took almost 18 months to complete the project in Tata Steel,
given the large size of its operations.
As in Tata Steel, the project revolves around small teams
and how they can contribute towards improving performance
on a regular basis. Small teams of up to six people were formed
at the soda ash division in Mithapur. Their mandate: come
up with ideas that could become strategic inputs to four areas,
namely manufacturing, purchasing, supply chain and customer
service. This is aimed at reducing costs at various levels
and improving quality. This will gradually cover 1,500 employees
at Mithapur. The company has a total strength of 2,100 employees
after the recent downsizing initiatives. While the project
is essentially a replica of Tata Steel's initiatives, the
names are different. Tata Steel called it TOP (Total Operational
Performance) while Tata Chemicals has named it Project Manthan
for a specific reason. This is because the company's products
are mainly sourced from sea. The current initiatives are part
of the Tata group's strategy to reposition Tata Chemicals.
Tata Strategic management group, the group's internal consulting
wing, had made a strategic assessment of its core businesses
more than a year ago. After this, the company had taken up
several initiatives including a cost-reduction exercise and
revamp of marketing activities.
As part of the strategy, the company created marketing teams
for the salt business and scrapped distribution arrangement
with a Mumbai-based company. Of late, Hindustan lever's Annapurna
salt brand has been providing a tough competition to the Tata
Salt brand.
The cost-reduction exercise was mainly targeted at its soda
ash business, which was adversely affected by soda ash dumping
from China. The company has also reached an understanding
with the Mumbai-based Jyothi Labs to sell its detergent business.
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