Cost Reduction Techniques-final

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Table of Contents

Page No

Chapter 1.

Introduction

Chapter 2.

Research Methodology

2.1

Primary Objective

2.2

Hypothesis

2.3

Research Design

2.4

Scope of Study On Cost Reduction-Automobile

`2.5

Limitations

Chapter 3

Critical review of literature

3.1

Automobile Market Overview

3.2

Automobile Domestic Performance

3.3

Exports of Automobile from India

3.4

Review of Literature on Cost Reduction

Chapter 4

Industry Profile-Automobile

4.1

The Pre 1997 Automobile Market

4.2

The Protected Indian Domestic Automobile Sector

4.3

The Advent of the Auto Majors-India

4.4

The After Sales Service Scenario

4.5

Market Potential of Indian Automobile Segment

4.5.1

Vehicle Prices

4.5.2

Consumer Finance

4.5.3

Infrastructure

4.5.4

Product Availability

4.6

The Future-Indian Automobile

Chapter 5

Company Profile-Tata Motors

5.1

History & Evolution

5.2

Area Of Business

5.3

Tata Motors Successful Car Indica

Chapter 6

Cost Reduction techniques in

Tata Motorss Indica

6.1

Outsourcing Strategy

6.2

Vendor Development

6.3

Supply Chain

6.4

Leveraging The Supply Chain

6.5

Cost Cutting

6.6

Quality Management

6.7

Cost Reduction In Energy Consumption

6.7.1

Energy Conservation Commitment, Policy and Set Up

6.7.2

Electrical Saving ( Compressed Air)

6.7.3

Thermal saving & Heat Recovery

6.7.4

Projects Implemented During 2004-2005

6.7.5

Energy Conservation Plans and Targets

Chapter 7

SWOT Analysis of Cost Reduction Techniques

in Automobile

Chapter 8

Recommendation

8.1

Main Indicators

8.2

Focus on Moves to Strengthen Ties with Automobile Manufacturers

8.3

Investment Margin is Key to Survival

8.4

Focus on Adequacy of Equity Capital

Chapter 9

Bibliography

Chapter 10

References

Chapter 11

Annexures

Chapter 1.

Introduction

This research work related to customer research study, titled Effectiveness Of Cost Reduction Techniques In The Automobile Sector, throws a bucket of ice water in the face of some core business management tenets plus a number of keystone principles of the marketing, distribution channel, advertising and customer relationship management (CRM) industries.

Freed from the editing and selective hearing businesses often invokes to avoid hearing unpleasant

truths, customers dish out an earful to companies about what they want, what they don't want and what they ignore and how they really make purchase decisions.

Businesses need to rethink their logic and develop new operating models based on customer centric behaviors and valuations.India has became manufacturing Hub for automobile and textile industries. Where FDI Has been donein these sectors. So its task for Operational Managers to optimize Cost with respect to Capital employed . This may helped companies to gain maximum Profit with minimum effort. So Competitive Pricing can be done by companies to competitor with their competitors. This Paper aims to study effective methods for Direct Cost reduction techniques that currently being implemented by Automobile

.

. The auto industry is another beehive of innovation. why so many MNCs were setting up car plants in Tamil Nadu. Because, the state produces an inexhaustible supply of engineers, maybe 200,000 per year! Many come from private engineering colleges of poor quality. But even if half the graduates are sub-standard, that still leaves 100,000 competent, innovative technicians. Multinational car companies originally came to India for the potentially huge domestic market. To cut costs, they had to use local components, which initially were of low quality. But soon, the interaction between component manufacturers and MNCs led to not just quality improvement but innovations that nobody had dreamed of earlier. Today, Indian auto component companies are doing computer-aided design and computer-aided manufacturing, constantly coming up with new designs that reduce cost and increase efficiency. This design-savviness has made India a global player, ex-porting over $1 billion worth of components last year. And car exports have shot up to over 100,000 in 2003-04. In the bad old days of the licence-permit raj, companies had no incentive to do R&D. Getting a foreign collaboration approval ensured monopoly profits for years. But the new competition brought in by economic liberalisation in the 1990s made R&D is an essential tool to compete and survive. Tatas Indica car is a prime example. Bajaj Auto once depended on technical know-how from Kawasaki, and TVS on Suzuki. Today, both two-wheeler companies rely overwhel-mingly on in-house R&D: this alo-ne will enable them to withstand the new challenge from Honda. Other miracle Asian economies like Korea and Taiwan used labour-intensive manufacturing as their launching pad, taking advantage of their low wages. Later, they moved up the value chain. India missed the bus of labour-intensive exports, but has now caught the jet plane of brain-power exports. This began in computer software. It then spread to design-intensive manufacturing. And it is now sparking an R&D revolution.

After booming years of 2002 and 2003 the sales growth is slowing down and the prices are falling. Competition is becoming fiercer. Pressure on profit margins and falling market shares force many local producers to move towards exports to foreign markets.

Up to 2010 India is going to become the second biggest automotive market in the world. Forecasters predict the country will be the fourth-largest producer of vehicles in the world by 2008, and may be the third-largest producer by 2010. Indian consumers are demanding high quality cars so prices must be cut and costs minimized. (source : Ernst & Young)

In 2005, India produced nearly five times as many motor vehicles as in the early 1990s. With annual production nearing six million vehicles, it is on pace to overtake Germany as the third largest national vehicle producer, and would trail only the United States and Japan in total vehicle output.

Among the study's key findings are:To Study Cost Reduction techniques practiced in Manufacturing Industries(Automobile)(a).Study of Effective Cost Reduction techniques in Supply Channel of distribution Network.

(b).Study of Effective Cost Reduction techniques in Procurement of Raw Materials.

(c).Study of Effective Cost Reduction techniques in Operational Management.

The presence of a growing gap between customer expectations and company behaviors, which creates opportunity for some companies and increasing risk to others. At a high level, a company's degree of customer focus was the most important purchase decision factor for customers, and by a very wide margin.

In terms of specific company behaviors delivering customer-relevant quality products, as expected, was the most desired factor; very closely and unexpectedly followed by companies empowering their employees.

Chapter 2 RESEARCH METHODOLOGY

Chapter 2. Research Methodology : CHAPTER 2.1

Primary Objective:The founder of the Japan-based 'Kaizen Institute,' Masaaki Imai, defined Kaizen in his book, 'Kaizen - The Key to Japan's Competitive Success' as, "Kaizen means continuous improvement in the personal life, home life, social life and working life." Automobile companies applied Kaizen for continuous improvement in their operations.

When Kaizen is applied to the workplace it means continuous improvement for - managers and workers. Thus, Kaizen involves everyone in an organization to make improvements 'without large capital investments.' It can be seen as a culture of continuous sustained improvement focusing on eliminating waste in all systems and processes. The Kaizen strategy begins and ends with people. With Kaizen, an involved leadership guides people continuously to improve their abilities to meet high quality expectations, low cost and on-time delivery, which in turn helps the organization gain a competitive edge

The savings are tremendous in time and material. The engineering resources - both budget and people - freed up from the productivity gains are being reapplied to bring out more new models more quickly."- Jay Wetzel, Vice President and General Manager, GM Technical Center, commenting on the benefits derived from CAD/CAM/CAE tools, in 200To Study Operations of Automobile Company.(Tata Motors)

.(a)Study of Effective Cost Reduction techniques in Supply Channel of distribution Network.

(b).Study of Effective Cost Reduction techniques in Procurement of Raw Materials.

(c).Study of Effective Cost Reduction techniques in Operational Management.According to the Council of Logistics Management Supply Chain Management, the process of planni