Role of Management Information Systems in Tata Motors

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INTRODUCTIONTata Motors is India’s largest automobile company. It is the leader in commercial

vehicles in each segment and the second largest in the passenger vehicles market in India, with winning products in compact, mid-size car and utility vehicle segment. 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 company’s 29,600 employees are guided by the vision to be “best in the manner in which we operate, best in the products we deliver and best in our value system and ethics”

Established in 1945, Tata Motors’ presence extends across the length and breadth of India. Over 3.5 million Tata vehicles have driven on Indian roads since the first one rolled out on 1954.The company’s manufacturing base is spread across multiple plants, supported by a nationwide dealership, sales and services and spare parts network comprising of about 1,200 touch points. The company also has a strong auto finance operation, Tata Motors Finance for supporting customers in purchasing Tata Motors vehicles.

Background

Tata Motors is a key business of India's Tata Group, India’s leading conglomerate with primary interests in steel, IT, commercial and passenger automotives, chemicals and telecom. The 140-year old Tata Group, feted by some as India's General Electric, is highly respected not just for its business prowess but also for its various social and educational projects that have contributed immensely to India's development.

Tata Motors is a key growth business for the Tatas, and currently contributes about 20% to the group's total revenue. It manufactures only heavy and light commercial vehicles, and its foray into passenger cars has been driven aggressively by Ratan Tata. Tata trucks dominate the Indian commercial vehicle landscape, having approximately 65% market for medium and heavy commercial vehicles (MCVs and HCVs), and 55%+ share for light commercial vehicles (LCVs). For passenger vehicles, the numbers are less impressive, with teething problems on some of its models (and stiff competition in the Indian passenger car market), such as the Tata Indica (compact car). TTM also offers the Tata Safari SUV and Tata Sumo MUV, and also has a presence in the mid-size car segment, with a slightly modified version of the Indica, called the Indigo. TTM's most ambitious project, the $2200 (Rs. 1 lac) car was launched in March 2009, and is by far Tata's biggest push into the passenger car segment. There were no competitors at this price point. The target market was the "bottom of the pyramid" - or the lower middle-class to middle class Indian, who is looking to change to a car from a two-wheeler.

Information Technology background

At Tata, IT is seen as an important global function. Organizationally it is incorporated into the management services division. The Chief Information Officer’s task is primarily to provide each area with IT resources and tools required and to analyze whether Tata Motors should implement new technologies and IT solutions. He draws up a three year plan in close

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cooperation with management and Tata Technologies, a fully owned subsidiary of Tata Motors providing business and IT services. This plan determines the basic IT strategy. The details are finalized in an IT balanced scorecard in which the various projects are defined for the next 12 months and listed in order of priority. Joint teams from IT and business are then charged with executing these plans.

In general, a distinction is drawn between project work and maintenance tasks. Tata Technologies is responsible for both. If required, external experts are consulted from relevant areas. Any differences of opinion about the long term perspectives of specific requirements are resolved together with the business team. The focus is a balance between business benefits and the required corresponding investments. WAN architecture is a mix of dedicated intercity / intra-city links, VSATs or VPN over service providers' network. LAN and WAN are monitored continuously with monitoring tools such as Cisco Works, Packeteer and other advanced tools.

SAP - ERPReasons for Implementation of ERP

In 1998, Tata Motors had its manufacturing plants located in Pune, Jamshedpur, and Lucknow. Its R&D centers were located in South Korea, Spain and UK. The corporate office of Tata Motors was located in Mumbai. It had 1,400 in-house engineers and scientists. Its spare part dealer network consisted of 1200 touch points. It had 27 spare part warehouses comprising of over 700,000 unique materials. It has 17 levels of bill of materials. It has 42 regional and sales-offices. Given its sheer size and its distributed units there was no online real time data available.

To add to this inappropriate real time data led to production loss. The current legacy system was not integrated. The sales, finance and production planning systems were independent of each other hence information flow across the organization was very cumbersome. There existed a need for collaboration between vehicle manufacturers and dealers. Tata Motors use a manual dealer management system, where every dealer managed details. With legacy-based systems, the environment produced inconsistent data, making interpretations difficult and resulting in inefficient planning for capacity and spare parts. Tata motors wanted to scale production and increase its capacity, hence there had to be backward integration of the process.

Selection of SAP as the ERP package

In the automotive industry today, there is no shortage of challenges. Executives find themselves being pulled in many directions – and struggling to do more with less. Stable or declining volumes in mature markets and increased competition from emerging economies are putting pressure on prices and margins, driving shorter product-development cycles, and making asset utilization a critical issue. Meanwhile, the cost of everything from raw materials to warranties must be strictly controlled. And customers, of course, have ever-increasing expectations for quality, speed, and flexibility. At the same time, automotive companies face the

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growing complexity of managing an ecosystem of partners and their own far-flung operations – which can include both mature markets and areas that hold the promise of new customers and lower labor costs, such as central and eastern Europe, China, and southeast Asia. The resulting complexity is multiplied by a growing number of regulations, such as the TREAD Act, the EU’s international material data sheet, and RoHS/WEEE requirements for monitoring environmental factors.

SAP helps companies meet their business challenges and capitalize on new opportunities with the SAP for Automotive solution portfolio designed specifically for the automotive industry. Drawing on more than 30 years of working with auto- motive organizations, SAP enables companies to manage and integrate critical business processes and collaborate with partners across the value network. Today, more than 1,600 automotive companies worldwide rely on SAP® solutions.

SAP for Automotive supports the entire range of industry processes, including supply chain planning, manufacturing, and logistics, sales and marketing, and customer service. It provides OEMs with support for everything from research and development to planning, manufacturing, and vehicle end-of-life considerations. It gives suppliers the tools they need to handle product development, quoting, manufacturing, procurement, and logistics processes. And it enables sales and service organizations to manage processes such as vehicle configuration, service-parts logistics, and warranty claims – among many others.

SAP for Automotive is designed to help automotive companies of virtually any size. In addition to providing the tools and capabilities needed to support fundamental enterprise processes – such as finance, regulatory compliance, human capital management, and corporate services.

SAP for Automotive solutions helped Tata Motors in the following activities:

Drive adaptive manufacturing and procurement

SAP for Automotive supports multiple manufacturing strategies, including repetitive, lean, flow , assemble-to- order, and forecast-driven processes. It could plan, execute, analyze, and control manufacturing operations in sequenced-build and just-in-time production environments. It also enabled TTM to leverage lean manufacturing and Six Sigma to improve efficiency while reducing the complexity of synchronizing the supply of automotive components and subcomponents. Moreover information about planning, accounting, human resources, materials, warehouse operations, plant maintenance, and quality to keep production in tune with overall business requirements and customer demands was easily available.

Perform model-option planning

SAP for Automotive Supports let Tata Motors manage customized orders and closely align model mix with market demands. It offered fully integrated solutions for planning, pricing, configuration, order processing, availability checking, production, fulfilment, billing, and

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financial reporting, giving a consistent view of the product in sales orders, production plans, and profitability analyses.

Manage the complete vehicle order-to-delivery process

Manufacturers, dealers, and importers could collaborate on the full range of activities associated with selling and delivering vehicles. SAP for Automotive gave importers a powerful channel- based tool for procuring, selling, distributing, and tracking vehicles and service parts, while enabling dealers to easily configure, search for, obtain, and track vehicles for customers.

Manufacture and deliver components

Suppliers in all tiers could use SAP for Automotive to ensure compliance with customer mandates for receipt of material releases; to synchronize production with demand; for data capture and error-proofing on the shop floor; for packaging, labelling, and shipping; and for generating advance-shipping notifications to maximize operational efficiency and effectiveness

Handle warranty claims with efficiency and accuracy

SAP solutions enabled TTM to process warranty claims and automate the claims-payment process for increased efficiency. The software facilitated the processing of warranty claims and handles multiple-warranty programs. It could use SAP software to examine and report on data from various sources and transform warranty information into additional product knowledge.

Streamline the service-parts process

SAP for Automotive lets provided TTM with powerful planning, fulfilment, and logistics tools. It could perform time-phased demand and replenishment planning while handling procurement, warehousing, distribution, and workload scheduling. It also gave visibility into de- pendent and independent demand, parts inventory, supply, and customer and system fill levels. The service-parts management capability support remanufacturing, core management, and entitlement controls.

Collaborate across engineering and design

SAP solutions provided tools for internal and external collaboration at every stage of engineering, including design and production start. The software supported collaborative product- development processes involving OEMs and suppliers, such as the Advanced Product Quality Planning (APQP) process and ISO/TS 16949, the globally accepted quality-management system that links customer satisfaction with the measurement and improvement of processes.

Strengthen the management of programs and projects

SAP solutions provided the tools needed to plan, manage, and control programs and projects of any size; oversee project structures, timelines, costs, and resources; and optimize re- source allocation across programs and projects.

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Deploy enterprise shared services

SAP for Automotive enabled Tata Motors to adopt and deploy back- office processes through shared-services centers. As a result, it could leverage enterprise best practices and achieve savings from reduced redundancy and the centralization of transactional information about suppliers and customers

Understand and control operations in greater depth

Comprehensive tools for analytics, forecasting, and reporting helped plan, budget, and optimize internal and external processes; improve sales planning and monitoring; and work with a complete picture of operations.

Improve the management of enterprise assets

Support for enterprise asset management covered the complete asset life cycle, including specification and design, development and procurement, operations, preventive and predictive maintenance, and disposal – helping TTM reduce operating costs and minimize downtime.

Ensure compliance with government regulations

Comprehensive capabilities addressed the full range of reporting requirements, including the Sarbanes-Oxley Act; global trade and customs rules; and environment, health, and safety regulations. Tata Motors could track detailed data about quality, materials, components, and products throughout the value chain.

Critical Success Factors

Some of the CSFs that Tata Motors took into consideration while implementing SAP were :

Improved Sales Revenue Cost Reduction Reduced Inventory Improved Production Scheduling Improved Productivity Enhanced organization-wide communication

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Supplier Relationship Management: Tata Motors was the first customer to implement and use all scenarios of SRM. These comprise:

Self Service procurement. Catalogue and Content Management. Strategic Purchasing Scenario: Spend Analysis, Contract Monitoring. Sourcing Scenario. Supplier Self Registration Module. Live Auction Cockpit Order Collaboration Scenario with full support for Goods Movement. Contract Re-Negotiation Scenario for Retrospective Price Amendments. Usage of SAP Net weaver: People Integration, Process Integration and Information

Integration.

Benefits Accrued

SRM Supplier Collaboration for Closed Loop Procurement Process

Feature Business Benefit

SUS Supplier self Service

PO / SA new and amendments

Delivery schedule

ASN creation at supplier

Excise Invoice capture

E mail and chat

Bulletin board

Provided suppliers with a streamlined order management system, along with a friendly interface and comprehensive search options make the job easy.

Reduced latency

Reduced manual efforts of excise invoice capture.

Efficient Goods Movement Tracking.

Suppliers Registration and Information Repository

Reduced efforts in short listing vendors for sourcing a part.

Easy capturing of new vendors capability.

Easy accessibility for all buyers

SRM Operational Procurement for Cost Reduction, Better Spend Control & Contract Compliance

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Feature Business benefit

EBP – Enterprise Buyer Professional

New part development

Shopping cart creation.

Create Contract or PO in R/3

Bid approval

Invitation and processing till Create contract or PO

Compressed cycle time

Reduced transaction cost

Electronic data storage - Quick retrieval.

Tracking of development items status –Time saved for review.

Integrated Procurement Process with Backend R/3 MM.

CCM Catalogue Content Management

TTM could buy directly from source based on prices fixed by empowered person

May be used for production resources and MRO items

Ease of procurement

Reduced inventories

Reduced cycle time

Reduced storage.

SRM Strategic Sourcing for Improved Supplier Selection, Reduced Cycle Time

Feature Business benefit

Bidding Engine

Supplier rationalization and prequalification

Supplier selection efficiency

Automated Contract creation or

Change

Closed Loop Sourcing Cycle.

Category based Sourcing Cockpit gives more control and ease of use for buyers.

Data Integration between Requirement, Sourcing and Fulfilment Process avoids manual data entry and increases efficiency.

Online Bid Submission Reduces Cycle Time and reduces cost for suppliers.

Online Bid Evaluation Analytics for Improved Supplier Selection.

Integrated Contract Management

Price change of existing contract from bid invitation to approval and amendment

Specifically developed for Tata Motors

Maker / checker facility in real sense. Improved data accuracy

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SRM Live Auction Cockpit for Better Savings and ROI through Supplier Competition

Feature Business benefit

LAC – Live Auction Cockpit In line with existing LAC engine of Ariba with added benefit of Integrated Procurement

Process that Streamlined the process flow through seamless top-to-bottom integration with multiple SRM components and backend systems.

Self hosted engine – reduced dependence on external service provider.

Integrated to Procurement Process Reduced Manual Data entry.

Electronic Workflow Approval Process that increased efficiency

SAP Netweaver :

Central Platform for Electronic Commerce

Feature Business benefit

Enterprise Portal – Single sign on. Easy Navigation to all systems thus enabling Seamless Integration to different Applications and Processes.

Role based and provides unified, secure access to supplier related information, transactions and

Services based on authorizations associated with a particular role

KM Knowledge Management

Repository of all training material

FAQs

E-learning and faster Knowledge sharing

Exchange Infrastructure Centralized Process Integration Model.

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Can be used in future for Non-SAP Integration and for B2B Communication

SRM Analytics Proactive Monitoring and Control

Feature Business benefit

BW Business Information Warehouse

Analytical reports

Spend analysis

Vendor Evaluation

SOB

Vendor database

Bid comparison

Shopping cart tracking

Rejections

Masop material supplies and balance

GR status and Payment details

Operation support

Decision support

Strategy development support

Customer relationship management - dealer management system (CRM-DMS)

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Tata Motors got started on what it has tagged the customer relationship management-dealer management system (CRM-DMS) at the turn of the millennium, when it was battling to regain relevance at a difficult time in its history. That’s when it realised that survival in the auto business depended on managing its relationships with its customers, dealers and anyone else who had a deep connection with the mother company.

Two parameters — customers, and their interface with the company, the dealers — were the critical links in a complex chain that Tata Motors had to deal with. The solution led to the emergence of Tata Motors’ integrated CRM-DMS, which is today the largest such application in the automobile industry worldwide, linking to more than 1,200 dealers across India and tracking the needs of some 25,000 customers.

How it was implemented

Tata Motors had no standard or benchmark to model its solution on when the relationship concept was first considered

The challenge was taken on by over 40 cross-functional teams, comprising one member each from design, manufacturing, sales and marketing, and service. Based on the output of this ‘quality functional deployment’ exercise and customer satisfaction surveys, Tata Motors came up with the top 25 issues that it needed to address from the customer’s point of view.

To standardise the sales process, the company broke it up into a four-part cycle: enquiry, warm prospect, hot prospect (industry terminology for potential buyers), and completion of sale and vehicle delivery. Using statistical analysis on the segmented data, the company was now able to predict its sales patterns.

Results:

Once standardisation was carried out across the dealer network, results were visible almost immediately. Accurate sales forecasts, reduced inventory for the company and the dealer, and better production scheduling were only some of the benefits. A shorter delivery cycle for the customer was an important fringe advantage.

CRM-DMS:

Tata Motors then embarked on implementing a solution that also facilitated the free flow of information across the enterprise. It put in place a robust information technology platform in the form of an innovative dealer management system, which automated sales processes for its 1,600 dealer locations, allowing them more time to focus on the customer.

Tata Motors chose Siebel for its CRM programme, which with its user-friendly interface simplified the process of training the company’s 15,000-plus dealer sales force. To support each dealer — who is actually a business partner representing the company with the end customer — Tata Motors involved dealers throughout the configuration and deployment process.

Implemented in three phases:

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CRM-DMS helped Tata Motors enormously in getting a firmer handle on its business. The system was implemented in three phases, the objective being to achieve success in one before moving on to the next:

Phase 1 focused on capturing customer and vehicle data and automating routine tasks. In phase 2, this data was used to improve customer interactions and streamline product

development and planning. Phase 3, now underway, concentrates on tuning the system and delivering additional

value-added services to customers.

Gains:

The CRM-DMS platform has been integrated with a wide array of back-office applications, including inventory management, fulfilment and parts location. Pricing and tax calculations can now be adjusted for each dealer’s requirements. The comprehensive sales and reporting functionality built into the Siebel solution allows Tata Motors to distribute sales targets directly to its dealers and roll up sales numbers across the country in real time

Benefits to dealers:

The dealer management system has meant a gross reduction in the amount of working capital needed to run their businesses. Transactions between the company and dealers, which earlier took up to 60 days, are now completed online and sealed in less than seven days.

Improvements at the workshop:

The system-based job card enables the mechanic to follow a checklist and diagnose faults through a process of elimination of probable causes, slashing diagnosis time. Simultaneously, the stores manager uses the system-based job card to assort a basket of the spare parts needed to fix the fault, and they are ready for pickup even before the mechanic walks into the stores.

With zero waiting times built into the service process, the system generates a dashboard for the workshop supervisor, indicating idle capacity and process times, and highlighting bottlenecks to optimise the use of service bays. The recent implementation of an SMS capability means that the system directly pings the customer when the job card is closed on the system and his vehicle is ready. The company can also now track each vehicle right through its operating lifetime, giving it valuable insights on product performance over time (earlier this was limited to the warranty period, after which scant information was forthcoming).

“Overall, we have transformed our organisation and made it truly customer-centric,” says Sreenivasan. “One of our first dealers to install the system doubled his sales volume in three months without the need for additional manpower. Another said that he can, for the first time, view his entire stock of vehicles and see how his inventory was ageing.”

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ConclusionTata Motors took the first important step toward a modern IT landscape in 1998 by

implementing SAP R/3 for the basic business processes, following an internal reengineering project. Implementing SAP helped the various sites improve automation and created a basis for integrated processes.

Although the effects of the implementation were noticeable, they were not far-reaching. Improvements - such as a more efficient way to access information or a more precisely defined workflow - could not be felt at the transaction level. Because of the required process volume, Tata Motors had to make a number of changes to the systems to meet performance requirements.

Five systems were consolidated on one server with one database and the company stayed as close to the standard version as possible. Both the business as a whole and developers are now much more involved. Since the implementation, the IT division of Tata Motors has been run according to the principle of “controlled programming.”

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