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Tata Indica
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  • 1. Tata Indica Making of the small car Presentation By: - Akhil Gupta, Student ISMC [email_address]
  • 2. Introduction to Case
    • The case provides an understanding of the issues concerning the supply chain management system at Telco in regard to its small car, Indica.
    • It outlines how
      • Telco, built the supply chain for the car by leveraging its existing competencies
      • it transformed itself from an integrated truck manufacturer to an automobile integrator
      • and from a product-centric company to competence- centric company.
  • 3. Points to be discussed!
    • The case discusses: -
      • various components of the supply chain.
      • and emphasizes how Telco orchestrated them with the objective of minimizing costs.
  • 4. Introduction about Co.
    • The location of the Telco plant originally belonged to Peninsular Locomotive Company (Peninsular), which was established in Tatanagar, Jamshedpur in 1923.
    • In 1927, Peninsular was taken over by East India Railway to manufacture passenger carriage underframes for the Indian Railways.
    • In 1945, Tata Sons purchased the plant from the Government of India for manufacturing steam locomotive boilers and other engineering products, under the name Tata Locomotive & Engineering Company.
  • 5. Introduction about Co.
    • By 1947, it started producing boilers for imported locomotives. The company also entered into collaborations with Marshal Sons (UK) to manufacture steam road roller, and with Krauss Maffei (West Germany) to manufacture steam locomotives.
    • In 1954, the company entered into a technical collaboration with Daimler-Benz to manufacture automotive vehicles.
  • 6. Introduction about Co.
    • In 1960, company's name was changed to Tata Engineering & Locomotive Company Ltd. By 1961, it was manufacturing construction equipments.
    • In 1961, Telco produced its first crane in collaboration with M/s Pawling & Harnischfeger (P&H), U.S.A.
    • In 1966, it acquired Investa Machine Tools Co and set up a machine tools division at Pune.
  • 7. Introduction about Co.
    • The first commercial vehicle was produced in 1977. In 1983, Telco started producing heavy commercial vehicles.
    • In 1986, the company rolled out its first light commercial vehicle - TATA 407 that had a completely indigenous design.
    • In 1991, Telco produced indigenously - designed passenger cars - Tata Sierra and Tata Estate and in the same year it started its assembly and training plant at Lucknow (Uttar Pradesh).
  • 8. Introduction about Co.
    • The product range of the company included passenger cars, heavy commercial vehicles, trucks and buses.
    • By the late 1990s, Telco had emerged as a leading name in
      • commercial vehicles,
      • passenger vehicles,
      • construction equipment,
      • metal cutting and grinding machines,
      • industrial shutters,
      • high quality steel,
      • alloy castings and other related products.
  • 9. Birth of Indica
    • Birth of Indica takes place by the idea of developing small car in the mind of Telco’s chairman Ratan Tata. (1990)
    • By mid – 1994 the basic design was in place.
    • Tata Indica – India's first indigenously designed and manufactured car – is launched by Tata Motors, spearheading the Group's entry into the passenger car segment. (1998)
    • Main competitor was Maruti.
    • Ideas was to build a car almost equivalent to: -
      • Cost of Maruti 800 (MUL)
      • Shape of Zen (MUL)
      • Space of Ambassador (HM)
    • For developing a new car, on an average it takes 48 months and $3 billion ( Rs.12,750 Crores ). But, Indica was developed in 31 months and the bill totaled to Rs.1700 Crores only !
  • 10. Tata Indica – Drawing Board
    • TELCO went to an Italian company, IDEA, for the product design, which gave it a 5-door hatchback resembling the Fiat Palio. TELCO bought the engine from the Institut Francais du Petrol of France. The transmission was developed at in-house at Pune, India. Putting all this together and engineering skills they had, TELCO gave birth to Indica model.
    • Finally, the company purchased its machinery with the objective of lowering project-costs. The assembly line of Nissan, Australia was bought for a mere Rs.90 Crores ( a new assembly line would have cost TELCO at least Rs.400 Crores ).
    • Others in the domestic market are global players and hence TELCO should be ready to face competition with this in mind. To evolve into a global player, one important element is an efficient Supply Chain network to cater the car market. All this has driven TELCO to put SCM in the prime slot and it plans to achieve the objective by organizing itself around capabilities & alliances - not products alone.
  • 11. Tata Indica – New venture
    • For its new venture: -
      • Telco outsourced 80% of the components (1,200 of its 1,500-plus parts), from 200-odd vendors (Indian vendors).
      • Telco had to combine the learning’s from its predecessors with its own unique supply chain management strategies to ensure a sustainable low-cost platform.
  • 12. The Outsourcing Strategy
    • Being a heavy truck and SUVs manufacturer they were facing problems in producing Indica in terms of its parts.
    • Main problem was that they were planning to make Indica only for Indian markets. So the volumes were low.
    • Telco decided to shop globally for the best deals and use its own expertise to make whatever modifications were needed.
  • 13. Vendor Development
    • Most of the parts were sourced locally.
    • 2% of the parts like some sheet metal parts, cylindrical baskets etc. were outsourced.
  • 14. Competitors
    • Indica falls under the segment of 3-5 lakhs.
    • Its major competitive car models of other company are: -
      • Ambassador
      • Fiat Palio
      • Hyundai Santro, Getz
      • Chevrolet Opel Corsa
      • Maruti Zen, Wagon R, Versa, Esteem, Gypsy
      • Ford Icon & Fiesta
      • Mahindra Bolero
  • 15. Competitive Analysis on Dimensional Basis 1015      755 1025 995 Kerb Weight (kg) 260 290 220 Boot Capacity (lts) 1350 1070 1330 1330 Rear Shoulder (mm) 840 860 880 870 Rear Kneeroom (mm) 1220 1250 1180 1290 Front Legroom (mm) 1440 1660 1590 1485 Height (mm) 1620 1495 1525 1665 Width (mm) 3763 3495 3810 3675 Length (mm) Palio Petrol Wagon R Getz Indica V2 Diesel Dimensions
  • 16. ? Question 1.
    • Highlight the supply chain management system at Telco in regard to its small car Indica, and how Telco, built its supply chain to become a competence – centric company?
  • 17. Telco’s competence centric strategy
    • Just in time basis.
    • High value components were delivered daily.
    • In case of nearby suppliers, twice a day.
    • Vendors far away from Pune plant have set their plants there.
    • Advantages were: -
      • Cost become low margins become high.
      • Time spend in transportation get reduced.
    • The name various suppliers of components are: -
      • Automotive components (TACO)
      • Automotive services (TACO, Tata Technologies)
      • Commercial vehicles (Tata Motors)
      • Diesel engines (Tata Cummins)
  • 18. OUTSOURCING THE COMPONENTS   JBM Tools Sheet metal items   Sona Steering Differential assemblies   Imperial Auto Fuel lines   Asahi Glass Wind screens and windows   Subros Ltd Air conditioning kits   Tata-Auto Plastics Front and rear bumper, dash-board, inside trims   Tata-Ficosa Rear view mirrors   Tata-Toyo Radiators   Tata-Johnson Controls Seating Systems   Sundaram Brake Linings (SBL) Clutch facings and rear (drum) brake linings   Rane TRW Steering Systems Steering systems   Lucas-TVS Electrical components and fuel injection systems   India Pistons Pistons and Piston rings   Mercedes Benz Presses   Nissan’s Plant, Australia Assembly Line   Institut Francais du Petrol, France Engine   I.DE.A, Italy 5 door hatchback   Supplier Components
  • 19. Other SCM strategies at Telco
    • The shift to buying over the Net is saving the company precious cash
      • The idea was to leverage on the power of the Internet for global sourcing.
      • Freemarkets has held reverse auctions on the Net for Telco, and through these, Telco has made purchases & makes it one of the biggest e-procurement initiatives in the country.
      • Telco is still handling with the complex task of managing the trade-off between sizeable short-term cost savings and decades-old supplier relationships.
      • Eventually, it invited 30 global and Indian suppliers. The result: a huge 50 per cent drop in prices.
      • The lowest bidder was a Chinese supplier. He was providing equipments at 20% cheaper rate.
  • 20. ? Question 2.
    • Discuss various components of supply chain management and emphasizes how Telco orchestrated them with the objective of minimizing the costs.
  • 21. Supply chain management
    • Supply chain management (SCM) is the oversight of materials, information, and finances as they move in a process from supplier to manufacturer to wholesaler to retailer to consumer. Supply chain management involves coordinating and integrating these flows both within and among companies.
    • The ultimate goal of any effective supply chain management system is to reduce inventory which at last results in reducing the cost.
  • 22. Components of SCM
    • The various components of Supply Chain Management are: -
      • Planning and control
      • Work structure
      • Organization structure
      • Product flow facility structure
      • Information flow facility structure
      • Management methods
      • Power and leadership structure
      • Risk and reward structure
      • Culture and attitude
  • 23. Components of SCM
    • A basic supply chain management system has five (5) components:
      • 1) The plan , which refers to the over-all strategy of the SCM program including the development of SCM metrics to monitor;
      • 2) The source , which refers to the suppliers who'll provide you with goods and services necessary for you to run your business;
      • 3) The ' make ' or manufacturing component, which refers to the execution of processes needed to produce, test, and package your products or services;
      • 4) The delivery , which refers to the system for receiving orders from customers, developing a network of warehouses; getting the products to the customers; invoicing customers and receiving payment from them; and
      • 5) The return , which is the system for processing customer returns and/or supporting customers with problems with the products they received.
  • 24. Company’s Objective
    • Tata engineering, maker of the Indica, was aiming for the highest standard in minimum cost. For this the best quality components should be used. To achieve this they had done following things: -
      • Technology Outsourcing.
      • Strategic direction to look beyond local suppliers.
      • Most of the companies supplying components were the sister companies of Tata.
      • Due to option of reverse auctioning on the internet they use to get the components at the cheaper rate.
      • Also they tried to build up the relationship with suppliers for getting the cheaper prices and also they promoted small companies who were supplying components.
      • Joint-venturing with foreign companies to get better technology.
  • 25. The Logistics
    • TELCO has set up a company - Tata Autocomp Systems (TACO) a separate company to manage the auto components business. This is in tune to its plan that its supply chain network works with the state-of the art technology of the world. TACO in turn has entered into several JVs to supply components for Indica.
    • With respect to vendors, the company has created a two-tiered structure - with the Tier II supplying components to the Tier I, which assembles them into complete systems, which is the only level TELCO interacts directly. This lowers both costs and complications.
  • 26. Thank You!