Fighting slowdown blues: Going digital to help JSW Steel save Rs 2.2k cr in 2 yrs

Steelmaker JSW Steel is riding on its digital focus to see off some of the impact of the ongoing slowdown. The leading steelmaker in the country expects to save Rs 2,200 crore in the next two years through its digital initiatives.

"Now each function in the company is being looked through the digital lens. It has a huge advantage, as digitally one can do much more than what was done manually," Jt Managing Director and Group CFO Seshagiri Rao told Moneycontrol in a recent interaction.

The company is presently implementing the “Third Wave” of its digital transformation. The initiative was first started in 2017, and the third wave gets over in 2022.

"We took help from management consulting firm Boston Consulting Group, who helped identify the theme. We decided that in each of our interactions, say with vendor, employee or contractor, we need to give a WOW experience," said Rao.

The savings through digital transformation is especially important in the current economic slowdown because of which steel demand and prices have seen a sharp fall. Most of the companies, including JSW Steel and Tata Steel, are sitting on high inventories.

The waves

In the first wave, JSW Steel identified marketing, manufacturing and supply chain functions for the digital change. To drive the change, a Digital Centre of Excellence was created that comprised of 10 senior executives.

Earlier in 2019, JSW Steel hired Vineet Jaiswal – who was earlier in GE Digital as the chief digital officer. He was “responsible for the digital transformation at JSW Group and to strategically align the company’s vision for the future in the digital space," as per his Linkedin profile.

The company is at present implementing the Third Wave, which focuses on procurement and project implementation. "Anything that one touches, there is potential to save costs, and improve efficiency," said Rao.

The savings

Rao gave three examples of how the digital transformation has helped the steelmaker.

Power unit

JSW Steel's unit in Dolvi buys power from sister firm JSW Energy. The electric supply comes in 15-minute cycle. And, every 15 minutes, executives from the Dolvi unit have to inform the grid of their requirement.

The problem is, if the demand is made for 35 MW but the unit consumes just 25 MW, the rest of the power goes free to the grid. In effect, JSW Steel loses 10 MW. Annually, losses like this would amount to more than Rs 100 crore.

To prevent the losses, the power requirement calculation was made digital. "The variables that influence the power requirement are programmed, and the power requirement and then generation, gets adjusted automatically," said Rao.

The losses are now down to Rs 30 crore. There is further scope to reduce this.

Production and planning

The engineers in JSW Steel's plant in Karnataka have to study 66 variables to decide which unit will produce what. The plant has hot strip mills, blast furnaces and two Corex units. "The variables have to be studied to decide which unit has to produce hot metal for a particular order, or which unit has to produce liquid steel or process it. The production planning and control department has to tell that," explains Rao.

But, given the high number of variables, it is a tough task. Thus, a digital solution was proposed. The solution has now made the process nearly seamless, savings time and preventing wastage.

Robots to sort bills

Going digital has helped JSW Steel share services among various units. One of this is the centre to manage accounts and coordinate to take orders, sort bills, and make payments to vendors and suppliers.

The company now has a centre in Navi Mumbai that handles this function for all its units across the country. There is no separate department for each unit or site. While, earlier, the checking was done manually, robots now manage it.

This has ensured that the job is done faster and more accurately.