PROJECT REPORT ON

SUPPLY CHAIN MANAGEMENT IN TATA NANO

SUBMITTED TO THE
BIRLA INSTITUTE OF TECHNOLOGY, RANCHI
FOR THE PARTIAL FULFILLMENT OF DEGREE OF
MASTER OF BUSINESS ADMINISTRATION

KURIYACHAN VITHAYATHIL
MBA/8021/09

Under the Supervision of

MR. SOOFI ANWAR
DEPARTMENT OF MANAGEMENT

BIRLA INSTITUTE OF TECHNOLOGY

INTERNATIONAL CENTER
RAS AL KHAIMAH
UNITED ARAB EMIRATES
 SUPPLY CHAIN MANAGEMENT IN TATA NANO
TOPIC PAGE NO
1 Executive Summary
2 Company Profile
2.1 Introduction
2.2 Areas of business 
2.3 SWOT Analysis
2.4 Product Development and Nano
2.5 Idea Generation and Nano
2.6 Vision, Mission, Values
3 Cost Reduction
3.1 Definition
3.2 Advantages of Cost Reduction
3.3 Dangers of Cost Reduction
3.4 Scope of cost reduction
4 SUPPLY CHAIN MANAGEMENT
IN TATA NANO
4.1 Objective of the Study
4.2 Limitations of the Study
4.3 Scope of the Study
4.4 TATA NANO- The complete Supply
chain and Drivers
4.5 Challenges to Supply chain outsourcing
in India

5 Conclusions
References

SUPPLY CHAIN MANAGEMENT IN TATA NANO

 CHAPTER 1
EXECUTIVE SUMMARY

Tata Nano is the cheapest car in the world. It is sold in home country
India around Rs 1-lakh i.e. approximately USD 2000. It is manufactured by
Tata Motor Limited, the largest automobile company in India. It’s Chairman,
Mr Ratan Tata envisions that Tata Nano to become a “People’s car” which is
affordable by almost everybody. Tata Nano was first launched in India on 1st
April 2009 and expected to be in Indian market by July 2009. Since launching,
it has created a huge buzz all over India. Within the first two days of lunching, it
has received 5500 booking. The figures keep increasing every day since the
launching.

The car was the result of a five year research and development project carried
out by Tata Nano development team. While developing the car, Tata Motors
and its SUPPLY CHAIN MEMBER constantly made efforts to reduce the costs
while ensuring quality of each and every component including engine, steering,
wheels, tires, windshield washing system, gear shifter etc.

CHAPTER 2
 COMPANY PROFILE
2. INRODUCTION
The Tata Group (www.tata.com) comprises 96 operating companies in seven
business sectors: information systems and communications; engineering;
materials; services; energy; consumer products; and chemicals. The Group was
founded by Jamsetji Tata in the mid 19th century, a period when India had just
set out on the road to gaining independence from British rule. Consequently,
Jamsetji Tata and those who followed him aligned business opportunities with
the objective of nation building. This approach remains enshrined in the Group's
ethos to this day.

The Tata Group is one of India's largest and most respected business
conglomerates, with revenues in 2005-06 of $21.9 billion (Rs 967,229 million),
the equivalent of about 2.8 per cent of the country's GDP, and a market
capitalization of $46.9 billion. Tata companies together employ some 202,712
people.

The Group's 28 publicly listed enterprises—among them stand out names such
as Tata Steel, Tata Consultancy Services, Tata Motors and Tata Tea—have a
combined market capitalization that is the highest among Indian business
houses in the private sector, and a shareholder base of over  2 million. The Tata
Group has operations in more than 54 countries across six continents, and its
companies export products and services to 120 nations.

The Tata family of companies shares a set of five core values: integrity,
understanding, excellence, unity, and responsibility. These values, which have
been part of the Group's beliefs and convictions from its earliest days, continue
to guide and drive the business decisions of Tata companies. The Group and its
enterprises have been steadfast and distinctive in their adherence to business
ethics and their commitment to corporate social responsibility. This is a legacy
that has earned the Group the trust of many millions of stakeholders in a
measure few business houses anywhere in the world can match.

Every Tata company or enterprise operates independently. Each of these

companies has its own board of directors and shareholders, to whom it is
answerable. There are 27 publicly listed Tata enterprises and they have
acombined market capitalisation of some $60 billion, and a shareholder base of
3.5 million. The major Tata companies are Tata Steel, Tata Motors, Tata
Consultancy Services (TCS), Tata Power, Tata Chemicals, Tata Tea, Indian
Hotels and Tata Communications.

Tata Steel became the sixth largest steel maker in the world after it
acquired Corus. Tata Motors is among the top five commercial vehicle
manufacturers in the world and has recently acquired Jaguar and Land Rover.
TCS is a leading global software company, with delivery centres in the US, UK,
Hungary, Brazil, Uruguay and China, besides India.  Tata Tea is the second
largest branded tea company in the world, through its UK-based subsidiary
Tetley. Tata Chemicals is the world’s second largest manufacturer of soda ash
and Tata Communications is one of the world’s largest wholesale voice carriers.

In tandem with the increasing international foot print of Tata companies,

the Tata brand is also gaining international recognition. Brand Finance, a UK-
based consultancy firm, recently valued the Tata brand at$9.92 billion and
ranked it 51st among the world's Top 100 brands. Business week magazine
ranked Tata 13th among the '25 Most Innovative Companies' list and the
Reputation Institute, USA, recently rated it 11th on its list of world's most
reputable companies.

Founded by Jamsetji Tata in 1868, Tata’s early years were inspired by the
spirit of nationalism. It pioneered several industries of national importance in
India: steel, power, hospitality and airlines. In more recent times, its pioneering
spirit has been showcased by companies such as TCS, India’s first software
company, and Tata Motors, which made India’s first indigenously developed
car, the Indica, in 1998 and recently unveiled the world’s lowest-cost car, the
Tata Nano.

Tata companies have always believed in returning wealth to the society

they serve. Two-thirds of the equity of Tata Sons, the Tata promoter company,
is held by philanthropic trusts that have created national institutions for science
and technology, medical research, social studies and the performing arts. The
trusts also provide aid and assistance to non-government organizations working
in the areas of education, healthcare and livelihoods. Tata companies also
extend social welfare activities around their industrial units. The combined
development-related expenditure of the trusts and the companies amounts to
around 4per cent of the net profits of all the Tata companies taken together.

Going forward, Tata is focusing on new technologies and innovation to drive its
business in India and internationally. The Nano car is one example, as is the Eka
supercomputer (developed by another Tata company), which in2008 was ranked
the world’s fourth fastest. Anchored in India and wedded to traditional values
and strong ethics, Tata companies are building multinational businesses that
will achieve growth through excellence and innovation, while balancing the
interests of shareholders, employees and civil society.

Introduction to Tata Motors:

 Tata Motors was established in 1945, when the company began making
trains.
 It has its manufacturing base in Jamshedpur, Lucknow, and Pune and
soon one more plant is going too established at Singur, West Bengal.
 Product Manufactured - Passenger Cars and commercial vehicle.
 Installed Capacity - 350,000-400,000 vehicles a year.
 Investment - Rs 2,500 crore (Rs 25 billion).
 Turnover - $21.9 billion (Rs 967,229 million).
 Employees - 2,46,000/22001
 Tata Motors had created the wealth Rs. 320 billion during 2001-2006 and
stood among top10 wealth creators in India.

2.2 Areas of business 

Tata Motors makes passenger cars, multi-utility vehicles and light, medium and
heavy commercial vehicles-

 Passenger cars: The company launched the compact Tata Indica in 1998,
the sedan Indigo in 2002 and the station wagon Indigo Marina in 2004.
Tata Motors also distributes Fiat’s cars in India.
 Utility vehicles: The Tata Sumo was launched in 1994 and the Tata Safari
in 1998.
 Commercial vehicles: The commercial vehicle range extends from the
light two-tonne truck to heavy dumpers and multi-axled vehicles in the
above 40-tonne segment.
  Passenger buses: The company also manufactures and sells passenger
buses, 12-seaters to 60-seaters, in the light, medium and heavy segments.

Joint-ventures, subsidiaries, associates:- 

Tata Motors has joint ventures with Marcopolo, the Brazil-based maker of bus
and coach bodies, and with Fiat Auto (to build a commercial vehicle at Fiat's
facilities in Córdoba, Argentina).

 Tata Daewoo Commercial Vehicle Company, a 100-per cent subsidiary

of Tata Motors in the business of heavy commercial vehicles
(www.daewootruck.co.kr/).
 Tata Motors European Technical Centre is a UK-based, 100-per cent
subsidiary engaged in design engineering and development of products.
 Telco Construction Equipment Company makes construction equipment
and allied services. Tata Motors has a 60 per cent holding; the rest is held
by Hitachi Construction Machinery Company, Japan (www.telcon.co.in/).
 Tata Technologies provides specialised engineering and design services,
product lifecycle management and product-centric information
technology services (www.tatatechnologies.com/).
 Tata Motors (Thailand) is a joint venture between Tata Motors (70 per
cent) and Thonburi Automotive Assembly Plant Co (30 per cent) to
manufacture and market the company’s pickup vehicles in Thailand
(www.tatamotors.co.th/).
 Tata Cummins manufactures high horsepower engines used in the
company’s range of commercial vehicles (www.tatacummins.com/).
 HV Transmissions and HV Axles are 100-per cent subsidiaries that make
gearboxes and axles for heavy and medium commercial vehicles.
 TAL Manufacturing Solutions is a 100-per cent subsidiary that provides
factory automation solutions and designs and manufactures a wide range
of machine tools (www.tal.co.in/).
 Hispano Carrocera is a Spanish bus manufacturing company in which
Tata Motors has a 21-per cent stake (www.hispano-net.com/).
 Concorde Motors is a 100 per cent subsidiary retailing Tata Motors’
range of passenger vehicles (www.concordemotors.com/).
 Tata Motors Finance is a 100 per cent subsidiary in the business of
financing customers and channel partners of Tata Motors
(www.tatamotorfinance.com/).
 Location

Tata Motors' plants are located at Jamshedpur (eastern India), Pune and
Sanand (west), and Lucknow and Pantnagar (north). Tata Motors and Fiat
have set up a common manufacturing facility at Ranjangaon, near Pune.

Tata Nano - ONE LAKH CAR PROJECT “People’s Car”

“A promise is a promise,” said Rattan Tata,Chairman, Tata Motors, on 10th
January, 2008, when the Nano was first displayed at the Auto Show in
Delhi.The Nano project didn’t grab the attention of only Indians; the entire
world had their eyes glued to the world’s cheapest car.A truly People’s Car, this
time is from India.Though the dealer price is Rs. 1 lakh, the price on road,when
it will be launched, will reach around Rs. 1,25,00but it will be still more
affordable and will be more ecofriendly than most other cars giving a mileage
of around23km/liters. The price of the car is such that a lot of richand HNIs, if
interested, can buy the car just by a single swipe of their credit cards.Providing
a car worth rupees one lakh car was the dream of the chairman of Tata motors
Mr. Rattan Tata. And with high qualified IT skills people he has shown the
Indian talents to whole the world.

 Idea conceived by - RattanTata

 Cost of development - 1700 crores
 Manufacturing cost (excluding dealer margin and taxes) - Rs 65,000per
unit
 Development of Design - India
 Time for designing the car - 4 years
 Team - A team of 150 engineers, everyone below age 28
 Biggest hurdle - To make a car cheap car without
Compromising design

Details of Nano Specs:

Engine: 624 cc / 33 bhp
4 door, 5 seater (and yes 4 Wheeled too)
Rear Engine
Weight: 600 kgs
Mileage - 22-23 km/liter
Variants:
Standard
Deluxe (with AC)

Future:
Diesel Variant
Exports outside India or assembly plants outside

2.3 SWOT Analysis

STRENGTH
 Brand name TATA
 Cost price low
 Fuel efficient
 Safe

OPPORTUNITIES
 Large market for selling
 Awareness in the market
 First car in low range
 Can hit in global market

WEAKNESS
 Low power
 Not a status symbol
 Delay in manufacturing
 Limited features

THREATS
 Company rival
 Not sure to hit in rural and semi-urban areas

2.4 New Product Development and Nano

As seen before, A product can be considered new under the following
situations:-
 New-to-the-world products
 New product lines
  Additions to existing product lines
 Improvements and revisions of existing products
 Repositioning
 Cost reductions

As far as Nano is concerned, it falls into new to the world products in the
context that it has made a history for the cheapest car ever made without
compromising on quality. I.e. best way value analysis.

It can also be considered as new product in the since of cost reduction as it’s the
first time in the history that such a cheap car is produced. The story of the Nano
is not confined to its impact on the auto industry. It's a tale that illuminates the
India of today—an eager, ambitious nation with a combination of engineering
talent, a desire for low costs and value, and the hunger of young managers
looking to break from a hidebound corporate environment. Indeed, the team that
worked on the Nano—on average aged between 25 and 30—has helped to
flatten Tata Motors' stodgy, multilayered management structure, which has
resulted in an unexpected side-benefit called "organizational innovation".

2.5 Idea Generation and Nano

A dream is born –Says, ”I observed families riding on two wheelers -- the father
driving the scooter, his young kid standing in front of him, his wife seated
behind him holding a little baby. Add to that the slippery roads & Night time
too. It is downright dangerous. It led me to wonder whether one could conceive
of a safe, affordable, all weather form of transport for such a family.”

So when Tata Motors needed someone to take charge of the company's most
ambitious plan yet to build the world's cheapest car ever Ravi Kant, who by
then had become the company's managing director, again turned to Wagh.
Wagh remembers what he learned marketing the little truck. "People want to
move from two-wheelers to four-wheelers," he says. "Today they can't afford
it."
More and more can, but Indian car buyers today represent a tiny slice of a
potentially giant market India has just seven cars per 1,000 people. India's auto
industry has grown an average of 12% for the past decade, but just 1.3 million
passenger vehicles were sold in India in the fiscal year ending March 2006. That
 means a billion Indians buy about the same number of cars in a year as 300
million Americans buy in a month.
If four wheels cost as little as two wheels, that could change fast. About 7
million scooters and motorcycles were sold in India last year, typically for
prices between 30,000 rupees and 70,000 rupees, about $675 to $1,600. Tata is
targeting a price of 100,000 rupees one lakh, in Indian terms of measurement or
about $2,500 at current exchange rates, for its small car. That sounds impossibly
cheap in the West but remains three times higher than India's annual per capita
income. The average pay for factory workers at Tata Motors is just $5,500 a
year.

Idea screening

Trying to build a car cheap enough for motorcycle buyers seems to

make sense now but seemed crazy several years ago when Rattan Tata,
longtime chairman of Tata Motors and scion of the nation's giant Tata Group
conglomerate, first mentioned his dream of building a one-lakh car in 2003.
"They are still saying it can't be done," he says, insisting that it can and will.
"Everybody is talking of small cars as $5,000 or $7,000. After we get done with
it, there will hopefully be a new definition of low-cost."

2.6 VISION, MISSION, VALUES

VISION
The vision statement of Tata Motors Limited, India's largest automobile
company, is to be "best in the manner in which we operate, best in the products
we deliver, and best in our value system and ethics."
MISSION
"Tata Motors is committed in letter and spirit to Corporate Social
Responsibility". 

VALUES
The Tata name is a unique asset representing leadership with trust. Leveraging
this asset to enhance group synergy and becoming globally competitive is our
chosen route to sustained growth and long-term success.

 Integrity: We will conduct our business fairly, with honesty and transparency.

Everything we do must stand the test of public scrutiny.
 Understanding: We will be caring, show respect, compassion and humanity
for our colleagues and customers around the world, and always work for the
benefit of the communities we serve.
 Excellence: We will constantly strive to achieve the highest possible
standards in our day-to-day work and in the quality of the goods and services
we provide.
 Unity: We will work cohesively with our colleagues across the group and
with our customers and partners around the world, building strong
relationships based on tolerance, understanding and mutual cooperation.
 Responsibility: We will continue to be responsible, sensitive to the countries,
communities and environments in which we work, always ensuring that what
comes from the people goes back to the people many times over.
 CHAPTER 3
COST REDUCTION
3.1 Definition:-

Cost Reduction may be defined as the real and permanent reduction on the cost
of goods manufactured/sold or the services rendered without impairing their
quality and suitability for the intended use.

3.2 Advantages of Cost Reduction

 Increases profit – dividends to shareholders.
 Money for labour welfare schemes.
 Goods will be available at a cheaper rate.
 Meets competition
 Revenue to government by taxation. Export price may be lowered.
 Cost reduction is obtained by increasing productivity.
 Cost reduction lays emphasis on continuous search for improvement
which will improve the image of the firm for long – term benefits.

3.3 Dangers of Cost Reduction

 Quality may be sacrificed at the cost of reduction in cost.
 Cost reduction programme may not be liked by the employees.
 Reduction in cost may not be real and permanent.
 Conflict between organisational objective and individual objective.

3.4 Scope of cost reduction

Cost reduction is attainable in almost all areas of business activities. There is
perhaps no situation which cannot be improved. It covers a wide range like new
layout, product design, production methods, materials and machines in factories
as well as in offices, innovation in marketing etc. it may also extend to specified
activities like purchasing, handling, packaging, shipping, warehousing,
marketing, use of administrative facilities and even the utilization of financial
resources.
 CHAPTER 4
SUPPLY CHAIN MANAGEMENT IN TATA NANO

4.1 OBJECTIVES OF THE STUDY

 In-depth study about the SUPPLY CHAIN in TATA NANO.
 Understand the supply chain drivers of TATA NANO
 Find out the different partners of supply chain
 Raw material supplied different members

4.2 SCOPE OF THE STUDY

Gathering information and theoretical knowledge is a part of study. As the
study has got wide relevance is formulating valid information about the
organization, it helps in getting a critical look into the supply chain
activities of the organization and the ways in which they have been benefited
through this function.

4.3 LIMITATIONS OF THE STUDY

 The period of the study was limited to 3 weeks.
 Data source is only from internet.
 Totally based on secondary data.
 Lack of on field experience.
 Accuracy will be low (data form internet).

4.4 TATA NANO- THE COMPLETE SUPPLY CHAIN

DRIVERS OF SUPPLY CHAIN

Facility Location
Transportation
Sourcing
Inventory
Information
Pricing

 FACILITY LOCATION

Infrastructure and Multi – modal connectivity

MICT
Connectivity

Supplier proximity and Rajkot

Land for supplier parks
convenience
GM
Business Environment Industrial and Labor environ.
Ahmadabad

Government Regulation Gujarat Industrial Development Corporation (GIDC)

Land
and Support
Gujarat Agriculture University (GAU)
Land

Delhi-Mumbai Industrial Corridor (DMIC)

Future Prospects Special Investment Region (SIR)

Gujarat is a better choice for logistical reasons and a satisfactory industrial and
labour environment in the State. The State, like West Bengal, is well-connected
by air, sea and land routes. Besides, the Delhi-Mumbai Industrial Corridor
(DMIC) passing two-thirds through Gujarat and the proposed Special
Investment Region (SIR) would soon make it even more attractive.

The location of the nano plant was close to the Charodi railway station, it was
just 200 km from Rajkot, where the best engineering workforce can be found.

Ports were just 300-400 km away from both Pipavav and Mundra (Mundra had
the edge given its container depots for vehicles - Maruti uses them - and a huge
ro-ro (or roll on, roll off) terminal for loading and unloading vehicles).

Then there was a 6-lane highway just 1 km away from the land earmarked for
Tata Motors. If the Tatas gave the go-ahead, the State could acquire this
kilometer of land, too. Last week, Tatas gave their go-ahead. In less than 24
hours, the 1,000 acres owned by the state were transferred to the Tatas at market
rate.

 TRANSPORTATION:-

Truck optimization softwares

Increased modularity rkLead Time Map
Local 3PL leveraged netwo
n
Open ortatio
Distribution transp
al
Shorte
Model Optim
r Lead
Assembly
Distributed
Most of the suppliers are located across 97% local vendors
India.
JIT and JIS requirements
TImes
Almost half located in Vendor Park

This is called “open distribution" innovation because it mobilizes large numbers

of third parties to reach remote rural consumers, tailor the products and services
to more effectively serve their needs, and add value to the core product or
service through ancillary services. Three innovations in products and processes
come together to support "open distribution:"
• increased modularity (both in products and processes)
• aggressive leveraging of existing third-party, often noncommercial,
institutions in rural areas to more effectively reach target customers

• creative use of information technology, carefully integrated with social

institutions, to encourage use and deliver even greater value.

Modular designs combined with creative leverage of local third-party

institutions help participants to get better faster. Companies such as Tata and
Cummins are going far beyond "customer co-creation" in the narrow sense of
soliciting isolated ideas from customers. Instead, they are building long-term
personal relationships with customers, enriched by the specialized capabilities
of broad networks of third parties that generate much deeper insight into
customer needs and afford opportunities to tailor value.

 SOURCING:-

Suppliers divided into Proprietary and

Non-proprietary.

97% parts sourced from local suppliers.

Innovation in mfg. processes done

locally to avoid extra costs

Long term volume contracts rather

than annual contracts

75% single source components

TATA divided the components into two parts: proprietary designs and tata
motor designs. For proprietary designs TATA motors went with established
suppliers such as BOSCH that supplies the engine management system and
significantly contributed to diesel engine. For components and systems designed
in-house, Tata Motors chose suppliers with strong process capabilities who
could give valuable suggestions and improve on the designs. Nearly everything
has been sourced locally and the Nano will have 97% local content from day
one. Tata’s suppliers were an integral part of not only the design and
development process, but also purchasing.

SUPPLIERS LIST:-
The key decision was to bring in suppliers. Tata brought following suppliers for
achieving this.
1. SUPPLIERS TO TATA NANO
 Bosch
 Freudenburg
 Caparo
 GKN
 Continental
 Itw Deltar
 Delphi
 INA
 Denso
 Johnson Controls
 Fag
 Mahle
 Ficosa
 Saint gobain
 TRW
 Ceekay
 Vibracoustic
 Visteon
 Z.f (friedrichshafen) A.G
 Behr
 SUPPLIED MATERIALS BY SUPPLIERS:-
 BOSCH: A German based automotive company.
It supplies Gasoline injection system, starter, alternator, brake system.

 Caparo Vehicle Technologies ( CVT ) : A Europe based company.

it supplies Inner structural panels.

 Continental motors: it is a Europe based company.

It supplies fuel level sensor, gasoline fuel supply system.

 Delphi : an automotive parts company headquartered in Troy, Michigan,

USA.
It supplies instrument clusters.

 Denso: a global automotive components manufacturer headquartered in the

city of Kariya, Japan.
It supplies Windshield wiper system.

 FAG: A German based company manufacturing ball bearings.

It supplies rear wheel bearings.

 Ficosa: It supplies Rear-view mirrors, interior mirrors, manual and CVT

shifters, washer system .

 Freudenberg: a town in the, in North Rhine-Westphalia, Germany.

It supplies Engine sealing.

 BEHR GmbH & Co : German corporation

It supplies engine cooling systems and HVAC for the luxury version.

 ZF Friedrichshafen: a town on the northern side of Lake Constance in

southern Germany, leading worldwide supplier of driveline and chassis
technology.
 It supplies Chassis components, including tie rods

 Vistoen: a U.S based company.

It supplies air induction system.

 Vibracoustic: it supplies Engine mounts.

 TRW: an American corporation.

It supplies break systems.

 Saint-Gobain : a French multinational corporation, headquartered on the

outskirts of Paris . Originally a mirror manufacturer, it now also produces a
variety of construction and high-performance materials.
It supplies glazing.

 Mahle GmbH: a german based company headquartered in Stuttgart.

it supplies Camshafts, spin-on oil filters, fuel filters and air cleaners .

 Illinois Tool Works (Itw): a U.S based company.

It supplies Outside and inside door handles .

 Johnson Controls: a U.S based company.

It supplies seating systems.
 INVENTORY:-

Less number of suppliers

Inventory Leveraging the proximity of suppliers
Just in time

Less number of total components

design
components
Multi-purpose Innovative but not too much complexity in

Early Capture of design issues

Integration Accurate data on forecast
Seamless
Above three strategies used for inventory, helped in, reducing inventory reduces
the working capital cost , reduces warehousing costs and obsolescence costs .
To reduce inventory, demand fluctuation will have to be reduced, reliability of
inventory replenishment will have to increased, Inventory Record Accuracy will
have to be above ~95% and supply chain length will have to be reduced.

 IT STARTEGY:-
• Tata Motors investment in IT for efficient supply chain
– Implementation of SAP 3.1 and 4.6c (Asia’s largest
implementation)
– SAP SRM (Supplier Relationship Management) for end to end
supply chain integration)
– SAP WM (Warehouse Management) combined with barcodes to
automate warehouse operations)
– Knowledge based Engineering (KBE) in design
• SRM platform used for sustainable savings and value generation
• Benefits
– Reduction in procurement cycle time
– Improve process by e-procurement
– Real time supplier integration with business
– Knowledge sharing
• SAP WM with mobile data entry is combined with RF Technology
(barcodes) to automate warehouse operations
• Benefits
– Improved throughput at warehouses by RF enabled processes
– Capability enhancement to handle more parts and team size
– Real time inventory tracking
• Knowledge based engineering in CAD/CAM with help of KNEXT – in
house software
 • Benefits of KBE
• 30% reduction in cycle time
• Designer’s knowledge and company’s best practices retained

 PRICING:-

Reducing Inventory

Eliminating waiting time and delays

Increasing utilization of warehouses & trucks

Optimizing location of warehouses and plants

Optimizing transportation networks

COST OF THE SUPPLY CHAIN:-

• Conventional Strategy
Calculate Production costs + Margin = Price
• Tata Nano’s strategy
Set price => Work backwards & Challenge Suppliers to lower costs

TARGET PRICING / PENETRATION PRICING/ LOW PRICING STRATEGY

These are the terms that designed the world’s cheapest car. It was important to
understand that the car was to be designed within the specified range of 1 Lakh
Rupees in the Indian Market.
The ‘Target Pricing’ attempted to understand what features were required in
the car.
The pricing strategy followed by the Tata Motors was “Penetration Pricing”.
This is the strategy where an organization sets the price of the product to a new
low level so that consumers switch to the product and the product penetrates the
market rapidly. The promise of 1 Lakh rupees car stated by the Tata’s was the
first step of initiation of this strategy.

4.5 CHALLENGES TO SUPPLU CHAIN OUTSOURCING IN INDIA

Following are internal challenges to supply chain outsourcing in India

 Strategic
– Management buy-in
– Cultural fit
– Scope of outsourcing
 Organizational
– Restructuring organization
– Re-deploying existing resources
– Anticipating quantum and timing of change
– Managing change
 Operational
– Reengineering existing processes in view of outsourcing strategy
– Framing KPIs/ SLAs both for internal resources and for external agencies
– Implementing processes across the organization and initiating MIS
generation
– Measuring performance and benefits of outsourcing
Following are challenges in vendor selection
 Selection Challenges
– Ability to understand and assess customer’s requirement
– Project management and roll-out capabilities
– Framing appropriate performance measurement system
– Information technology integration and interface
– IT and communication infrastructure up gradation
– Managing relationship with customers/ vendors/ authorities/ employees
 – Developing short-term and long-term infrastructure
– Developing strong intra-country dependable distribution service
Following are external challenges
 Optimizing within infrastructure constraints
• Poor road conditions
• Lack of dependable communication infrastructures
• Real estate hurdles
 Managing multiple government authorities
• Sales tax authority
• Octroi Authorities/ Entry Tax Authorities
 CHAPTER - 5
CONCLUSION

The great wonder car by Tata’s has stunned the entire world. Critics who often
said that it was not possible to make a car at a price below $3000 were taken to
a back sit when Ratan Tata the chairman of Tata Motors unveiled this car in
New Delhi at a price of $2500. Since then it has been in lime light and has been
making news in the auto sector throughout the world. 

REFERENCE
 TataNano.com
 tatamotors.com
 www.tatatechnologies.com
 www.tatamotors.co.th
 www.tatacummins.com
 www.tatamotorfinance.com
 Scm project by KANIKA LUTHRA
 Scm tata nano ppt by
 Neha Baid
 Anand Pillay
 Arun Sharma
 Naveen Kumar
 Nidheesh Hirwani