Tata Indica - The Making Of The Small Car

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Vendor Development

Once Telco made its make-or-buy choices, the next step was to identify the vendors. Most of the parts that went into making Telco were sourced locally. Except for some sheet metal parts, cylindrical gaskets, and belts--which accounted for 2% of the component value, the Indica was totally indigenous.1 K. Mahesh, CEO, Sundaram Brake Linings, said, "Localisation of components is the most important challenge a new manufacturer faces. It is a time-consuming and painstaking process." Telco employed a simple yardstick for selecting suppliers: the ability to supply components at the negotiated quality, cost, and quantities. In the first stage of selection, an initial assessment team from Telco evaluated the supplier. This was followed by self-evaluation of the supplier, based on a format provided by Telco. Then there was a quality systems survey, carried out by a Telco quality audit team. This was followed by design validation. And then there was a manufacturing validation to ensure that the supplier was following the proper manufacturing processes. This was followed by the Production Part Approval Process (PPAP), which certified the production quality.

R. Chakraborty (Chakraborty), senior deputy general manager, materials & supplier quality improvement group, said, “When a vendor reached this stage, our comfort level in dealing with him goes up considerably, with regard to quality and his ability to supply material to us. We feel that he has a proper production process in place to ensure quality and timely supplies.” Only a handful of vendors met Telco’s stringent requirements.

Telco set up Supplier Quality Improvement Teams to improve the vendors' systems to ensure that they produced defect-free parts. It applied a 13-step Quality Improvement Programme, covering supplier self-evaluation, thorough design-validation, and audit of supplier quality. Another key to Telco's successful vendor-base was a modern system of process management. Telco's target-costing was broken up into vendor-wise cost targets, and the suppliers had to carry out their own value-engineering exercises to lower cost and improve quality. For example, India Pistons, which supplied the pistons and piston rings, walked away with the Indica order because it benchmarked itself against supplies to Maruti Udyog; whereas the other vendors benchmarked themselves against pistons supplied to Telco's commercial vehicles. India Pistons invested Rs 1.5 million in toolings, and Rs 25 million in a separate line at its Maraimalai Nagar (Tamil Nadu) facility. N. Venkatramani, CEO, India Pistons, commented, "TELCO is very particular about logistics, that raw materials have a supply trace, be ready for assembly, need no inspection. It is a demanding customer."

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