Role of Management Information System in Tata Motors

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NarasimhaBala.S(15)

Prasanna.D(20)

Sandeep Sharma(33)

Shankar Ganesh.A.S(36)

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INTRODUCTION

Tata Motors is India’s largest automobile company. Its revenue in 2005-2206 was Rs 24,000 crore (U.S.$ 6.4 billion).It is the leader in commercial vehicles in each segment and the second largest in the passenger vehicles market ,with winning products in compact, mid-size car and utility vehicle segment. The company is the world’s fifth largest medium and heavy commercial vehicle manufacturer and the world’s second-largest medium and heavy bus manufacturer. The company’s 29,600 employees are guided by the vision to be “best in the manner in which we operate, best in the products we deliver and best in our value system and ethics”

Established in 1945, Tata Motors’ presence extends across the length and breath of India. Over 3.5 million Tata vehicles have driven on Indian roads since the first one rolled out on 1954.The company’s manufacturing base is spread across multiple plants, supported by a nationwide dealership, sales and services and spare parts network comprising of about 1,200 touch points. The company also has a strong auto finance operation, Tata Motors Finance for supporting customers in purchasing Tata Motors vehicles.

Background

Tata Motors (NYSE:TTM) is a key business of India's Tata Group, a $22 billion (in revenues) conglomerate with primary interests in steel, IT, commercial and passenger automotives, chemicals and telecom. The 140-year old Tata Group, feted by some as India's General Electric, is highly respected not just for its business prowess but also for its various social and educational projects that have contributed immensely to India's development. Its holding company, Tata Sons, is 65% owned by charitable trusts, which doled out over a billion rupees last year - and trusts in India are not tax avoiding schemes like in the U.S. Recently, the "Tata" brand was valued at $5.5 billion, and has mindshare with "trust" - a Tata product is considered reliable and a value for money, more than anything else. All group companies pay Tata Sons a fee for using the Tata name.

The Tata Group's Chairman, Ratan N. Tata, is recognized as the leading Indian businessman of his generation. Taking over as chairman in 1991 during a time of tumultuous change in India's economic landscape, he undertook a bold restructuring and reorganization of the group, and is widely given credit for the group's transition and success post the economic reforms of 1991 that made the Indian business environment far more competitive. Ratan Tata has repeatedly spoken of targeting what University of Michigan professor, C.K. Prahalad, might call "the bottom of the pyramid" - in other words, the market opportunity offered by the vast and voiceless masses of India. TTM Managing Director Ravi Kant has vast experience in the Indian automotive market, and is a veteran of the company, the right man in the right place at the right time.

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TTM is key growth business for the Tatas, and currently contributes $4.6 billion or about 20% to the group's total revenue. It manufactured only heavy and light commercial vehicles, and its foray into passenger cars has been driven aggressively by Ratan Tata. Tata trucks dominate the Indian commercial vehicle landscape, having approximately 65% market for medium and heavy commercial vehicles (MCVs and HCVs), and 55%+ share for light commercial vehicles (LCVs). For passenger vehicles, the numbers are less impressive, with teething problems on some of its models (and stiff competition in the Indian passenger car market), such as the Tata Indica (compact car). TTM also offers the Tata Safari SUV and Tata Sumo MUV, and also has a presence in the mid-size car segment, with a slightly modified version of the Indica, called the Indigo. TTM's most ambitious project, the $2200 (Rs. 1 lac) car is due out by CY 2008, and is by far Tata's biggest push into the passenger car segment. There will be no competitor at this price point. The compact car will have a 30 BHP engine, and will seat 4-5 people. The target market is the "bottom of the pyramid" - or the lower middle-class to middle class Indian, who is looking to change to a car from a two-wheeler. With India's burgeoning middle class of over 300 million people, the car has a large market. Its customer is less in cities like Bombay and Calcutta, than the smaller towns and perhaps even villages of India, true to the chairman's vision.

Information Technology background

At Tata IT is seen as an important global function. Organizationally it is incorporated into the management services division. Mitra’s (CIO) task is primarily to provide each area with IT resources and tools required and to analyze whether Tata Motors should implement new technologies and IT solutions. He draws up a three year plan in close cooperation with management and Tata Technologies, a fully owned subsidiary of Tata Motors providing business and IT services. This plan determines the basic IT strategy. The details are finalized in an IT balanced scorecard in which the various projects are defined for the next 12 months and listed in order of priority. Joint teams from IT and business are then charged with executing these plans.

In general, a distinction is drawn between project work and maintenance tasks. Tata Technologies is responsible for both. If required, external experts are consulted from relevant areas. Any differences of opinion about the long term perspectives of specific requirements are resolved together with the business team. Mitra sees himself as an arbitrator in this process. The focus is a balance between business benefits and the required corresponding investments. Currently the company has deployed a gigabit backbone network in its Engineering Research Centre and manufacturing plants. Key locations have a high level of redundancy for accessing business critical applications. WAN architecture is a mix of dedicated intercity / intra-city links, VSATs or VPN over service providers' network. LAN and WAN are monitored continuously with monitoring tools such as Cisco Works, Packeteer and other advanced tools.

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Reasons for Implementation of ERP

Tata Motors had its manufacturing plants located in Pune, Jamshedpur, and Lucknow. Its R&D centers were located in South Korea, Spain and UK. The corporate office of Tata Motors was located in Mumbai. It had 1,400 in-house engineers and scientists. Its spare part dealer network consisted of 1200 touch points. It has 27 spare part warehouses comprising of over 700,000 unique materials. It has 17 levels of bill of materials. It has 42 regional and sales-offices. Given its sheer size and its distributed units there was no online real time data available.

To add to this inappropriate real time data led to production loss. The current legacy system was not integrated. The sales, finance and production planning systems were independent of each other hence information flow across the organization was very cumbersome. There existed a need for collaboration between vehicle manufacturers and dealers. Tata Motors use a manual dealer management system, where every dealer managed details. With legacy-based systems, the environment produced inconsistent data, making interpretations difficult and resulting in inefficient planning for capacity and spare parts. Tata motors wanted to scale production and increase its capacity, hence there had to be backward integration of the process.

Selection of SAP as the ERP package

In the automotive industry today, there is no shortage of challenges. Executives find themselves being pulled in many directions – and struggling to do more with less. Stable or declining volumes in mature markets and increased competition from emerging economies are putting pressure on prices and margins, driving shorter product-development cycles, and making asset utilization a critical issue. Mean- while, the cost of everything from raw materials to warranties must be strictly controlled. And customers, of course, have ever-increasing expectations for quality, speed, and flexibility. At the same time, automotive companies face the growing complexity of managing an ecosystem of partners and their own far-flung operations – which can include both mature markets and areas that hold the promise of new customers and lower labor costs, such as central and eastern Europe, China, and southeast Asia. The resulting complexity is multiplied by a growing number of regulations, such as the TREAD Act, the EU’s international material data sheet, and RoHS/WEEE re- quirements for monitoring environmen- tal factors.

In response to these challenges, leading automotive companies are pursuing innovative approaches and positioning themselves to thrive in a global industry.They are enabling cross-functional processes to take time and cost out of every aspect of their enterprise – from engineering and production to payables,receivables, and purchasing. They are focusing on sales and service operations to strengthen their ability to provide a differentiating, high-quality customer experience. And they are implementing a range of adaptive approaches – such as lean enterprise and Six Sigma – to ensure that customer requirements drive engineering, manufacturing, and logistics processes. These innovations

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offer great potential to the industry. However, the challenge lies in approaching them systematically, enabling and supporting them in an integrated fashion. Too often, automotive companies are burdened with fragmented, disparate systems – and manual, paper-based processes – that create friction in external and internal value chains and lead to disconnects among automotive manufacturers (OEMs), automotive suppliers, and sales and service organizations. This disjointed approach makes it difficult to share information, develop an accurate view of demand, work closely with supply chain partners to understand and reach the customer, and, ultimately, turn innovative ideas into practical realities.

SAP helps companies meet their business challenges and capitalize on new opportunities with the SAP for Automotive solution portfolio designed specifically for the automotive industry. Drawing on more than 30 years of working with auto- motive organizations, SAP enables companies to manage and integrate critical business processes and collaborate with partners across the value network. Today, more than 1,600 automotive companies worldwide rely on SAP® solutions.

SAP for Automotive supports the entire range of industry processes, including supply chain planning, manufacturing, and logistics, sales and marketing, and customer service. It provides OEMs with support for everything from research and development to planning, manufacturing, and vehicle end-of-life considerations. It gives suppliers the tools they need to handle product development, quoting, manufacturing, procurement, and logistics processes. And it enables sales and service organizations to manage processes such as vehicle configuration, service-parts logistics, and warranty claims – among many others.

SAP for Automotive is designed to help automotive companies of virtually any size. In addition to providing the tools and capabilities needed to support fundamental enterprise processes – such as finance, regulatory compliance, human capital management, and corporate services.

SAP for Automotive solutions help companies performs the following activities:

Drive adaptive manufacturing and procurement

SAP for Automotive supports multiple manufacturing strategies, including repetitive, lean, flow, assemble-to- order, and forecast-driven processes. Companies can plan, execute, analyze, and control manufacturing operations in sequenced-build and just-in-time production environments. It enables them to leverage lean manufacturing and Six Sigma to improve efficiency while reducing the complexity of synchronizing the supply of automotive components and subcomponents. And companies can draw on information about planning, accounting, human resources, materials, warehouse operations, plant maintenance, and quality to keep production in tune with overall business requirements and customer demands.

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Perform model-option planning

SAP for Automotive lets companies manage customized orders and closely align model mix with market demands. The portfolio offers fully integrated solutions for planning, pricing, configuration, order processing, availability checking, production, fulfilment, billing, and financial reporting, giving companies a consistent view of the product in sales orders, production plans, and profitability analyses.

Manage the complete vehicle order-to-delivery process

Manufacturers, dealers, and importers can collaborate on the full range of activities associated with selling and delivering vehicles. SAP for Automotive gives importers a powerful channel- based tool for procuring, selling, distributing, and tracking vehicles and service parts, while enabling dealers to easily configure, search for, obtain, and track vehicles for their customers.

Manufacture and deliver components

Suppliers in all tiers can use SAP for Automotive to ensure compliance with customer mandates for receipt of material releases; to synchronize production with demand; for data capture and error-proofing on the shop floor; for packaging, labelling, and shipping; and for generating advance-shipping notifications to maximize operational efficiency and effectiveness

Handle warranty claims with efficiency and accuracy

SAP solutions enable dealers, importers, OEMs, and suppliers to process warranty claims and automate the claims-payment process for increased efficiency. The software facilitates the processing of warranty claims across brands and handles multiple-warranty programs. Companies can use SAP software to examine and report on data from various sources and transform warranty information into additional product knowledge. They can analyze campaigns, components, dealerships, and vehicles to drive strategies based on an understanding of factors such as parts-failure and returned-parts patterns and participation levels for a given recall campaign.

Streamline the service-parts process

SAP for Automotive lets companies manage today’s complex service-parts operations with powerful planning, fulfilment, and logistics tools. They can perform time-phased demand and replenishment planning while handling procurement, warehousing, distribution, and workload scheduling. And it gives them visibility into de- pendent and independent demand, parts inventory, supply, and customer and system fill levels. The service-parts management capability supports re- manufacturing, core management, and entitlement controls.

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Enhance dealership management

The SAP Dealer Business Management solution – part of the SAP for Automotive portfolio – lets independent, group-owned, and OEM-owned dealers manage their entire business, even when working with multiple brands, franchises, and locations. Using the integrated set of solutions, vehicle retailers can manage everything from procurement of service parts and accessories to sales of new and used vehicle, as well as finance and marketing. SAP Dealer Business Management enables dealers to work seamlessly with their parent group or OEM to boost efficiency and meet customer needs.

Collaborate across engineering and design

SAP solutions provide tools for internal and external collaboration at every stage of engineering, including design and production start. The software supports collaborative product- development processes involving OEMs and suppliers, such as the Advanced Product Quality Planning (APQP) process and ISO/TS 16949, the globally accepted quality-management system that links customer satisfaction with the measurement and improvement of processes.

Strengthen the management of programs and projects

SAP solutions provide the tools companies need to plan, manage, and control programs and projects of any size; oversee project structures, timelines, costs, and resources; and optimize re- source allocation across programs and projects.

Manage relationships with customers and partners

SAP for Automotive gives companies the sophisticated customer relationship management tools needed to manage sales and service interactions with all partners in their value network, including dealers, OEM customers, partners, and suppliers. A comprehensive set of marketing, sales, and service tools integrated with vehicle and product data ensures that knowledge-driven interactions improve customer satisfaction and increase collaboration.

Deploy enterprise shared services

SAP for Automotive enables companies with diverse, geographically distributed operations to adopt and deploy back- office processes through shared-services centers. As a result, companies can leverage enterprise best practices and achieve savings from reduced redundancy and the centralization of transactional information about suppliers and customers

Understand and control operations in greater depth

Comprehensive tools for analytics, forecasting, and reporting help companies plan, budget, and optimize internal and external processes; improve sales planning and monitoring; and work with a complete picture of operations.

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Improve the management of enterprise assets

Support for enterprise asset management covers the complete asset life cycle, including specification and design, development and procurement, operations, preventive and predictive maintenance, and disposal – helping companies reduce operating costs and minimize downtime

Ensure compliance with government regulations

Comprehensive capabilities address the full range of reporting requirements, including the Sarbanes-Oxley Act; global trade and customs rules; and environment, health, and safety regulations. Companies can track detailed data about quality, materials, components, and products throughout the value chain.

Critical Success Factors

Some of the CSFs that Tata Motors took into consideration while implementing my SAP are :

Improved Sales Revenue Cost Reduction Reduced Inventory Improved Production Scheduling Improved Productivity Enhanced organization-wide communication

Tata Motors Project: Overview

Tata Motors has been the first Customer to Implement and Use all Scenarios of

SRM these comprise of the following:

Self Service procurement. Catalog and Content Management. Strategic Purchasing Scenario: Spend Analysis, Contract Monitoring. Sourcing Scenario: Rfq, Rfx. Supplier Self Registration Module. Live Auction Cockpit Order Collaboration Scenario with full support for Goods Movement. Contract Re-Negotiation Scenario for Retrospective Price Amendments. Usage of SAP Net weaver: People Integration, Process Integration and Information

Integration.

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Benefits Accrued

SRM Supplier Collaboration for Closed Loop Procurement Process

Feature Business Benefit

SUS Supplier self Service

PO / SA new and amendments

Delivery schedule

ASN creation at supplier

Excise Invoice capture

E mail and chat

Bulletin board

Provides suppliers with a streamlined order management system, along with a friendly interface and comprehensive search options make the job easy.

Reduce latency

Reduce manual efforts of excise invoice capture.

Efficient Goods Movement Tracking.

Suppliers Registration and Information Repository

Reduce efforts in short listing vendors for sourcing a part.

Easy capturing of new vendors capability.

Easy accessibility for all buyers

SRM Operational Procurement for Cost Reduction, Better Spend Control & Contract Compliance

Feature Business benefit

EBP – Enterprise Buyer Professional

New part development

Interface with Denis

Shopping cart creation.

Create Contract or PO in R/3

Bid approval

Invitation and processing till Create contract or PO

Compress cycle time

Reduce transaction cost

Electronic data storage - Quick retrieval.

Tracking of development items status –Time saved for review.

Integrated Procurement Process with Backend R/3 MM.

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CCM Catalogue Content Management

Users can buy directly from source based on prices fixed by empowered person

May be used for production resources and MRO items

Ease of procurement

Reduce inventories

Reduce cycle time

Reduce storage.

SRM Strategic Sourcing for Improved Supplier Selection, Reduced Cycle Time

Feature Business benefit

Bidding Engine

Supplier rationalization and prequalification

Supplier selection efficiency

Automated Contract creation or

Change

Closed Loop Sourcing Cycle.

Category based Sourcing Cockpit gives more control and ease of use for buyers.

Data Integration between Requirement, Sourcing and Fulfilment Process avoids manual data entry and increases efficiency.

Online Bid Submission Reduces Cycle Time and reduces cost for suppliers.

Online Bid Evaluation Analytics for Improved Supplier Selection.

Integrated Contract Management

Price change of existing contract from bid invitation to approval and amendment

Specifically developed for TML

Maker / checker facility in real sense. Improve data accuracy

SRM Live Auction Cockpit for Better Savings and ROI through Supplier Competition

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Feature Business benefit

LAC – Live Auction Cockpit In line with existing LAC engine of Ariba with added benefit of Integrated Procurement

Process that Streamlines the process flow through seamless top-to-bottom integration with multiple SRM components and backend systems.

Self hosted engine – reduce dependence on external service provider.

Integrated to Procurement Process Reduces Manual Data entry.

Electronic Workflow Approval Process that increases efficiency

SAP Netweaver :

Central Platform for Electronic Commerce

Feature Business benefit

Enterprise Portal – Single sign on. Easy Navigation to all systems thus enabling Seamless Integration to different Applications and Processes.

Role based and provides unified, secure access to supplier related information, transactions and

services based on authorizations associated with a particular role

KM Knowledge Management

Repository of all training material

FAQs

E-learning which is quite convenient and faster Knowledge sharing

Exchange Infrastructure Centralized Process Integration Model.

Can be used in future for Non-SAP

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Integration and for B2B Communication

SRM Analytics Proactive Monitoring and Control

Feature Business benefit

BW Business Information Warehouse

- Analytical reports

Spend analysis

Vendor Evaluation

SOB

Vendor database

Bid comparison

Shopping cart tracking

Rejections

Masop material supplies and balance

GR status and Payment details

Operation support

Decision support

Strategy development support

Growth of Tata Motors

Pre 1990 Mid 1990 Yearly y2k 2003

20

4025

65

Growth Of Tata Motors

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Overall Integration of the departments –Finance, Sales, Production etc. On Demand Decision making data Backward Demand Integration Reduction in inventory cost as real time info is available Reduction in production bottleneck with better scheduling Seamless integration across the Supply Chain Standardization of processes across plants at various locations Reduction in manual efforts of Invoice Capture Reduction in Transaction Cost & Compress Cycle time

Conclusion

Tata Motors took the first important step toward a modern IT landscape in 1998 by implementing SAP R/3 for the basic business processes, following an internal reengineering project. Implementing SAP helped the various sites improve automation and created a basis for integrated processes.

Although the effects of the implementation were noticeable, they were not far-reaching. Improvements - such as a more efficient way to access information or a more precisely defined workflow - could not be felt at the transaction level. Because of the required process volume, Tata Motors had to make a number of changes to the systems to meet performance requirements.

Five systems were consolidated on one server with one database and the company stayed as close to the standard version as possible. Both the business as a whole and developers are now much more involved. Since the implementation, the IT division of Tata Motors has been run according to the principle of “controlled programming.”

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