2/22/2017 ERPImplementationatTataMotorsEssayExample|Topics,SamplePapers&ArticlesOnlineforFree

ERPImplementationatTataMotors
Tata Motors Limited is Indias largest automobile company, with revenue of Rs. 1,88,818 crores in
201213. It was established in 1945 and is present across the length and breadth of the country.
Today, it is worlds second largest manufacturer of commercial vehicles, fourth largest truck
manufacturer and second largest bus manufacturer. It has over 60,000 employees guided by the
companysmissiontobepassionateinanticipatingandprovidingthebestvehiclesandexperiences
thatexcitethecustomersglobally.IthasitsmanufacturingbasesinJamshedpur(Jharkhand),Pune
(Maharashtra), Lucknow (Uttar Pradesh), Pantnagar (Uttarakhand), Sanand (Gujarat) and Dharwad
(Karnataka).

The companys dealership, sales, services and spare parts network consists of over 3,500 touch
points.ItalsohascentresforresearchanddevelopmentinPune,Jamshedpur,Lucknow,Dharwadin
India,andSouthKorea,SpainandUK.ItisaduallistedcompanytradedonboththeBombayStock
exchangeandtheNewYorkStockExchange(September2004).Ithasemergedasaninternational
automobile company. Tata Motors has its operations in UK, South Korea, Thailand, Spain, South
AfricaandIndonesiathroughitssubsidiariesandassociatecompanies.

Milestones
It launched the first indigenously developed Light Commercial Vehicle in 1986. It also introduced
Indias first Sports Utility Vehicle in 1991 and the Tata Indica, Indias first completely indigenous
passenger car in 1998. Tata Indica received immediate success, since it was inexpensive and
comparativelyeasytobuildandmaintain.ItwasalsoexportedtoEuropeandItaly.

SecondgenerationofIndica,V2wasevenmoresuccessful.ItshugesuccessgaveTataMotorsthe
financial power to take over Daewoo Motors in 2004, which in turn gave Tata Motors brand an
internationalexposure.In2005,TataMotorscreatedanewsegmentofminitrucksbylaunchingTata
Ace.InJanuary2008,itlauncheditsPeoplesCar,theTataNanowhichwassubsequentlylaunched,
aspertheplans,in2011inNepalandSriLanka.In2009,itlauncheditsgloballybenchmarkedPrima
rangeoftrucksandtheUltrarangeofinternationalstandardlightcommercialvehiclesin2012.

Some of its other major acquisitions include Jaguar Land Rover in 2008, 21% stake in Hispano
Carrocera, a famed Spanish bus and coach manufacturer in 2007, and subsequently the remaining
stake in 2009. Some of its alliances include a 51:49 joint venture with the Brazilbased, Marcopolo,
global leader in building of body for buses and coaches, Thonburi Automotive Assembly Plant
CompanyofThailandin2006andajointventurewithTataAfricaHolding(Pty)Ltd.setupin2011.
Tata Motors is committed to improve the quality of life of the communities in which it operates by
focussingonfourthrustareashealth,education,employabilityandenvironment.

Thecompanyssupportinfieldofeducationandemployabilityisfocusedonyouthandwomen,which
rangesfromschoolstotechnicaleducationinstitutestofacilitationofincomegeneration.Inhealth,the
company has interventions in curative and preventive health care. Tree plantation, water
conservation, creation of new water bodies and introduction of environmentfriendly technologies in
alternative fuels, manufacturing processes and emissions is undertaken for the goal of environment

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protection. It has also developed electric and hybrid vehicles both for personal and public
transportationtofurthercontributetothiscause.

Background

TataMotorsLtd.isapartofthebusinessconglomerate,TataGroup,andwasformerlyknownasTata
Engineering and Locomotive Company, TELCO. It has its headquarters in Mumbai, India and is a
multinationalcorporationcontrolling70%cumulativemarketshareinthedomesticcommercialvehicle
segment.

TataGroupishighlyrespectedforitsbusinessprowess,varioussocialandeducationalprojectsthat
have contributed immensely to Indias development. The charitable trusts have a 65% stake in its
holdingcompany,TataSons.TheTatabrandissynonymouswithtrustandisconsideredreliable
andconsideredasprovidingvalueforonesmoney.Allcompanieswithinthe
grouppayTataSonsafeeforusingtheTataname.

TataMotorsisakeygrowthbusinessfortheTatagroupofcompanies.Itinitiallymanufacturedonly
heavyandlightcommercialvehicles.ItsforayintopassengercarswasaggressivelydrivenbyRatan
Tata, former Chairman of Tata Sons. Tata trucks dominate the Indian commercial vehicle market.
However, for passenger vehicles, the numbers are not very much impressive due to problems
encountered in some of its models and stiff competition in the Indian passenger car market. Tata
MotorsalsoofferstheTataSafariSUVandTataSumoMUV,alongwithapresenceinthemidsizecar
segmentwithaversioncalledIndigo.

RatanTatabelievesintargetingthebottomofthepyramid,atermusedbyProf.C.K.Prahalad.This
meansthathebelievesintappingthemarketopportunityofferedbythevastandvoicelessmassesof
India.Thus,thetargetmarketforTataMotorsisthelowermiddleclasstomiddleclassIndian,whois
lookingtochangefromatwowheelertoacar.WithIndiasincreasingmiddleclasspopulationofmore
than300millionpeople,thecarhasalargemarket.Itscustomersaremoreinthesmallertownsand
villages of India when compared to metropolitan and other big cities. Background of Information
Technology

ITStrategy

At Tata, IT is considered to be a global function, and this is incorporated into the management
services division of the organization. Each area within the organization is provided with required IT
resources and tools by the CIO, who then takes critical decisions concerning the implementation of
new technologies and IT solutions. A three year plan is also drawn by him in coordination with
managementandTataTechnologies,fullyownedsubsidiaryofTataMotors,whichprovidesbusiness
andITservicestoTataMotors.ThisplandeterminesthebasicITstrategy.

The IT strategy in turn delivers strategic programs and services which supports its business growth
andcompetitiveness.ThedetailsarethenfinalizedinanITbalancedscorecardinwhichthevarious
projectsaredefinedforthenext12months
andlistedinorderoftheirpriority.Responsibilityforexecutionoftheseplansischargedtothejoint
teamsfromITandbusiness.Ingeneral,adistinctionisdrawnbetweenprojectworkandmaintenance
activities. Tata Technologies, however is responsible for both. If needed, external advice is sought
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from the consultants in the relevant area. CIO also acts as an arbitrator, settling any differences of
opinion regarding the long term perspectives of specific requirements after discussing with the
businessteam.

RecentITinitiatives

BenchmarkCRM(CustomerRelationshipManagement)solutionswhichisusedbymorethan3,200
channel partners and 37,000 users to handle customer needs reflects its commitment towards its
customers. Tata Motors is also expanding usage of information through analytics across the
organization. It is now involved in even greater usage of eCommerce with suppliers through SAP
Supplier Relationship Management (SRM) Solutions. It also strengthened the usage of IT in
manufacturing, supply chain, quality and workforce management deployed benchmark ITIL
(InformationTechnologyInfrastructureLibrary)processestoimprovetheeffectivenessofitsservices.

ReasonsforimplementationofERP

Before looking at the reasons for ERP implementation, we will see the bigness of Tata Motors
worldwide.Itisworldseighteenthlargestmotorvehiclemanufacturingcompany,fourthlargesttruck
manufacturerandsecondlargestbusmanufacturerbyvolumegenerating$33Bdollarinrevenuewith
presenceinmostofcountriesspanningacrossallthecontinents.TataMotorshasvehicleassembly
operationsinIndia,UK,SouthKorea,SouthAfrica,ThailandandSpain.Thereareplanstoestablish
plantsinIndonesia,TurkeyandEasternEurope.Mostoftherawmaterialsaresourcedfromlowcost
countries and then, distributed to their R&D centers in South Korea, Spain and UK, and above
mentionedassemblyunits.Sparepartsdealernetworkcomprisesof1200touchpoints.Finalgoods
produced in the manufacturing units are distributed to the warehouses across globe as per the
demand.

Before the implementation of ERP, the company was using internal legacy system. Manual dealer
managementsystemwasusedwhereeverydealermanageddetails.UseoflegacysystemresultedI
lackofconsistentdata,makingavailabilityofrealtimedatadifficultforforecastingofsparepartsand
rawmaterials,whichsubsequentlyresultedinlossofproductionandeventuallyhurtingtherevenues.
Managing the logistics across the geographies was another big concern. The situation was
exacerbatedbythelackofcoordinationamongdifferentverticalslikesales,financeandoperations.
With growing competition around the world, there was need to integrate and optimize the complete
process.

ImplementationofERPwillresultinbettersharingofinformationacrosstheorganizationgivingreal
timeaccesstothedata,betterforecastingofdemandsreducingpilingofinventories,lessduplication
and time wasting across the board. Also, ERP is a modular software system it is possible to
implementeitherafewmodules(or)variousmodulesbasedontherequirementsofanorganization.
Thevariousmoduleswillbringinbetterbusinesspracticesacrosstheverticalslikefinance,accounts
HR, operations, and project management and will enable the company to gauge customer
satisfaction.

The extended benefit can be done by integrating other systems (like barcode reader) to the ERP
systemthroughanAPI(ApplicationProgramingInterface).Thiswillhelptokeeptrackofthelogistics

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across geographies. Allinall, procurement of raw materials, forecasting the demand, enhancing
employee productivity, optimizing business processes and maintaining high networking within the
company, are the major reasons for the implementation of ERP. Selection of SAP as the ERP
package

SelectionforSAPwasdoneconsideringthelargesizeofthecompany.Tatabelieveininstallingthe
bestofservicesandSAPisundoubtedlythefirstnameforERP.SuccesstrackwithSAPsoftwarewas
impeccable. Service level agreements (SLAs) were signed between the management for the
resolutionoftheissues.Also,SAPhasseparateautomotivesolutionsthathelpcompaniesperforms
thefollowingactivities:

Optimizing manufacturing and procurement This enables the company to forecast in more efficient
mannertokeepproductioninaccordancewithoverallbusinessrequirementsandfuturedemandsof
the customers. This will help company to achieve Justintime environment which will curb the
problemofinventories.Itwillalsoenableefficientuseoftheresourcesthatwillhelptheorganization
toachieveleanandsixsigmamethodologies.

This also enables the users to place customize orders and closely align model mix with market
demands.Integratedsolutionsforplanning,billing&pricing,availabilitychecking,configuration,order
processing,production,fulfillmentgivecompaniesaconsistentviewofthesalesorderoftheproducts,
plansformanufacture,andstudyofthecompanysprofit.SAP}forautomotiveenablestointegratethe
activities of dealer, vendor and manufacturers for variety of activities like procurement of raw
materials,sellingoffinishedgoods,trackingtherawmaterialsandspareparts.Italsohelpsthedealer
totrackthevehiclesfortheircustomers.Suppliersinalltierscanusethisforpackaging,labeling,and
shipping of the finished goods. It helps in generating advanceshipping notifications to maximize
operationalefficiencyandeffectiveness.

HandlingofWarrantyclaims
AlotoftradehappenswithOEMs,dealersandsuppliers.Thisresultinlotofpaperworkregardingthe
warranty attached to the spare parts and finished goods. Managing this warranty claims is a huge
problemforthecompanyandpartnersconsideringsuchamagnitudeofthebusiness.SAPsoftware
helps in segregating warranty information attached to each of the products. The report and data is
availableontheclick.Thecompanycananalyzethedetailsofthepartsfailureandreturnedpattern
andparticipationlevelsforagivenrecallcampaign.

Crossteamcollaborationamongvendors,designersandusers
SAPsolutionsprovidecollaborativeproductslikeAdvancedProductQualityPlanning(APQP)process
andISO/TS16949thatincreasethecollaborationbetweentheengineers,designers,vendors,dealers
and users. These are the globally accepted qualitymanagement system that links customer
satisfaction with the measurement and improvement of processes. A comprehensive tool
encompassing marketing and sales integrated with vehicle and product data ensures customer
satisfaction and increase collaboration through knowledgedriven interactions. SAP Dealer Business
Management solution part of the SAP for Automotive portfolio enables manage everything from
procurement of service parts and accessories to sales of new and used vehicle, as well as finance
and marketing. It provides tool company need to manage projects, control programs and manage
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resourceswithinbudgetandtimelines.ItenablesindependentvendorsandOEMdealerstomanage
theirentirebusinesswhenworkingwithmultiplebrandsandlocations.

Compliance with government regulations SAP ensures that it addresses the full range of reporting
requirementsincompliancetotheSarbanesOxleyAct(SOX).SOXisaUnitedStatesfederallawthat
setneworenhancedstandardsforglobaltradeandcustomsrules,environment,health,andsafety
regulations.

TataMotorsFinancials

India,beingadevelopingcountrylacksfinancialresources,particularlyintermsofaccessibilityofthe
financial sector to customers. Thus, there occurred a need for financial organizations catering to
specific industries. The automobile industry all over the globe faces the problem of finding the right
amount and source of funding for its customers. These factors clubbed together with the cyclical
nature of demand in the auto industry forced automobile companies to consider captive financing
armsoftheparentcompaniestoexclusivelyfundtheparentproductsandalsoactasacatalystfor
promoting their products. Tata Motor Finance (TMF), the auto financing arm for Tata Motors, was
established in June 2003. This was formed jointly by the asset financing arm of Tata Finance and
BHPC(BureauforHirePurchaseandCredit)ofTataMotors.Thiscompanywasavirtualentity,both
divisions of which maintained their separate legal identity, and existed in the market for exclusively
financing Tata Motors vehicles. Subsequently, Tata Finance merged with Tata Motors and in April
2005andthus,TMFbecameadivisionofTataMotors.

CriticalSuccessFactors

Some of the factors that Tata Motors considered while implementing mySAP and eventually turned
outtobecriticalforitssuccesswere:Improvementinsalesrevenueorthenetsales
Reduction in cost, that primarily resulted from more efficient use of hardware resources that in turn
eliminatedtheneedforadditionalresourcesReductionininventory
Improvement in the productivity by means of enhancement of overall business efficiency
Enhancementorganizationwidecommunicationthatwouldenablemanagementtotakedecisionand
react more quickly to business needs Improvement in level of satisfaction of business users due to
fasterserverresponsetimeNonegativeimpactonotherongoingcriticalupgradeandimplementation
projects

SAPImplementation:MethodologyandProcess

SAP Version 3.4 implementation was successfully carried out during the commencement of SAP
implementationinTATAMotorsintheyear1997.Sixyearslateri.e.,in2003,itisupgradedtoSAP
Version4.6whereHumanResourceservicesandProductionPlanningmoduleswerecompletelyset
to be functionally integrated. A total of 3000 employees were planned to use this system. In total
about20moduleswereimplemented.Thefollowingbenefitswereimmediatelyrealized:

ProductionschedulingimprovedandafewbottlenecksinproductionweretakenawayVCMwhichis
thelegacyERPatthevendorendwasintegratedduringtheupgradeSignificantreductioninInventory
costs.

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The implementation methodology followed was SAPs Phased ERP implementation methodology.
ThisprojectimplementedbySAPisthelargest(inmagnitude)inIndia.Fiveserversarefunctionally
integratedtoperformasonefunctionalserver.Thedetailsarecoveredinlatersectionsofthisproject.
ThefollowingdiagramindicatesTataMotorsmotivebehindthisERPimplementation1

mySAPSRM40ERPimplementationatTataMotorswasnamedProjectVECTORwhichisaimedat
increasing negotiating power with suppliers, increasing the ease for the suppliers to integrate using
catalogue management, evaluation of new suppliers and delivery schedules of current suppliers
,usage of live auctions for competitive pricing. The ERP implementation also helped in streamlining
the process of procurement and automation of the same. The ERP is centralized across the 4
locationsLucknow,Mumbai,JamshedpurandPune.Thesupplierscollaboratedandthisreducedthe
procurementeffortsinfollowingupoforders.Thecollaborationthusispossiblethroughinternetand
automatedupdatesonthestatusofprocurement.

SAPsERPimplementationinTATAMotorsincludedChangeManagementasapartofthecontract.It
is noted that due to the huge number of employees to be trained (about 3000) and due to the
magnanimous size of the clients organization, SAP chose to phased methodology of ERP
implementationatTATAMotors.DuringtheinitialphasesSAPconsultantswereactivelyinvolvedwith
strategicmanagementofbothTataEngineeringandTataTechnologieswhichareconstituentfirmsof
Tata Motors. The steering committee included senior Tata employees from Chairmans office,
CorporateAffairsoffice,Jemshedpurplant,Pune,MumbaiandLucknowdivisions.Projectmanagers
wereappointedfromTataTechnologies.Theprojectispresentedtotheemployeesinsuchawaythat
theERPtechnologywouldhelptheemployees(andcompany)touncovertheunusedvaluehiddenin
collaborativepurchasingandsupplychainmaintenance.

PeoplefromthefourimportantlocationsofTATAMotorsi.eMumbai,Pune,JemshedpurandLucknow
are shown successful implementation of pilot project in phase 1 where 4 vendor are chosen and 4
different products are chosen for ERP implementation. SAP anticipated long term business
relationship with TATA Motors and this was evident from the friendly nature of SAP Consultants
workingwithTATAemployees.Duetosuchamicableenvironmentcreatedduringthecriticalstagesof
ERPimplementation,TATAemployeesbelievedinthetruevalueofERPimplementedtobettertheir
supply chain management strategies and worked actively for the successful implementation of the
same.BenefitsAccruedduetoimplementationofSAPERPatTataMotors

TATA Motors successfully implemented ERP in a phased methodology and the following are a few
significantbenefitsaccruedbytheorganization.TheSAPERPservicesexpertsdeliveredmeasurable
improvementsacrossTataMotorsextensiveITlandscapewithinonly12months.Byoptimizingdisk
management, for example, Tata Motors now has 2.3 terabytes more storage space available, and
CPU utilization has been reduced by 20%. Response time of production servers is 20% faster, and
theteamwasabletooptimizemanyofthecompanyscustomizedprogramsuptothe50%level.

Diskspace optimization activities were carried out by IBM with timely support from the companys
data center. Significantly, the company achieved all of these improvements while the system load
actually increased by 20%. Company executives also point to tangible business benefits that go
beyondtheperformancenumbers.Fasterresponsetime,forexample,hasboostedusersatisfaction
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while saving the company some 1,600 labor hours each month. And more efficient use of existing
resourceshassavedthecompanyanestimatedRs45million(US$1million)byeliminatingtheneed
foradditionalhardware.Inadditiontooptimizationatthetechnicalfront,theSAPERPserviceshelped
Tata Motors to make sure a successful implementation of warranty management software that was
worldclass.

The integration of the companys SAP ERP application with the dealer customer relationship
management functionality is another achievement of the new system. This has made the company
capabletomonitorallopen,newandprocessedwarrantyclaimsinanautomaticmanner.SAPERP
supportedbothstrategicandoperationalobjectivesatTataMotors.Forexample,theprojecthelpedin
thecreationofastrongersynergicrelationshipbetweenthecompanysbusinessandITdivisions.It
alsoextendedSAPsrolefromsoftwarevendortotrustedpartnerandtheseniorofficialswereeyeing
towardsmorevalueaddservicesinthefuture.

StrategicandFinancialbenefits

Saved Rs 45 million (US$ 1 million) due to more efficient use of existing hardware resources that
eliminated the need for additional resources The management was enabled by the use of SAP to
react in a more efficient and quick manner to the business needs Increase in the efficiency of the
overallbusinessprocess

Helped ensure success of projects related to critical upgrade and implementation Improved
satisfactionofbusinessusersasaresultoffasterserverresponsetimeBusinesstransactionsspeed
washugelyaccelerated

OperationalBenefits

KeyPerformanceIndicatorfortheOperationalBenefits
Impact
CPUutilization
20%
Productionserverresponsetime
20%
Optimizationlevelofcustomizedprograms
Upto50%
Laborhourssaved
1,600permonth
Availablediskspace
23%

CurrentStatusofERPinTATAMotors

At present SAP MaxAttention module is implemented to their ERP system. This is a move through
which TATA Motors can directly call in SAP Experts on demand and engage them oncall duty to
supportERPissuesatcriticaltimeswhichincludebutnotlimitedtoanadditionalsoftwareupgrade,a
futuresoftwaregoliveevent,performanceoptimizationtesting,volumetesting.ThisMaxAttentionis

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currentlybeingimplementedinconjunctionwithSAPEnterpriseSupportServiceforwhichlicenseis
renewedannually.

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