TATA NANO - A CASE

STUDY
LEAN WASTES AND SOLUTIONS
THE PRODUCT IN CONSIDERATION
TATA NANO - THE PEOPLE’S CAR
1. The Tata Nano is a small car manufactured by Tata Motors made and sold
in India. Nano was initially launched with a price tag of Rs.1,00,000 which
was ultimately increased with time. Designed to lure India's burgeoning
middle classes away from two-wheelers, it received much publicity.

2. The predictions were also made about how Tata Nano can destroy the
second hand car market of the country. A record fall down in the price of
second hand Maruti 8oo( Nano‘s Closet Competitor) was also marked.
WHAT WENT WRONG ?
Unlike the predictions , TATA NANO could not live up to the expectations of
the market and the sales graph for Nano was not so promising.
IDENTIFICATION OF LEAN WASTES
1. OVERPRODUCTION AND OVER-PROCESSING
❏ When bookings opened on April 9, 2009, Tata Motors dealers expected a
surge of customers. The company printed over 20 lakh booking forms and
expected bookings to be more than 5 lakh.
❏ On April 25, 2009, when the bookings were closed, Tata Motors
announced it had received a total of 2,06,703 bookings.
❏ In the first two years Tata Motors just managed to sell 1.75 lakh Nanos
since the celebrated commercial launch in March 2009, which was far
lower than the acclaimed figures predicted about the booking numbers
thus leading to overproduction and over-processing.
IDENTIFICATION OF LEAN WASTES
2. WAITING AND TRANSPORTATION

❏ After receiving around 2.1 lakh bookings in 1st phase of sales of NANO ,
TATA Motors announced that only the 1,00,000 lucky customers would get
the delivery of the car till the last quarter of 2010.
❏ By the end of last quarter of 2010 , TATA Motors were able to
manufacture and supply only 1.8 lakh NANO cars.
❏ This selection strategy and prolonged delay in transportation/supply of
cars did not please the customers.
IDENTIFICATION OF LEAN WASTES
3. MOTION , INVENTORY AND RE-WORK

❏ Even after slowdown in Nano sales in the first three quarters of 2011-12 ,
TATA Motors decided to export NANO to Africa, South America and
South-East Asia after making certain modifications in their model and
marketing strategies.
❏ But , in these continents also the sales were less than expected.
❏ This led to accumulation of inventory and wasteful motion and the
re-work done was futile.
SUGGESTING LEAN SOLUTIONS
1. APPLICATION OF JUST IN TIME CONCEPT -

❖ Production of limited no. of models at genuine price as promised (

NANO’s price escalated later) as per the no. of bookings can save a lot of
storage space and man power.
❖ Proper and timely transportation of cars to the customers.
❖ Production of cars or any other goods even after less sales in both India
and overseas should be avoided to save time , money and unnecessary
accumulation of inventory.
SUGGESTING LEAN SOLUTIONS
2. LEVEL SCHEDULING -

❖ Level Scheduling is one of the concepts of High Velocity Manufacturing.

❖ Level Scheduling requires proper and even flow of materials and events in
a scheduled manner.
❖ In our case , proper scheduling of production of cars would have led to
quick transportation of cars from the manufacturing unit to the
showrooms and finally to the customers.
SUGGESTING LEAN SOLUTIONS
3. APPLICATION OF KAIZEN CONCEPT -

❖ KAIZEN is a Japanese term which means continuous improvement.

❖ The failure of TATA NANO is a learning lesson for TATA Motors.
❖ The design , marketing strategies , quality of a particular vehicle , price ,
supply , etc. should be re-considered to identify where the NANO project
went wrong. This the essence of Kaizen - change for good.
❖ TATA Motors is planning to launch a new vehicle similar to NANO named
TaMo in 2018 which seems to be an upgraded version of the former.
SOURCES

❖ New Market Creation via Innovation: A Study on Tata Nano ; Dr. Swati
Singh & Dr. Manoj Joshi
❖ Tata Nano: A Positioning Disaster ; Dr. Neelam Kalla ;IOSR Journal of
Business and Management (IOSR-JBM)
❖ IOSR Journal of Business and Management (IOSR-JBM) ;Dr. Binod Kumar
Singh;International Journal of Research in Management