tata indica the making of the small car
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Tata IndicaThe Making of the Small Car
MADE BY :
ACHYUT VITHAL AGARWAL SHADWAL HARSH AYAN ASIF SUSHANT GUPTAKATIYANI TOMAR TARUN KRISHNAPRANSHUL TRIPATHI VASUNDHRA SINGHPOOJAN JAIN
INDEXHISTORYMAKING OF INDICAOUTSOURCING OF COMPONENTSVENDOR DEVELOPMENTSUPPLY CHAINOBJECTIVE OF COST MINIMIZATIONSTP ANALYSISBCG MATRIXSWOT ANALYSISCONCLUSION
HISTORYThe background of Telco India's leading automobiles manufacturer dates back to the early 1920s , TELCO originally belong to peninsular locomotive company & its plant was established in Tatanagar Jamshedpur & was taken over by East India Railways in 1927.
In 1945 TATA sons purchase the plant from the govt. For manufacturing steam locomotive boilers & other engineering product.
Tata got into the motoring business in 1954 when it starting producing heavy trucks in a joint venture with Daimler-Benz, Daimler Benz helped TELCO to establish strong R&D centre at PUNE, Maharashtra in 1960Over the year , the company acquired technology from several collaborations & Co-operations agreement with international countries .
Tata Cummins LtdJoint VentureCummins Engine Co.BusinessManufacture of Cummins B series engineTata Holset LtdJoint VentureHolset Engineering Co. LtdBusinessManufacture of turbochargersConcorde Motors LtdJoint VentureJardine International Motors LtdBusinessRetailing of Passenger CarsIn 1986 the company rolled out its 1st Light Commercial Vehicle TATA 407 . In 1991 TELCO produced indigenously design, passenger car Tata Sierra & Tata Estate
By late 1990s Telco emerged as a leading name in commercial vehicles, passenger vehicles etc.MAKING OF INDICAIn 1990s Telcos chairman Ratan Tata flirting with the idea of developing a small car & in 1994 Tata gave basic design to their car.
In 1995 Tata announced that it planed to build a car which will priced to Maruti 800, Shape like Zen & spacious like Ambassador.
Telco was the truck maker, producing a small car - Indica represented a different kind of challenge for Telco
As an Automaker Telco had to focus on the value chain that stretched b/w raw materials & after sales service as well as assembling the parts into the complete automobile.
Telco outsourced 80% of the components (1200 out of 1500 plus part) from 200 odd vendors , to develop Indica. Telco had to combine learning from its predecessor & its own unique supply chain management to sustain low cost .
Outsourcing the part was one of the most difficult part for Telco in producing Indica , for that Telco decided to shop globally for the best deals & use its own experience.
Tata Indica was launched in 1998 & within a week of launching , company received 1,15,000 bookings & in two years Indica became no. 1 car in its segment.OUT SOURCING OF COMPONENTS
COMPONENTSSUPPLIER5 Door Hatch BackI.D.E.A ItalyEngineInstitute Francais Du Petrol , FranceAssembly LineNissan Plant , AustraliaPressesMercedes BenzPiston RingsIndia PistonSteering SystemRano TRW Steering systemSeating SystemTata Johnsons ControlsUnlike Global Automobile majors like Ford or General Motors which had global vendor base , Telco had to start from the scratch for this Telco had to take its primary make or buy decision for key inputs & Telco decided to Shop Globally.RadiatorsTata ToyoRear View MirrorsTata FicosaAir Conditioning KitsSubros LtdWind Screen & windows Asahi GlassFuel LinesImperial AutoDifferential AssembliesSona SteeringSheet Metal ItemsJBM ToolsTelco turned to the Italian & France company for design & engine respectively & applied its engineering skills to adapt engine requirement.
Of the Rs 2.5 billion spent on designing the Indica the major share went in buying design tools & training engineers in new skill. VENDOR DEVELOPMENTNext Step was to identify the vendor , most of the parts that went into making Telco were sourced locally except for some sheet metal parts, cylindrical gaskets, and belts which amounted 2% of the components value, The Indica was totally indigenous.
Telco employed a simple yardstick for selecting suppliers ; the ability to supply components at negotiated cost with good quality and quantity.
In the first stage of selection , an initial assessment team from Telco evaluated the suppliers, this was followed by self- evaluation of the suppliers, based on format provided by Telco.
Then there was a quality system survey, carried out by a Telco quality audit team & it applied a 13 steps Quality improvement programs, covering suppliers self-evaluation, through design evaluation & audit of supplier quality .
Another key to Telcos successful vendor-base was a modern system of process management.
Telcos target-costing was broken up into vendor-wise cost target & the suppliers to carry out their own value-engineering exercises to lower cost & improve quality
Telco even involved its vendors in the design-process to give suppliers more lead time to innovate, and for better supply chain coordination
T.K. Balaji, CEO, Lucas-TVS, which supplied electrical components and fuel-injection systems for the Indica, By making vendors its partner early, TELCO ensured both quality and price-conformity. Late involvement would have yielded different results.
M.S. Kumar, Director & CEO, Rane TRW Steering Systems (Rane), which supplied the steering systems for the Indica, added, TELCO has been extremely supportive, making available its entire R&D resources to our engineers. It is one of the best experiences we have had in product-development.SUPPLY CHAINSupply chain management is a process to provide the product or service from suppliers to manufactures to wholesaler to retailer to customers. The ultimate goal of any supply chain management system is to reduce inventory cost & provide their goals & service very effective way.
Telco Chosen the supply chain management because they want to provide their product & service immediately to their client & customer, supply chain also reduced the cost of logistics.
Tata make joint venture with manufacturers & the transporters for improving their supply chain, Transportation cost alone accounted to 45% of the total logistics cost for company.
They wanted to create a positive image in the mind of customer through their proper supply chain & supply chain also created the reliability of the product in the customer mind.
All high value components were delivered daily & in case of near by suppliers , twice a day & vendors who were located far away from pune set up local warehouse near the plant.
The material was centred to the factory where it was checked whether the material was scheduled to arrive or not, if the material was not scheduled the truck was not allowed to enter the factory premises .
Once the material was unloaded & unpacked it moved to the transit area & from there they went into the Super Market
The Super Market was close to assembly line , in super market material were arranged in such a way that workers could easily access all the material without wasting much time and effort.
The benefit of this just in time inventory system was that the inventories were low & so interest cost was also low ,again the manpower required to handle the inventories was also low.OBJECTIVE OF MINIMIZING THE COSTThe supply infrastructure would become economical as the volume of the business that Telco offered its vendor increased.
The volume of business will increase with a large number of cars.
The learning that it was extracting from Indica supply chain would also be available to the company as it moves 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.STP ANALYSIS OF TATA INDICASTP Marketing is 3 steps approach to build a targeted marketing plan . The S stands for Segmentation , T for targeting & P for positioning. Going through this process allows a business owner to formulate a marketing strategy that ties company, brand & product benefit to specific customer market segment.
SEGMENTATION The Segmentation step is the brainstorming activity. You list out all the potential market segments you could target in marketing campaign TATA MOTORS HAS SEGMENTED ITS CUSTOMER IN FOLLOWING WAYS
DEMOGRAPHIC VARIABLEAGE - Anybody of age b/w 18 to 50 yearsINCOME - Anybody with income of 4 lakhs p.aOCCUPATION - Employed as professional, manager & those who want to buy their 1st car.SOCIAL CLASS - Middle Class, Upper Middle, Lower Upper & Upper Upper
PSYCHOGRAPHIC PERSONALITY Dreamers those who want to achieve big , Ambitious , Price conscious .BEHVIOURAL VARIABLEBENEFITS Quality, StyleUSER STATUS Potential User & First time userREADINESS STAGE Those who are aware , informed , interested & intending to buy.
The Research team of TATA Indica spend time in :
Understanding the needs & preferences of the customerGrouping customer based on their need & preferences Targeting the segment that the company can best meet the needs & preferencesBranding the commodity
TARGETING When you have multiple, distinct market segments, you typically need to customize marketing campaign that appeals to each. As you go through STP process you select which segment to target with your upcoming campaign . Tata motors has full market coverage in vehicle m