Welcome to “Seminar on Material Cost...
Transcript of Welcome to “Seminar on Material Cost...
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Welcome to
“Seminar on Material Cost Management”
Moving Closer to Supplier – Customer Location
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Tata Motors –widest range of vehicles
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• Total Vehicle Sales – 506,421 nos.
Commercial Veh - 265,373 nos. Passenger Veh - 207,512 nos
• 5 Manufacturing plants
Tata Motors – Key Numbers (FY 09)
Lucknow
Dharwad
Pune
Jamshedpur
Pant nagar
Existing
In progress
Proposed
Sanand
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Support for growth in Multiple Locations in India & Abroad,
Support Introduction of Record No. of Products & Variants,
Vendor park Concept at New Locations.
2005-2008
Global sourcing, Early Vendor Integration, Outsourcing, Focus on quality, Increasing Geographies for sales and manufacturing2002-2005
Era of consolidation driven by Vendor Base Rationalization, strengthening Quality Systems and reducing costsLate 1990s till 2002
Development of Aggregates/ Modules, Support Localization in new geographies identified, Commodity Org. Structure, Green Supply Chain
Future Outlook
Rapid growth of ancillary base driven by high growth rates1980s to early 90s
Early beginnings of Ancillary Development Activities1970s
Limited supplier capabilities, Era of vertical Integration1950s and 60s
TrendsPeriod
CVBU has pioneered the vendor development activity in the Indian Automotive Industry..
Vendor Management
�Global Sourcing/Joint Sourcing
�Early Vendor Involvement
�Strategic Outsourcing
�Vendor base rationalization
�Vendor capability up-gradation
(CII clusters)
�Category Management
�Long term relationship with vendors
� VA/VE Initiatives
�e-Procurement
Turnaround Consolidation Growth
Roadmap for deployment of Sourcing Initiatives in-line with CVBU strategy
�Vendor Quality
�Vendor Rating�ICR
�Vendor Satisfaction
�People Development
�World class products
�Non-vehicle business
�International business
�Globally benchmarked
processes
�Cost Reduction
Turnaround (00-01) Domestic Growth (04-05) International Growth (11-12)
�Strengthening the
Sales and service
Network
�Products appropriate
to market needs
CVBU strategy
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Direct Inputs (95% of spend)
•Raw Materials – Steel, Aluminium etc.
•Components and assemblies – Sheet metal, Forgings, Castings etc.
•Proprietary Auto Parts – Fuel Injection Eqpmt, turbochargers, Tyres,
Batteries etc.
•Consumables – Paints, Greases and Lubricants
•Standard Items – Fasteners etc.
Indirect Inputs
•Consumables – Tools, Cutting Oils, Stationary, Spares
•Machinery and equipment
CVBU purchases a variety of products and services..
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With Direct Material procurement alone of magnitude as below, CVBU has one of the largest
purchasing budgets in Indian Industry..
CVBU Direct Material Purchase
0
5000
10000
15000
20000
2000-
01
2001-
02
2002-
03
2003-
04
2004-
05
2005-
06
2006-
07
2007-
08
2008-
09
(Est.)
Year
Rs. Crores
With Material cost alone,
contributing 65% of CVBU costs,
vendor management assumes a
critical dimensions.
DM Purchase
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Others
14%
Proprietary
15%
Rubber & Plastics
16%Machining
16%
Sheet Metal
13%
Raw Material
3%
Casting Forging
16%
Fasteners
7%
Supplier Base CVBU
Supplier Base
Auto Materials
Buying overview - Zone wise
Maharashtra
53%
Chattisgarh
0%
Bihar
2%
Goa
1%Delhi
1%Andra Pradesh
3% Gujarat
0%
Gujrat
3%
Hariyana
5%
Imports
1%
Himachal Pradesh
0%
Jharakhand
7%
Madhya Pradesh
3%
West Bengal
0%
Uttar Pradesh
1%
South
18%
Punjab
1%
Rajastan
2%
Orisa
0%
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2000 2001-02 2003-04 2006-07
Kolhapur Chennai
BanglorePune Mumbai
50+
202933Suppliers
3-42-33-412No. of
Milk
Runs
Logistic contract 3 PLHired Vehicles
Milk Route
UnderImplementation.
Implemented
Chennai 17 Suppliers
B’lore 8 Suppliers
Evolution of Logistics Initiatives at TML
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For Cockpit
•Part design and integration
•Air Flow Management
•GD & T Studies
•CAD modeling and CAE Simulations
•Complete integration of all dashboard components
For Seating•Styling•Part design •CAD modeling and CAE Simulations
For Cooling Module
• System design, and CAE Simulations•Integration of Radiator, Condenser and Fan modules
Value Added ProcurementFunctions are now available as Systems and modules and not just parts, with
styling, designing and engineering done by the suppliers. For Automakers, it is
a big saving on reduced transactions with simplified responsibility allocations
and for suppliers, it is a bigger business of full systems against parts.
12Strategic Sourcing
Procurement as Higher Level Assemblies – some
examplesEarlier Now
Dashboard
Cross Car Beam
Airbags
Hood
Cluster Cover
Facia Centre Cluster
Glove box
Lower CoverNacelle
Received Drier
Fan Motor
Fan
Radiator
Condenser
One part –One supplier
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Higher Level Procurement Examples – Corner Module
Strut
Knuckle Brake Disc
Sub Frame
Hub
Corner Module
Existing IndicaNew Indica –
Design
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Outsourcing
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Critical Components to be Offloaded
Fully Assembled for specific models. ( 207 / 407 )Rear Axles13
Outsourcing of subassembliesCabs and Cowls14
Ready for fitmentPropeller Shaft12
Fully AssembledFrame11
Fully finished Out Sourcing, Assembly - In houseGear box Housing2
Pressed and Sub assembledPressings ( Except skin panels )10
Fully MachinedFront Axle beams9
Fully finishedStub Axle8
Fully finishedConnecting Rods7
Fully finishedCamshaft6
Fully finishedCrankshaft5
Roughing - O/S , Finishing - I/HCylinder Block4
Roughing - O/S ,Valve Seat, Valve Guide fitment &
finishing - I/HCylinder Head3
Fully finished - Out SourcingGears, Shafts1
Condition of supplyComponentSr.
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Modules/ Subassemblies to be Outsourced--
Radiator, Condenser, Fans, Shroud, Wiring HarnessCooling Module4
Assembled, Inflated,Balanced Tyre Wheel assembliesTyre Wheel Assembly5
Assy of Front Brake caliper, steering Arm, Stub Axle etcCorner Module4
Piston, Pin, Circlips, Con Rod, Cap, Bolts, Rings duly graded Piston Con Rod Assy1
Assembly Dash with Cross bar beam, Instrument Cluster,
Shroud,Clock, Aux Switches etcCockpit3
Semi-trailing Arm subassembly Rear Suspension Indica2
Door Assembly CompleteDoor Assembly1
TCF Line 53 Modules /
subassemblies like
Condition of supplyComponentSr.
No.
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Cockpit
Lighting Suspension
System
Climate Control
Power Steering
Seating
System
Sealing System
Door Module
Occupant
Restraint System
Cooling Module
Driver Information
System
Transaxle
Electrical
Architecture
Interiors
Exteriors
Steel
NVH Solutions
Deployment of Early Vendor Integration - Examples
Engine Mounts
Braking and ABS
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Introduction of New concept
Vendor Park
Introduced first in Uttarakhand Plant at
Pantnagar
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Advantages of Vendor Park concept –
Project inception stage –
1. Rigorous monitoring of progress across all vendor base is possible,
enabling better adherence to meet SOP.
2. Common facilities and resources are employed.
3. Collaborative approach towards all Infrastructure development with local
government.
Post Productionisation
1. Inventory control optimisation
2. Quick flow of communication , avoidance of Whip effect
3. Complete alignment to OE plant in terms of capacity / capability ramp up.
4. Bare minimum material movement reducing logistic costs.
5. Extensive use of common services like surface treatment , steel service
providers