2. Highlights
Development of local team
Redesigning the off line costing module
to show element wise cost for the plant
Separation of cost of Hot Rolled for sale
from that of Hot Rolled for Cold Rolled
Cost variance analysis
Regular cost meetings at the shop floor
Communication of reports to key people
4. Costing
The situation earlier
There was only one
cost sheet to calculate
the variable cost of
hot rolled. The input
cost to Cold Rolled
included packing cost
of Hot Rolled.
Improvement made
Introduction of
separate cost sheets
for Hot Rolled for sale
and Hot Rolled for
Cold Rolled thus
representing the true
cost of products
7. Costing...
Situation earlier
There was no basis
for valuation of by-
products
Improvement made
Value of by-product
was linked with
parent product. For
example, zinc dross
linked with price of
zinc, sinter screen
linked to iron ore cost
8. Costing…
Situation earlier
Packing cost included
too many items of
insignificant cost
Improvement made
Packing cost was
rationalised to
include only the
major items and other
items were clubbed
10. Costing…Costing…
Situation earlierSituation earlier
Arbitrary allocation ofArbitrary allocation of
fixed costs to finishedfixed costs to finished
productsproducts
Improvement madeImprovement made
Basis established forBasis established for
allocation of fixedallocation of fixed
costscosts
12. BudgetingBudgeting
Situation earlierSituation earlier
While calculating theWhile calculating the
scrap requirement,scrap requirement,
processing loss ofprocessing loss of
scrap was notscrap was not
considered resulting inconsidered resulting in
higher scrap purchasehigher scrap purchase
than what wasthan what was
budgetedbudgeted
Improvement madeImprovement made
Process loss of scrapProcess loss of scrap
was taken into accountwas taken into account
to estimate the scrapto estimate the scrap
requirementrequirement
13. Budgeting…
Situation earlier
Basis for valuation
of unit cost of
materials could not
be established
Improvement made
Unit cost of material
was linked to
materials budget
and the actuals of
the preceding year
14. Budgeting…
Situation earlier
Packing cost did not
consider the
coil/sheet impact
Improvement made
Packing cost was
fixed based on mix,
weight and
consumption for
coils and sheets
separately
15. Budgeting…Budgeting…
Situation earlierSituation earlier
Yield for Hot RolledYield for Hot Rolled
was considered forwas considered for
the total productionthe total production
Improvement madeImprovement made
Yield was fixedYield was fixed
separately for Hotseparately for Hot
Rolled for sale andRolled for sale and
Hot rolled for ColdHot rolled for Cold
Rolled for betterRolled for better
controlcontrol
17. MIS
Situation earlier
No report on cost
variance
Improvement made
Cost variance report
was made and
circulated to key
people for
monitoring
18. MIS…MIS…
Situation earlierSituation earlier
Report for weeklyReport for weekly
CEO conference callCEO conference call
did not have a costdid not have a cost
bridgebridge
Improvement madeImprovement made
A cost bridge is sentA cost bridge is sent
with the report forwith the report for
weekly CEOweekly CEO
conference callconference call
showing elementshowing element
wise cost variancewise cost variance
per tonper ton
19. MIS…
Situation earlier
Daily report was
confined to costing and
was not circulated to
other people
Improvement made
Daily report covers
production, shipment,
cost and power plants
and is being circulated
to many people
21. Development of local teamDevelopment of local team
Situation earlierSituation earlier
Even routine tasks wereEven routine tasks were
performed by theperformed by the
expatriateexpatriate
Improvement madeImprovement made
Practically all tasks havePractically all tasks have
been delegated to thebeen delegated to the
locals, including thelocals, including the
following:following:
1.1. Business PlanBusiness Plan
2.2. Costing report for theCosting report for the
day/week/monthday/week/month
22. Cost meetingCost meeting
Situation earlier
No formal cost
meeting was held
Improvement made
Scheduled formal cost
meeting is being held
in each major shop
including energy
shops, involving shop
chief and local team
23. Costing module
Situation earlier
Offline costing
module was only in
English language
Improvement made
Offline costing
module was made
bilingual to include
Russian – the official
business language
24. Focus on other areas
Situation earlier
Function was focused
mainly on cost
Improvement made
1. Accumulation of zinc
dross was highlighted
resulting in
reprocessing of zinc
dross
2. Attention to Timber
shop resulted in
change of purchase
strategy
