Tata Indica - The Making Of The Small Car

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Leveraging the Supply Chain

Indica marked the beginning of Telco's drive into India's auto market as an integrator with a multi-product portfolio. Analysts felt that the competencies that Telco had grown in the process of marketing Indica would be the core around which it would build its future car business. Analysts also felt that Tata would use the supply chain that fed the Indica to feed a whole range of Telco cars of the future. D.C. Anand, CEO, Anand Group, said, "Telco's capacity will be tested by how many new models it can come up with--and how soon. Is Telco in a position to do so? Four years ago, I would have said no. Today, I am not going to underestimate their capacity. They have demonstrated it." Business Today5 wrote, "Leveraging the low-cost supply chain that it has built, Telco will launch a series of other cars--priced both below and above the Indica, straddling the entire spectrum--each of which will be progressively easier to integrate."

The supply infrastructure would become economical as the volume of the business that Telco offered its vendors increased. The volume of business would increase with a larger number of cars. The learning that it was extracting from the Indica supply chain would also be available to the company as it moved into other products. There seemed to be a distinct opportunity for a smaller, cheaper car, positioned as an entry-level for the first-time buyer. Analysts felt that Telco's supply chain management would become the pivot around which it could assemble its passenger-car business.

Questions For Discussion

1. Telco did not have the expertise either to design a car or to build an engine for it. In light of this fact, critically analyze the steps taken by the company to keep its product development costs low.
2. Discuss why the company decided to create a vendor-base from scratch for the smaller car and comment on how it developed its vendor base.
3. As an integrator of automobiles, Telco had to ensure that there was seamless flow across the supply chain. Explain how Telco managed its Supply chain.