LSCM Group Project - Group1 - Automobile Inustry - Tata Motors

Group Project on
Automobile Industry
Tata Motors
Logistics & Supply Chain Management
With the Guidance of Professor W.S.William
LSCM
(EPGDM-VIL course)
June
2022
Prepared by
Name Roll Number
Lingaraj Panda UV21007
Bikramdev Padhi UV21001
Debashreeta Swain UV21003
Sanjoli Gupta UV21013
Tata Motors – Logistics & Supply Chain Management
0/conversion/tmp/activity_task_scratch/598382423.docx0598382423.docx 2
Contents
1 Executive Summary...........................................................................................
2 Industry Overview..............................................................................................
3 Tata Motors – Company Background................................................................
4 Supplier & OEM Manufacturers.......................................................................
5 Process Flow Charts........................................................................................
6 Level of Technology used by Tata Motors........................................................
7 Value Chain......................................................................................................
8 Supply Chain....................................................................................................
9 Case Study.......................................................................................................
10 Regulations......................................................................................................
1 Executive Summary
Supply chain management has been defined as the "design, planning, execution, control,
and monitoring of supply chain activities with the objective of creating net value, building a
competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand
and measuring performance globally.
The automobile industry is a pillar of the global economy, a main driver of macro-economic
growth and stability and technological advancement in both developing and developed
countries, spanning many adjacent industries.
In this project, we have taken India’s leading automobile manufacturer, Tata Motors Limited (TML) for
analyzing Supply Chain Management in Automobile Industry and found out the following.
Tata Motors Limited products are sold and serviced through a network of authorized dealers
and service centers across the domestic market, and a network of distributors and local
dealers in international markets.
The company monitors the performance of its dealers and distributors and provides them
with support to enable them to perform to the expectations. Any under-performance by the
dealers or distributors could adversely affect TML’s sales and results of operations.
The company relies on third parties to supply raw materials, parts and components used in
the manufacture of products. Furthermore, for some of these parts and components, the
company is dependent on a single source.
The company’s ability to procure supplies in a cost effective and timely manner is subject to
various factors, some of which are not within its control. While the company manages its
supply chain as part of the vendor management process, any significant problems with
supply chain in the future could affect the results of operations.
Impact of natural disasters and man-made accidents, adverse economic conditions, decline
in automobile demand, lack of access to sufficient financing arrangements, could have a
negative financial impact on the Company’s suppliers and distributors, in turn impairing
timely availability of components, or increases in costs of components. In managing a
complex supply chain, the Company has developed close relationships with both direct and
indirect suppliers. The Company continues to develop long-term strategic relationships with
suppliers to support the development of parts, technology, and production facilities
2 Industry Overview
Automotives contributes to several important dimensions of nation building right from
generation of government revenue to creating economic development and encouraging
people development along with fostering research and development and innovation.
Automobiles depend heavily on consumer trends and tastes. The large pool of skilled manpower
and growing technology poses heavy demand for automobiles in India which will list our country
one amongst the top five auto producers by the year 2015. The liberalization of the Indian
industry saw significant growth in the Indian Automotive Industry. Today, the Indian Automotive
Industry is a significant contributor to the Indian economy, contributing nearly 5% to the country’s
GDP and about 17-18% to the kitty of indirect taxes to the Government. Income and the cost of
ownership are the two factors which are majorly affecting the demand for the automobiles.
With its wide penetration and strong influence on the country’s economic and industrial
development, the auto sector is indeed one of the major drivers of our economy. Moreover,
economic liberalization coupled with its technological, cost and manpower advantage has
made India one of the prime business destinations for many global automotive players. The
sector has moderate direct employment and significant indirect employment; it is estimated
that the sector provides direct and indirect employment to over 13 million people.
With many new launches in the luxury and premium carmakers segment, the Indian market
condition plays a catalyst role in the growth of the industry. The top-end carmakers have posted
double-digit growth for the quarter ended June 30, 2013, with firms like Honda at 45 per cent and
Audi recording higher sales and revenue growth of about 26 to 28 percent in this quarter itself.
India is emerging as an export hub for sports utility vehicles (SUVs). Global automobile majors
are looking to leverage India's cost-competitive manufacturing practices and are assessing
opportunities to export SUVs to Europe, South Africa and Southeast Asia too. India is also one of
the key markets for hybrid and electric medium-heavy-duty trucks and buses.
Key Statistics
Growth Forecast for Sales
Growth Forecast for the Auto Segment
Evolution of Indian Automobile Sector
2007 onwards
1993 - 07
- More than 35 marktet

players
1983 -92 - Sector de-licensed - Removal of import
in 1993 control
- Major OEM started - Indian companies
- Joint venture : assembly operation gaining acceptance on
Indian government in India global scale
Before 1982 and Suzuki formed - Import permitted - Setting up of national
Maruti Udyog; from April 2001 Automotive Board to
commenced
- Close market - Introduction of act as faciltator
production in 1983
value added tax in between the
- Five Players - Component 2005 government and
- Long waiting manufacturers enter industry
period and the market via JV
outdated models - Buyer's market
- Seller's market
Major Market Players

Segments Indian Origin Foreign Origin
Cars/ SUVs Hindustan Motors Ford
Mahindra & Mahindra Hyundai
Maruti Udyog Ltd Suzuki
Tata Motors Ltd Honda
Toyota
GM
Skoda
Commercial Vehicles Ashok Leyland Tatra
Swaraj Mazda Volvo
Tata Mitsubishi
Mahindra & Mahindra
Cars & Utility Vehicles
LCV, M&HCV
Growth drivers
More than 125 Fortune Companies can leverage

500 (including large auto India’s acknowledged
companies) have R&D leadership in IT industry
centres in India
Continuing in economic
Skilled labour costs Proven Product
reforms and policies
amongst the lowest development
related to investments
in India capabilities
Stable
Competitive
Economic
Manufacturing
Policies
Costs
component Indian Demand growth
of 14% CAGR
Most leading
makes India one
manufacturers are Auto the fastest
QS & ISO certified Large & growing
High Quality Hub growing markets
Standards domestic
demand
11 Indian
component 0.4 million
manufactures have engineering
won Deming Award Proximity to Availability of graduates every
Markets Manpower year
Shipments to Europe Proximity to Asian

cheaper than those from economies & emerging 7 million enter
Brazil and Thailand markets like Africa workforce every year
3 Tata Motors – Company Background
Established in 1945, Tata Motors’ presence cuts across the length and breadth of India. Over 8
million Tata vehicles ply on Indian roads, since the first rolled out in 1954. The Company’s
manufacturing base in India is spread across Jamshedpur (Jharkhand), Pune (Maharashtra),
Lucknow (Uttar Pradesh), Pantnagar (Uttarakhand), Sanand (Gujarat) and Dharwad (Karnataka).
The Company’s dealership, sales, services and spare parts network comprises over 6,600 touch
points. Through subsidiaries and associate companies, Tata Motors has operations in the UK, South
Korea, Thailand, Spain, South Africa and Indonesia. Among them is Jaguar Land Rover, acquired in
2008.
Tata Motors Limited is India’s largest automobile company. It is the leader in commercial vehicles
and among the leaders in passenger vehicles in India with winning products in the compact, midsize
car and utility vehicle segments. It is also the world’s fourth largest bus and fifth largest truck
manufacturer. Tata Motors in 2005 was ranked among the top 10 corporations in India with an annual
revenue exceeding INR 320 billion. Tata Motors is committed to improving the quality of life of
communities by working on four thrust areas – employability, education, health and environment.
Highlights of the company (as a TATA Motor Group) in FY2021 -22
Production Capability:
4 Supplier & OEM Manufacturers
Provisions relating to Supply of Products

Tata Motors purchase Products from supplier, subject to supplier meeting system specifications,
quality, reliability, performance, delivery, price requirements etc. of Tata Motors as detailed in
various sections in this General Terms and Conditions, RFQ, Drawings, Tata Motors Standards,
Purchase Orders and other agreements, such as Purchase Agreement, Supply Agreement etc.
that may have been executed with the supplier.
Supplier must extend the status of a very important global customer to Tata Motors
and deal with Tata Motors as the supplier would deal with other similar customers.
Such status, however, neither confers any legal rights on Tata Motors nor does it
impose any legal liability on supplier.
Supplier must not supply to any third party without prior written consent from Tata
Motors, if the products in Purchase Order are manufactured using any of the following:
• Any intellectual property rights of Tata Motors or its promoters.

• Secret knowledge of manufacturing processes (know-how) of Tata Motors.
• Dies, moulds, models, patterns, jigs, tools or accessory equipment that were
acquired from without payment obligation or fully paid by Tata Motors.
Similar products or their packaging supplied by supplier to the third parties shall not
bear any mark or reference of, either intellectual property rights of Tata Motors or the
Promoters of Tata Motors.
The items agreed to be sold and supplied by the supplier must be delivered at
designated points within Tata Motors premises at various locations or any other
location specified for Spare parts.
The supplier needs to supply components in reusable containers. Exceptions, if any,
will have to be informed to buying agency in advance and mutually agreed upon.
Each shipment by the supplier must be made under separate invoice.
Prices
Initial price for every item shall be settled between Tata Motors and the supplier, based on
the quotation and detailed cost break-up provided by the supplier and mutually agreed
between Tata Motors and the supplier. Tata Motors then release Purchase Order on the
supplier for the price thus settled.
Unless agreed to specifically, any qualifying terms and conditions of the Supplier contained
in their quotations / purchase order acceptance or any other form of communication shall not
govern the business with Tata Motors.
Together with Tata Motors, the supplier is expected to commit offsetting inflationary
increases in costs through productivity gains and reducing cost further through value
engineering, six sigma and Kaizen exercises, increased volumes of procurement from Tata
Motors leading to lower Fixed cost per unit, achievement of higher productivity, effect of
learning curve and by initiating other cost reduction measures, and Supplier agrees to bring
down the prices as per the targets set from year to year with help of these measures.
If there are changes in the said Product specifications, which are approved by Tata
Motors, to improve quality, reliability, performance and / or delivery requirements, the
impact will be reviewed jointly and if found appropriate, the Tata Motors will carry out
the consequential amendments in the Purchase Order.
Unless specifically agreed, unit rate applicable for serial production goods will also
be applicable for all requirements on prototypes and for service and replacements.
Price revision effected for an item, due to Value Engineering exercises or changes in
supply conditions or specifications shall normally be considered only once a year, or
at intervals mutually agreed upon.
Any applicable development expense, such as Styling, Engineering, Integration,
Validation, tooling etc., is settled with the Supplier considering the supplier delivers
the product achieving the specified system level targets.
Payment Terms
Local Products: Payment will be made as per payment terms as mentioned in the Purchase
Order, by the respective purchasing agencies in Tata Motors, which are made in Indian
Rupees for all procurements done in India, and is generally made within 30 days of
satisfactory acceptance of Products at Tata Motors i.e. 30 days after Goods Inward
Notification, against documents such as (i) Lorry receipt / Rail receipt (ii) Commercial invoice
(iii) Packing list etc.
Imported Products: Payment will be made as per payment terms as mentioned in the
Purchase Order. The payment terms are generally against irrevocable letter of credit or cash
against documents. Payments shall be released within 30 working days from submission of
documents such as (i) Bill of Lading/Airway bill, (ii) Commercial invoice, (iii) Packing list, and
(iv) Certificate of Origin etc.
For the development cost to be paid in foreign currency, the agreed cost is always
gross of the Withholding tax as applicable under Double Taxation Avoidance Treaty
between India and supplier’s country of origin.
Local Facility
Supplier shall normally establish its manufacturing facilities near assembly location of Tata Motors
with an objective of JIT supplies to Tata Motors. In the event Supplier’s manufacturing location is not
in the vicinity of Tata Motors’ ordering plant, supplier shall establish storage facility near the ordering
plant of Tata Motors to provide uninterrupted and streamlined supply of materials.
In case the initial supplies are imported, in its endeavour to remain price competitive,
supplier shall aggressively explore possibility of setting up facilities in the same country of
Tata Motors’ ordering plant in the earliest possible time for which the supplier shall commit to
a time-bound action plan for setting up a local production facility.
Service and Replacement Parts, Spares Parts and Service Support

At the request of Tata Motors during the period after Tata Motors complete current model
purchases, say 15 years, supplier shall make supplies to fulfill Tata Motors past model service and
replacement requirements at the prices specified in a purchase order plus actual cost differentials
for packaging and transport. During the final year of such period, the Supplier
and Tata Motors shall negotiate in good faith with regard to the Supplier’s continued
manufacture of service and replacement supplies.
Supplier must provide such sale and after-sale service related information as mutually
agreed by the parties, such as (but not limited to) parts, catalogue, workshop manual,
training manual and maintenance guide, diagnostic equipment etc.
Product Specifications
The products to be sold and supplied by the supplier to Tata Motors against the released Purchase
Orders terms shall meet the specifications as finalised and agreed in writing between the supplier and
Tata Motors hereto on completion of development work on the Product. Product specification, thus
finalised, is generally documented in the form of drawings. Supplier is expected to participate in
preparing this drawing jointly with Tata Motors, although the responsibility of approval and release of
such drawings and specs sheets is solely with Tata Motors. The specifications can not be changed
unilaterally by the supplier without prior written approval from Tata Motors.
Forecast and Orders

Actual purchase / supply of components shall be made against specific purchase orders.
Tata Motors provide an annual non-binding forecast to the supplier. The supplier for planning
purposes only may use this forecast.
Volume projection provided in by Tata Motors (including spare parts) is not a commitment by Tata
Motors to purchase the quantities specified. Supplier acknowledges that Volume Projections, like any
other forward looking projections, are based on a number of economic and business factors
Initially Purchase order / Scheduling is released by Tata Motors like an open order. After start
of production of the Product, Tata Motors issue monthly supply schedule, time to time, with
specific quantities to be delivered at a time.
Packing and Transport

For Local supplies, supplier shall supply components in reusable containers. Exceptions,
if any, will have to be informed to buying agency in advance and mutually agreed upon.
Supplier shall provide a mutually agreed Unique Identification mark including location
of Identification (such bar code, color code etc) on each and every Product supplied,
which shall be as agreed upon jointly before start of serial production supply.
Unless agreed otherwise, product prices are inclusive of such marking fees.
Delivery Clauses
Supplier must supply products as per Tata Motors schedules as indicated in Purchase Order
or as communicated from time to time. Supplier is expected to agree on a specific logistics
protocol with Tata Motors prior to commencement of production.
5 Process Flow Charts
Enterprise Resource Planning
6 Level of Technology used by Tata Motors

What is the level of technology adoption in their supply chain? What are
the future plans regarding the type of technology they want to adopt?
JLR is aiming to increase its collaboration and partnerships both within

the Tata Group and with external organizations in a number of areas,
including ADAS and battery technologies, services, and connectivity.
JLR is also exploring collaborations and partnerships for vehicle
architectures, most notably for Jaguar’s new dedicated BEV
architecture. Beyond the design of its vehicles, the other significant
strategic pillar in Reimagine is a radical digital transformation of the
business. Data is the backbone of every vehicle JLR creates, the quality
of manufacturing, supply chain and the support and services it provides
to the customers.
Automobile companies have a complex supply chain. The automobile

supply chains can be broadly classified into - Direct Material Suppliers
(auto components fitted on vehicle) and Indirect Material Suppliers
(consumables such as paint, pre-treatment chemicals gases, etc. used
in the manufacturing process as well as other materials required for
supporting processes).
TML engage with their channel partners as well as suppliers very closely.
They believe in partnering with their suppliers and dealers for sharing
knowledge and developing capacity, will add to cost efficiency and
ensure an enhanced customer experience.
Retain, right-size, repurpose and reorganise
JLR's Reimagine strategy looks to right-size, reorganise and repurpose

the global footprint to become a more agile business. It will rationalise
sourcing and accelerate investments in local circular economy supply
chains, by consolidating the number of platforms and models being
produced per plant. Agility will not just be based on size: flatter
management structures will empower employees to create and deliver at
speed and with clear purpose.
Focus on quality, sales, costs, digital transformation
Refocus brings together existing and additional activity from across the
organisation to deliver value, address pain points and find efficiencies.
Refocus is more than an efficiency programme: it will move JLR from a
functional silo driven method of working, to a more agile organisation
generating more value.
The Refocus programme consists of six separate pillars, supported by three cross-
functional enablers.
The Company positively influences and encourages its subsidiaries to

adopt Business Responsibility (BR) initiatives. All the Company’s
subsidiaries are guided by Tata Code of Conduct. It covers suppliers,
customers and other
 stakeholders. The Company’s suppliers and distributors are critical

participants in supply chain operations and its sustainability
issues can have glaring impact on overall operations. The
Company engages with its suppliers and channel partners on BR
initiatives through Sustainable Value Chain Program. The
suppliers and dealers’ sustainability initiatives serve as a platform
to raise awareness on sustainability topics such as health, safety,
environment and community at large. The vendors and dealers
situated across all locations participate in these sustainability
initiatives. Nearly 100% of our critical suppliers have been
covered under the sustainable supply chain initiative. JLR is
streamlining purchasing processes and building on its strong
relationships with suppliers, while increasing employee
deployment and flexibility across sites.
Going forward
- TML will continue to implement multiple initiatives undertaken in

recent past to structurally improve margins and strengthen
profitability. This includes, Value Analysis and Value Engineering
(VAVE) process implemented to optimise outputs by crafting a mix
of function performance and costs.
Initiatives like feature rationalisation, alternate sourcing, and so on

used to consistently deliver margin improvement. Our focus has
been on product innovation, optimisation of product mix for
increased contribution and growth in the non-vehicle segment
performance. TML will achieve economies of scale with increased
modularity and localisation of key components will also be
enhanced for increased margins.
- TML will leverage existing assets to cater to increasing demand,

while ramping up production aligned to future market demand with
proactive debottlenecking actions to maintain market dominance. It
will adopt Industry 4.0, robust software maturation to reduce
defects and attain flawless launch. It will deploy specialised teams
for quick-turnaround in customer and supplier problem resolution,
and regular supplier quality check for an enhanced in-service
experience.
7 Value Chain
Value chain analysis is much important for each organisation as its divide firm in to various distinct
activities carry out by the organisation such as, designing, manufacturing, marketing etc. The concept
of value chain is developed from accounting practices which helps to analyse the value added to
organisation at every stage of manufacturing or services or marketing. (Cowe, 2008)
The value chain involves two types of activities: Primary activities & Support activities.
Primary activities change inputs (Inbound logistics, operation, outbound logistics, marketing
and sales, service) into outputs and bring them to customer. All this primary activities are
carried out by use of support activities which are firm infrastructure, Human resource
management, technology development and procurement.
Every single activity in value chain can contribute to firms relative cost position and create a
basis for differentiation’ (Porter, 1985 In Cowe, 2008, p.178). Value chain analysis makes
possible for the organisation or management to find out activities which adding value to the
organisation and activities that may destroy the value rather than creating and thereby helps
to identify the source of competitive advantage.
8 Supply Chain
9 Case Study
10 Regulations
10 Rewards & Recognition
11 References

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Group Project on

Growth Forecast for Sales

Growth Forecast for the Auto Segment

Evolution of Indian Automobile Sector

- More than 35 marktet

Major Market Players

Cars & Utility Vehicles

More than 125 Fortune Companies can leverage

Shipments to Europe Proximity to Asian

3 Tata Motors – Company Background

Highlights of the company (as a TATA Motor Group) in FY2021 -22

4 Supplier & OEM Manufacturers

Provisions relating to Supply of Products

• Any intellectual property rights of Tata Motors or its promoters.

Service and Replacement Parts, Spares Parts and Service Support

Forecast and Orders

Packing and Transport

5 Process Flow Charts

Enterprise Resource Planning

6 Level of Technology used by Tata Motors

JLR is aiming to increase its collaboration and partnerships both within

Automobile companies have a complex supply chain. The automobile

Retain, right-size, repurpose and reorganise

JLR's Reimagine strategy looks to right-size, reorganise and repurpose

Focus on quality, sales, costs, digital transformation

The Company positively influences and encourages its subsidiaries to

 stakeholders. The Company’s suppliers and distributors are critical

- TML will continue to implement multiple initiatives undertaken in

Initiatives like feature rationalisation, alternate sourcing, and so on

- TML will leverage existing assets to cater to increasing demand,

10 Rewards & Recognition

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