Abstract

The case talks about the operational changes at TISCO that enabled the company to become the lowest cost producer of steel in the world. TISCO initiated a five-phase modernization program in the early 1980s, to overcome problems in the steel-making process. The program’s primary objectives were to enhance the operational processes and reduce costs. The operations’ aspect was addressed in the Phase III of the program with the help of consultants McKinsey and Booz Allen-Hamilton. McKinsey designed a program called Total Operational Performance (TOP). TOP’s main objective was to impact the bottomline with minimum expenditure and minimum time. TOP enabled TISCO to improve its performance. TISCO also achieved cost reduction through other strategies like manpower reduction, organizational restructuring, and using information technology to enhance certain business processes. With the completion of the modernization program, TISCO was able to record profits despite the low global demand for steel and cheap imports.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Factors that enabled TISCO to become the world’s lowest cost steel producer.

Keywords

Operational changes, TISCO, lowest cost producer, steel, five-phase, modernization, program, 1980, steel-making process, primary objectives, operational processes, reduce costs, Phase III, consultants, McKinsey, Booz Allen-Hamilton, McKinsey, Total Operational Performance, TOP, cost reduction, manpower reduction, organizational restructuring, information technology, business processes, modernization program