tcm maturity model – case study analysis · a.t. kearney xx/mm.yyyy/00000 1 1 tcm maturity model...

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TCM Maturity Model – Case Study Analysis


Coverage

� Background Information

�Changing Business Environment and Cost Management

� CII Model- our evaluation

� Tata Motors Company Overview & Business Dynamics

� TML’s Business Processes as differentiator

� Summary and Conclusion


Background Information

The House has already witnessed that Commercial Vehicle segment of Tata Motors has been awarded with highest rating “Exemplary” in TCM

evaluation by CII

This presentation will cover our perception about the evaluation process, our self evaluation as to why we have been so rated, journey so far and the

path ahead.


Free Economy Globalization

Increased Competition

Rapid information

flow

Lower Entry Barrier

Rapid Technology

change

Possibility of Extinction of well

established business

Eg: Kodak

Continuous InnovationContinuous Innovation

Continuous pressure on Profit margin

Increased spend on

R&D

Changing Business Environment


Changing Business Environment

� Increasing competition resulting from Globalization & free economy and Reducing entry barrier emanating from rapid information flow is leading to higher threat on competitive advantage of companies across industry

� To maintain competitive advantage, companies need to constantlyimprove its efficiency with the help of robust cost management system

� Rapid technology changes and business environmental changes areprompting changes in business model.

� Hence cost management practices also need to be robust enough to support ever changing business model

Robust cost management practice is must in today's business situation


• To help Indian companies improve its cost management practices CII has developed one model with the following objective

� To grade the company’s cost management system.� To evolve a certification process.� Develop Roadmap for moving forward in the hierarchy

•The study had evolved the concept of five maturity levels of companies in cost management

Background of TCM Maturity Model


� CII’s TCM maturity model is not only evaluation tools, it also guides companies to achieve excellence

� Assessment process comprise of filling one detailed questionnaire followed by visit of assessment team to observe the demonstration of processes explained in questionnaire

� This questionnaire is so well developed and designed that it captures all activities of an entity. Filling this questionnaire is so self propelling that it clearly throws an unbiased mirror image of our true maturity level of cost management practices.

� Further this questionnaire focus more on processes and practices rather that data. This allows this assessment to be done with out compromising on confidentiality

�This model is designed to help Indian companies to achieve excellence and enhance cost competitiveness which will ensure effective utilization of resources for India as a country.


Company Overview

� Tata Motors Limited is India's largest automobile company

� Tata Motors established in 1945 and rolled out its first vehicle in 1954

� Since its inception TML achieved various milestones

� We are World's fourth largest truck manufacturer

� World's second largest bus manufacturer

� Tata Motors has operations in the UK, South Korea, Thailand and Spain.

� Tata cars, buses and trucks are being marketed in several countries in Europe, Africa, the Middle East, South Asia, South East Asia and South America.


TML Portfolio

Products ranges from � 0.5 T to 49 T in case of Trucks�12 seater to 55 seater�Nano to Jaguar� Sumo to Aria

TML caters to all segment of 4 wheeler Auto industry


Manufacturing Locations

Manufacturing locations all over India


Before 1990 After 1990

Ashok Leyland Nissan Vehicles Ltd

Changing Auto Business Environment

Increased Competition: Example for Commercial Vehic le Segment

Increasing competition is changing business dynamics


• Polarization of vehicles at both ends of the tonnage spectrum (HCVsand SCVs to grow)

• Increasing demand from rural and semi-urban areas, primarily in SCV Cargo and Passenger segments

• Fully Built Vehicles (FBV) offerings , though still a small proportion of the market, will continue to grow at a steady pace

• Continued change in MHCV volume mix

−Preference for higher tonnage multi axle trucks, tippers and tractor trailers

• Increasing customer requirement (like better quality, extended warranty, lower operational cost etc)

Dynamic Customer Requirement/ preference

Changing Auto Business Environment

Fast Changing business dynamics requires faster response which in turn depend on maturity level of cost management system


Importance of Robust cost Management

� As already explained we have presence in wide geographical locations with wide product range catering to different kind of customers.

� From very beginning Tata Motors felt the need of robust cost management system to sustain its competitive advantage in the dynamic world

� Our top management always focused on Improving cost management practices.

� In Tata Motors cost management is in our DNA, part and parcel of our day to day activity. It is so integrated with system that every decision be taken by top management or middle management or low level of management, it is always backed by detailed data analysis

� Detailed data analysis is possible only because of our robust cost management system

� Few Business processes demonstrating robustness of our cost management practices are explained in subsequent slides



CVBU Strategy Implementation


Deployment of Task and target

Key differentiators of Strategy process

Individual KRAs

Objective of AO

Objective of RO

S&M objective

CVBU objective


Robust and comprehensive Strategy implementation process acts asbackbone of TML’s Long-term activity


�Ability to covert strategic initiatives to measurable targets

�Assigning responsibility to top level manager for each initiative

� Deployment of task to lowest level employee,

� Regular review mechanism

� Capturing data at lowest level which allows us to develop VC wise year wise target

� Effective communication to employee through various forums and mediums

� Communication by chairman on 1st of April every year

� Plant head interaction with employees on half yearly basis

� Various role plays to communicate specific messages


�Enterprise Risk management is imbibed in TML’s strategy

� Maps strategic, operational, environmental, financial & governance risks

� Also assesses potential weakness in the internal processes

� The process is facilitated by respective risk champions who arerequired to determine the risk treatment and work out the mitigation plans

� The reviews happen

� at Risk Programme managers & champion level on quarterly basis,

� at Steering Committee and Board level on quarterly basis

� at Cluster champions level with related Process & Function owners


Enterprise Risk Management



CVBU Budget Process


Key differentiators of Budget process

Inclusive process

Budgeting process of TML is facilitated by Business Analysts across organization.

Business analysts across the organization develop a Budget / Business plan with all channel partners to create a win win and able to face challenges within the organization, country and the globe

All agencies participates in budgeting process. This ensures that every one takes ownership of their respective part.

Tight budgetary control is established with the support of robust system and well defined process

Above process serves following purpose

� Ensures tighter budgetary control mechanism

� Ensures ownership from all level of management

� Decentralization of Decision making

� Timely alarm to Top management



Short term as well as long term plan is not done in isolation of competition.

Competitions every move is tracked and monitored closely. Time to time effort is given to analyze the impact of new initiative of competition on our business. Corrective action is taken if necessary

Competition financials are closely monitored and costs are analyzed.

Benchmarking

Based on above analysis concrete action plan is prepared

Action Plan

1.CFT to analyze concern areas from specific future move of competition and suggest possible corrective action plan . Eg. BharatBenz

2.Product specific workshops to brainstorm on ideas for value enhancement and cost reduction

3.ICR: Cross functional team comprising to work on cost reduction projects


Finally we can proudly say that “yes our detailing and analysis’ of cost structure rich enough to drive cost leadership ”

This was reflected in “Exemplary” Rating


Getting leadership position is difficult but retain ing the same is even further difficult

“Show me a thoroughly satisfied man – and I will show you a failure.” –Thomas Alva Edison

“If you stop learning, you stop creating history and become history” - Vadim Kotelnikov

“If you're not getting better, you're getting worse.” - Pat Riley

“The only thing constant in life is change”…………………….. François de La Rochefoucauld


Way Forward

TML management believes on continued learning and adopts the tools, techniques, process and practices in such a manner that in it allows us to achieve excellence in this dynamic world

To counter increasing business challenges and survive in competitive world we constantly need to revisit our competitive advantages.

TML’s ever learning culture ensures that continuous efforts are made to retain cost leadership, produce at minimum cost and deliver at right price to ensure that all stakeholders within the supply chain enables to optimize on return and customer value is maximized, the larger interest national and global is also addressed


Way Forward

As a part of this ongoing continuous efforts to achieve excellence , we have always some pool of initiatives which are on implementation mode.

Some of such initiatives which are in process of implementation are: � Implementation of “Should Costing” techniques for Cost Targeting of New Products � Benchmarking during Value Engineering activity.� Online tracking of cost during design phase� “Online Contribution improvement Portal ” for tracking of implémentation of cost reduction ideas� Implementation of Hyperion, BIW etc to eliminate manual work.

Journey towards excellence never ends


Thank You

tcm maturity model – case study analysis · a.t. kearney xx/mm.yyyy/00000 1 1 tcm maturity model...

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