The Challenges and Lessons of Operations Management: A

Case Study of Tata Motors' Nano

Introduction

India is set to become the most populated country in the world, and as such, there is an increased
need for affordable and accessible transportation. Despite India's rapid urbanization, only 15 out
of every thousand Indians own a family car, which makes it a dream for most. However, Tata
Motors plans to change that with the release of the world's cheapest car, the Nano.

The launch of the Tata Nano in 2009 was a significant achievement for Ratan Tata, Chairman of
Tata Group, and the Indian automobile industry. The creation of a low-cost, safe and all-weather
car that could meet the needs of the Indian middle class was a major operational challenge that
the company had to overcome. In this essay, we will discuss the major operational issues
addressed in the video, the challenges faced by the organization and how they handled them, and
the lessons that can be learned from this experience.

Major OM Issues Addressed in the video

Design and Development

The development of a product requires a lot of research, planning, and careful execution to meet
customer needs and expectations. The development of Tata Nano faced significant design and
development challenges in terms of creating an affordable car that meets safety and
environmental standards. The process of developing the car took years, and the company had to
come up with a unique strategy to develop the car at a lower cost.

 Cost management: Cost management is critical in any business, and in the Tata Nano's
case, it was even more crucial as the company aimed to produce the world's cheapest car.
The company had to come up with innovative ways to keep the cost of manufacturing the
car low without compromising on quality and safety.
 Safety: Creating a low-cost car was not the only challenge for Tata. The company had to
ensure that the car was safe to drive and met the regulatory requirements. The company
 had to invest in research and development to design a car that was safe to drive and could
meet the regulatory standards.
 Durability: The Nano had to be designed and developed to withstand Indian road
conditions, which can be challenging due to poor road infrastructure and extreme weather
conditions.

Production

Another major OM issue that was addressed in the video was production and assembly. The team
had to create an assembly line that was efficient, cost-effective, and scalable. They also had to
ensure that the car could be produced at a rate that would meet demand. To address these
challenges, the team opted to use modular construction techniques and to keep the number of
parts to a minimum. They also made use of automation and standardization to increase efficiency
and reduce costs. In the case of the Nano, Tata Motors faced the following challenges:

 Capacity: Tata Motors had to build a new production facility to manufacture the Nano,
which required a significant investment in time and resources.

 Supply chain: Supply chain management is crucial in any manufacturing process.

Managing the flow of materials and information from suppliers to manufacturers and
finally to customers is critical in ensuring efficient and cost-effective operations.
 Quality control: Maintaining quality is crucial to any business's success. In the Tata
Nano's case, the company had to ensure that the car met safety and environmental
standards while keeping the cost low. To achieve this, the company had to implement
effective quality control measures to detect and correct defects early in the manufacturing
process.

Marketing and Sales

The marketing and sales phase involves promoting and selling the product to customers. In the
case of the Nano, Tata Motors faced the following challenges:
  Brand image: Tata Motors had to overcome the perception that the Nano was a cheap
and unsafe car that was only suitable for low-income families.
 Distribution: Tata Motors had to establish a distribution network that could reach
customers in rural and remote areas of India.

Major Challenges Faced by the Tata Nano Project

Tata Motors, the automobile manufacturing arm of India's Tata Group, set an ambitious target to
produce a car priced at $2,500. This car, the Tata Nano, was launched in 2009. However, the
road to success was bumpy, to say the least. In this article, we will look at how Tata Motors
overcame numerous obstacles to build the Nano.

Land disputes

Tata Motors chose West Bengal as the site for its Nano factory. However, the ownership of the
land allocated to Tata by the government was disputed by local farmers. From the outset, the
farmers tried to thwart construction, resorting to stealing construction materials, breaking walls,
and physically attacking people. Despite the challenges, Tata Motors held out for two years, but
the situation became untenable when there were close to 100,000 people outside the factory gate.
Tata eventually had to close the plant, which was a painful decision.

Relocation

After the closure of the West Bengal plant, Tata had to relocate to a friendlier home in Gujarat,
which was 2,200 kilometers away from the previous site. This relocation was a massive
undertaking, with three distinct projects:

 Dismantling of everything in the old factory.

 Setting up everything in the new factory.
 Entry management for the production of cars.

The project head, Ramesh Vishwakama, was tasked with relocating the factory within one year.
The robots were ready for work, but they had to pull down the factory and start again. It was the
biggest ever relocation in the world, and the project was dangerously behind schedule.
Nevertheless, Tata was successful in relocating the factory with no loss or damage to parts,
maintaining quality, and shifting the entire factory 2,250 kilometers away from the old site.

Training workers

The new factory in rural Gujarat faced a new challenge: finding skilled workers to crew the
factory. Tata had to train hundreds of villagers in a specially built training center at the factory.
Trainees had to learn basic skills like painting techniques, tightening bolts at any angle, picking
up and placing parts in the right order, and assembling a Nano on their own mini production line.
The trainees also had to learn responsibility and moral behavior to build a better car while
becoming better human beings.

Fire incidents

The early models of the Nano caught fire on public streets, which was a public relations
nightmare. The Nano team set up a team of local and international experts to investigate the fires.
They did a thorough investigation and analysis of the situation and brought in forensic experts
from abroad to look at the incidents. They gave a clean chit and said that nothing was wrong
with the design of the car. In some cases, a foreign piece of cloth left on the exhaust system of
the car or the customers tapping the electrical system for accessories led to a short circuit in the
electrical system.

The Challenge of Two Cylinders

One of the biggest challenges that the Tata Motors team faced in designing the Nano was the
engine. They wanted to create a car that was affordable, which meant that they had to cut costs
wherever possible. One solution they came up with was to use a two-cylinder engine, which
would be cheaper to produce than a four-cylinder engine.However, two-cylinder engines were
known to be inherently unbalanced and prone to violent shaking forces.

How the Organization Handled the Challenges and Lessons Learned

The Tata Nano project faced many challenges during its development, but the team was able to
overcome them with innovative solutions and perseverance. Below are some of the ways the
team addressed the challenges and the lessons we can learn from their experience:

1. Cost Management: One of the key challenges was to produce a car at an extremely low
cost. The team was able to achieve this by simplifying the design and using fewer parts in
the car. They also found ways to optimize the supply chain and reduce waste. The lesson
here is that cost management is critical for success in any business, and by focusing on
finding innovative ways to reduce costs, organizations can increase their chances of
success.
2. Design Simplification: The team had to simplify the design of the car to reduce
production costs, but they also had to make sure that the car was safe, reliable, and met
customer expectations. They were able to achieve this by focusing on the essential
features and eliminating unnecessary ones. To improve the engine, the team brought in
Gary Schwag, who had successfully developed a light truck called the Ace. Schwag and
his team worked for almost 10 months to increase the capacity of the engine and refine it
so that it would not sound like a motorcycle with four wheels. The result was an engine
that was more powerful and refined, and Tata was finally satisfied with the drivability of
the Nano. The lesson here is that simplicity can be a powerful tool in design and that it is
important to focus on what is essential to meet customer needs.
3. Innovative solutions: One of the most significant challenges was to find skilled workers
to assemble the car. The team came up with an innovative solution by training local
farmers to assemble the car, which helped to create employment opportunities and also
reduced production costs. The lesson here is that creativity and innovation can help to
overcome seemingly insurmountable challenges.
4. Flexibility: The team had to be flexible in their approach to deal with unexpected
challenges such as protests and supply chain disruptions. They were able to overcome
these challenges by being adaptive and finding alternate solutions. The lesson here is that
organizations need to be agile and able to adapt to changing circumstances to be
successful.
5. Continuous Improvement: Throughout the development process, the team was
constantly looking for ways to improve the car and the production process. This focus on
continuous improvement helped to make the car safer, more reliable, and more efficient.
The lesson here is that organizations should always strive for continuous improvement to
stay ahead of the competition and meet changing customer needs.