[JayPrashanth]

Originally Posted by chinkara

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

Quality was accepted due to corporate corruption at the sourcing dept level and as I've pointed out, TML might have already begun tightening the screws internally. The rest, only time can judge.

Cheers,

Jay

[teamveevee]

Originally Posted by JayPrashanth

Tata Motors now aims to have only one vendor for each part

It is a good move to reduce the total number of vendors. But one vendor for each part? I do not think any manufacturer can afford to do that. If you remember Toyotas brake fiasco few years back, 2 vendors used to supply the same brake part and one of them had the defect (both were based on the same drawings by Toyota).
Recently i visited auto part company in Canada, who supply parts to a OEM in Detroit. According to them, every night a Tractor Trailer goes to the OEM with the parts for the next days production by the OEM. One more vendor based in US does the same thing. If OEM rejects the lot on a given day, the part supplier need to pay the OEM millions of dollars in compensation. I am not sure TML can afford such measures, as they bargain for price with the vendors. Hope overall price of TML vehicles wont go up with such measures.

[chinkara]

Originally Posted by JayPrashanth

Quality was accepted due to corporate corruption at the sourcing dept level and as I've pointed out, TML might have already begun tightening the screws internally. The rest, only time can judge.

Cheers,

Jay

Agree.
However, the problem is not there alone.

As spike alluded, there is also this issue of specs / design / tolerances / common sense.

I know of 1 instance where a particular vendor was supplying a part for some time. In the drawing, a grade of SS was mentioned which was not available! So what was the vendor supplying?

Another instance - more than a decade back, when I used to work there. We had 2 vendors for the cylinder block -- 1 was nearly 2 kg heavier than the other. On being asked, the QC guy said: material to zyada hi de raha hai, kam to nahi.

Also, historically Tata's issues were always with major vendors -- Lucas, Delphi etc. for major components. But maybe this is because AC or alternator failure gets highlighted -- small parts do not.

Also, the less said about Concorde the better. I have thrice requested Concorde to get an executive to call me for a Storme. Yet to get a call back. And I always get this line: "Sir, all our sales executives are busy -- can you leave your number? We shall arrange a call back."

The best thing they can do is reduce the number of Concorde outlets and get more professional dealers in. ABS motors (Gurgaon) is better than all the Concordes in NCR in terms of responsiveness at least.

[pacman2881]

If you look at the article carefuly, it appears to be a vendor rationalization exercise similar to any other manufacturer. The stress on quality for this particular move looks to be an inference of the author / independent auto consultants the author spoke to.
The author has probably mixed up TML's renewed focus on quality with this move.

[MaxTorque]

Originally Posted by JayPrashanth

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.

I think this is a welcome move from Tata Motors. By taking this step, Tata may reduce the no of direct dealing vendors. Currently there are many small scale industries who are supplying directly to Tata and later those parts are assembled to another part (supplied by another vendor). Once this exercise is over, those small vendors may supply to the second vendor and the assembly process will happen in second vendor's place. By doing so Tata's sourcing team can focus on quality improvement of incoming materials.

[kpzen]

Originally Posted by Rehaan

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.

Rehaan,
With plastic molding parts, source material, chemical composition and molding parameters used are critical & once the part has been produced and delivered, it becomes extremely difficult to find any variation in those three factors in case of any quality issue.

Reducing the number of vendors may not help the situation much as Spike has mentioned but producing the same part in house would help in improving quality control by having more control on all factors.

[Vishal.R]

For me one positive aspect of the news is at least, TATA Motors and TATA sons leadership have recognized that they need to improve quality, now there can be so many reasons of bad quality parts/vehicles but there are ways to solve problems.

If they had recognized this earlier, they would have been if batter position now, also It is important that how much quality improvement they have internally targeted? only time will answer this, but investment in quality always pays.

[drive_factor]

The appropriate word is Vendor Rationalization and its been in the works for a while. TML presented this afresh last week at the vendor strategy meet at Macao. Probably an attendee yapped about it to a sensationalist rag and we go on a hullabaloo!

In fact there were more juicy stuff revealed at the strategy meet. No I don't know anything about the short video that Karl presented, starring himself in a James Bond avatar, which gave a very tantalizing peep on upcoming TATA cars

Vendor rationalisation is a massive exercise and TML is doing it in a very transparent manner. They just wont announce “Hey you are no longer our vendor. It was great having you, but now Goodbye!”

Originally Posted by SPIKE ARRESTOR

Why should a product manufactured at two sources be different//-

This is true in a perfect world. But do you seriously believe that even the same Honda/Toyota/Sony product made in Japan/US/India/Russia/Mars has the same QC level?

In reality parts have deviation even within the same batch. Batches from the same shift/day/setup have deviation. And if the same part has more than one vendor than the magnitude just goes up by an order. Vendor rationalization, coupled with other measures, minimizes this to a large extent.

Earlier TML was encouraging vendors to setup their units near its plants. So you had one vendor making the same part in different locations in small quantities. Now the vendor will have just one plant and scale up to meet TML's total requirement across the geographical divide. Vendor now has a bigger order book and he can invest more lavishly. TML will pay the differential freight for deliveries to its plants. Clearly this is not a bean counters driven strategy. This is a purely Slym initiative.

Originally Posted by Rehaan

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

Exactly. This is the reason TML is adopting an an integrated approach. They identifying “Lead” vendors for each product category. The existing vendors will become Tier II/III suppliers to these Lead vendors. The Tier II/III suppliers will actually gain in terms of higher business.

Originally Posted by Sutripta

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

In fact it makes perfect sense in today’s dynamic business scenario. Multiple vendor for the same product are a thing of past.

Originally Posted by Sutripta

Single vendor = more volumes for that vendor = more bargaining by TMC.

It can be other way around also! A single source vendor can really torment the buyer. But there are enough checks and balances to ensure that both parties are protected. Vendor too is exposed massively due to high level of investments he makes on serving just one client. Both the buyer and vendor have their respective tails in each other hand. Partnership is key here.

Originally Posted by Sutripta

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!

Modern QC approach calls for intercepting/investigating/re-occurrence of faults right at first stage. Its more than just "rejecting" a part. And bigger vendors are better kitted out in terms of TQM to offer a high final quality.

Manufacturing best practices has spread quite swiftly among Tier 1 vendors in India. But it is yet to make deeper inroads into the lower tiers of the supply chain. Thus rationalization of vendors is a logical thing. Global automakers have long been doing this. Even in India automakers such as Hyundai, Maruthi, Honda have single vendor for critical items.

Our vendor industry was an early adapter of this concept. For several decades now TVS is the sole supplier of radiator caps for GM worldwide. Bharat Forge is the sole supplier of FAB forgings for Mitsubishi etc.

Originally Posted by prashanthyr

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.

Yes are right on both counts. Thus TML is taking calibrated steps on this. The gains outweigh pitfalls.

Originally Posted by prashanthyr

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.

Yes 3rd party inspection at vendors end is already happening. They creating these so called “Quality Gates” at vendors end. Any component that passed this gate but fails at TML carries huge penalty for the 3rd party. The TATA-FIAT engine plant is 100% on this system. That plant is the sole supplier of transmission gears for FIAT worldwide.

Originally Posted by prashanthyr

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?

Sometimes they are. I remember when Tata was designing Indica. They floated RFQ for drive shafts and selected the same model which was being used by then Maruti Esteem VX. But under pressure from Maruti the vendor backed out and Tata lost 6 months in the process.

Originally Posted by chinkara

I know of 1 instance where a particular vendor was supplying a part for some time. In the drawing, a grade of SS was mentioned which was not available! So what was the vendor supplying?

Originally Posted by chinkara

Another instance - more than a decade back, when I used to work there. We had 2 vendors for the cylinder block -- 1 was nearly 2 kg heavier than the other. On being asked, the QC guy said: material to zyada hi de raha hai, kam to nahi.

Sir with due respect I doubt this:
- The vendor may been allowed a deviation on material spec. Unauthorized changes to material specification carries severe penalty and even black-listing
- A critical item like Cylinder block is unlikely to have such weight mismatch. We are talking about serious dimensional discrepancy to result in weight overshoot of 2 kg.

Originally Posted by JayPrashanth

>> 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.

You need a vendor code to supply anything. Be it the toilet paper or the clutch plate. However I think in last many years they have hardy issued any new vendor code for automotive parts. Exceptions would be mega projects of vendors with 100's of crore of exclusive investment for TML

Originally Posted by JayPrashanth

"sting operation".

There was this famous sting where they unearthed the fuel scam. Usually newly made truck chassis are taken by road to dealership. This activity is outsourced to contractors whose drivers were siphoning off diesel and putting in water in the fuel tank to maintain level. Such Trucks were already damaged when they reached the dealerships. In a particular incident the dealership itself was scooping out diesel. This was one of the largest and oldest TML dealer. He was terminated.[/quote]

Originally Posted by JayPrashanth

>>>the "churn" at TML.

Yes there is a churn happening but in typical Tata way it is understated. Also there is a misconception that Karl Slym has brought in a big team from outside. Till now he has only recruited one new person at top level. But there is a reorganization of existing positions and people are being moved around.

Originally Posted by teamveevee

Recently i visited auto part company in Canada, who supply parts to a OEM in Detroit.

Magna?

Originally Posted by teamveevee

If OEM rejects the lot on a given day, the part supplier need to pay the OEM millions of dollars in compensation. I am not sure TML can afford such measures, as they bargain for price with the vendors.

TML (like other automakers) also do that. The actual debit amount depends at which stage the defective part was intercepted. At incoming stage it is just the part cost. If it fails in the field than the debit is several times the PO rate of that part.

The basic problem with TML is/was they became obsessed with costs and their managers started taking this thinking to absurd levels. This started in late '90 with commercial vehicle division and got carried over to the cars division in early 2000's. Purely engineering merit started taking a back seat to this self destructing mission of building everything to a price point. They do need to revisit this strategy. They should be ready to pay for Quality. Lets see how things go from here.

Designing, building, testing, marketing and servicing an automobile is an incredibly complicated affair. This is compounded by ever changing dynamics of this business. An automaker can never afford to grow complacent and live in that golden glow. You need deeply passionate people to head and run a car company. TML became confused a few years ago. I just hope that is past and the next decade is a period of consolidation and innovation.

Edit: Just realised it is my 50th post. So that makes is a whopping 0.0257 post per day for me since 2008!

[chinkara]

Originally Posted by drive_factor

Sir with due respect I doubt this:
- The vendor may been allowed a deviation on material spec. Unauthorized changes to material specification carries severe penalty and even black-listing
- A critical item like Cylinder block is unlikely to have such weight mismatch. We are talking about serious dimensional discrepancy to result in weight overshoot of 2 kg.

You may doubt it, but the story is true.

But the caveats:
1. It is more than a decade back, when quality systems were far less sophisticated.
2. Critical dimensions were at the outer limit of tolerances -- close, but within the limits.

However, if you have ever seen a cylinder block, significant parts of it goes into the engine as cast, i.e. un-machined. At that point in time, these were not checked (not considered critical - there was a minimum wall thickness, that's it). This is where the extra material was.

Funnily enough, the vendor was not getting paid for those 2 kg (it was 1.7 or something) of material. (Or at least I hope he wasn't). But he was just "erring on the side of caution" to prevent rejects.

[a4anurag]

Won't downsizing their vendor base give Tata a problem for smooth functioning of their production line? Reduction of the vendors would give the remote control of production in their hands rather than the management at Tata. It would be a pain if things go wrong with parts needed.

As a QA guy, I know the pain and pressure on ones head while new parts from vendors or a lot of materials have been arrived that are to be used for immediate production or later. The whole management looks down on your head and wait like vultures for the final decision whether the lot is accepted or no. Such materials are not in small quantities either so sampling, testing accuracy would have to be done fast to prevent line stoppages.

If a material is rejected 1000's of question are thrown from the Plant Manager till the QA Executive as to what were the reasons for QA HOLD/QA REJECTION!

Since the material that has to be supplied is a standard one and doesn't change with suppliers or any other factor, the material of construction, procedure of manufacturing remains the same so variation between suppliers is ruled out.

Tata must look into other things than reduce the vendors for Quality Improvement.

Anurag.

[Sutripta]

@D_F
Let me say that I agree with some of your opinions, disagree with others, and have a somewhat different take on some more. Maybe we can discuss over a cup of coffee. Anyway, I wish TML all the best.

Any insights into why panel gaps in TML vehicles is inconsistent. Whereas paint is (I feel) of a pretty high (non TML!) quality?

Regards
Sutripta

[Contrapunto]

Originally Posted by SPIKE ARRESTOR

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

You're right Spike. There are measures that improve administrative efficiencies, and there are measures that improve quality. Sometimes one leads to the other, but often it does not.

I owned an Indica ev2, and recently sold it at whatever price I could wrangle, and have always been amazed at how my machine was a mixture of awesomely well engineered parts (the CR4 engine, for one)as well as miserably executed ones (the fuel guage malfunctioned in 12 months 20 k Kms for God's sake and the list is long).

Mr. Slym is an industry veteran, and I sure do hope his bets pan out. I would however recommend a significantly stronger sense of urgency (18 months as opposed to 48 months), as the market and competitors may not patiently wait for 4 years for TML to pick up its socks. I understand vendor rationalization is not easy, and there may be contractual limitations (guaranteed volume, contract term, re-negotiation limitations etc) but desperate times call for desperate measures. Being a customer, I see the challenge as pretty much existential one, I hope the same sense of urgency pervades the organisation.

In fact, if I was a large, unhappy, international institutional shareholder in TML, I'd demand that the passenger car division be hived off to a different legal entity and made to float/ sink in its own merit without dragging the rest of the company down. Its not such a dramatic thing- I am confident free of the influence of "truck-maker executives" in their product and service decisions, they will do far better (surely can't do any worse than the trajectory they are in today).

[1100D]

What TML should probably look at, rather than dictating a spare cost to the vendor, is how the same part is manufactured for a different manufacturer, say Toyota. What equipments, they dictate to be used, what manufacturing processes they ask for adherence to.

For example, they employ Tata-Johnson controls at Toyota, and the quality output from them is at a higher scale at Toyota. Besides this, Toyota also dictates having the vendor setup shop inside their plant, under their watchful eyes, monitoring everything, from raw materials entry to manufacturing processes. Tata I think, is very well equipped to do this.

[anu21v]

As an Engineer cum Bean-counter i must say, this move by TML makes perfect sense for few reasons.

a. Tatas have currently 1200+ vendors, despite having Taco as the prime supplier. Something is definitely wrong here. Maruti has ~240 vendors and even if i add the truck business of tatas, the total vendors shouldn't be more than 500.

b. Managing 1200 Vendors requires a huge Quality and Supply chain team and keeping a quality controls for these many vendors is a tough task. Mr Venkatram sure would have realized the need for efficiency there considering the low car+truck volumes of Tatas. Mind it, he has handled a Korean car company which sells more than 15 lakh + cars and he sure must have seen the efficiency benefits by comparing two companies.

c. Design and spec-sheet can not be the only thing determining the final component quality. In this complex world, there are quite a few suppliers who do not even seek the design from Tata Motors (Say Bosch or Delphi or Denso), so controlling the design/Specs do not mean everything. The design and spec which are submitted by suppliers may go well in lab test conditions but manufacturing processes may lead to a greater degree of variability. A well designed component with a good spec sheet if has a manufacturing variability of 50,000 PPM then what is the use? Tatas have to take the component manufacturing to the level of at most 500 PPM (if not 6 sigma), which is roughly the same quality target as Suzuki, to be able to fight in market place. Mind it, 500 PPM for 350+ major component will still lead to a roughly 1%-3% overall quality issues but that would still probably in the range of its major competitors.

I definitely don't agree with spike and I support this move of TML

Originally Posted by Contrapunto

In fact, if I was a large, unhappy, international institutional shareholder in TML, I'd demand that the passenger car division be hived off to a different legal entity and made to float/ sink in its own merit without dragging the rest of the company down. Its not such a dramatic thing- I am confident free of the influence of "truck-maker executives" in their product and service decisions, they will do far better (surely can't do any worse than the trajectory they are in today).

Well, I do agree there are benefits of demerging the businesses but this would also lead to losing long term competitiveness. If Ford and VW shareholders start demanding the same for their Indian-Ventures probably we will not have Fords and VWs in this country. Keeping the long term plans these india ventures' losses are being supported by their parent companies. Same is the case with Tata Motors. Everyone knows that TML car division is a losing proposition and wouldn't stand on its own if hived off from Commercial division.

[chinkara]

Originally Posted by anu21v

I am an Engineer-Bean-counter and i must say, this move by TML makes perfect sense for few reasons.

a. Tatas have currently 1200+ vendors....

b. Managing 1200 Vendors requires a huge Quality and Supply chain team and keeping a quality controls for these many vendors is a tough task....

c. Design and spec-sheet can not be the only thing determining the final component quality. In this complex world, there are quite a few suppliers who do not even seek the design from Tata Motors (Say Bosch or Delphi or Denso), so controlling the design/Specs do not mean everything. The design and spec which are submitted by suppliers may go well in lab test conditions but manufacturing processes may lead to a greater degree of variability. A well designed component with a good spec sheet if has a manufacturing variability of 50,000 PPM then what is the use? Tatas have to take the component manufacturing to the level of at most 500 PPM (if not 6 sigma), which is roughly the same quality target as Suzuki, to be able to fight in market place. Mind it, 500 PPM for 350+ major component will still lead to a roughly 1%-3% overall quality issues but that would still probably in the range of its major competitors.

I definitely don't agree with spike and I support this move of TML

Well, I do agree there are benefits of demerging the businesses but this would also lead to losing long term competitiveness. If Ford and VW shareholders start demanding the same for their Indian-Ventures probably we will not have Fords and VWs in this country. Keeping the long term plans these india ventures' losses are being supported by their parent companies. Same is the case with Tata Motors. Everyone knows that TML car division is a losing proposition and wouldn't stand on its own if hived off from Commercial division.

A. Agree, but please note that TACO itself is 10+ companies.
B. Agree broadly. Some vendor rationalization is always good, but 1 vendor for every part across the board can be disastrous.
C. Ppm itself not mean anything if the specs themselves are too lenient. Take the panel gap example quoted by Sutripta above. I am sure that all panels meet the specs. But if both are at high end of the tolerances, you probably see a good fit. If both are at the lower end you see gaps.