Tata Indica Making of A Small Car Presented By Tarun Arya

Introduction The Indica is a product of Tata Motors Pvt. Ltd. It is a leading manufacturer of Trucks in India and India's largest automobile company. It is the second largest manufacturer of passenger vehicles n the world. The company is the world's fifth largest medium and heavy commercial vehicle manufacturer, and the world's second largest medium and heavy bus manufacturer.

The Indica is a product of Tata Motors Pvt. Ltd.

It is a leading manufacturer of Trucks in India and India's largest automobile company.

It is the second largest manufacturer of passenger vehicles n the world.

The company is the world's fifth largest medium and heavy commercial vehicle manufacturer, and the world's second largest medium and heavy bus manufacturer.

Introduction Indica was Launched in 1998. The idea was to be prices near to Maruti 800. Company wanted to give all the good features of its competitors, in this car. Company wanted to change its traditional image.

Indica was Launched in 1998.

The idea was to be prices near to Maruti 800.

Company wanted to give all the good features of its competitors, in this car.

Company wanted to change its traditional image.

Outsourcing The Components Outsourcing seemed to be one of the most difficult aspects of producing the Indica. Unlike global automobile majors, Ford Motors or General Motors, which had a global vendor-base. Telco had to create a vendor-base from scratch. It did not have the expertise either to design a car or to build an engine for it.

Outsourcing seemed to be one of the most difficult aspects of producing the Indica.

Unlike global automobile majors, Ford Motors or General Motors, which had a global vendor-base.

Telco had to create a vendor-base from scratch.

It did not have the expertise either to design a car or to build an engine for it.

Outsourcing The Components Telco had to take its primary ‘make-or-buy’ decisions for the key inputs-design, engine, and transmission. Telco decided to shop globally for the best deals and use its own expertise to make whatever modifications were needed.

Telco had to take its primary ‘make-or-buy’ decisions for the key inputs-design, engine, and transmission.

Telco decided to shop globally for the best deals and use its own expertise to make whatever modifications were needed.

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

Vendor Development Next step was to identify the vendors. Most of the parts that went into making Telco were sourced locally. Except for some sheet metal parts, cylindrical gaskets, and belts--which accounted for 2% of the component value, the Indica was totally indigenous.

Next step was to identify the vendors.

Most of the parts that went into making Telco were sourced locally.

Except for some sheet metal parts, cylindrical gaskets, and belts--which accounted for 2% of the component value, the Indica was totally indigenous.

Vendor Development Telco employed a simple yardstick for selecting suppliers: the ability to supply components at the negotiated quality, cost, and quantities. In the first stage of selection, an initial assessment team from Telco evaluated the supplier. This was followed by self-evaluation of the supplier, based on a format provided by Telco.

Telco employed a simple yardstick for selecting suppliers: the ability to supply components at the negotiated quality, cost, and quantities.

In the first stage of selection, an initial assessment team from Telco evaluated the supplier.

This was followed by self-evaluation of the supplier, based on a format provided by Telco.

Vendor Development Then there was a quality systems survey, carried out by a Telco quality audit team. It applied a 13-step Quality Improvement Program, covering supplier self-evaluation, thorough design-validation, and audit of supplier quality. Another key to Telco’s successful vendor-base was a modern system of process management.

Then there was a quality systems survey, carried out by a Telco quality audit team.

It applied a 13-step Quality Improvement Program, covering supplier self-evaluation, thorough design-validation, and audit of supplier quality.

Another key to Telco’s successful vendor-base was a modern system of process management.

Vendor Development Telco’s target-costing was broken up into vendor-wise cost targets, and the suppliers had to carry out their own value-engineering exercises to lower cost and improve quality. For example, India Pistons, which supplied the pistons and piston rings, walked away with the Indica order because it benchmarked itself against supplies to Maruti Udyog.

Telco’s target-costing was broken up into vendor-wise cost targets, and the suppliers had to carry out their own value-engineering exercises to lower cost and improve quality.

For example, India Pistons, which supplied the pistons and piston rings, walked away with the Indica order because it benchmarked itself against supplies to Maruti Udyog.

Answer 1 Supply Chain of Telco To keep its transaction costs low, Telco configured its supply chain on a just-in-time basis. All high-value components were delivered daily, and in the case of nearby suppliers, twice a day. Vendors who were located far away from Pune set up local warehouses near the plant.

To keep its transaction costs low, Telco configured its supply chain on a just-in-time basis.

All high-value components were delivered daily, and in the case of nearby suppliers, twice a day.

Vendors who were located far away from Pune set up local warehouses near the plant.

Supply Chain of Telco The rationale for the relocation: Transportation costs alone accounted for 45% of the total logistics costs for a company. Delays in supplies added to costs in terms of machine down-time at the plant. Meanwhile, on the shop floor, where the assembly line was located, Telco had done away with the traditional store function.

The rationale for the relocation:

Transportation costs alone accounted for 45% of the total logistics costs for a company.

Delays in supplies added to costs in terms of machine down-time at the plant. Meanwhile, on the shop floor, where the assembly line was located, Telco had done away with the traditional store function.

Supply Chain of Telco There was no material store in the Pune plant of Telco. The truck loaded with the material first entered the factory at the material gate where there was a documentation center. A person at this center checked whether the material was scheduled to arrive or not, by keying in the part number and the supplier code.

There was no material store in the Pune plant of Telco.

The truck loaded with the material first entered the factory at the material gate where there was a documentation center.

A person at this center checked whether the material was scheduled to arrive or not, by keying in the part number and the supplier code.

Supply Chain of Telco If the material was not scheduled to arrive, the documents were not processed further and the truck was not allowed to enter the factory premises. Once it was cleared at the gate, the truck proceeded to the receiving center. Once the items were unloaded, unpacked and cleared for quantity and quality, they were moved into the transit area.

If the material was not scheduled to arrive, the documents were not processed further and the truck was not allowed to enter the factory premises.

Once it was cleared at the gate, the truck proceeded to the receiving center.

Once the items were unloaded, unpacked and cleared for quantity and quality, they were moved into the transit area.

Supply Chain of Telco From there they went into what was called the ‘super market’. The super market was close to the assembly line. In the super market, the materials were arranged in such a way that the workers could easily access all the material required on the assembly line without wasting much time and effort.

From there they went into what was called the ‘super market’.

The super market was close to the assembly line.

In the super market, the materials were arranged in such a way that the workers could easily access all the material required on the assembly line without wasting much time and effort.

Supply Chain of Telco The benefits of this just-in-time inventory system were that the inventories were low and so the interest costs were also low. Again the manpower required to handle the inventories was also low.

The benefits of this just-in-time inventory system were that the inventories were low and so the interest costs were also low.

Again the manpower required to handle the inventories was also low.

Answer 2 Objective of Minimizing the Cost Analysts felt that the competencies that Telco had grown in the process of marketing Indica would be the core around which it would build its future car business. Analysts also felt that Tata would use the supply chain that fed the Indica to feed a whole range of Telco cars of the future.

Analysts felt that the competencies that Telco had grown in the process of marketing Indica would be the core around which it would build its future car business.

Analysts also felt that Tata would use the supply chain that fed the Indica to feed a whole range of Telco cars of the future.

Objective of Minimizing the Cost “ Telco’s capacity will be tested by how many new models it can come up with--and how soon. Is Telco in a position to do so? Four years ago, I would have said no. Today, I am not going to underestimate their capacity. They have demonstrated it.” D.C. Anand, CEO, Anand Group

“ Telco’s capacity will be tested by how many new models it can come up with--and how soon. Is Telco in a position to do so? Four years ago, I would have said no. Today, I am not going to underestimate their capacity. They have demonstrated it.”

D.C. Anand, CEO, Anand Group

Objective of Minimizing the Cost “ Leveraging the low-cost supply chain that it has built, Telco will launch a series of other cars--priced both below and above the Indica, straddling the entire spectrum--each of which will be progressively easier to integrate.” Business Today The supply infrastructure would become economical as the volume of the business that Telco offered its vendors increased.

“ Leveraging the low-cost supply chain that it has built, Telco will launch a series of other cars--priced both below and above the Indica, straddling the entire spectrum--each of which will be progressively easier to integrate.”

Business Today

The supply infrastructure would become economical as the volume of the business that Telco offered its vendors increased.

Objective of Minimizing the Cost The volume of business would increase with a larger number of cars. The learning that it was extracting from the Indica supply chain would also be available to the company as it moved into other products. There seemed to be a distinct opportunity for a smaller, cheaper car, positioned as an entry-level for the first-time buyer.

The volume of business would increase with a larger number of cars.

The learning that it was extracting from the Indica supply chain would also be available to the company as it moved into other products.

There seemed to be a distinct opportunity for a smaller, cheaper car, positioned as an entry-level for the first-time buyer.

Objective of Minimizing the Cost Analysts felt that Telco’s supply chain management would become the pivot around which it could assemble its passenger-car business.

Analysts felt that Telco’s supply chain management would become the pivot around which it could assemble its passenger-car business.

Competitive Analysis | | | | | | M | M | | | | | | | | M | M | M | | | | In | | | Torque (Nm@rpm) Power to weight (bhp/ton) Power (bhp@rpm) Drive Gears Aspiration Fuel system Values configuration Values per cylinder Compression ratio Bore (mm) x stroke (mm) Engine Engine & transmission [email_address] 74 [email_address] FWD 5 Naturally-aspirated MPFi SOHC 4 9.2:1 69 x 72 Inline Maruti Wagon R LXi Duo (Petrol/LPG) [email_address] 65 [email_address] FWD 5 Turbo-charged TDI SOHC 2 21.0:1 75 x 79 Inline Tata Indica DLX Turbo

Competitive Analysis 165/65 R13 Independent, se... Independent, Ma... 4.9 Rack and pinion... Drums Ventilated discs Tata Indica DLX Turbo 20.93 16.69 154 15.45 7.14 Tata Indica DLX Turbo Tyres Suspension - rear Suspension - front Min. turning radius (m) Steering type Brakes - rear Brakes - front Brakes, Steering, Suspension & Tyres 40-100 kph (m) 20-80 kph (m) Top speed (kph) 0-100 kph (sec) 0-60 kph (sec) Performance 145/70 R13 Coil spring, th... MacPherson stru... 4.6 Rack and pinion... Solid discs Ventilated discs Maruti Wagon R LXi Duo (Petrol/LPG) 24.06 14.71 154 16.6 6.31 Maruti Wagon RLXi Duo (Petrol/LPG)

Competitive Analysis Torque (Nm@rpm) Power to weight (bhp/ton) Power (bhp@rpm) Drive Gears Aspiration Fuel system Values configuration Values per cylinder Compression ratio Bore (mm) x stroke (mm) Engine Engine & transmission [email_address] 65 [email_address] FWD 5 Turbo-charged TDI SOHC 2 21.0:1 75 x 79 Inline Tata Indica DLX Turbo [email_address] 73 [email_address] FWD 4 Naturally-aspirated MPFi SOHC 3 10.1:1 67 x 77 Inline Hyundai Santro XingAT