“Dream-dream and dream, because dream gives vision, vision gives thoughts and finally

thoughts lead to the action". -India's former President Dr. A.P.J. Abdul Kalam

Mr. Ratan Tata, Chairman

of Tata group, who in the
year 2003, dreamt of
producing a safe, affordable
Car for the common man-
Crossing all Financial &
Technological barriers,
Ratan Tata keeping his
promise unveiled Tata
'Nano‘ ,at the 9th Auto
Expo 2008 in New Delhi.

Group 4
Kumar Gauraw 23NMP15
Rajan Pathak 23NMP25
Sunil K Barnwal 23 NMP32
 Tata NANO
• The project has literally become India's claim-for-
fame in the international-media due to Tata Motors'
innovation in developing the car, as well as keeping it
low in price.
• The car itself is expected to boost the Indian
Nano was among top two most talked brand in World in
Economy, create entrepreneurial-opportunities
2008 the other being I-phone
across India, as well as expand the Indian car market
by 65%.
• Nano has been greatly appreciated through out the
world for its revolutionised engineering
 The Idea…..

• Accident…..
In an interview at the Geneva Motor Show, Ratan
Tata was asked what the price would be, and he
responded “about Rs. 100,000”. This number became
widely publicized
Great and became
Idea…..But the BHAG
Feasibility (Big Hairy
?????
Audacious Goal)!
• Wining Strategies OPTIONS:
Disruptive in Technology :Non-Availability of R&D
Capabilities of the international auto OEMs in India.
Disruptive in Pricing : Advantage of lower costs and
talented Engineers.
Supply Chain Management
 Strategic supply Chain
Strategic
Customer Importance
Value Added
Technology Clockspeed Qualitative
Competitive Position
Model SVA
Supplier Capability
(Strategic)
Architecture

Let us see How Tata Motors did it …. Recommendations:

Sourcing
Synthesis Investment
Architecture
Alliance Insights

Costs

Assets Quantitative
Quantitative Model
Revenues Model EVA
Competitive Cost (Financial)
(Economic)
Structure
Economic

Value Added
Nano : Supply Chain Model
Internal Supply chain Model
 Frugal Engineering
• It does not require high-spending R&D: it simply needs creativity and imagination - Anil Ambani
once said Reliance succeeded through innovation, not invention.
• One avatar of jugaad is what management gurus call "frugal engineering", exemplified in the
Tata Nano, the most affordable car in the world.

Frugal Innovation or ???

Basic
“Make a product that would address the needs ofComponent
the BOP at a cost they can afford, and
value being delivered is higher than what they are paying.” Re-Building Each
Complex Component in the most
Engineering Basic Economical Manner
Processes Component

Is this about targeting what the consumer wants to pay, and what the supply
Basic
chain can deliver?
Component
 Reverse Innovation or Frugal Innovation
• Key ideas: Listen Poor’s need  Create Product
Redesign products & processes (Using existing technology
in new ways)
Applying Division of Labor (stick to core competency
“Make a product
-Expert does that
whatwould address
they are Expertthe
at)needs of the customer
at a cost theyRestructuring
Organizational can afford, and get higher
(creation value
of cross-functional
teams) to break the functional silos.
• Criteria
Product must be Tough and Easy to use
Use minimal Raw Materials
Not Harsh on Environment
 Frugal Engineering : Tata Nano
• Designing of car: Simple-to-Manufacture Pannels &
Plastic Mouldings- Instead of Steel to reduce cost.
• Wiperblade: Use of single wiper blade
• Steering system: Replaced Steel Steering with Steel
More &
Tube than 200 patients
Integrating filed byinto
2 Pieces Tata, 34 major
1-A alreadycost
approved
Reducer
• Driveshaft: Designed Smaller Dia of Shaft to make
lighter & Saved on material Cost
• Structural Pannels: Sophisticated Analysis of Body
Technology (Zero tolerence) quality control at low cost
Supplier Relationship
Management
 Tata-Ariba Tie up
• Tata-Ariba Development Team :
Specification of General goals for each Part
Development of specific prototypes by Several supplier: To
meet or exceed targets.
Driving Cost & Waste out of Supply Chains
Decide whichCollaboration
bidder would get is the Key
contract for the entire life of
the model.
Focus on using Local Design Capabilities
• Uses Ariba’s Spend Management Solutions
Introduction of New Suppliers
Rationalization of Supply Base
Run on-line markets.
 Supplier Selection: Target Pricing
• Unlike normal supplier selection thru bidding processes ,
Tata adopted new strategy called Target pricing
• Target Pricing
Step-I: Determination of what features and functions the
customer wants in a car.
Is this aboutAssigning
Step-II: targeting what the consumer
Target Costs to wants
each to and
pay, orevery
Component/System.
what the supply chain can deliver? 
Step-III: Working with suppliers to design the
components/systems within the target cost
Note:
Setting the price and working backwards required a fundamental
shift in the way the car was designed, as many costs are fixed once
the design is set.
 Supply Chain Network Design
• Main objective was ‘Cost Elimination’
Co-locating suppliers in the vendor park near Plant.
Contract Suppliers - Long Term volume contracts
instead of Annual contract.
70% of the cost
Distribution of a supply
Centres - 4chain is fixed
Plants at the design
in various stage to
locations
save significantly on logistics & inter-state taxation.
Choosing Suppliers with strong process capabilities for
valuable suggestions and improvement on the designs.
 Treating Suppliers as Innovation Partners

• Reduced number of suppliers for each component to 2- 3.

• Suppliers joined the dream for 2 reasons:

To be part of the revolution
Realized the volume potential of the Nano would offset
the low costs of the parts.
• Suppliers redesigned parts using innovative means to
meet low target costs requirements.
• Suppliers redesigned their parts for the Nano to be lighter,
use fewer parts and be easier to manufacture.
 Supplier’s Innovation…
• Autoliv IFB India (Automotive safety component maker)
Developed a $10 air bag for the deluxe version of the Nano.
World’s cheapest air bag
Air bags fitted in other Indian cars like the Zen Estilo cost $150.

• Delphi
Chosen for expertise in systems integration capabilities.
Basic instrument cluster: just a speedometer, odometer & turn indicator
signals.
Replaced screws with panels & parts that just snap on firmly.
Plastic panel for display was curved at an angle to eliminate reflections and
glare instead of usual Anti-Glare Coatings
 Supplier’s Innovation…….
• Bosch
Developed locally: (70 % of the technology and development for the Bosch
products) used in the Nano would come from India.)
Developed a special low-priced CRDi fuel injection system for
Nano’s diesel variant .
Enable Nano to meet emissions standards (Euro-IV) expected to
take effect in India in 2010.
• Samco Machinery (A Canadian based small Enterprise)
Developed a chassis made entirely from 1 piece of metal.
Eliminated need for Welding – Saving cost, time & wastage

Similar Innovation……
-by Many such Suppliers to achieve TARGET PRICING.
Distribution
 Distribution- “OPEN SOURCE” WAY ?
• Nano in Kits:
Final Assembly by Non-Professionals
Distributed & Serviced by Same People.
Remove layers in Distribution and Service.
• Support for 'open distribution‘- 3 innovations in Products and
Processes:
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 IT, carefully integrated with social institutions,
to encourage use and deliver even greater value.
Revised SCM-Model
 Future Challenges for TATA-Nano
• Quality Adherence:
Deliver good quality & reliable product – To Cash on First Move Approach.
In long Run at “Assembler & Service Provider”.
• Scaling:
Production of 1 million cars in 4 years with uncompromising Quality.
• Prices and Costs:
Staying on long-promised price even when costs for raw materials have gone
through the roof.- Steel, Tires etc.
• Competition:
Imitation of Lessons Learned- by Competitors
French auto major Renault & Bajaj Auto to come up with ultra low cost (ULC) car
priced at USD 2,500(around Rs 1.10 lakh) to take on Nano
• Crash safety and emission standard compliance:
To meet Euro IV emission norms and stringent safety standards.
Fear of increased pollution with the introduction of the Nano
 Lessons from case - Rethinking Innovation
• Value Chain Optimization:
Co-locate suppliers.
Co-development of parts with suppliers.
Utilize non-traditional supply base.
• Low Cost Design
Minimizing Total number of components
Try to achieve dual functionality for each component.
• Manufacturing Simplicity
Effective supply chain adds “lots of VALUES TO A LOW COST
Avoid need for building and operating large final assembly operations.
• Target- contenting
PRODUCT”
Optimize customer required features & eliminate non-valued
• Rethinking Supply Chain & final distribution model.
Reduce layers in distribution and service – Shipment in Kits
THANK YOU !