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SAP Value Proposition for Tata Motors

Establishing SAP as a Competitive Differentiator at Tata Motors

October 15, 2010

DRAFT VERSION

SAP CONFIDENTIAL - Page 2 For Internal Use Only - This page is from the VE Study prepared for Tata Motors and subject to the terms, conditions and assumptions contained in the VE Study. Information contained herein is not a guaranty of future results, performance or cost savings.

Statement of Confidentiality and Exceptions

No part of this publication may be reproduced or transmitted in any form or for any purpose without the express permission of SAP AG. The information contained herein may be changed without prior notice.

The furnishing of this document shall not be construed as an offer or as constituting a binding agreement on the part of SAP to enter into any relationship. SAP provides this document as guidance only to estimated costs and benefits of the predicted delivery project.

These materials are: (i) based upon external and assumptions that are subject to change; (ii) illustrations of potential performance and cost savings; (iii) not guaranties of future performance or cost savings; and (iv) provided solely for internal review and use by the subject Company. SAP AG and its affiliated companies ("SAP Group") make no representations or warranties of any kind with respect to these materials, and SAP Group shall not be liable for errors or omissions with respect to the materials.


1. Engagement Objectives and Overview2. Executive Summary 3. Next Steps4. Appendix – Detailed Analysis

Agenda


Engagement Objectives and Scope

ObjectivesUnderstand Tata Motors business strategy, business processes, current business challenges, and resultant IT challengesBenchmark KPIs and Best Practices adoption level with global peers in the automotive industryIdentify value creation opportunities to address current pain points/process gapsRecommend IT roadmap to enable business strategy and goals for next 3-5 years

Interviews to Assess BusinessObjectives and Pain-points

Benchmarking Survey

Corporate Regional Office

Production Units Others

Scope Pune Jamshedpur Lucknow Pantnagar Sanand HVAL/HVTL FBV TMLD

Finance NA

Human Resources NA NA NA

Materials NA NA

CRM DMS NA NA NA NA NA NA NA NA NA

Supply Chain Mgt NA NA

Manufacturing Operations NA NA NA NA

Quality NA NA NA NA NA

Plant Maintenance NA NA NA NA NA

Planning

Engineering Research NA NA NA NA NA NA NA NA

Spares/Customer Service NA NA NA NA NA NA NA

Real Estate/Hospital Mgmt. NA NA NA NA NA NA NA NA NA

Business Intelligence

Information Technology


Engagement Progress

Executive Alignment & Kick Off

Business & IT Interviews

Team Analysis

Validation of

Findings

FinalPresentation

Alignment & scope determinationIdentify participantsConduct kick off call Position Benchmarking surveyPut up project management system

Understand current IT and resultant business challengesGather detailed pain pointsHigh level analysis of pain points Input on key value drivers

Identify relevant solutions to address pain pointsCreate solution roadmap for each manufacturing location, Regional Office and Corporate OfficeFinalize Benchmarking reports

Conduct 1-2 hour sessions with relevant stakeholdersValidate key pain points, value drivers, IT roadmap and business caseDiscuss results of benchmarking exercise

Present findingsto Tata Motors Business Unit HeadsAgree on next

steps to secure buy-in and execution of roadmap

TBDSep 28th – Oct 7th Oct 8th – 30th

Activities

Jul 20th – Oct 1stJun 9th – Jul 8th

Complete

We are here today

We are here today

Completed


Team Interviewed More than 200 Tata Motors ExecutivesTML Names & RolesCorporate P M Telang – MD, India Operations

C Ramakrishnan – CFORavi Pisharody – President, CVBUGirish Wagh – Head, Passenger Car OperationsR T Wasan – Head, International BusinessS N Ambardekar – SVP, Manufacturing Operations, CVBUB B Parekh – Chief, Strategic sourcingV B Somaiya - Head, TreasuryN S Kulkarni – Head, Corporate PlanningAbhijit Gajendragadkar – VP, Corporate FinanceJagdish Belwal – CIOSunil Pundlik – DGM, LawRamesh Kulal – DGM, Material ImportsS Sreeraman – DGM, Customer Care & DQCTCV M Kulkarni - Head, Vehicle Parts & Aggregates (CVBU)S G Jogalekar – GM, After Sales Business & Network Plng.Priya Giri –GM, Corporate Human ResourcesP Sunavantee Ursekar – AGM, Credit Control & ReceivablesRavindra Vasant Pethe – AGM, Shared Services

Regional Offices

Dipankar Tiwary – RM, PCBU West 1Girish K Janardan – RM, PCBU West 2Tapan Ghosh – RM, PCBU North 1Sandeep Kumar – RM, CVBU NorthAnand Totla – RM, PCBU North 2Gautam Mukherjee – RM, PCBU EastHabib Saleh – RM, CVBU EastSanjay Mishra – RM, CVBU SouthVijay Menon – RM, PCBU South 2

Subsidiaries/ Other Divisions

A B Lall – CEO, HVAL/HVTLV G Prasad – Head, FBVJawahar Seth – CFO, TMLD

TMLUnits Names & Roles

Pune R Bhaskar – Plant Head, CVBUVikram Sinha – Plant Head, PCBUSuhas P Kulkarni – AGM, Finance (PCBU)U K Mishra – Head, MaterialsAshok Kangude – Head, Customer Services (PCBU)Rajinder Kaul – Sr. GM, Auto ProjectsA K Ghose – Head, HR (PCBU)Prashant Ahir - Head - HR (CVBU)A S Prasad – GM, Auto Production (CVBU)K Chandrasekhar – GM, QA

Jamshedpur Satish B Borwankar – Plant HeadUttam Kr Biswas – Head, FinanceK Mohankumar – GM, Materials & ADDP K Sinha – Sr. GM, ManufacturingSushant K Routray - GM - HR & Productivity ServicesS K Dhawan – GM, TechnicalAkhilesh Kumar - GM - WT Factory

Lucknow Alok Saxena – Plant HeadAmitava Roy – Head, FinanceKumar Lalit – Head, HRMukesh Chandra – DGM, Manufacturing & EnvironmentTirbhuvan Kumar – AGM, Planning

Pantnagar P K Chobe/Atul P Renavikar – Plant HeadG S Nadgouda - DGM - Materials, ADD, Auto Matl and MPCK Venkata Krishna – AGM, FinanceSrinath S Sharma – DGM, ManufacturingS G Krishnan – Divisional Manager, HR

Sanand Arijit Bandopadhyay – Div. Mgr, Plant Business PlanningPrashant Saxena – GM, Small Car SourcingPriyadarshan Kshirsagar – DGM, Planning, SystemsRakesh Mital – DGM, Supply Chain



Agenda


Tata Motors’ Recent Performance: Creating Building Blocks for Further Progress

Tata Motors has rapidly recovered from the industry downturn in 2008-09 and recorded growth of 34% in number of vehicles sold in the domestic market in India, representing a 25.5% share in the industry (improving from 24.4% share in the previous year)

Buoyant market demands, successful launch of new models based on market insights and improved operational efficiencies have been some of the key drivers behind this growth

Capability to network across global centres in product and technology development , ability to derisk its business by focusing on less cyclical segments, expanding capacity to offer cost advantage by leveraging economies of scale would help Tata Motors to strengthen its position as a viable automobile enterprise in the global industry

Stock performance over the past 5 yearsRevenue and Operating Income – standalone

20,891

27,470 28,73025,629

35,593

2,869 3,313 3,093 1,7534,179

2005-06 2006-07 2007-08 2008-09 2009-10

Revenue (in Rs crore) Operating Income (in Rs crore)

Operating Income = Revenue – Cost of Raw Materials & Manufacturing – Employee CostSource: Annual reports; SAP analysis

Tata Motors

BSE Sensex


Focus on volume and scaleIncrease reach through more touch pointsDrive more revenue through ownership lifecycleFocus on value added servicesFocus on international expansion

Focus on end-to-end supply chain Reduce complexityEfficient product innovation Enhance vendor collaborationWorld-class quality standardsTalent managementEfficient capital management

Business Priorities and IT Imperatives

Vision to be “Best in the manner in which we operate, best in the products we deliver…”

Business Priorities IT Imperatives

Continue Profitable Revenue Growth

Drive Operational Excellence

Leverage shared services

Transform SAP to a decision support

system

Optimize existing SAP landscape

Enable integrated end-to-end

process visibility

Source: Company Interviews, Company Reports, SAP Analysis


Tata Motors IT Journey

Benefits realized

• Established a robust and scalable platform for India operations• Basic transactional processes across functions automated• A shared services platform has also been created for IT and shared financial services• Ease of consolidation across units on account of single platform and common processes• Non-value-add activities have been lowered• With BW, first level visibility of information, data accuracy and faster access to information achieved • In partnership with SAP MaxAttention, utilization of existing functionalities and implementation issues around Warranty

Management, Service Parts Management have been resolved to a great extent• Platform established for optimizing performance in next phase of IT capability development• With ongoing Business Objects roll out, Tata Motors would further have,

Visibility into different parts of the business through reportingData accuracy and faster access to informationDashboard reporting tool to provide key analysis to management

Tata Motors has traditionally been an early adopter of new technologies, which has generated significant business value

1998-2008

Implemented SAP 3.1 H, upgraded to 4.6 C and ECC 6.0

2000’s

Developed Integrated CRM-

DMS system

2004-06

Implemented SAP SRM and

WM

2000’s Mid-2000 2009

Implemented MES solutions

PLM with Delmiaand Team Centre

SAP IS-Auto, Business Objects

Roll out


Business Application Landscape and Maturity Across Units/Locations

Struggling Meets Basic Needs Mature Not Applicable (NA)

While there are pockets of IT excellence, the current application maturity level would not support the aggressive future growth planned

Function / Location Corporate Regional Office Jamshedpur Pune Lucknow Pantnagar Sanand

Finance SAP SAP SAP SAP SAP SAP SAP

Human Resources Mgt SAP/Custom SAP/Custom SAP/Custom SAP/Custom SAP/Custom SAP/Custom SAP/Custom

Materials/ADD SAP NA SAP SAP SAP SAP SAP

Sales & Marketing Siebel Siebel NA NA NA NA NA

Supply Chain Management Manual Manual Manual Manual Manual Manual SAP

Manufacturing Operations NA NA SAP/Custom SAP/MES/Custom SAP/Custom SAP/MES SAP/MES

Quality NA NA SAP SAP SAP SAP SAP

Plant Maintenance NA NA SAP SAP SAP SAP SAP

PlanningSAP/Hyperion NA SAP SAP SAP SAP SAP

Engineering ResearchNA NA Team Centre Team Centre Team Centre Team Centre Team Centre

Customer Service SAP/Siebel NA NA NA NA NA NA

Business Intelligence SAP SAP SAP SAP SAP SAP SAP


Significant Opportunity to Improve Best Practice Adoption Compared to Global Peers

Function CoverageBest Practice Adoption Gap Peer Coverage1

Key IT Enablement Areas (based on Importance vs. Coverage Gaps identified internally) Average Q1W.r.t. Avg. W.r.t. Q1

Human Capital Management 1.8 0.7 2.2 2.5 4.0

Enable analysis of workforce data, implementation of corporate strategies and what-if analysisAutomate analysis and reporting of time and attendance KPIs Integrate compensation planning system with sales-processing and financial systems

Supply Chain Planning 2.5 0.1 1.8 2.6 4.3

Provide a supply chain performance KPI dashboard and exception-based reporting for enterprise wide and individual supply chainsCollaborate with contract manufacturers and component suppliers on the PO which includes BOM and its componentsIntegrate all supply chain processes (planning, warehousing, transportation

Finance 2.9 NA 1.4 2.7 4.3

Enable G/L Accounting system to handle multiple currencies and accounting standards (e.g. US GAAP, IFRS)Automate budget and forecast simulationsAllow users to access standardized input forms/templates at the beginning of the planning cycle

Manufacturing 3.0 NA 1.2 2.8 4.2

Automate monitoring and analysis of KPI performance across labor, assets and plantsAllow production personnel to identify and respond to root causes of problems when KPIs fall outside acceptable parameters

Supplier Relationship Management

3.1 NA 1.1 2.6 4.2

Enable suppliers to self-register via supplier portalFacilitate order collaboration through a supplier portal for order acknowledgementsImplement supplier managed inventory and collaborative replenishment

Small/No Gap (less than equal to 0) Moderate Gap (0-1.5)Significant Gap (> 1.5)Best Practice Adoption Gap:

Note 1: Color commentary based on peer Group comprising of companies in the automotive sector


Enabling Tata Motors’ Business Transformation

Enable Integrated and End-to-End Process Visibility

Optimize the Current SAP Landscape at Tata Motors

Transform SAP to a Decision Support System

Leverage Shared Services

Establish SAP as a

Competitive Differentiator



Enable Integrated End-to-End Process Visibility




Establish SAP as a



Optimize the Current SAP Landscape (1/3)

Business Function SAP Module Pain Points Suggested Improvements

Human Resources

Self Services De-centralized web based self service solutions across TML

Enhance HR with centralized ESS/ Performance Management Solutions

Personnel Management

Recruitment is cumbersome due to high reliance on paper based processes

Adopt E-Recruiting

Training and Development

Lack of enterprise wide learning repository/ system

Implement E-Learning and a robust knowledge management solution

Project Management

Project Systems

Lack of a structured project management process leading to project delays and cost overruns

Leverage expert consulting to address issues in budget consumption and drive user adoption of SAP-PS for project management

Fixed assetsManual paper based system for Asset Capitalization

Streamline process with SAP Interactive forms from Adobe and SAP BPM

Procurement SAP SRM

Only basic procurement activities are carried out in SAP i.e. Purchase Requisition, Purchase Orders, Goods Receipt etc

Expand the coverage of SRM to include supplier performance management, RFx management and extended supplier collaboration



Plant Maintenance Plant Maintenance

Difficulty in analyzing breakdowns due to lack of data points

Drive maturity of PM across all plants for maintenance optimization

Advanced analytics such as MTTF and MTBF are cumbersome to perform

Automate data collection and report generation wherever possible

Production Planning

MRP Schedule lines are generated manually Fix issues in BOM and drive user adoption of MRP across plants

ECMMBOM -EBOM synch issues leading to inventory obsolescence

Address PLM-ERP integration issues to ensure EBOM and MBOM synchronization

Sequenced Manufacturing

Production sequence manually generated Automate line sequencing through IS-Auto

Shared Services

VirsaRole based access limited to SD, MM & FI only; need to extend it to other areas too

GRC Access control will enable online validation of roles

Open TextInvoice verification process needs to be automated

OCR can be enabled through open text

KNOAPerformance management is being done manually

Drive end user performance improvement through KNOA

InfrastructureBW

Reduced responsiveness due to long lead times in report generation

Hardware needs to be augmented both at the plant and area offices

SAP Login Long login times due to system performance





International Business

Production PlanningTracking of the customer order status (production stages) is difficultThere is limited flexibility to address the challenges of having higher varieties

Configure Make to Order scenario for International businessExplore the possibility of using variant configuration

VMS

Distributors are unable to track ordersThere is no interface with the distributors system and there is no visibility in the stock of the distributors

Implement SAP Vehicle Management System (VMS) that can serve as a central tool for managing, procuring, sales/distribution and tracking of vehicles with interfaces to distributors’ system

Reporting and Dashboards

Collecting, gathering, analyzing and reporting is a big challenge

SAP Business Objects can enable tracking of KPIs and publish required dashboards

HVAL/HVTL

Training & Development

SAP processes are not being fully used Conduct training sessions specifically for HVAL/HVTLCreate bluebook for SAP transactions

SAPThere are many processes that are not being used and some process have not been configured

Conduct system audit and configure processes if required

Production

Unable to view vendor stock at various stages of productionUnable to view the status of the shop floor on the desktop

Use SNC to get the production stage information at the vendorsUse MII to create shop floor dashboards

FBV Production

Tracking of Fully built vehicles till it reaches the customer is not happeningDiversion by RSO of unique models is challengingProduction loss at plant mounting because of scheduling challenges

SAP event management can be implemented to track the vehiclesStreamline the MTO/Allocation process for FBV requirements Explore the possibility of using finite capacity planning with SCM solution


Ongoing

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Optimize Current SAP Landscape

Existing Capability to be Implemented

Optimize Current Implementation

Real-time Visibility & Analytics: Roll out of Business Objects across the enterprise and build dashboards and simulate business scenarios

Leverage costing capabilities in SAP to address new material costing and pricing decisionsEnable Employee Performance Mgmt throughout the enterprise

Phase 0: Standardize

Leverage SAP Max Attention to address existing IS-Auto implementation related challengesAddress MASOP process with SAP consultingExtend Kanban across unitsEnhance asset management capabilitiesAddress existing issues in project planning and executionStreamline integration between PLM systems and ERP: Enable workflows across business functions and processes







Establish SAP as a



Integrated End-to-End Process Visibility (1/4)

Key Area Existing Issues Root Causes SAP Recommendations Organizational Requirements

Customer Examples

Supplier Collaboration

Longer than optimalnew product development time

Limited vendor collaboration in the design phase

Early supplier involvement in NPD facilitated by a TML collaboration platform

Suppliers to be included as stakeholders in NPD process

Volkswagen

Shanghai GM

YAPP Automotive

Harman/ Becker

Limited or no visibility into supplier inventory and production

Lack of a collaboration platform that provides visibility

Implement a seamless supply network collaboration platform

Set up a centralized supply chain team to manage operations with addition of visibility clauses in supplier contracts

Limited or no insight into supplier performance across locations

Lack of a enterprise wide supplier performance framework

Implement supplier performance management functionality in SAP SRM to monitor and optimize supplier performance

Institute a supplier performance framework across Tata Motors (PCBU and CVBU)

Inefficiencies in line scheduling due to lack of aggregate visibility

No visibility into aggregate supplies from other TML plants and into stock levels at 3PL warehouses

Extend supply network collaboration framework to sister plants and 3PL warehouse

Set up a centralized supply chainmanagement team



Key Area Existing Issues Root Causes SAP Recommendations OrganizationalRequirements

Customer Examples

Demand Planning

Manual demand planning process resulting in low forecast accuracy

Lack of a robust demand planning solution to generate scientific forecasts

Leverage the robust demand planning capabilities in SCM to improve forecast accuracy

Forecastingprocess needs to be collaborative across Tata Motors

BMWSales teams have no visibility into ATP leading to lost orders and missed sales

Lack of active collaboration between SHQ and the Plants

Leverage the collaborative forecasting and ATP functionalities in SCM

One common collaborative framework for sales and manufacturing

Manufacturing

Parts shortages at line leading to downtime

Lack of an early warning systems on material/parts shortage

Station wise inventory consumption in real time as vehicle passes through the station and advanced broadcast of material shortage

Ensure seamlessintegration between MES and SAP

Daimler

Robert Bosch

Witte Auto-motive

QingduaJinhuaIndustry Group

Challenges in rolled out vehicle tracking at plant and storage yard leading to dispatch delays

No vehicle tracking solution in place at plants and storage yard

Implement RFID enabled vehicle tracking within plant and storage yard

NA

Higher than optimal re-work levels in the assembly lines

Static paper driven instructions at stations leading to wrong part fitment/rework

Introduction of dynamic model specific pictorial work instructions at assembly stations with MES

Ensure integration between SAP PP& PLM/DMS withMES System


Key Area Existing Issues Root Causes SAP Recommendations

Organizational Requirements

Customer Examples

Sourcing

Multiple contracts for the same item across different plants

Lack of centralized contracting process

Centralized supply contracts for common components with deliveries across plants

Centralized sourcing process for common components across Tata Motors

Hero Honda

M&M

BOSCH

International Business (IB)

Tracking of order, vehicle and spares status a key pain area for international business

No international business specific business processes in current system

Map and integrate all processes of IB on a common platform and implement Vehicle Management System to manage vehicle movement

Detailedbusiness process study for IB to be carried out

GM

Quality

Quality management in Tata Motors is a resource intensive manual process which needs to be improved

Quality data not captured at the station but at the end of the line

Automated data collection by interfacing to PLC/SCADA and logging of defects in MES and ERP

High number of warranty claims settled due to product quality issues and lack of feedback loop for corrective action

Delayed communication of quality issues from dealerships to units

Capture defects information through DMS and provide seamless information to plant through portal

Ensure integration between ERP and DMS



Key Area Existing Issues Root Causes SAP Recommendations Organizational Requirements

Customer Examples

Spare Parts

Complexity in planning and distributing spare parts due to propagation of models, variants and part revisions

Current system does not support service parts management processes, i.e. cross docking etc

Implement Service Parts Planning to address the unique business requirements of spare parts division

Bajaj Auto

Ford

Finance

Spreadsheet based planning leading to high manual effort

Lack of a robust online planning tool

Increase ease of planning through SAP Business planning IVECO

Subros

YAPP Auto-motive

Inability to accurately forecast price fluctuations of Raw Materials and simulate business impact

Lack of a simulation and analytics engine

Leverage SAP business objects/PCM to simulate scenarios

Web based and disparate balance scorecard systems used across Tata Motors

No centralized solution to manage strategic initiatives

Implement SAP Strategy Management for a single strategy management tool

Transportation Management

Transport planning for distribution of vehicles is a manual process

Lack of transportation optimizing engine available

Explore usage of transport planning engine along with event management

Transpor-tationplanning team under TMLD Harman/

BeckerMilk run planning and 3PL collaboration is a key area of concern

Lack of an online collaboration platform

Leverage supply network collaboration capabilities to integrate 3PL vendors into TML



Driving RFID-Based Kanban Process Example: Daimler AG

Daimler AG is one of the world’s most successful automotive companies based in Stuttgart, Germany and is one of the biggest producers of premium cars and the world's biggest manufacturer of commercial vehicles with a global reach

Became the first automotive manufacturer to combine kanban with RFID technologyCarried out a 3-month feasibility study to establish replenishment control for transmission productionSubsequently went live with the RFID-based transport process

SAP software automatically posts the movements of the 750 different types of materials between supermarket and assembly areaAs material level falls below the minimum inventory level, system automatically informs the third-party suppliers and orders replenishmentsMinimized the number of time-consuming inventories in the supermarket and assembly line and mapped inventory in the system to reflect the organizational and physical realityReduced time required to perform identification and eliminated process weaknessesRFID technology also helped to track premium and high-security parts

What Daimler did

Benefits Achieved

Project Background• In its production facilities and

warehouses, countless parts are moved resulting in a constant shift in inventory levels

• Its supply-to-production operations were earlier controlled by a manual kanban process

• However, it was extremely difficult for production and logistics to determine the current inventory levels

• Regular inventories and time –consuming manual counts were necessary


Lean Manufacturing Process with RFID Data Capture Example: Robert Bosch

Robert Bosch GmbH, with more than 300 subsidiaries and regional companies in over 60 countries, is a leading global supplier of automotive and industrial technology, consumer goods and building technology

Chose SAP Auto-ID Enterprise which provides tight integration along with all desired functionalitiesProvides scalability to use the solution extensively throughout the companyPilot projects carried out in Homburg and Bamberg plants

At Homburg plant, replenishment is achieved through the automatic capture of production information by RFID gatesBased on information of when and where intermediate goods are required, just in time delivery from warehouse takes place reducing the need for costly buffer inventories Replenishment route is easier to plan simplifying the planning processAt Bamberg, mapping of the production progress is quickly and accurately achieved making the entire production process transparent and easier to planAchieved substantial annual savings through laboursavings and process improvements

Implemen-tation

background

Benefits Achieved

Project Background• Robert Bosch wanted to

boost productivity in its already lean manufacturing plants by using RFID

• The objective of RFID in production logistics processes were:

Reduction of efforts for production confirmations and material requisition

Leveled material replenishment to production using kanban

Reduction of replenishment time at staging


Streamlined Transparent Procurement Process Example: Harman/Becker

Harman Becker Automotive Systems, Inc. designs and manufactures audio and infotainment systems for the automotive original equipment manufacturers and is based in Karlsbad, Germany with 6,700 employees

Implemented SAP Supply Network Collaboration applicationAlso went for SAP NetWeaver XI application integration tool for optimal integration with SAP backend softwareAutomatic transfer of master data from back end was achieved

Reduced stock levels and operating overheadBusiness partners have access to transparent data in electronic formBased on scheduling agreement releases suppliers create Advance Shipping NotificationSupplier-managed inventory function that is used to replenish stock and gives suppliers freedom to decide their own stocking strategyAuto alerts are generated if stock levels deviate from agreed limits or if suppliers issues ASN for incorrect quantity or when back log occursPossible to deploy a worldwide centralized supplier platform

What Harman/ Becker did

Benefits Achieved

Project Background• Delivering complex goods to

customers worldwide, which consists of numerous individual parts required efficient procurement processes

• Earlier processes had disparate procedures and integration gaps

• Data exchange with suppliers was through conventional EDI

• Processes offered zero transparency and were a dangerous source of errors





Establish SAP as a





Transform SAP to a Decision Support System (1/2)

Key Area Existing Issues Business Examples SAP Recommendations

Organization Pre-requisites

Dashboards

Lack of management dashboards for business and functional heads renders decision making difficult

Production units need dashboards to monitor key performance parameters like production level, line availability, machine efficiency, accident rates etc. for better visibility into operations

Implement MII to get real time shop floor performance .

Business needs to define KPIs to be tracked through dashboards

Dashboards also required for purchase, quality, supply chain and human resources functions

Expand Business Objects roll out t to all core functions of Tata Motors

NA

Business Simulation

Inability to run business simulations and what-if analysis that could aid business decisions

Simulation tools are required to assess the impact on vehicle price , components price for price increase in base raw materials like steel, rubber etc.

Adopt robust analytics capabilities in Profitability & Cost Management and Business Objects for business simulations and what-if analysis

NA

Data Capture

Delayed data entry into the system results in post-facto reports and data analysis and does not support pro-active /fast decision making

Scrap data, tool cost from various shop floors are available only by the month end which impedes immediate corrective action

Implement robust data capture systems at the shop floor and link them to the ERP for seamless information flow

Up-skill workersto leverage technology and drive data entry discipline at shop floor


Transform SAP to a Decision Support System (2/2)

Key Area Existing Issues Business Examples SAP Recommendations Organization Pre-requisites

Reporting

Standard reporting functionality less than desirable. On the fly report generation is cumbersome and custom reports are dependent on availability of IT support

For FBV, Daily Production Reports are produced manually which requires 2 hrs effort

Extend Business Objects implementation across businesses and functions and empower business users to create reports

Roll out of business intelligence platform across the units and training of business users

Manual report creation is a time consuming and error prone process which reduces productivity and time spent on analysis

Many key reports are generated manually like:- Inventory valuation and Inventory level in terms of no. of days- Carbon foot print reporting- Dealer incentive reports

Data Quality

Data accuracy is often compromised due to manual entries leading to reduced business user confidence on system generated report/analysis

Variation in system generated and manually prepared report on spares sales order, payment status and pending order status

Leverage advanced reporting capabilities in Business Objects to generate user and business specific reports on portal and dashboards, reduce manual intervention and improve data quality

Data, info cubes needs to be updated on the system on a regular and timely basis

Inventory level shown in system and in reality are different leading to reliance on manual method for inventory reconciliation

Design business process to ensure consumption happens as per BOM


Plant Production Batch

Oct-2008 – Sep-2009

Dealer

5350 ALLConcord Motors (India)

2.5 Cr

Total Credit No. of Claims

749

Model

ALL

No. of Chassis Covered

392

Sub model

ALL

Decision Support Example: Warranty Analysis


Decision Support Example: Vendor Dashboard

31


Decision Support Example: Manufacturing Analytics (Utility View)





Establish SAP as a





Shared Services at TML:The Current Initiative and Road Ahead

A common platform enables cross-functional and geographical synergies across Tata Motors

Enterprise IT strategyIT Landscape ownership, maintenance and supportIT support to business across TML

Strategic Finance-Treasury

Accounts PayableAccounts ReceivableBudget management

Personnel AdministrationPayrollRecruitmentPerformance ManagementEnterprise Learning

Requisition ProcessingCatalog ManagementPurchase Order ProcessingContract Management

Travel ManagementEnterprise Asset ManagementReal estate management

Information Technology

Finance

Human Resources

Operational Procurement

You are here today

The existing shared services framework needs to be expanded to support growth and drive value

Facility and Admin

The Next Steps


Establishing Harmonized Business Processes Example: M&M Project Harmony

Mahindra Group is a US 6.7 billion industrial house and the market leader in multi-utility vehicles with over 100,000 people and several state-of-the-art facilities in India and overseas

Key executives from group companies and SAP Business Transformation Consulting Group identified common processes that caters to the need and among the best practices in the industryVery strong change management initiative was run within the organizationProject went live on 3rd April 2010 in a big bang fashion with Harmony!

Unified processes and common IT platform creates foundation for leveraging shared services benefitsImproved effectiveness due to reduction of administrative costsGroup procurement benefits (through common master data, common processes and volume buying)Uniform One Mahindra experience for group employeesGroup wide talent management processSeamless, error-free inter unit transactions and processes

Migrating to Success

Strategic and Operational

Benefits

Project Background• Value Engineering study

identified opportunities to bring in synergy in common processes across 40+ businesses in varied industry

• Group agreement to harmonize 44 common business processes across HR, Finance & Accounts and Procurement

• Processes benchmarked against the world’s best

• Project Harmony initiated with 400+ strong project team, involved with 14,000+ users across 400+ locations


Key Considerations Behind Proposed SAP Roadmap

Process Improvement Initiatives Identified Overall Degree of Pain

Business Impact1

Feasibility and Effort2

Supplier Collaboration Enable seamless supplier interaction High High Medium

Supply Chain VisibilityIntegrated Demand and Supply planningService Parts ManagementIS-Auto roll out across plants

High High Medium

Manufacturing Excellence

RFID enabled chassis and vehicle trackingRFID enabled Kanban and MESShop floor optimization

High High Medium

Business Analytics Roll out of Business Objects across the enterprise and build dashboards and simulate business scenarios High High High

People Development Employee and Manager Self ServiceTraining, Knowledge repository Medium Medium High

Financial Excellence

Organizational Planning & BudgetingAutomate cost audit, cost calculation & profitability analysisEnterprise wise strategy managementInvoice management

Medium Medium High

Compliance Process Controls, Enterprise Risk Management Medium Medium High

Sustainability Carbon emissionEnergy management Medium Medium Medium

IT Testing and Performance optimization solutions Medium Medium High

Maximizing End user performance

Empower field force through enterprise mobility solutionsOffline forms for data capture High Medium High

1 Business Impact = f(Cost Savings, Efficiencies, Strategic Benefits, Competitive Advantage, Compliance, TCO Impact)2 Feasibility and Effort = f(Technology Risk, Business Risk, Organizational Readiness, Effort required)


To be implemented by: Now – Year 1

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Proposed IT Roadmap to Establish SAP as a Competitive Differentiator

To be implemented by: Year 1-2 To be implemented by: Year 2- 3

Manufacturing Excellence: RFID enabled kanban and MESIntegrated Demand and Supply Planning PlatformShop-floor Optimization: Automate for visibility and controlEmpower field force: Enterprise mobility solutionsAutomate data capture: Offline forms for data captureEnterprise Knowledge Management: Training, Knowledge Repository

Standardize Enterprise Processes : IS-Auto rollout across plantsOptimize Profitability and Cost Management : Automate cost audit, cost calculation and profitability analysisCarbon Emission and Energy ManagementEnterprise-wide Strategy ManagementGovernance, Risk & Compliance (Clause-49 requirement): Process Controls, Enterprise Risk Management

Phase 0: Standardize

Track and Trace: RFID enabled chassis and vehicle tracking

Supplier Collaboration: Enable seamless supplier interaction

Service Parts ManagementOrganizational Planning & BudgetingEmployee & Manager Self Service: Automate key admin processes for managers and employees

System Optimization: Testing and performance optimization solutions

Invoice ManagementE-RecruitmentEnvironment, Health & SafetyOptimize existing SAP

Extend Analytics across the Enterprise & Maximize End User Performance

Phase 1: Optimize

Phase 2: Transform


Value Creation Potential of Proposed Roadmap (1/2)

Process Value DriversBenefit Estimates

Customer Value ReferencesPotential Likely

Supplier Collaboration & Supply Chain Visibility

15-20% reduction in inventory levels2-6% less spend on indirect material, stores and spares and imports 0.5-1% less spend on direct materials0.5% less maverick spend/ expedition30-40% buyer efficiency5-6% reduction in logistics cost5-10% reduction in premium freights cost3-4% reduction in warehouse management cost5-7.5% improvement in sales revenue30-40% productivity improvement of supply chain and sales staff

Hero Honda: Reduced inventory carrying cost by 10%BOSCH: Improved planned productivity by 20%, reduced inventory by 17%Viper Motorcycle: Achieved 17% improvement in procurement marginsVolkswagen: 30% lower supply chain costs, safety-stock fell from 60 to 5 daysDaimler: Mapped inventory in the system to reflect the organizational and physical realityToyota: Lowered time to confirm orders from 2 days to 2 hoursBehr: Reduced premium freight component

Mfg. Excellence

1-1.5% lower manufacturing overheads0.5-1% higher throughput from improved asset utilization5-8% lower cost of quality and wastage5-8% lower energy cost5-10% reduced repair and maintenance cost30-40% higher shop-floor and maintenance workmen efficiency

Witte Automotive: Better reactivity through real-time monitoring of the production processDaimler: Improved quality through tracking & reduced time required to perform identification and eliminated process weaknessesViper Motorcycle: Improved productivity of production by 27%Qingdao Jinhua Industry Group: Reduced cost of production operations by 5-8%

Rs. 1,265 Cr Rs. 480 CrTotal Annual Benefits:

306 Cr753 Cr

70 Cr204 Cr

Note: Directional analysis based on SAP experience from more than 3,000 value engineering engagements, data from TML Annual Report and inputs received during VE interviews

Improvement Potential

Conservative Estimate

174 Cr 115 Cr

One-Time BenefitOne-time Benefits: 174 Cr 115 Cr


Value Creation Potential of Proposed Roadmap (2/2)

Note: Directional analysis based on SAP experience from more than 3,000 value engineering engagements, data from TML Annual Report and inputs received during VE interviews

Process Value DriversBenefit Estimates

Customer Value ReferencesPotential Likely

Better Decision Making through Analytics

25-30% less time spent on data gathering2-4% increased revenue through better insights at various operational level

Hyundai: Efficient strategy management through real-time data and improved data precisionContinental Automotive System: Improved and efficient reporting to facilitate better-informed business decisions

Robust Business Planning & Forecasting

2.5-5% improvement in sales revenue due to better forecasting0.25-0.50% improvement in operating margin due to better insights into costs30-40% improved productivity of planning staff

SI Corporation: Improved forecast accuracy to double in certain divisionsIVECO: Shortened world wide financial closing cycle to 1 week

People Development

5-10% reduced cost on training anddevelopment10-15% reduced hiring cost20-30% reduced time spent by staff/ managers on employee administration

Nissan: Eliminated paper-based forms and processes and improved productivity by 35%Kongsberg Automotive: Reduced expenses for workforce education by 30-50% and increased accessibility to education documentation by 80%

Compliance, EH&S and IT

3-4% reduction in IT infrastructure and support cost10-15% lower application development and integration costs10-15% reduction in EH&S and compliance related costs

Hella KGaA Hueck & Co: Effectively manage its environmental protection and industrial safety processesM&M: Improved system performance and business users satisfaction towards IT

15 Cr25 Cr

59 Cr226 Cr

14 Cr24 Cr

16 Cr33 Cr

Rs. 1,265 Cr Rs. 480 CrTotal Annual Benefits:One-Time BenefitOne-time Benefits: 174 Cr 115 Cr

Improvement Potential

Conservative Estimate


Executing the Roadmap: Critical Success Factors

C-level mandate is critical for ensuring project successOngoing leadership through steering committee participation & communicationBusiness Head participation for every change initiative

Executive Sponsorship & Involvement

Respective functions need to assign their best business resources to the projectEach major project should be treated as a business transformation initiative rather than an IT-driven project

Business Ownership

Leverage inbuilt best practices and standard processes embedded in the systems to shorten process standardization exercise Avoid customizations unless business critical. Business leaders to decide on criticality.

Process Standardization

Significant focus on change management and communication is required to ensure the success of such a transformational project

Change Management

Support Value Realization through a value management frameworkHelp establish a Value Management Office

Value Management

Criticality of Success Factor



Agenda


Next Steps

Review of VE presentation with Jagdish: Completed

Review of VE presentation and agreement on the next steps with CR: Oct 15

Investment proposal: Oct 22

Presentation of Engagement Findings to the CVBU and PCBU Business Heads: Oct 18-29

Presentation to the Management Committee: Nov 9

Presentations to the CVBU and PCBU steering committee: Nov 2nd week

Finalization of commercials: Nov 20

Execute ELA: Nov 30



Agenda


Business Application Maturity Assessment: Methodology Followed

Parameters defined for assessing business application maturity:

Whether the application meets the business functionality requirements

Level of automation of basic transactional processes

Whether data quality is consistent and accurate

Whether the application supports business analytics requirements

Ability to generate report from the application as & when required

Reliability and scaleability of the application

User friendliness of the application

Based on feedback during interviews and respective BPO’s assessment (function wise and unit wise), rating of 1 (worst) to 5 (best) given for each parameters for 12 identified business functions across all units, RO and Corporate Office

Maturity assessment defined as:

Mature (Green) if average functional rating is between 4-5

Yellow (Meets basic needs) if average functional rating is > 2 and < 4

Red (Struggling) if average functional rating is between 1-2


Mahindra & Mahindra: Project Harmony Details


Proposed Shared Services Value Framework for Tata Motors:

From Mono-functional to Global Shared Services

MultifunctionalShared Services

Global Shared

Services Management

Mono-functional Shared Services

F&A HR IT Procure-ment Facility

Drive Efficiency

Drive Effectiveness

CompetitiveAdvantage

Evolve towards a lean Organization Scale with future growthQuick integration of future M&As

Reduce cost of running shared servicesIncrease productivity and market share

Reduce cost of doing businessImprove key financial KPIs with consolidation and harmonization

Global shared services for TML and JLR will enable Tata Motor’s strategic direction and support scale across geographies

Best practice companies aim to cut SG&A costs by 10 to 20% with shared servicesShared services provides transparency to improve cash flowImproves quality and accountability with guaranteed service levels

Multifunctional shared services provides an additional decrease in administration costsAnd a more holistic, flawless end-to-end experiences for customers, partners & employees

Impact of Shared Service Centers

Phase-1

Phase-2

Phase-3

Business Value


I. Reduced Inventory Levels (One-Time) Customer Example:

1. Hero Honda reduced inventory carrying costs by 10%

2. Robert Boschreduced component inventories by 17%

3. YAPP Automotive Parts Co. reduced raw material inventory for significant parts from 60 days to 30 days

4. Robert Boschreduced inventory by 17%, improved planner productivity by 20%

5. Viper Motorcycle Company reduced inventory levels by 18%

6. Qingdao JinhuaIndustry Group reduced inventory by 13%

7. SI Corporation reduced finished goods inventory by 60%

8. Subros achieved reduction in raw material and finished goods inventory by 60% and 75% respectively

Tata Motors Pain Points:1. Real time inventory status is not available from the system and inventory reporting involves a lot of manual effort2. Little or no visibility into supplier inventory/production3. Higher inventory levels due to asynchronous JIT sequencing

Value Drivers:1. Gain visibility into supplier inventory/production 2. Optimize inventory levels with synchronous JIT sequencing3. Optimization of line scheduling through visibility of aggregates supply and 3PL warehouse inventories4. Improve efficiencies in line through RFID enabled kanban and kitting

Description Value SourcePotential LikelyInventory balance of Raw Materials & Components, Stores and Spares, Consumable tools (Rs Cr)

995 995 Annual Report & Client Discussion

Expected reduction in inventory 15% 20%

1.SAP customers have experienced reductions in inventory of 20-40%2. Based on discussion with Tata Motors executives at various production units

One-time cash flow (Rs Cr) 149 199 Calculation

II. Reduced Inventory Carrying CostsDescription

ValueSourceConservative Likely

Inventory carrying cost percentage 12% 12%

Benchmarking Data (Inventory carrying cost is primarily cost of capital along with other costs like inventory obsolescence, shrinkage, expiry, storage etc.

Expected reduction in expenses (Rs Cr) 18 24 Calculation

Baseline/Assumptions: Data inputs from Tata Motors

Value Drivers: How SAP solutions can address the pain

Improvement Range: Based on SAP benchmarking & customer experiences

Process/IT Pains:Based on discussions with Tata Motors Business and IT teams

Customer Examples:Customer benefits as per published studies

Benefit Estimation Methodology – An Example


SAP Customers’ Proof Points in Automotive Industry (1/6)

Business Process Key Metrics Customer Proof Points

Customer Relationship Management

Order processing timeCustomer service level (%)On-time delivery (%)Customer service productivity Compliant resolution time

Improved accuracy of deliveries – from 98% to 100%Faster, more efficient order processing, cutting 3 days off previous manual order processing time

Increased first-call resolution rate from 36% to 95%

5% to 25% service level improvement for customers of Caterpillar Logistics Services15% to 30% reduction in customers’ inventory25% to 30% improvement in customers’ warehouse management productivity

Improved discount and incentive spend by 12%Lowered time to confirm orders from 2 days to 2 hoursRaised market awareness by 15%Increased sales order acceptance rate by 20%

Reduced average complaint resolution time from 6 to 2.8 daysEnabled call center to handle 50% more calls per monthImproved dealer data accuracy from 40% to 90%



Business Process Key Metrics Proof Points

Supplier Relationship Management

Procurement function productivityPO errors (%)Supplier lead time% maverick spendAnnual savings (%)RM inventory turns

Reduced inventory carrying cost by 10%

Mahindra and Mahindra improved productivity of procurement function significantly

Viper Motorcycle Company improved procurement staff productivity by 12%Achieved 17% improvement in procurement margins

Increased procurement efficiency for direct services and materials by more than 4%

Reduced component inventories by 17%Improved planned productivity by 20%

Reduced lead time for components from 60 days to 40 days

Reduced strategic sourcing costs by 10%

Reduced raw material inventory for significant parts from 60 days to 30 days

Reduced errors in purchase orders by more than 50%

Standardized procurement processes worldwideReduced holding cost and operating overheadStreamlined system monitoring and maintenance

Gain transparency for purchasing processReduce non adding value tasksImprove and consolidate processes group-wide




Supply Chain Management

Inventory turnsInventory obsolescence cost Forecast accuracy (%) Order fill rate (%)Order fulfillment lead timeStock-out (%)Supply chain planning productivityTransportation cost (% of revenue)Warehouse cost (% of revenue)

Viper Motorcycle Company reduced inventory levels by 18%

Improvement in order fill rate by 12%

Qingdao Jinhua Industry Group reduced inventory by 13%

Reduced finished goods inventory by 60%Improved the “perfect” order rate from 78% to 91%Improved forecast accuracy to double in certain divisionsReduced total company backorders by 83%

25% to 50% improvement in warehouse productivity5% to 10% improvement in fill rates15% to 25% reduction in inventory

40% improvement in forecasting accuracy35% to 40% improvement in spare parts availability

Improved on-time delivery to OEMs from 95% to 100%Reduction in raw material and finished goods inventory by 60% and 75% respectively

Reduced warehouse maintenance and investment costsMore efficient use of resources as a result of automation

* R&D Effectiveness = Annual revenue / Annual R&D spend




Manufacturing Manufacturing lead timeOn-time delivery Inventory turnsCustomer reject rate (parts per million)Capacity utilizationScrap cost (% of manufacturing cost)Overall Equipment EffectivenessManufacturing FTEs ProductivityManufacturing cost (% of revenue)

Viper Motorcycle Company improved productivity of productionby 27%

Reduced lead time for production to a maximum of 10 days

Qingdao Jinhua Industry Group reduced the cost of each production operation by 5% – 8% Increased productivity by 16%Reduced product shortages by 70%

Improvement in product quality levels by 50%Reduction in inventory by 50% (projected)

Minimized the number of time consuming inventories in the super market and assembly lineImproved quality through tracking and mapped inventory in the systemReduced time required to perform identification

Reduced buffer inventoriesReduced number of loops required to supply a production line

Increased transparency through role-based KPIsBetter reactivity through real-time monitoring of the production processIncreased productivity through plant utilizationReduced manual effort through automated machine data acquisitionReduced error risk and less defective goods

Business Intelligence Reporting and analytics productivityTime to create business reports

Improved the quality, detail, and efficiency of reporting




IT Integration and Support

IT staff productivityIT spend (% of revenue)

Adeep Locks increased transparency within the company by integrating the data system

Lowered total cost of ownership of electronic data interchange environment by 30%

Reduction in total cost of ownership by 20% (Projected)

40% reduction in IT development costs30% reduction in implementation costs20% reduction in ongoing maintenance costs

Reduced IT running costs by 30%

Improved system performance (CPU utilization up by 50%, Dialog response time reduced by 40%) Improved business users’ satisfaction toward IT

Human Capital Management

HR function productivityEmployee self-service (% of transactions)Payroll errors (%)HR function cost (% of revenue)

Improved productivity of certain business processes by 25%Improved payroll processing time by 35%Eliminated paper-based forms and processes

Reduced expenses for workforce education by 30 – 50%Increased global accessibility to education documentation by 80% Decreased time needed for installing educational instructions by 50%



Financial Management Time-to-close booksTime-to-conduct auditFinance function productivityDays sales outstanding

75% reduction in effort to close books

Reduced financial closing time from 10 days to 1 day

Reduced time needed to conduct month-end closing from 3 days to 1 day

50% reduction in time required for monthly closings and 25% shorter year-end closing

Shortened worldwide financial closing cycle to 1 week

Time to close books reduced by 75%Days receivables outstanding reduced by 56%Invoice error rate reduced from 2% to 0.001%Time for payroll processing reduced by 70%


Product Lifecycle Management

Time-to-marketCost to introduce new product (% of new product revenue)R&D effectiveness*

Lowered cost of process for introducing new products by 30%50% reduction in lead time to move information and document distribution into development projects

Volkswagen achieved significant savings by eliminating redundant dataUp-to-date BOM data and easy identification of required components


SAP Driving Customer Value: Selected Automotive Sales & Service References

Improved discount and incentive spend by 12%

Lowered time to confirm orders from 2 days to 2 hours

Raised market awareness by 15%

Reduced average complaint resolution time from 6 to 2.8 days

Enabled call center to handle 50% more calls per month

Reduced the cost of marketing campaigns

25% to 50% improvement in warehouse productivity.

15% to 25% reduction in inventory.

20% to 30% reduction in support cost.

Implemented common processes and workflow across multiple brands and all functions

Reduced IT running costs by 30%

More than 50% reduction in purchase-order errors.

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SAP Driving Customer Value: Selected Automotive Supplier References

Increased revenue by nearly 80% due to acquisitions and international expansion

Increased inventory turnover with order-driven planning

20% improvement in planner productivity

17% reduction in inventory

Reduced space requirements

Reduced lead times for information and document distribution into development projects by 50%

Calculated ROI after 1½ years, based on implementation duration of 2 years

Only 1 staff member required for maintenance

Quick, simultaneous , remote access for multiple users

Significantly reduced inventory by using material requirements planning functionality

Reduced premium freight through visibility into parts inventory

SAP Value Proposition for Tata MotorsEnabling TML’s Strategy

Jamshedpur Unit

Pune Unit

Lucknow Unit

Pantnagar Unit

Sanand Unit


Jamshedpur Unit: Profile and Key Requirements

Source: TCL Website, Discussion with Haldia plant personnel

Key requirement at Jamshedpur include better decision support, better process configuration for HVAL/HVTL, project traceability and control and better usage of plant maintenance module

Profile

• First unit of TML set up in 1945

• Consists of 4 major divisions - Truck Factory, Engine Factory, Cab & Cowl Factories

• Axle and Engine plants hived off into independent subsidiaries HVAL &HVTL

• Advanced facilities for manufacturing long members

• In house Foundry and Forge division

• Present capacity of 480 vehicles per day

• 5,800 permanent employees

Processes configuration for HVAL/HVTL does not meet business requirements and needs to be benchmarked with Tata Motors

Disparate human resource systems leads to high manual effort in various HR activities with duplicate data entry

Project traceability and controlling is a key challenge with high level of manual effort in budget control and monitoring

Preventive maintenance is a weak area and impacts machine usage

Production scheduling for world truck operations need to be based on stock rather than expected arrival of material

Decision support system with dashboards and auto alerts, exception reporting

Key IT Requirements

User training on SAP features to improve awareness and adherence

Automatic data capture at all assembly lines is a requirement for QA Department

Supplier collaboration for inventory visibility and vendor performance evaluation capacity is necessary


Current IT Landscape

Enterprise Management Enterprise Asset

Management

Management Accounting

FinancialAccounting

Governance, Risk & Control

Financial Supply Chain Management

Business Analytics

Product Lifecycle Management

Product Data Management

ProjectPlanning

Collaborative Project

Management

Engineering Change

Management

Quality Assurance/

Control

Master Data Management

CRM: Marketing Sales, Service Sales Forecasting Marketing Management

Dealer Business Management & Warranty

Mgmt

Business Support Corporate Performance Management

Human Resources

ESS/MSS Knowledge Management

Real Estate & Hospital

ManagementProject Management

Supply Chain Master Production Schedule

Transportation Planning &Execution

Material Requirements

Planning

Warehouse & Storage

Sales & Operations Planning

Sourcing and Procurement

Inbound Logistics

SupplierManaged Inventory

Supplier Collaboration

Supplier Inventory Visibility

Operational Procurement

QualityManufacturingModel Mix

Planning and Sequencing

Shop Floor Interface to Planning & Execution

Manufacturing Visibility & Costing

Lean Manufacturing

Environment, Health and Safety

Strategic Sourcing

Manufacturing Execution

SAP Non-SAP Manual

Supply Chain Visibility

Process Engineering

Quality

Sales Order Processing

Sales Analytics


Key Pain Points and Solution Enablers (1/11)

Business Area

Current Situation Way Forward

Materials/ADD

Optimizing existing systemSub-contracting process needs to be streamlined

Retro payment of vendors to be streamlined Impact of price changes to be incorporated in the system automatically

Freight elements should be captured in system

MRP run currently not being done in SAPMaterial transfer process for ERC from Pantnagar not fully establishedAmortization of dies not possibleCapture of revisions data in Purchase orders required

Standard costing template required for ADD for zero based costing

SAP to provide expert consulting after process study. Sub-contract line rejections to be accounted in SAP with suitable workaround. Issue of bulk material to sub-contractor needs to be studied in detail.Process to be studied in detail The BOM at a high level need to be maintained with reference to the base raw material like steel and further pricing model can be built in SAP BPC/ PCM. A detailed BOM with Base Raw Material and Overhead to be maintained in SAP ERP. Product Costing to be done with this in the system. BI simulation capabilities to be used.Explore functionalities of Transportation Management/include conditions in P.O.s, STOs.Existing SAP processes to be enabledClean/fine tune master data and phased roll out of MRPStreamline and introduce the process in SAP either with the activity rate or quantity based overheadECM process to be formulated and implemented in SAP to enable MRP to give exception list on the changes made. The changes to PO need to be manual keeping in view the existing contracts with vendorsExplore base planning object/unit costing functionality



Business Area


Materials/ADD

Business improvement needs • Visibility of stock at vendor end not available• Vendor capacity mapping not available• Tracking of of materials and trucks required within and outside the

plant• Category wise spend performance data is not available• Material procurement planning is a challenge because of fluctuating

demand• Transport planning of supplier materials is necessary• Need for acknowledgement scanning at stores• System for identification of parts required at stores• Category wise (sheet metal, plastic, rubber) spend performance data

and inventory data not available from the system

Implement supply network collaboration solutions

Implement SAP Yard Management and Auto-ID Enterprise

Implement SAP Spend Performance ManagementImplement advanced planning tools like APO

Implement Transportation Planning SolutionsBarcode driven acknowledgementImplement RFID or Barcode based tagging solutionLeverage spend performance management to address this requirement



Process Current Situation Way Forward

Manufacturing

Optimizing existing systemKanban is not being done through systemMaintenance process needs to be streamlinedPast equipment history, cost of maintenance is not available in the system

Business improvement needsTracking of chassis through the production line and in yardChassis scanning capability to match the chassis number with the one in invoice at the time of dispatchProper production sequencing system to be availableMulti tiered stock capture required-i.e. ready to use at assembly line, available at aggregate factories and on aggregate assembly lines Shortage SMS alerts to be sent to all concerned agencies as soon as chassis is droppedAll scanned aggregates and VC should be matched while bookingProvision to enable a VC search by providing some VC attributes like engine, gear box etc.Schedules to be given to vendors based on dropping plans at various assembly linesAttendance verification system through retina scan requiredNeed facility to capture chassis number at the time of punching the serial numberEquipment level BOM required for World Truck vehicles Need for visual display boards at assembly lineProvision for MTO scenario to be made availableNeed for a comprehensive solution to manage carbon footprint

Implement Kanban in SAP

Review processes and conduct enhanced user awareness / training

Ensure increased usage and adoption of SAP Plant Maintenance functions. Develop BI reports out of SAP PM

Enable RFID enabled chassis tracking and yard management

Implement the PPDS capabilities of APO

RFID enabled linkages of VC to aggregates

Enable real time supplier collaboration through supply network collaboration

Implement IS Auto

SAP PI for integration of advanced attendance systems to SAP – Whether SAP Payroll is being used for Worker Payroll?

Enhance SAP to have the business process of MTO mapped.

Implement SAP Sustainability Solutions



Business Area Current Situation Way Forward

Projects Planning

Optimizing existing system

Approved projects cannot be tracked in the current system

Lack of control of budgets allocation across different heads (e.g. allocation under materials can get utilisedunder labour head)

No control on budgets if cost escalation takes place

Assets that cannot be forecasted and are procured against revenue budgets cannot be capitalised leading to lack of asset traceability, spare parts procurement etc.

Monitoring of Bank Guarantee status is done manually

Capability to amend POs with proper authorization required

System should support detailed PO description to describe the project

Project timelines should be tracked in SAP system

Provision for entering monthly plan in the system is lacking leading to manual MIS creation

Vendors not able to correlate the payments received with corresponding invoice numbers

Lack of visibility to users on payment status against POs raised

Online asset verification capability not available and hence dependent on asset list shared by Shared Services team

SAP to provide expert consulting after process study

To enhance the current Investment management with Projects and as well explore advanced planning solutions like Business Planning

Explore the possibility of using different WBS Elements for material / labour. Alternatively explore the possibility of Funds management

Implement active availability control/ ensure process compliance.

Enhance user acceptance of process through user awareness/ training and better adoption

Collabra / development to be done

Ensure that proper processes are followed i.e PO has WBS Account Assignment. Purchase Order amendment are subject to PO releases

Explore the possibility of using Purchase Order text field/ description/ text field in Projects

Implement PS Comprehensively with networks.

Better user training/ awareness / SRM

Better user training/ awareness

Enable viewing of asset history/ asset master data and reports. Enhanced user awareness

Implement Business Planning

Implement Business Planning / Advanced analytics with SAP Business Objects




Finance


• VFJ sales accounting process needs to be streamlined

ERC Accounting is excel based and needs to be automated

Accounting of imported items needs to be streamlined

Activity rate computation is difficult

Expenses incurred on new projects beyond DR3 stage needs to be capitalized

Enhanced user awareness / training to adhere to the defined process

Integrate Team Center with SAP and explore the possibility of using Internal Order/ Projects to account expenses of ERC (BPM can be explored)


Real Estate Management


Residential accommodation allotment process is fully manual

Current system does not support maintenance of notice records (e.g. violation notice, quarter not vacated etc)

Lack of visibility into the status of application and user complaints pertaining to quarters

Employee attendance during allotment lottery and vacancy list update is manual

Services data, i.e. maintenance, electricity are not maintained in the system

HOPE system has 2 unique IDs for each employee

HOPE system does not have the provision to upload the photograph of employees


Existing SAP processes to be activated




Quality


Lack of archiving and retrieval solution for quality reports of parts being passed

Mismatch in price between BW and ECC leads to warranty related problems causing reversals

Business improvement needs

• More categories of defect codes need to be added in CRM

• Current complaint analysis system is a standalone PC based

• Automated data capturing required at each of the gates

• Unable to identify the suppliers of parts that have failed leading to sub-optimal share of business

Implement SAP Archiving solutions with Opentext.

Needs to be explored further with data consistency checks

Build out a comprehensive defect/damage codes catalogue in ERP

Leverage Business Objects to run complaint analytics

Existing SAP Processes to be used

Implement SAP MII to enable automatic capture of data/ Existing SAP Solutions

Institute a robust vendor performance management program on SAP SRM which captures product defects and delayed deliveries

Implement SAP GRC – Process Control



Business Area


HR


Lack of process standardization reducing effectiveness of PD

ERP integration to PMS is asynchronous and requires manual effort

A comprehensive training management is required with self service capabilities

Lack of integration between PP and HR leading to manual effort

Integration of RE module with HR is lacking

Employee skill mapping not maintained in SAP

Seamless update of relevant process with EC lacking

Estimate sheet has not been captured in the routing

Candidate data upload involves duplication of work and is error prone

Stand alone web based ward registration in the hospital leading to manual entries in SAP

Employee dependents data not available in SAP

Manual assessment of manpower based on production schedules

Lack of required controls in HR system*

Government reporting needs to be supported


Integrated approach required for e-learning

Standardize processes and implement SAP PD module.

Implement SAP PMS to provide online real-time interaction and data availability

Persons can be assigned to Work Center and Activity Type and further skill matrix can be maintained in the system

Extend ESS to appropriate levels in the organization

Capture employee skill data in SAP HR with the relevant infotype

Leverage Adobe forms to automate data capture and synchronization with SAP

Implement a comprehensive e-learning solution with administered content, courses and programs




HVAL/HVTL


Cash journal not being used in HVAL/HVTL

Service entry sheets are not getting printed

Production Planning and Control is outside SAP

Asset Master data does not match with physical assets

Production schedules from Tata Motors is received offline

HVAL/HVTL business processes needs to be benchmarked with TML

Lack of visibility into vendor stock and production status

Pricing panel activities –i.e. evaluation of RFQs etc are done offline

Productivity calculation is outside the SAP system

Ageing reports are not available from the system

Project System module is not being effectively used

Time tracking system of Tata Motors is not implemented

ERC should be created as a plant for testing and prototyping

Production scheduling is possible for an equipment in the system which is currently under maintenance


Overall Equipment Effectiveness needs to be measured

Shop floor status is required to be visible on the desktop of production managers

Adopt production planning in SAP ERP

Implement a portal driven schedule line communication from TML

Roll out BPM at TML and at HVAL/HTL to harmonize processes

Gain real time visibility by leveraging SAP SRM to drive the sourcing process

Drive adoption of plant maintenance module for equipment performance measurement

Implement MII to get real time shop floor data




World Truck Operations


Lack of visibility into orders in the supply chain

Need to support remote trouble shooting to cut down on service time

Need linkages of part s and chassis number to ensure traceability and handle recalls

Need for a production scheduling system which enables scheduling on the basis of stock availability

Automated quality related data capturing and resolution mechanism required at each of the gates

Implement supply network collaboration to get real time visibility into order status

Serialized part management in ERP supplanted with MES

Implement PPDS in SAP APO to cater to the advanced scheduling requirements


Internal Audit


History of previous audits carried out are not available in the system

Provision for capturing audit comments and their follow up actions are not available in the system


• Need for a disaster management system


Implement SAP GRC Process Control





IT Process Improvement


BPOs need to have visibility into all the BRDs raised

Best practices sharing across plants needs to be facilitated

Strengthen local IT support to increase effectiveness

Cumbersome SAP access requisitioning process

Performance issues with BW system leading to long wait periods

System speed needs to be enhanced, particularly during month ends

Low user awareness on capabilities of SAP


• Need for a disaster management system


Develop a collaboration forum to share best practices across the organization

Upgrade Virsa to GRC for ease of us and standardized workflows


Implement performance optimization solutions for better system response

Improve awareness through structured info sessions, creation of knowledge repositories and enabling e-learning




Business Reporting/ Analytics

No system to support measurement and tracking of KPIs online*

No real time dashboards available to business heads to support decision making

Support for user specific reports is not very robust in the existing system.

Price movement for parts across locations

Parts for which inspection has been switched off

Scrap generation report across shops needs to be available at the end of the day

Break up of warranty incurrence details

Supplementary bill payment and deduction reports

No system support to simulate what-if scenarios like warranty provisioning in case of change of spare parts prices

Exception reports are currently not available from the system

Integrate all pertinent modules of SAP, i.e. HR, PP etc with the Analytics platform ( SAP BI/BO) to gain visibility into the required performance parameters

Roll out the analytics platform across the enterprise to provide business leaders with decision support information directly

SAP to study the reporting requirements in detail

Leverage analytics capability in BI to create what if queries in versatile dashboards

SAP to study the requirement in detail

Documents

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