Strategic Management short Project for Tata Motors

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Strategic Management

Group Assignment – 1

TATA MOTORS

Submitted To:

Prof. Amar KJR Nayak

Submitted By – (Group 5)

Sourabh Kumar Choudhury – U108 109 Subhransu Sekhar Mandal – U108 110 Sujit Kumar Sahoo – U108 111

Swarup Kumar Kar – U108 112 Sweta Sah – U108 113

Tanya Gupta – U108 114 Thendral I. – U108 115

Udaya Bhanu Satapathy – U108 116 Vibhav Kumar – U108 117

Vikrant Krishan Mahajan – U108 118 Vineet Agrawal – U108 119

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INTRODUCTION

Tata Motors, leader in commercial vehicles, is India's largest automobile company with revenue of USD 14 billion in 2008-09. Tata Motors, the first company from India's engineering sector to be listed in the New York Stock Exchange and has operations in the UK, South Korea, Thailand and Spain.

Tata Motors started operations in 1945 and entered commercial vehicle sector in 1954 after forming a joint venture with Daimler-Benz that lasted till 1969. In more than six decades of its operations, it has grown both organically and inorganically. In 2004, Tata Motors bought Daewoo’s truck manufacturing unit in South Korea followed by the acquisition of the Hispano Carrocera in South Africa. In 2008, it acquired prestigious brands Jaguar and Land Rover from Ford Motor Company. This acquisition was important since before that Tata Motors was considered as a formidable global player at lower market segment only.

CORPORATE STRATEGY

The current strategy of the Tata Motors can best be summarized as ‘Disruptive Innovation’, wherein it has offered lower priced products and surpassed the market expectations. Its two latest offerings have further strengthened the Tata Motors position as a leading player. While Ace has been a rage in the market, Tata Nano has taken the world with awe.

Much of the practices of Tata Motors, including its customer focus, attributes to the learning and experience of over six decades. Tata Motors that started with a huge success and market demand faced its first product failure in the launch of 1516. With the foreign players entering India, Tata motors that was primarily focusing on High weight commercial vehicles, included LCV in its offering and came up with Tata 407. Tata Motors in the meanwhile was also vying to develop end to end in-house technical competence and thus ventured into engine design by partnering with Cummins. Tata motors continuously faced the problem of overloading by the users and responded by introducing stronger machines. However, a major change came after a heavy loss of Rs 550 cr in 1999 where in it re-aligned its marketing team and became more sensitized to customer needs. The revival strategy of Tata motors had three phased business plan. Firstly, it focused on the cost reduction initiatives for immediate turnaround. Secondly, it focused on domestic and international growth through new products and improved sales and service. Finally, it linked long term growth with increased business in LCVs, new product segments and new geographies. The strategy and learnings have gone a long way with Tata Motors earning net profit of more than Rs 1000 cr even in a lean FY 2008-09.

Corporate Governance

Tata Motors being part of the Tata conglomerate has its philosophy deeply linked to the core philosophy of the Tata group. It has fair, ethical and transparent governance practices along with highest standards of professionalism, honesty, integrity and ethical behaviour. The company gives maximum importance to the

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value creation and sustainability of all the other stakeholders’ viz. customers, creditors, employees, vendors, community and the Government. Tata Motors have implemented the Tata Business Excellence model which is a part of Tata code of conduct applicable to all subsidiaries of Tata group. The company operates with a strong social conscience and believe in bringing benefit to people’s lives.

Tata Motors strictly follows The Whistle Blower Policy, an extension of the Tata Code of Conduct, which requires very employee to promptly report to the management any actual or possible violation of the Code or an event he becomes aware of that could affect the business or reputation of the Company. the Ethics and Compliance Committee who monitors the compliance of the ‘Tata Code of Conduct for Prevention of Insider Trading’ by checking monthly reports on dealings in securities and also decides penal action, if necessary. This is more important since in Indian market Tata brand is synonymous with Trust. CSR activities of Tata Motors covers major areas like environment, energy and water conservation, health, education and livelihood.

SWOT Analysis

TATA-JLR

TATA Motors bought the iconic Jaguar and Land Rover operations from Ford for 1.15 billion pounds in Mar-Apr’08. Tata gained the rights to the Daimler,

Lanchester, and Rover brand names. In addition to the brands, Tata Motors also gained access to 2 design centres and 3 plants in UK. The key acquisition would be of the intellectual property rights related to the technologies. However there is a challenge related to the technology changes in the new entity and Ford’s

technology will help in the short run and looking at the emerging emission standards hybrid and green technology will be the need of the hour.

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The Major SBU’s of Tata Motors in which they have divided their business are:

• Commercial Vehicles (Light weight trucks to multi-axle 40 ton vehicles)

• Passenger Cars, economy and luxury (Indica, Nano, JLR)

• Utility vehicles, standard and premium (Sumo, Safari)

• Spare parts, components and accessories (HV Axles and transmission, High horse power engine via Tata Cummins)

• Financing for customers and channel partners (via Tata Motors Finance)

1

_{Enterprise Process Model (EPM) - Process Management}

at Tata Motors

When Tata Motors made a huge loss of 500 crores in the year 2000-01, analysts had all but written off Tata Motors fortunes. But TML was determined to bounce back and hence started the process of serious introspection. Three key reasons were identified for the massive loss—a) Lack of customer focus b) lack of process management c) lack of new products and variants. TML had decided the three elements in a systematic manner, the major emphasis being process management.

Tata Motors hence started to adopt the APQC 13 (American Productivity and Quality Center) processes and sub process and hence derive the Tata Business Excellence Model (TBEM, based on the Malcolm Baldrige National Quality Award Process), thus adopting a process oriented approach than merely people oriented approach. This practice minimized the ‘influence of individual employees’ in running the operations. This also entailed the documentation of the processes, which brought about lot of clarity in terms of roles and responsibilities of process owners, inputs and outputs of the processes, in process and end process measures, entities involved and its linkage with the ISO and TS standard system. The Enterprise Process Model has been depicted in the figure below.

1_{Hasamnis, Sudhir, ENTERPRISE PROCESS MODEL (EPM) – PROCESS MANAGEMENT AT TATA MOTORS LIMITED,}

2008

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Figure: Enterprise Process Model1

Operations & Production Management

Inbound Logistics

Procurement

Vendor Management

In the Year 1997, Tata Motors promoted a company called “Tata Autocompsystems Limited (TACO) “. The main objective was to serve form joint ventures with international auto component manufacturers and streamlining the vendor management processes for the company.2_{Tata Motors sources from}

2_{ICMR case study, Operation Management at Tata Motors, excerpts.}

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vendors who focus on their own R & D to reduce cost. Most of the vendors develop products with Tata Motors itself and quite a few were given designs by Tata Motors. TML also helped the vendors find international partners to make products that would meet their requirements. Some of the vendors who supply to Tata Motors also did competitive buying of material from China and Thailand.3

Manufacturing

In an automotive industry, the main emphasis on quality would be on the manufacturing process. There would be about fifteen thousand accessories and component parts to assemble and activate while we manufacture a car. Tata motors believes in the indigenous development of manufacturing process and development of technology. Unless many automobile companies, the strategy of the firm is not to blindly adopt any new successful technology. It believes in state-of-the-art technology. With reference to the product market matrix (with product development, market development, market penetration and diversification) which composes the merging of production and marketing strategies Tata motors is seen to follow the diversification strategy wherein it produces new products and gets into new market to target with the product.

Product development

New Product Development would involve idea generation, product screening, concept testing, Business and financial analysis, product development, test marketing and commercialization. An automobile product development cycle is said to be consisting of concept stage (where the car starts), Advance engineering (where the car takes shape), product engineering (where the details are filled in), production engineering (where the car is worked out) and the manufacturing stage (where all comes together)3. _{Tata Motors Engineering}

Research Centre in Jamshedpur focuses in upgrading the components and parts with evolution of technology and also is one of the best in determining the needs of a customer and developing a new product to cater to the needs. Tata Nano is one such product from the stable of Tata motors. Besides this centre the Research and development of Tata motors has become international with centres in Spain, UK and South Korea also.

Cost Cutting Techniques

After a rough fiscal year in 2001, Tata Motors realized that the only way to survive this market was to cut down on costs. They started practicing an entirely new way of procuring their supplies and hence gave rise to a unique way of managing supplier relationship. The earlier traditional method that Tata Motors gave the technical specifications to the supplier and the supplier who was successful in acquiring the bid filled up the orders. However under the new system Tata Motors simply provided the output they expected, and allowed the suppliers to be as creative and innovative with their designs, materials, and prices. In other words Tata Motors would simply describe the goal that they

34_{http://msl1.mit.edu/TPP12399/Session01/lecture018.htm}

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wanted to achieve with certain part and the suppliers would supply the parts according their own convenience. For example instead of giving technical specifications for the wind shield of Tata Indica, it would just describe the goal of cleaning the windshield, and let the suppliers come up with ideas to meet those goals in the most cost effective manner, without compromising on quality. This practice led to huge cost savings in raw materials and the Tatas could deliver the cheapest car of the world at just 2500$. By leveraging local design capabilities and avoiding the dependency on high end design systems, Tata Motors has been able to provide low cost solutions in a continuous and efficient manner. Also Tata Motors tried the innovative method of Zero Based Costing. For example initially TML paid for forged components on a cost plus basis, in the new system it paid a price depending on the weight of the forgings.

Quality Management

The shifting of focus on TQM (Total Quality Management) and Six Sigma principles by Tata Motors has been a gradual one since the year 2000. One quarter of the work force undergo training to maintain and create high quality products every year. The personnel are even sent to foreign manufacturer’s locations, whenever a new machine would be imported, to undergo training.

Operations

Outbound Logistics

Sales & Marketing at Tata Motors

Product and Brand Strategy

Tata Motors follows a sub brand strategy. Although there is no separate Brand for TATA motors as such but the TATA brand is used as a mother brand. All

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products of benefit from the association with the TATA brand, which in India stands for trust and reliability. TATA motors products can be categorised into four major categories: Passenger cars, Utility vehicles, trucks and commercial passenger carriers. The following table shows the different product lines of each category and the launch periods as well. (Source: Company Website).

TATA Motors Product Portfolio Product and Variant Launch years

1989

TATA Mobile 206 3rd LCV

1991

TATA Sierra

TAC Crane

1992

TATA Estate

1996

Sum

o

Safari

1998

Indica

2000

CNG Buses

Indica V2, Indica V2 Petrol, CNG Indica, TATA Safari Ex

2003

Tata 207 DI

Tata Sum

o'+

' Series

2003 SAFARI range

Tata Indigo

135 PS Safari (EXi) petrol

2004

New Indica V2

Tata LPT 909EX Turbo Truck

NOVUS

2005

Ace

Safari Dicor

Indica V2 Turbo Diesel

Tata Novus truck

Tata TL 4X4-sports utility vehicle

2006

Indica V2 Zeta

Tata ACE' in Sri Lanka

Indigo and Indigo Marina range

2007

Magic

Winger

‘Tata ACE’ in Nepal

2008

TATA Nano

Indica Zeta LPG

Super Milo range of Buses

2009

Sum

o Grande MK II

Prim

a World Truck

IndiGo Manza

Freelander 2 launched in India

Tata 407 Pickup

Tata Super Ace

Tata Ace EX

The product strategy in TATA motors has been driven by two primary objectives – Identifying the market need and creating new market segments.

The success stories in the past two decades (Sumo, 207, Ace, Indica etc) have been able to fulfil these overall objectives. The strategy adopted behind these

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products also reflects the commitment of TATA Motors to customer needs and new product innovation. The company has also exported its vehicles after creating customised variants which have higher payload and engine capacity. It has also customised its domestic products by introducing passenger option, higher payloads, bigger engines etc.

In broad terms the following sums up the TATA motors marketing philosophy:

Pricing

TATA motors have a pricing advantage due to its low cost leans manufacturing abilities. The in-house steel company acts as a shock absorber against steel price fluctuations. The pricing methodology adopted is that of a perceived value pricing. It was demonstrated by the Rs 1 Lakh price of TATA Nano, where the cost of producing the car left a very small margin for TATA.

Promotion

TATA Motors uses extensive promotion for its passenger car segment. The Utility vehicle and commercial passenger carrier follow this segment based on Share of Voice.

Distribution

TATA Motors has a large network of dealers and Stockyards, all across the globe and uses the DMS technology for efficient cooperation between these dealers. Its distribution network includes operations in India, Nepal, Bhutan, Ghana, Italy, Poland, South Africa, Spain, Sri Lanka and Turkey. The company's dealership, sales, services and spare parts network comprises over 3500 touch points.

Apart from the wide distribution network Tata Motors also has Distributed manufacturing – it has Assembly units at South Africa, Thailand, Bangladesh, Brazil apart from India. The company's manufacturing base in India is spread across Jamshedpur (Jharkhand), Pune (Maharashtra), Lucknow (Uttar Pradesh), Pantnagar (Uttarakhand) and Dharwad (Karnataka).

To augment the scarce resources, it has a joint venture with Fiat wherein Fiat sells its vehicles through Tata dealerships and in return Tata Motors has access to Fiat’s technology and unutilized capacity

Over the years, one of the major success factors of Tata Motors is their supply chain excellence. To keep their distribution costs to the minimum they have outsourced the logistics and distribution part of their business to Tata Motors Ltd. Distribution Company (TDCL), a wholly owned subsidiary of Tata Motors Ltd.

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Through this arrangement, Tata Motors is able to reduce its logistical costs by at least 1% and to focus more on the core business. This in turn has provided flexibility to Tata Motors in terms of delivering the right product at the right time at the right place. Therefore, today, Tata Motors is a fully integrated automobile manufacturer with a portfolio which covers trucks, buses, utility vehicles & passenger vehicles/cars.

The dealers and suppliers are bound by a Supplier Relationship Management Program and Dealer Management System. These programs are reviewed from time to time. The efficiency of transactions within the organization and also supplier coverage are given importance. Supplier’s day, Vendors meets, Channel partner meets are organised wherein the Board members can interact with suppliers to share ideas and thoughts.

Financial Strategy of TATA MOTORS

Cost cutting and recovery strategies:

The transformation of Tata Motors into a highly successful, well-diversified, and globally ambitious automobile giant represents one of India’s most remarkable corporate-success stories in recent times.

In 2001 after a decade of strong revenue and margin growth, Tata Motors plunged into a financial crisis when demand for its trucks suddenly collapsed. The lost sales compounded by heavy investment for its entry into the passenger car business, the cost of complying with new emissions standards, and an increasing threat from overseas competitors caused Tata Motors to shock the markets with a 5 billion rupee ($110 million) loss for the fiscal year ending March 2001.

Even in late 90’s Tata Motors was predominantly a manufacturer of commercial vehicles, and that is a very cyclical business. At the time it was making huge investments in car manufacturing to move away from that cyclicality. But while it was in the middle of this diversification, the commercial-vehicle market in India shrank by more than 40 percent, with massive consequences for both the top and, more particularly, the bottom lines of the company. The 5 billion rupee loss in 2001 was the first time something on this scale had happened in the company’s history which really shook everybody within the organization.

So in 2001 Tata Motors decided on a recovery strategy that had three distinct phases, each of which was intended to last for around two years—six years in all. Phase one was intended to stem the bleeding. Phase two was to be about

consolidating our position in India, and phase three was to involve going outside India and expanding our operations internationally.

The key objectives were to move to a system of market pricing and to reduce our break-even point, both of which called for major reductions in costs—variable costs, fixed costs, and interest costs. It used many approaches to cost reduction, including bench-marking its rivals. For example, it took apart vehicles to see what

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they could do to modify their products and to lower costs. They went in for sourcing, which was then very new, but today it is the largest company doing e-sourcing in India and one of the leading ones in the automobile industry worldwide. In two and a half years, it reduced our break-even from nearly two-thirds of capacity utilization to around one-third, which meant that even if the market shrank by close to 60 percent, it would still be profitable. The whole organization really got together to ensure that the bleeding stopped.

For phase two, the concentration was on improving product quality and upgrading product features so as to make the products more competitive. It also started work on new products that would be required by the market after three to five years and strengthened its position in the marketplace by setting up a new sales-planning process, tightening credit norms, improving the liquidity and profitability of the dealers, reorienting toward customer satisfaction, and extending the reach of its distribution network. For phase three, the concentration was on starting work on international markets by identifying key markets and segments and developing a comprehensive plan to improve its competitive position so as to get a respectable market share. It also started looking at opportunities for inorganic growth.

Tata Motors Finance Ltd (TMFL)

The auto financing arm for Tata Motors was established in 1957 in the name of BHPC (bureau for Hire Purchase and Credit). TMFL came into existence in June 2003. This was a common front-end, jointly formed by BHPC (Bureau for Hire Purchase and Credit) of Tata Motors and the asset financing arm of erstwhile Tata Finance Ltd. It was in the market for exclusively financing Tata Motors vehicles. Subsequently Tata Finance was merged with Tata Motors and in April 2005 TMF became a division of Tata Motors. It is engaged in financing entire range of passenger cars & commercial vehicles manufactured by Tata Motors Ltd.

TMF is the largest financier of vehicles manufactured by Tata Motors Ltd. With more than 2 million customers financed, TMF reaches out & helps customers to realize their dreams of owning a Tata vehicle easily.

Corporate Purpose

TMF aspires to be a preferred financier by choice for Tata Motors customers & dealers across all its products. Tata Motor finance would be the top-of-the-mind choice for all stakeholders when it comes to Tata Motors products. With a core purpose to reach out & help customers realize the dream of owning a TATA vehicle easily, we are present across 150+ locations and at all Tata Motors Ltd authorized dealerships.

Schemes designed to suit every customer requirement, flexible repayment options, hassle-free eligibility criteria, simple documentation and fast sanctioning process makes it the preferred choice of any customer desirous of owning a Tata Car or Commercial vehicle.

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Strategy defined

TMF came into existence for the prime reason of easy financing the Tata Car or Commercial vehicles. Through these new initiatives, TMF aimed to reach small towns and villages, where they could find buyers for their products, such as the Ace and, going forward, for their small car. In the competitive world, there is an existing demand for cars, and along with it, it is important to make finance available to the potential buyers to help them buy the vehicles. With the low availability of conventional banking services in rural areas, it was necessary for them to offer finance to their buyers in such far-flung markets. Tata Motors has dealers in nearly every district in India. This helps them to build a good database of the financial credibility and worthiness of their customers across the country, which will be valuable information for the entire Tata Group. Similarly, this perspective would be deployed in their global operations — in South Africa, South Asia, South Korea and the Middle East – where they can adopt

a partnering strategy.

The partnering strategy could well involve a local bank in the respective country as the individual countries have their own financial regulatory requirements. In other cases we could partner with Indian banks which have operations in foreign countries. The State Bank of India, for example, is already present in many African countries. So it can be looked upon as a prospective partner

PAT/Sales structure of TATA Motors for the last 30 years: 1975 1980 1985 1990 1995 2000 2005 Sales 22510 44827 93353 196910 568312 896114 2064866 PAT 541 1762 2313 10254 31895 7120 123695 PAT/Sale s 2.40% 3.93% 2.48% 5.21% 5.61% 0.79% 5.99% In last 5 Years: 2005 2006 2007 2008 2009 CAGR Sales 2064866 2429052 3212988 2876791 2566067 5.58% PAT 123695 152888 191346 165417 92151 7.10% -PAT/Sal es 5.99% 6.29% 5.96% 5.75% 3.59%

The above table shows the net profit margin for the last five years and also shows the compounded annual growth rate over the last 5 years. We can see that there has been a 5.58% growth in sales whereas PAT has gone down by 7.10%. However we cannot blame its strategy being wrong because we see that

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TATA motors has invested heavily in various mergers & acquisitions which has bought down its PAT, but is in line with their Inorganic growth strategy.

Sustainability and road ahead:

In a broad way, Tata Motors has been silently transforming itself for a long time and this will continue. The company started manufacturing locomotives, and then concentrated on heavy trucks before moving to light trucks, multi-utility vehicles, passenger cars, and buses. It has to continually reinvent itself. The important thing is to keep looking at external changes in the marketplace and to respond to these changes appropriately while continuing to retain its values, which have been its beacon for the past 60 years. Tata Motors used to be an engineer’s organization that needed to understand more about profits, costs, and contributions. Now people at all levels realize it doesn’t make sense to just manufacture anything, that products must sell to make a healthy contribution, and that market share must continually be increased to sustain growth.

It should grow and produce a healthy bottom line, necessary for sustained growth. But in doing so, it be seen as an innovative company breaking new ground and going into uncharted territories successfully like the recent JLR deal.

Human Resource at Tata motors

Few specific events related to downsizing at Tata Motors would help us describe the HR culture at the company.

From 1970s to present Tata Motor’s share value has increased nearly 4000 pp, turnover has increased from about 1800Cr. to 75000 Cr. But manpower figures have not been following the same trend. From a figure of 11000 employees it rose to 35000, then came down to almost half (18000) and the number is again on rise.

For understanding the trend, we must become familiar with the factors affecting manpower. Some of these factors are listed below:

• Volume of business: a fast growing business like Tata Motors needed more hands to work on day by day

• Locational delinkage: Tata Motors started off a new unit at Pune

• Adopting new product or technology: advent of passenger cars and light commercial vehicles

• Shift in customer preferences: style and comfort became important like never before

• Starting support activities

o Finance: the need to provide finance to people to buy their vehicles, Tata Motors started off Tata Motors Finance

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o Logistics: the Hub ‘n’ Spoke model of the dealer network was introduced

o IT: need for information was growing day by day and it needed to be addressed soon

o Automation: automation in assembly was introduced

This has provided us with a fair background of the changes in the company. Now let us try to understand the company’s HR policies and culture against this backdrop.

Phase I:

During 1970s, money and people were available in abundance with

Tata Motors. It cared for its employees like a father cares for his children. Today’s buzz words like mentoring and coaching were actually practiced nearly three decades back in Tata Motors. Senior executives handheld new employees and helped them blend with the company.

Colonies were made for the TELCO community, which provided residents, apart from basic amenities, with, facilities like security, health care, clubs etc. Tata Motors wanted its employees to have no reason to leave the organization before their retirement. Though it also set out some basic codes of conduct, to which, if one fails to conform, he would be asked to leave the Tata Motors family within a stipulated time period. These included refraining oneself from stealing (even stealing a pencil was an offence), and not indulging in an undesirable relationship between a man and a woman who lived in the colony. The sincerity of management at Tata Motors in implementing these two rules can be judged from the incident that when Daimler’s Chief was found guilty of getting into an undesirable relationship he was given a return ticket to his homeland.

Also employees were given loans without any interest rates being charged from them.

With the advent of IT, IBM 1401 was introduced in the company. The machine required inputs through punch cards and hundreds of people were required to punch these cards. Tata Motors again found a chance to work for the society at large. It employed several widows to do the job in three different shifts and helped them earn bread and butter for their families. Also there was some reconditioning of motors and the winding department had work that could again be performed by women, so again it employed even more women for the job. By 1980s, too much automation had taken place, the wizards of the organization who earlier experienced a sense of vanity about their expertise of precisely identifying the problem areas in a machine or assembly line, felt useless. They were gradually becoming technologically obsolete.

At that point Tata Motors offered them a scheme that if they do not wish to stay in the company they may leave but they would continue to get benefits of employment till 60 years of age. Company was in good shape at that time and was still trying to look after them as parents. The scheme received an

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overwhelming response and resulted in voluntary downsizing. We see here that though there was a downsizing still it was not cruel; employees weren’t chopped cruelly off the muster rolls of the company.

Phase II:

This would show the survival mode adopted by the company. From the year 1995 onwards, company was compelled to share publicly the quarterly results for the benefit of the shareholders. Cost of employees had also risen from about 10% to nearly 30%. Also the company was facing stiff competition. This led to the development of the Tata Business Excellence Model. Every individual was put under a scanner. 360 degree appraisals, Balance Score Cards started being implemented to assess employee performance. Big consultants like Mckinsey and the Tata group itself joined the scanning process. The company was bleeding, everyone was fearing that the company might close down completely. Finally it was decided that the bottom 10% would have to leave the organization. A hockey stick syndrome prevailed throughout the organization; within a very short period of time there was a tremendous morale crash. The company lost about 7000 employees over the years due to the process. It had to take corrective actions. As a result:

• Salaries of those who stayed were jacked up 4-6 times

• Huge induction from outside was done at every level

• Brilliant people were given promotional jumps, eg: Tata Nano chief

Phase III:

Tata Motors started in Jamshedpur, operating in the product range of locomotives, commercial vehicles, excavators. Then it started off a new unit at Pune that was majorly a centre for R&D along with production of commercial vehicles. It then had to open up a new plant in Lucknow without any agenda, just because of the pressure from the centre. It involved huge costs. The hierarchy had been becoming unwieldy. Company had to adopt a profit oriented face.

It revisited following areas of improvements;

• Automation Development employed nearly 3000 employees, so many of them were not really needed and were a burden on the company

• Today finance is available in abundance, a captive finance company like Tata Motors Finance was not really needed

• The Hub ‘n’ Spoke model required thousands of drivers, a number of logistics companies are available today and all this could be easily outsourced at a much lower cost

All these led to several of integrated organs like Tata Motors Finance, Tata Motors Automation Ltd., Tata Engineering & Constructions, Tata Motors Logistics etc. to be snapped out and become individual companies with independent GMs of whom Tata Motors would only be one of the clients.

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Today the core values of Tata Motors are slightly skewed towards business, but that is because the context changes with era. As the time changes one has to constantly change and adapt with the changing times and as they say, “No prescription is a permanent prescription”, Tata Motors is simply evolving with time, yet at every step, taking care of what it leaves behind.

Information Technology Strategy

Enterprise Resource Planning

Prior to the SAP implementation TML has a host of legacy applications which had been developed and maintained over a period of time. Thus the underlying technologies and platforms were diverse along with diversity in functions and locations. This led to redundancy, inconsistency and inefficiency in data management. A unified real time database with an IT infrastructure that was integrated across the functions, locations and even businesses was the need of the hour, in order to cut costs and manufacturing cycle times and also serve the customers more efficiently.

Why SAP?

“SAP has a clear superiority in the market. It has a large presence and good support, so we chose the SAP ERP Solution for our company. The results have definitely exceeded our expectations,” says Probir Mitra, CIO, Tata Motors.

• SAP was the business leader in ERP solutions space.

• SAP offered strategic fit to TML’s TO-BE stage process mapping.

• SAP was able to integrate various functions across geographies yet maintaining real time data updates.

• TML’s business processes were rationalized across all manufacturing units using the power of SAP’s ERP infrastructure.

The existing environment prior to SAP implementation was – Oracle database solutions, Unix as operating system and predominantly IBM for hardware support. The implementation of SAP ERP solution (Version 3.1H) started in about 1998 and was finished by 2000 for about 3500 users. Later in 2003 TML moved to version 4.6C on a single server platform.

The major benefits from implementation included enterprise integration, reduction of inventories, better control over receivables, easier financial consolidation, single unified database, improved efficiency by reducing redundancy and inconsistency, reduced response time to customers and reduction of operational costs.

Customer Relationship Management

With increasing competition from both Indian and foreign automakers in a cyclical business environment, Tata Motors needed strategies to build

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competitive advantage through strong relations with customers and good customer service. Being a global player with a widely dispersed dealer network Tata Motors was in the need of a common system to link its company, dealers and customers. In 2005, Tata Motors took a decision to implement a robust CRM throughout the organization. Oracle’s Siebel Automotive CRM solution

customized for the automotive industry was chosen as the CRM system for the organization.

Standardizing Customer-Facing Processes

Tata Motors aimed to standardize its customer-facing business processes

companywide through reengineering, thus improving operational efficiency and effectiveness, building stronger dealer relationships and a better customer experience. This task involves working with about 250 dealers and more than 1600 locations staffed by more than 10,000 salespeople across India. TML has also deployed a robust technology platform consisting of an innovative dealer management system to improve the information flow across the enterprise. This system helps dealers in functions such as inventory management, credit

reporting, calculating commissions etc. Siebel Automotive CRM, in conjunction with the dealer management system, has streamlined transactions, ensuring real time capturing of customer data. The solution provides a 360-degree view of customers to the extended organization, with appropriate visibility controls to ensure that one dealer is not privy to information from another.

Registering Strong Success with Dealer

Siebel Automotive has transformed Tata Motors into a truly customer-centric organization. Information redundancy and disparity has been reduced and the business processes have been improved. By working upon real-time, centralized customer and vehicle data, the employees and dealers have been empowered immensely.

References:

http://www.tatamotors.com/pdf/2009/CG-Report-2009.pdf http://www.tatamotors.com

http://www.tata.com/aboutus/articles/inside.aspx?artid=/CZR9jStvb0

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Strategic Management short Project for Tata Motors