Case TATA Motors

7/31/2019 Case TATA Motors

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Strategic Sourcing

India Sourcing Summit 2008


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Strategic Sourcing

Tata Motors Overview

Global Aspiration of Tata Motors

China Sourcing


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Strategic Sourcing

Indias largest automobile company

Revenue $ 7.2 Billion (2006-07)

Market leader in Commercial Vehicles & 2nd largest in

Passenger Vehicles in India

2nd largest medium and heavy bus manufacturer & 5th largest in

medium & heavy trucks in the world

1st company from the Indian engineering sector to be listed on

the New York Stock Exchange

Over 4 million vehicles on Indian Roads

Employee strength of around 22,000 employees

Tata Motors


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Strategic Sourcing

1945 : Tata Engineering and Locomotive Co. Ltd., was established to manufacture

locomotive and other engineering products

1954 : Collaboration with Daimler Benz, West Germany

1954 : Launch of the first Tata Mercedes Benz Truck

1969 : First Tata branded trucks

1986 : First indigenously designed light commercial vehicle, Tata 407

1991 : Launch of Tata Sierra

1992 : Launch of Tata Estate

1994 : Launch of Tata Sumo

Milestones


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Strategic Sourcing

1998 : Launch of Tata Safari

1998 : Launch of first indigenous passenger car - Tata Indica

2002 : Launch of Tata Indigo

2003 : Announcement of plan for small car

2004 : Launch of Indigo Marina: Acquisition of TDCV

2005 : Launch of Globus & Starbus

: Launch of ACE: 21% stake in Hispano Carocera

: MOU with Fiat

Milestones


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Strategic Sourcing

2006 : JV with Marcopolo (Brazil)

: JV with Thonburi (Thailand)

: Distribution of Fiat branded cars in India

2007 : Small car plant construction in West BengaL

: JV plant at Ranjangaon with Fiat

: Magic and Winger launched

2008 :Unveiling of TATA Nano, New Indica , Sumo Grande

Milestones


7/217Strategic Sourcing

Tata Daewoo Commercial Vehicle Company Limited (TDCV) : Manufacture and sale of heavycommercial vehicles

Telco Construction Equipment Company Limited (Telcon) : Construction equipment and allied

services

Tata Technologies Limited (TTL) :Specialised Engineering & Design Services (E&D),ProductLifecycle Management (PLM) and productcentric IT services

TAL Manufacturing Solutions Limited (TAL) : Factory automation solutions and machine tools

HV Transmission Limited (HVTL)and HV Axles Limited (HVAL) : Gear Boxes and axles for heavy

& medium commercial vehicles

Tata Motors European Technical Centre plc (TMETC ) :Design engineering and development of

products for the automobile industry

TML Financial Services Limited (TMLFSL) : Preferred financier for customers of Tata Motors

Key Subsidiaries



Tata Cummins Limited (TCL) : High horse power engines

for medium and heavy commercial vehicles

Tata AutoComp Systems Limited (TACO) : Domestic andforeign Joint Ventures in auto components and systems

Hispano Carrocera S.A (HC) : Bus manufacturing

Associate Companies



Manufacturing Base

JamshedpurCommercial Vehicles

PuneCommercial as well as Passenger Vehicles

LucknowCommercial Vehicles

PantnagarCommercial Vehicles

South KoreaHeavy and Medium Trucks

SpainHigh Capacity Buses

MoroccoHigh Capacity Buses





China Sourcing



Across Europe, Africa , Middle East, South East Asia,

South Asia, South America

Focus on select geographies - South Africa, Italy,Spain, Turkey etc.

Franchisee/joint venture assembly operations in

Malaysia, Kenya, Bangladesh, Ukraine, Russia andSenegal.

International Business



Acquisition of Daewoo Commercial Vehicles, S Korea

21% stake in Hispano Carrocera, Spain for buses &

coaches

JV with Thonburi in Thailand for pick-up trucks

JV with Brazil-based Marcopolo for buses& coaches

International footprint



Broad Memorandum of Understanding in 2005

Tata Motors distributes Fiat branded cars in India

JV factory in Ranjangaon to produce bothcompanies cars & Fiat powertrains

Fiat to manufacture Tata licensed pick-up in

Argentina

MOU with Iveco for feasibility study

Strategic Alliance with Fiat



Tata Motors will manage product development programsusing all our synergies to meet timelines with thoroughproduct validation

Engg Research CentrePune, Jsr, Lko

TATA TechnologiesINCAT, UK

Aggregate Suppliers

TATA Daewoo

Korea

Outsourcing Partners

Hispano-Spain &Marcopolo JV

Bus Body Building

ACGL - GoaTML-European Tech

Centre, UK

Managing

ProductDevelopmentneeds

ofTata Motors





China Sourcing



Low

High

Focus Geography: U.S. Japan, Europe

Components: In Vehicle Networking,Navigation System, Body Control

Module, Automatic Lighting Controls,

Power Antenna etc.

Competitive Advantage: AdvancedTechnology

Focus Geography: India

Components: Forgings, Castings,Fasteners, rubber parts etc.

Competitive Advantage:Lower cost ofproduction and low transportation cost.

Focus Geography: US & Europe

Components:Airbag, ABS, Power Train,Automatic transmission, Vehicle

Architecture, EMS, etc.

Competitive Advantage: DevelopedAdvanced Technology

Focus Geography: China, Thailand,Taiwan, South Korea, India

Components: Power Steering, WheelRims, Clutch Boosters, Batteries, etc.

Competitive Advantage: Economies ofScale & updated technology

Technology

Value of Component

Low High

Sourcing Strategy


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Global Sourcing

Support Global manufacturing footprints by establishing world class

vendor base in territories of interest

Exploit FTAs by identifying sourcing opportunities in different

geographies which enjoy cost competitiveness due to unique local factors

Explore global market place to identify of the shelf / library contact tominimize development / tooling investments as also use proven products .

Overcome scale disadvantage faced by local suppliers by identifying

sources abroad who release much larger scale economies due to high

volume of production for the parts in those geographies.

Identify sources abroad to counter capacity shortage with domestic

supply base.


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20

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Ind

ianRetail

Price

Indire

ctTaxes

Costof

Capital

Capital

Productivity

Labourcosts

Labour

Productivity

Manu

facturing

M

argins

Retailing

Margin

ChineseRetail

Price

Manufacturing Cost In India Supplier is Higher by 34 % wrt China


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0 10 20 30 40 50 60

Others

Metal parts

Plastic & rubber parts

Electronic & electrical parts

Mechanical Parts

Capital expenditures

Goodyear

Cummins

China offers substantial cost benefits and as a result, many of our Indian competitors arlooking for sourcing from China

SAVING POTENTIAL AND PLANS OF OTHER INDIAN COMPANIES

Average 35%

Primaryresearch

Secondaryresearch

Source: Tata Strategic analysis, BCG study


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Components Sources From China

Steering System Wheel RimClutch Booster

Front & Rear Axle Parts

Tyres

Glasses

Bearings


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Thank You

Case TATA Motors

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