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The Secret of the World’s Cheapest Car Windows wind down by hand 624cc, 33bhp, 2 cylinder engine

in boot, giving max space and

speed of 70kmph(43mph) with
a single wind screen wiper

How did a company best known for its

lumbering trucks (and much later, its sub-
compact car, Indica) end up designing a "cute- Fuel efficiency : 60mpg
0 – 60mph in 61secs
as-a-bug" car that its rivals said could not be
built to the target price of Rs 1 lakh? What sort
Advantages/Benefits of JIT:
• Continuous improvement in of out-of-the-box thinking did the engineering
quality Manual Steering, no air bag Plastic and adhesive
• Cost is reduced
team have to do? What were the rules of car
replaces welding
• Elimination of waste making that they had to rewrite?
• Manufacturing time is cut

Design and
• Better productivity
• Better supplier relationships
• Cost efficient production

Problems with
No other car launch in the
Countering the problems Implementation JIT.
Vendor Problems - The
The company got suppliers
involved in the Nano project at
vendors had to invest in new
processes and methods to re-
history of Indian auto
a very early stage and this was
one major reason by which
costs were reduced.
engineer their products to
specifications that were rigidly industry has received as
guided by cost, performance
Establishment of a vendor park
ensured that parts between
and regulatory compliances. much global press as the
Just In Time (JIT) is a production and Very low profitability margins -
vendors and the assembly line
moved smoothly and just in inventory control system in which most vendors stated that they
would only be able to break
Tata cut costs by minimising
components, particularly steel,
"people's car", the Tata The importance of balancing
and taking advantage of India’s design changes with their
materials are purchased and units even in the 3rd or 4th year of
production. low production costs. Because Nano. A report from respective cost implications
are produced only as needed to of its size, it uses less sheet cannot be overstated. Every
meet actual customer demand. The metal, has a smaller and lighter
engine than other cars, smaller
Business Today design, therefore, had to cater
to three key requirements-cost,
basic premise of JIT is that an tube-less tyres and a no-frills regulatory requirements and
interior. The company has acceptable performance
organisation can benefit from applied for 34 patents to cover standards.
synchronising the scheduling, sales its innovations. “We shrunk it, The NANO is not over-
and production processes. The made the engine smaller and engineered like, say, German
used fewer materials but we cars are, this is a great
central idea is to finish production of haven’t taken any shortcuts in example of frugal cost-effective
a product or group of products “just term of safety or emissions,”
Mr Tata said.
and relevant engineering.
in time” to meet currently emerging
Countering the problems
• Purchasing in bulk to provide
liquidity to small suppliers. Suppliers traditionally have
• TATA choose suppliers with strong been clustered in India in auto
process capabilities and centres and getting them to
encouraged them to give move next to the proposed
suggestions and vital inputs on TATA NANO plant in Gujarat
ways and means to improve the was a big challenge especially
design, processes and even since most small scale
purchasing. This resulted in most suppliers small scale suppliers
suppliers having a sense of did not possess the financial
personal belonging and involvement capabilities.
towards building the “people’s car”.
They felt as though they would
become in due course a part of

• Free Trade Isn’t really free- Most free
trade zones in the world are subject to
certain taxes and duties though they might
be substantially lower there still is a
• Increase in Intellectual capital -Constant
interaction with supplier’s leads to building
up of a effective ever growing knowledge
• Better relationship with suppliers -
Suppliers tend to trust the producers more
and vice versa, as trust builds so does
efficiency and performance. This also
leads to better co-ordination as difference
are minimized.
• Quicker product innovation and transfer of
Knowledge - As a result of closeness
between suppliers and manufacturers
constant upgrades and innovations are
easier and faster.

Domestic Sourcing
Countering Problems
Only products that could be Problems with domestic sourcing
effectively managed and produced
by domestic suppliers were given to
is the activity of contracting Most suppliers could not provide the
level of expertise that
them the rest were given to
international giants such as Bosch,
Saint Gobain etc.
for goods or services that international/global suppliers can.
Most vendors had to invest heavily in
The Nano is constructed of
components that can be built and
are delivered or upgrading their technology and
shipped separately to be assembled
in a variety of locations. In effect, the
manufactured within the There was a danger of confidential,
technical and engineering
Nano is being sold in kits that are
distributed, assembled, and serviced buyers home country. It is information being leaked out as a
result of closeness to the suppliers.
by local entrepreneurs.
important to note here that
almost 97% of the NANO is
sourced domestically.

Countering Problems
• TATA Motors worked hand in hand
with its suppliers helping them
develop the systems and processes
necessary to support the NANO
• TATA used a comprehensive mix of
international as well as domestic
suppliers to offset the problems
caused by either one. The products
that needed to be sourced were
divided into two parts.

Saad Ibrahim – 000574362 Anjan Kumar Kalarasaiah – 000573013 Mohammed Ali Shareef – 000576601 Lucas Cadavid Velasquez – 000583122 Ali Raza Mitru - 000588903