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Old 6th September 2013, 15:11   #1
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Default Targeting quality improvements, Tata Motors plans to downsize vendor base

Many Tata cars are not known to age well with their various parts failing to function robustly after a couple of years. The variable quality level of parts used in Tata cars is said to be the cause of this issue, leading to many Indian car buyers to migrate to more reliable and robustly built cars from competing brands. Under the HORIZONEXT strategy that Mr Karl Slym, the managing director of Tata Motors, unveiled recently, improvements in overall quality levels and service experiences were promised.

Targeting quality improvements, Tata Motors plans to downsize vendor base-tata-motors-assembly-line.jpg

One such measure to improve quality levels on Tata cars begins right at the vendor/supplier level. Tata Motors has a large number of vendors, many of them supplying the same part. This results in variable quality levels, leading to inconsistent quality in Tata cars. To solve this issue, Mr Slym has embarked on a vendor downsizing mission. Tata Motors now aims to have only one vendor for each part, giving it better control over part quality.

The vendor downsizing exercise will happen in a phased manner. In the next four years or so, Tata Motors plans to reduce its vendor base from the current 1,200 plus to about 300-400. If this exercise is successful and if Tata Motors manages to squeeze out better part quality from vendors, expect to see dramatic increases in quality levels on Tata cars. From being stuck with a taxi image, cars from the Tata Motors stable could once again find favour with car buyers in India.

Sales of the Indian car and utility vehicle maker have been slipping in the passengers car space. From once being a strong contender to unseat Hyundai from second place in the Indian car market, Tata Motors finds itself in fifth place, with Mahindra and Toyota also overtaking it in terms of sales numbers. Apart from boosted quality levels, Tata Motors also plans to build newer cars that actually excite the car buyer into making a purchase. The Advanced Modular Platform is a step in that direction.

Source LiveMint
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Old 6th September 2013, 15:31   #2
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Default Re: Targeting quality improvements, Tata Motors plans to downsize vendor base

IMO this makes sense. Too many suppliers for same products may lead to higher degree for tolerance for products that may not meet standard quality, & eventually lead to minor niggles &/ or major problems in product, as seen past. Kudos to Karl Sym .

If I remember correctly, Rahul Bajaj also adapted the same approach for the bike division, when he took over reins of Bajaj Auto & he has redefined the business & market over the past 15 years.
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Old 6th September 2013, 16:59   #3
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Thumbs down Re: Targeting quality improvements, Tata Motors plans to downsize vendor base

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Tata Motors has a large number of vendors, many of them supplying the same part. This results in variable quality levels, leading to inconsistent quality in Tata cars. To solve this issue, Mr Slym has embarked on a vendor downsizing mission. Tata Motors now aims to have only one vendor for each part, giving it better control over part quality.
I don't agree with this one bit. Why should a product manufactured at two sources be different, if they are produced from the SAME DRAWING and SPECIFICATIONS? There are tolerances, but still the final product should lie within the given tolerances specified in the drawings. Manufacturer related differences are understood, but this is beyond me.

Mr. Slym must first ensure that the drawings released by their product development teams are robust and error proof, otherwise the cat fight with vendors will continue. As simple as that.

Spike

Last edited by Rehaan : 6th September 2013 at 17:34. Reason: Be polite.
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Old 6th September 2013, 17:36   #4
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Default Re: Targeting quality improvements, Tata Motors plans to downsize vendor base

Spike, you're right with that! And the sourcing people at Tata are real fighters to not have any blame on themselves.

We had a project with a Kanpur based firm which had a high rejection for the seat sliding mechanism. We did not do any why why analysis or and detailed problems methods. Did a simple jugaad which made the part simply rejection free on the basis of that particular part. Had a chat with the Tata Johnson Engineer regarding the fault being at the design end and not with the vendor. We had a very heated argument with later only our professor stepping in. A month later, Tata Johnson Senior management person calls up the prof. Owns up it is a design fault and pays the vendor for the rejections in the past 3 years.

That is the condition of Tata presently.
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Old 6th September 2013, 17:37   #5
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Default Re: Targeting quality improvements, Tata Motors plans to downsize vendor base

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Originally Posted by SPIKE ARRESTOR View Post
why should a product manufactured at two sources be different, if they are produced from the SAME DRAWING and SPECIFICATIONS? There are tolerances, but still the final product should lie within the given tolerances specified in the drawings.
I agree here.

Also, just lowering the number of vendors is not going to help at all.

They need to make sure vendors adhere to specifications (more than just dimensional tolerances - eg. source materials used, etc), and they also need to have much tighter quality control - right from the start, so they aren't forced to go ahead with less-than-perfect parts.

Having less vendors may make policing the above easier, but in itself, it wont do much.

cya
R

Last edited by Rehaan : 6th September 2013 at 17:42.
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Old 6th September 2013, 18:02   #6
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Default Re: Targeting quality improvements, Tata Motors plans to downsize vendor base

Having a large number of vendors only means that many more people to talk to and coordinate with on a daily basis which can be tiring , it is however not and cannot be a reflection on the quality in Tata , 1 vendor or a 1000 is irrelevant if quality checks are not upto the mark , and while reducing vendors is one step perhaps in the entire scheme of things its not going to be the only solution.

And we are talking 4 years here as well , given the pressure and the urgency of the problem i would expect this to be turned around faster and not at leisure - but like i said , and as others have too - improving quality does not mean a wait time of 4 years - it can be in place and effective much faster if quality standards are adhered to , for all we know Tata's quality standards are not as high as others to begin with either...
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Old 6th September 2013, 18:52   #7
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Default Re: Targeting quality improvements, Tata Motors plans to downsize vendor base

Not sure why Mr Slym does not get to the root cause of problems. Same was the case when he was at the helm of GM operations in india. All the while company keeps on struggling to retain the quality and spruce up the sales, the dealers keep on creating some or the other nuissance at the root level. Tata motors needs to pull up it socks right away from sales to service. Else they will keep on slipping down the ladder from third to 5th to 7th or the tenth. The high vendor base helps Tata with the option of divide and rule. The pricing factor and the liberty to choose is where TML stands to gain.

As mentioned by a fellow Bhp'ian, there is a basic problem with QC dept at the Production lineup and the sales at the dealer level.

Improve these two and rest should fall in place.
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Old 6th September 2013, 19:09   #8
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Default Re: Targeting quality improvements, Tata Motors plans to downsize vendor base

Mr Slym must be having enough experience & qualification to know that reducing vendor count is not equal to quality improvement. Having said that, reducing vendor count is a desirable move at many levels.

I am very sure that media understood the information wrongly and reported it wrongly. Perhaps the event is one of the many end states of a planned quality drive, which has wrongly been attributed as the cause in the first place.
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Old 6th September 2013, 20:43   #9
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Default Re: Targeting quality improvements, Tata Motors plans to downsize vendor base

Reducing vendor count is fine, but one vendor per part defies commonsense.

Call me cynical, but I see it as a move initiated by the beancounters, and I would think driven more by falling volumes. Single vendor = more volumes for that vendor = more bargaining by TMC.

Can you realise the pressure on a QC guy who rejects any part. Single vendor also means lack of a single component can bring production to a halt. And the vendor will also know that!
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Old 6th September 2013, 21:03   #10
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Default Re: Targeting quality improvements, Tata Motors plans to downsize vendor base

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Originally Posted by Rehaan
Having less vendors may make policing the above easier, but in itself, it wont do much.
Lesser number of vendors should help logistics & vendor mgmt to some extent, but yes - Quality should be the focus after that.
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Old 6th September 2013, 21:06   #11
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Default Re: Targeting quality improvements, Tata Motors plans to downsize vendor base

I am all in favor of reducing the number of vendors, though not down to one part = one vendor level. The advantage with limited vendors for a part is that the vendor can be involved in the design, will have the motivation to invest in new tooling / processes simply because he is assured of a certain level of business.

Also, the quality level specified needs to be the best and an independent team (maybe completely independent of TM) needs to be formed to ensure standards are met.

One thought - why not source from the same vendor base that Maruti / Hyundai use? They have practically the same level of local content and are able to produce cars at reasonable prices, with acceptable levels of quality? Surely their vendors are not tied into exclusive supply deals?
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Old 6th September 2013, 21:13   #12
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Default Re: Targeting quality improvements, Tata Motors plans to downsize vendor base

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One thought - why not source from the same vendor base that Maruti / Hyundai use?
Something I've always wondered about. Had an Indica. During its rather short stay with us, almost all its electricals failed at some time or another. Electrical manufactured by companies who supply to the rest of the industry also. Where they work quite well! (alternators for the early lot of indigenised Marutis excepted.)

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Old 6th September 2013, 21:32   #13
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Default Re: Targeting quality improvements, Tata Motors plans to downsize vendor base

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Originally Posted by Sutripta View Post
Reducing vendor count is fine, but one vendor per part defies commonsense.

Call me cynical, but I see it as a move initiated by the beancounters, and I would think driven more by falling volumes. Single vendor = more volumes for that vendor = more bargaining by TMC.

Can you realise the pressure on a QC guy who rejects any part. Single vendor also means lack of a single component can bring production to a halt. And the vendor will also know that!
Agree totally. This is an initiative that will probably be reversed after 5 years. And do a lot of damage in between.
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Old 6th September 2013, 22:20   #14
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Default Re: Targeting quality improvements, Tata Motors plans to downsize vendor base

I have interacted with many entrepreneurs, in and around Pimpri-Chinchwad (PCMC) who aspire to get the much coveted "vendor code" from Tata Motors. The rigmarole for such a code involves plenty of the so-called "influence" and other means of inducements. In this process, merit/quality for becoming a vendor often gets overlooked. In fact, getting a vendor code from Tata Motors is a matter of prestige for many suppliers. Perhaps, Karl Slym's approach to reduce the vendor count has to do with weeding out incompetent vendors.

Also, in many purchasing/sourcing departments of certain automakers, the incentives that the heads of sourcing take home each year depends on the money that they manage to save for the automaker. This results in parts that just about manage to meet the quality levels. This might be one reason why certain cars simply do not exude an over-engineered feel in terms of part quality.

So, if incompetent vendors can be weeded out and if the sourcing methods get more stringent, there's no reason why a better quality automobile can't roll out. Production processes at TML are quite robust. It is the part quality which usually results in loss in longevity. Have you noticed how parts begin fall apart in certain Tata cars while other cars of the same model feel better put together? Same assembly line but variable part quality.

Another thing about Tata Motors is the culture thing. Getting a job in Tata Motors is almost like managing to get a government job. In fact, the union leaders in Tata Motors are said to be very strong, in terms of political patronage and strong arm tactics. Assembly line workers who're in the unions, and are in position to influence hiring are seen in flashy cars. One such worker owns a couple of high end SUVs, (one from Tata Motors ) and plenty of property in the PCMC area. So, that's how things have been working at TML.

Things are changing. After Mr Mistry took over, there was something called a "sting operation". Yes, the vendors who had a ring side view of such an operation actually told me this, and also that the operation was Mr Mistry's pet project. TML employees, mainly in the sourcing and quality depts, who were put under the scanner by a certain consulting company (one of the big four) for unethical processes got the boot. They were found guilty of accepting inducements from vendors. Inducements ranged from cash, to certain smaller gifts such as iPads, high end mobile phones etc. These vendors were weeded out by decoys that the consulting company used in place of actual vendors. All vendors have been on high alert after the "sting operation".

Also, now employees at TML, in certain key depts like design etc, can't wander around to other depts. For instance, a guy working in the passenger car business unit (PCBU) can't just enter the design wing of the commercial vehicle business unit (CVBU). Apparently, this was possible before.

Then there's the case of Tata Motors working at the retail level to expand the TML subsidiary, Concorde, to establish more company owned dealerships across the country. Concorde could become something like the Fiat Caffe, in terms of the experience it delivers to prospective buyers. Well, that's at least the aim, as many people close to the project have professed. The future will tell how effective the implementation is. Also, incentives for sales persons, for promoting dud sellers like the Nano and Aria have been bumped up.

All these points above are my own experiences/interactions. More experienced members may correct me wherever necessary. I'm also sure that some BHPians closely involved with TML know more about the "churn" at TML. Kindly share more information if possible. From the little knowledge and grapevine information I have, the winds of change have already started blowing at TML.

Cheers,

Jay

Last edited by JayPrashanth : 6th September 2013 at 22:24.
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Old 6th September 2013, 22:51   #15
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Default Re: Targeting quality improvements, Tata Motors plans to downsize vendor base

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Originally Posted by JayPrashanth View Post
I have interacted with many entrepreneurs, in and around Pimpri-Chinchwad (PCMC) who aspire to get the much coveted "vendor code" from Tata Motors. The rigmarole for such a code involves plenty of the so-called "influence" and other means of inducements.
So he should set his house in order.
Tata, being adha sarkari, had adha sarkari corruption.
If they find vendors who indulged in corruption - they should definitely fire them. Same for poor quality vendors.

But the question is, as spike said, why was this quality accepted? Unless they can sort out this issue, problems will remain.

One vendor per part will not solve problems, but add to them.
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