Role of Management Information

System in Tata Motors

Submitted by
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 Provides suppliers with a streamlined order

management system, along with a friendly
PO / SA new and amendments interface and comprehensive search options
make the job easy.
Delivery schedule
Reduce latency
ASN creation at supplier
Reduce manual efforts of excise invoice
Excise Invoice capture
capture.
E mail and chat
Efficient Goods Movement Tracking.
Bulletin board

Suppliers Registration and Reduce efforts in short listing vendors for

Information Repository 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 Compress cycle time

New part development Reduce transaction cost

Interface with Denis Electronic data storage - Quick retrieval.

Shopping cart creation. Tracking of development items status –

Time saved for review.
Create Contract or PO in R/3
Integrated Procurement Process with
Bid approval
Backend R/3 MM.
Invitation and processing till Create contract
or PO

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 CCM Catalogue Content Ease of procurement
Management Reduce inventories
Users can buy directly from source based Reduce cycle time
on prices fixed by empowered person
Reduce storage.
May be used for production resources and
MRO items

SRM Strategic Sourcing for Improved Supplier Selection, Reduced Cycle Time
Feature Business benefit

Bidding Engine Closed Loop Sourcing Cycle.

Supplier rationalization and Category based Sourcing Cockpit gives

prequalification more control and ease of use for buyers.

Supplier selection efficiency Data Integration between Requirement,

Sourcing and Fulfilment Process avoids
Automated Contract creation or manual data entry and increases efficiency.
Change Online Bid Submission Reduces Cycle
Time and reduces cost for suppliers.

Online Bid Evaluation Analytics for

Improved Supplier Selection.

Integrated Contract Management Specifically developed for TML

Price change of existing contract from bid Maker / checker facility in real sense.
invitation to approval and amendment 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 E-learning which is quite convenient and

faster Knowledge sharing
Repository of all training material

FAQs

Exchange Infrastructure Centralized Process Integration Model.

Can be used in future for Non-SAP

Integration and for B2B Communication

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SRM Analytics Proactive Monitoring and Control
Feature Business benefit

BW Business Information Operation support

Warehouse Decision support
- Analytical reports Strategy development support
Spend analysis

Vendor Evaluation

SOB

Vendor database

Bid comparison

Shopping cart tracking

Rejections

Masop material supplies and balance

GR status and Payment details

Growth of Tata Motors

Growth Of Tata Motors

65

40

25
20

Pre 1990 Mid 1990 Yearly y2k 2003

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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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