ibm confidential sustainable growth in steel

© 2009 IBM Corporation

IBM Global Business Services

An Indian Perspective

IBM India Pvt. Ltd.

Sustainable Growth in Steel

Please consider the environment before printing this presentation

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© Copyright IBM Corporation 2009

Sustainability

Until the 1980s, business leaders used the word sustainability to mean a company’s ability to increase its earnings steadily

The term became widely used in its present sense in 1987, after it appeared in a UN report by Norway’s former prime minister Gro Harlem Brundtland, who defined sustainable development as “meeting the needs of the present without compromising the ability of future generations to meet their own needs”

True sustainability has four equal components:– Social, to address conditions that affect us all, including poverty, violence, injustice, education,

public health, and labour and human rights

– Economic, to help people and businesses meet their economic needs—for people: securing food, water, shelter, and creature comforts; for businesses: turning a profit

– Environmental, to protect and restore the Earth—for example, by controlling climate change, preserving natural resources, and preventing waste

– Cultural, to protect and value the diversity through which communities manifest their identity and cultivate traditions across generations

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The Development Conundrum…

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The Development Conundrum…

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Snippets...

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Steel Producers Launch Green CampaignUnderscoring the steel industry’s effort to reduce its CO2 emissions, the World Steel Association (worldsteel) has launched its Climate Action recognition programme that recognises steel producers that have met their commitment to participate in its CO2 emissions data collection programme.

Japanese Steel Industry commits to GHG Emission TargetsJFE and six other major steel makers announced they will jointly develop technologies for reducing about 30 percent of the current level of GHG emitted by the steel industry by 2015. The industry accounts for about 40 percent of the Japanese domestic industry’s total emissions

Industry Emission Norms in the USThe U.S. steel industry in general which operate carbon-intensive integrated mills, will be hurt badly under a carbon-emissions cap and trade system, WSJ reports. To pay for emissions, they will be forced to raise prices or, in order to reduce their carbon footprint, produce less steel.

Survival of companies will depend on being “really” green .. move beyond public relations,

CSR, beyond local Statutory requirements

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Environmental factors doubled in CEO importance over the past four years

Source: IBM CEO Study 2008, n = 1,130

2004 2008

9%

18%

External forces impacting the organization: Environmental factors

80% of CEOs view sustainability as impacting brand value

82% of executives expect some form of climate change regulation within 5 years

31% say they want to reduce their environmental impact

Expectations around corporate responsibility have changed

80%

82%

31%

Negative impact

68%

12%

Positive impact20%No impact

Source: IBM 2008 Global CEO Study | McKinsey Global Survey | IT Managers Driving Green Agenda | ‘08; IDC Green IT Survey | Sept ‘07

Leadership Focus is increasing…

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Thought Processes are Evolving…

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I want to do what is right for the planet

Traditional imperatives for green focused on a moral imperative to

preserve safety & life

Energy

Land & Resources

Air

Water

Conservation & clean energy

Reducing pollution/CO2

Clean water

Protection

There is a need to create space for the traditional operating principles and acumen within the sustainability dimension

I need to do what is smart for my business and the planet

The new imperatives are about being responsive to stakeholders and building a better, sustainable business

Brand & Growth

Regulation

TalentRisk

Operational effectiveness

Cost reduction

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The Indian Scenario...

Low Per Capita Consumption

High Recyclability and Reuse

Selective application of new manufacturing technologies– Larger Productive Window– Greater Energy Efficiencies

Government Thrust in stimulating the economy in the short term– Push in Infrastructure is expected to be sustained over the next few years– About $ 500 bn. of Infrastructure Investments being planned in the 11 th 5 Yr. Plan, 26% of this

will be allocated to Roads and Rail infrastructure– Focus on development of the Rural Economy

Relatively higher GDP growth in India – in comparison to the Rest of the World

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Priorities in a “Low Carbon” Economy…

Include Carbon Management as a Core Principle of the Business Model– Essential to identify areas for maximum environmental action– Regular Organisational Performance Metrics will include Carbon Management Costs and

Environmental Impact Assessment– Driving the organisation towards a sustainable Supply Chain will be a Strategic Objective

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Source: CBI Report “Climate Change: Everyone’s Business” 2007

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A Steel Manufacturing Organisation – Overview

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Business Development Sales & Service Distribution Production

Equipment & Plant

Management

Business Management

Plan

Control

Execute

Human Resources Planning

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Business Development Sales & Service Distribution Production

Equipment & Plant

Management

Business Management

Plan

Control

Execute

Enterprise Business Performance Management

Environment/ Energy Management Monitoring

Production

New Product/ New Demand Strategy

New Business Strategy

Customer Relationship Mgmt. Strategy

Supply & Capacity Planning Facility Investment

Planning

Facility Maintenance Planning

Enterprise Business Planning

Environment/ Energy Management Planning

Quality Tracking

New Product Development

R&D Strategy ExecutionShipping

Transportation

Facility Maintenance Execution

Environment/ Energy Management

Supplier PerformanceManagement

Production Planning

R&D Strategy

Logistics Strategy

Transportation Planning

MRO Material & Service

Purchase Planning

New Demand Generation

Purchasing

Demand Forecasting & Sales Planning

Integrated Sales-operation Planning

Finished Product Inventory Planning Quality Management

Inbound Logistics Planning

Inbound Logistics

Raw Material Inventory Management

Production Order Management

Facility Order Processing

Facility Acquisition

Finance & Accounting

Facility Construction Monitoring & Management

Market analysis & Pricing StrategySales Channel

Strategy

Evaluate Facility Investment Plan

Human Resource Management

Business Administration

Public Relations

Some carbon/GHG impactModerate carbon/GHG impactMajor carbon/GHG impact

A Steel Manufacturing Organisation – Overview

Contract Management

New Product Development, R&D

Performance Management

Accounts Receivables & Credit Management

Inquiry Processing

Offer/order Processing & Billing

Claim Management

Human Resources Planning

Purchase Planning

Logistics Monitoring & Performance Management

Finished Product Inventory Monitoring &

Management

Production Monitoring & Performance Management

Facility Maintenance History Management

MRO Material & Service Purchasing

New Product Development Project,

R&D Monitoring

Sales Force Management

Quality Management for Inquiring Order

Technical Support

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Defining a Strategy

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In Conclusion...

Capitalise the opportunities presented for growth in the short term

Sensitise the organisation towards the Sustainability dimension– Preparedness– KPIs– Execution

Adapt the organisation towards delivering results sustainably

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Thank You

ibm confidential sustainable growth in steel

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