Tata Indica - The Making Of The Small Car

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The Story of Indica Contd...

TABLE III
OUTSOURCING THE COMPONENTS

Source: Business Today, March 22, 1999 and December 7, 1999.

Telco turned to the Italian company, I.DE.A, for the product-design. It bought the engine from the Institut Francais du Petrol of France, and applied its engineering skills to adapt the engine requirements. The transmission was developed in-house at its Engineering Research Centre (ERC), at Pune. Of the Rs 2.5 billion it spent on designing the Indica, the major share went in buying design tools and training its engineers in new skills. Telco's engineers traveled regularly to the sites of its technology suppliers, to receive training before the actual delivery of the machines. Telco also outsourced its assembly line from Nissan's plant in Australia for just Rs 900 million. Telco transplanted it at its factory at Chikli near Pune, which was newly set up for Indica. A new assembly line of the same proportions would have cost at least Rs 4 billion.

Again, of the 3 presses for the Indica, only 1 was new, acquired for Rs 900 million, while the other 2 were bought second-hand from Mercedes-Benz and modified to suit the Indica. Telco's engineers and the ERC did the application engineering, programming, installation, and commissioning to save around 45% of the technology costs. The tooling for the car too was supplied internally by Telco's machine tool division. To manage the supply chain better, Telco kept the number of suppliers for Indica to just 200 as compared to about 1,000 for trucks. Most of the parts were supplied by Telco's traditional suppliers- TVS, Rane Group and Tata Auto Component Systems (Taco) who were single source suppliers. Pressed parts, assemblies, and drive shafts were sourced from single vendors.

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