Steeled for the future: Abraham Stephanos

For Abraham Stephanos, it’s been a whirlwind ride; he not only watched, but also helped steer a renaissance in the Indian steel industry. In just two decades, the industry has gone from a traditional domestic supplier to a global powerhouse using technology and management practices that can match other nations’ capabilities.

Abraham joined Tata Steel Processing and Distribution (TSPDL) 21 years ago, was appointed COO in 2007 and since late 2014 has been the Managing Director. He looks back with some pride at the transformation TSPDL has undergone in that time.

"We started as Tata Ryerson in 1997 and we were the first organised Steel Service Centre company in India," he recalls. "The purpose of the service centre company was to make sure that customers got materials – in this case, steel – in the form and quantities they wanted. In 1997, the steel industry was dominated by two large companies, Tata Steel and SAIL.

"The suppliers had a lot of power in the equation, and customers really didn’t have any option but to take whatever steel they could get from one of those plants. But Tata Steel, looking to the future, understood that more and more customers wanted materials in processed form, and decided to set up service centres. At the time, Tata Steel’s joint venture partner, Ryerson, was the largest service centre company in the world," he says.

A key driver of the surge in India’s steel industry in the 2000s came from the huge investment in the Indian automotive industry as it became a vehicle manufacturing centre for international suppliers. This growth also had implications for Tata’s operations.

"Companies like Ford and Nissan produce vehicles for India, but in some cases they also produce vehicles in India for their entire worldwide supply chain," explains Abraham.

"So quality standards and supply chain expectations went up drastically. Also, newer companies entering this market adopted modern management practices in their operations and supply chains. This meant that the way they bought their materials needed the services of our steel service centre to support the supply chain, so the service centre’s role also became critical. Mills immediately recognised that having a service centre to coordinate with brings you great competitive advantages."

The Indian steel industry was internationalised by these dramatic changes; the result was that greater degrees of product traceability, process certification and quality controls were required. That was only possible with organised service centres that had manufacturing capabilities.

"As the industry structure changed, customers’ expectations also changed," says Abraham. "They were more concerned about quality standards and quality assurance processes, so you can say the conversation moved from availability to quality.

"Our job is to make our customers successful and do it in the most efficient way possible. We are a key participant in the supply chain of steel for Tata Steel, so we are the last-mile connection between Tata Steel and its customers. Whatever quality levels customers experience are the quality levels that we provide with our services. The service quality and dimensional quality depend on the last mile, which is TSPDL. Therefore, our role is very critical, not only for the customer but also for Tata Steel."

"Our job is to make our customers successful and do it in the most efficient way possible."

Despite the industry downturn last year, TSPDL turned over nearly INR4,300 crore (about US$600 million) from INR3,200 crore (about US$450 million), achieving about
34% growth.

"We have improved our share of business with almost every category of customer," says Abraham, "and our latest customer satisfaction survey tells us that over 70% of customers regard us as the best-in-class supplier. This is purely because we started focusing on delivering a very high level of service excellence. In fact, our company’s vision is to be the benchmark in service excellence in our industry. In the future, it will be customer experience that drives purchasing behaviour. That’s the direction in which we want to move – to be the best in class. We want to be the benchmark for service excellence in our industry."

"Our company’s vision is to be the benchmark in service excellence in our industry."

He considers that two factors clearly set TSPDL apart. "One is the quality of steel products that we supply to the customer – it’s not just the quality of the material, but the way it is processed in terms of dimensional accuracy, the correct grade, the proper finish, and all quality aspects. We are way ahead of the competition. The other part, I think, is our team. Our team has consistently been rated much higher than our competition. It’s a team that delivers service excellence. Ultimately, service excellence is concerned with how people feel about good or bad service."

India’s steel industry is rivalled only by China in showing appreciable growth, according to Abraham, and is poised to make hay while it can. "India is an island of growth globally for the steel industry, other than China. So, India has a huge opportunity for steel. Our steel consumption, which was around 138 million tonnes last year, is expected to climb to 300 million tonnes by 2030. This is driven by urbanisation. About 31% of today’s Indian population lives in urban areas, accounting for about 63% of GDP. It’s expected that by 2030 this will increase to about 40% of the population, who will account for about 70% of GDP. With urbanisation, we’ll need more cars and buses. This is one big factor driving the consumption of steel. Then we have improvements in transportation and logistics networks all over the country, which support the use of steel in infrastructure. The oil and gas and defence industries are also driving huge growth in steel.

"The service centre industry will ride the wave of growth, so the future is really very bright. I’m personally optimistic about the industrial scenario in India. I think the current government has generated renewed confidence. We’re seeing a lot more reforms in the steel space being rolled out and a lot of projects being expedited, so, on the whole, I’m very optimistic about the industry," Abraham enthuses.

Steel production requires a large yet close-knit group of suppliers who understand the complexities of the full production chain. For that chain to work seamlessly, each must maintain strict protocols to ensure its success.

"We are constantly working with all our suppliers to improve as participants in the steel supply chain. We understand how critical it is to have a good supply chain, so we work very closely with our suppliers to improve quality and service levels. We have large cost improvement programs and operational excellence programs going on with our suppliers. But we also deal with a large number of contractors who work on our businesses in similar areas. We are proactively engaged in improving safety standards."

Tata uses between 20 and 30 key suppliers in areas such as packaging materials, lubricants, pallets and tooling. "In the lubricant space, we have people like Castrol, Quaker, Indian Oil and Tide Water. In packaging materials, we have companies like Signode for our metal banding requirements. We also have key equipment suppliers from different parts of the world, such as Redbud in the US, Fagor in Spain, and FIMI in Italy."

In an ongoing push for improvements in operations and processes, Abraham is keen to point out that his division is working closely with the Tata Group Technology and Innovation Office on an open innovation platform that can assist in tackling challenges that require imaginative solutions.

"As a service centre, our vision is to make our customers more competitive, and we believe that providing benchmark-level service centres is key to making that happen."

"We are working with several startups and innovators to develop solutions for some operational challenges for which there may not be the right materials or technology available today. We are doing those experiments in our own plant and trying to come up with solutions that we’ll build for the whole industry.

"As a service centre, our vision is to make our customers more competitive and providing benchmark-level service is key to making that happen. If you are able to support customers the way nobody else can, your market is safe, irrespective of what happens. You will still be the preferred supplier because you’re providing the best service. That is the confidence we have built, and I think that is something that is transferable to any industry. Unless you provide really high levels of service and reliability, customers are not going to stay with you.

"And if you do that, then you can insulate yourself from the fluctuations in the market and find yourself in a much better competitive situation."

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