Tata Indica - The Making Of The Small Car

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Supply Chain Contd...

Once it was cleared at the gate, the truck proceeded to the receiving center. Once the items were unloaded, unpacked and cleared for quantity and quality, they were moved into the transit area. From there they went into what was called the 'super market'. The super market was close to the assembly line. In the super market, the materials were arranged in such a way that the workers could easily access all the material required on the assembly line without wasting much time and effort. The benefits of this just-in-time inventory system were that the inventories were low and so the interest costs were also low. Again the manpower required to handle the inventories was also low. For Telco, a crucial link in the supply chain was its ability to forecast demand accurately, which would help the vendor plan his production-schedule in advance, thus lowering costs. Telco and Concorde2 employed market research agencies to help forecast demand through trend analysis, using the historical data technique. It used a complex web of correlation involving the country's economic situation, competitors' products, and their USPs.

To ensure quick flow of information along the value chain, Telco electronically linked its demand forecasts to production, and backwards to its suppliers. All its dealers were linked to the plant through VSATs³ connected by e-mail to relay demand patterns on-line to the Pune plant. This reduced the order-processing time by 80%. Analysts felt that by being online, Telco would save a minimum of 4 days from the order-to-despatch lead-time.

For speedy delivery, Telco resorted to inter-location transfers of the product between dealerships. This would ensure movement of the product to a place where there was more demand. This would make a big difference to finished goods inventory management once Telco started producing at optimum capacity. Telco also trimmed costs by making Concorde leaner than other dealerships, with just 3 levels: managing director, general managers, and managers.⁴ Each of Concorde’s general managers worked as profit-centre heads of their individual business regions, and reported directly to the managing director. Added, A.K. Seth, General Manager (Delhi), Concorde, "The company wanted to create a lean and responsive network, with the primary objective being to meet customer requirements as quickly as possible."

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2] Telco's dealer for Indica. It had 9 dealerships and 25 outlets.
3] Very Small Aperture Terminal (VSAT) is a satellite communications system that serves home and business users. A VSAT end user needs a box that interfaces between the user’s computer and an outside antenna with transceiver. The transceiver receives or sends a signal to a satellite transponder in the sky. The satellite sends and receives signals from an earth station computer that acts as a hub for the system. Each end user is interconnected with the hub station via the satellite. For one end user to communicate with another, each transmission has to first go to the hub station which transmits it via the satellite to the other end user’s VSAT. VSAT handles data, voice and video signals.
4] Most other car-marketers in the country operated with a minimum of 5 levels.