CASE STUDY FOR CRM IN B2B- THE MAKING OF TATA NANO

ROLE PLAYED IN DEVELOPMENT BY VENDORS

The tale of the creation and design of the Nano is one of innovation and ingenuity, both
inside and outside Tata's own organization. First, Ratan Tata called a meeting of his top
parts suppliers and, after showing them the early, earnest but flawed prototypes, asked
them to help. Companies including Germany's Bosch, which makes the computer that is
the heart of car's engine, were skeptical. So were local Indian players.

But Tata persisted, pointing out that not only could a company's specific developments
for the Nano help to make history but they could also improve their companies'
businesses and bottom lines. Soon most of Tata's traditional suppliers were on board.
Rane Group, for instance, makes a rack and pinion steering system. It focused on
reducing the weight of the materials used, replacing the steel rod of the steering with a
steel tube—a major cost-reducer. Typically, the product is made of two pieces, but it was
redesigned as one to save on machining and assembling costs. According to Harish
Lakshman, director of the $317 million company: "The world has seen this sort of
integration of two pieces into one, but applied differently—not for a new car, and not to
reduce costs".

GKN Driveline India, a subsidiary of global auto parts leader GKN, made the driveshaft
—the component that transfers power from the engine to the wheel. The team spent a
year developing 32 experimental variants to create the perfect driveshaft for the Nano. It
roped in designers from the company's French and Italian operations and changed the
design to make it lighter and easier to manufacture. For the Nano's rear-wheel drive
system, GKN designed a smaller diameter of shaft, which made it lighter and saved on
material costs. "We thought if we were successful in this, we could dictate terms to the
market, and every other car manufacturer would want to work with us," says Rajendra
Ojha, chief executive of GKN Driveline India.

Taking the pulse of the project

All the suppliers have similar stories. And although none would disclose specific cost
savings, most stuck to Tata's mandate to cut costs. That was, as Kant –Director
-acknowledges, the biggest hurdle for the company—"then, now, and in the future,"—
particularly as the price of raw materials like steel have more than doubled in the past
four years, and the company has to follow new, tighter industry regulations. Kant, who
recently led negotiations to acquire luxury auto brand Jaguar Land Rover, has little time
to get involved in day-to-day details of Tata's many projects. However, with the Nano,
"every cost, every component price, has to be run by me," he says.

Co-ordinating the vendors with Tata Motors' team was a whole new exercise in logistics.
Wagh quickly realised it was necessary to bring everyone on board, "else it leads to last-
minute heartache and delays". Every morning, he would spend an hour or two on the
floor of the Pune factory, insisting that everyone involved—designers, manufacturing
teams, vendor development people—be there to accelerate decision-making and problem-
solving. "We had to have the pulse of the project and know exactly where the hurdles
were," Wagh remembers.

Over time, Wagh's team grew to comprise some 500 engineers, an impractically large
group to gather on a daily basis. So instead, a core team of five engineers gathered every
day at three pm to discuss the latest developments. Each engineer represented a different
part of the car: engine and transmission, body, vehicle integration, safety and regulation,
and industrial design.

Tata Motors' new plant for Nano to come up in Gujarat Chosen site is at Sanand,
near Ahmedabad

Tata Motors today announced that the mother plant for the Nano will be relocated to
Sanand in Gujarat.

The company had received overwhelming support from several states for relocating the
plant. After examining various sites in these states and carefully evaluating offers from
the respective governments, the company has concluded that the site at Sanand and the
offer from the Gujarat Government is in the best interest of the project.

The integrated project, comprising the mother plant and the vendor park, will come up on
an area of about 1100 acres. The plant, to begin with, will produce 250,000 cars per
annum. The capacity is expandable up to 500,000 cars per annum. The project, including
Tata Motors' plant, vendor facilities and service providers, will together generate over
10,000 direct and indirect jobs. In addition to the Sanand plant, Tata Motors will explore
the possibility of manufacturing the Nano at its existing facilities at Pune and
Pantnagar ,also.

THE OBJECTTIVE OF THE CASE STUDY

You are required to study both situations explained above i.e. Role played by vendors in
the development of Nano car & shifting of the Nano plant to Sanand in Gujrat ( instead of
at Singur in West Bengal ) and come up with a presentation as to how Tata Motors must
have managed their B2B scenario in both these situations.