Tata Motors Limited is an Indian multinational automotive manufacturing company founded in the year 1945 headquartered in Mumbai, India. It is a member of the Tata Group. Its products include passenger cars, trucks, vans, coaches, buses, sports cars and military vehicles.
Tata motors are India’s leading automobile manufacture, which is in the top most 5 manufactures in commercial vehicle in the world. Tata Motors is currently the global player, which is not just limited to Indian markets but also started expanding into several International Markets across the world. (Tata Motors.2017). It has also purchased the British companies like Land Rover and Jaguar. TMS is first Indian company, which has been listed in the stock exchange in New York. Tata Motors has auto manufacturing facilities in India, as well as in Argentina, South Africa, Great Britain and Thailand. It has research and development centres in India, South Korea, Great Britain and Spain. Tata Motors principal subsidiaries purchased the English premium carmaker Jaguar Land Rover (the maker of Jaguar and Land Rover cars) and the South Korean commercial vehicle manufacturer Tata Daewoo. Tata Motors has a bus-manufacturing joint venture with Marcopolo S.A. (Tata Marcopolo), a construction-equipment manufacturing joint venture with Hitachi (Tata Hitachi Construction Machinery), and a joint venture with Fiat Chrysler which manufactures automotive components and Fiat Chrysler and Tata branded vehicles (Retrieved, 2017).
Supply Chain Management of Tata Motors
Tata Motors produces tangible products. The automobile organization like Tata Motors produces tangible products such as commercial vehicle, passenger vehicle. It also produces intangible services. Intangible outputs are the services such as information for safest measures like safe drive, fuel save, end of life vehicle process and as well as other services are provided by the organization to its stakeholder. Any organization has to manage two types of demands. The demands are independent where the management is highly dependent on the certainty of the demand. The demand is assumable, which is called dependent demand. Independent demand is not predictable because such kind of demand will not be visible factors (Supply.2008). Logistic Supply chain management is used to gain competitive advantage, which was very useful for Tata Motors because they outsource their logistics to third parties. Tata Motors produces commercial vehicles, passenger vehicles, and defence vehicles. Their vehicles are mainly sold to agents, dealers, businesses, and army. They also sell their cars directly to customers like households, company owned showrooms and small business. Tata Motors was mainly trying to increase the deals and establishing an easily accessible service points across the country to provide quality services after sales (Shoshanah & Joseph, 2005).
Operation Management of Tata Motors
Operation management always deal with the main purpose of the business, which is to produce products and services. In the case of Tata Motors, Operation Management plays a key role, which is very much evident in the manufacturing process. They are busy preparing cheap cars, which is never easy, as it also requires some strategic planning to roll out inexpensive cars in the market. They have their own strategies, which is fulfilling the requirements of many but are not justifying the quality potentiality. Nevertheless, they are highly acknowledged for some outright manufacture such as heavy vehicles but they are more or less equally criticised for their cheap cars especially the Nano series cars (S L, 2012)
Issues in Operation Management
One weakness that Tata Motors faces is its inability to meet safety standards. Although they have made the most inexpensive car out in the market, it has yet to pass all the safety standards, which is a legal factor. Some consumers and pessimists inquire as to how Tata Motors can make such a cheap car and withstanding a car accident or not just falling apart after hitting something once. Pessimistic people also want to believe that car manufactures are already doing everything they can to keep costs low for the consumer, and if that is the case, then putting the cheapest car out in the market automatically questions if it is safe to drive. Tata Motors only have been making passenger cars for the approximately last ten years. This can be viewed as a weakness from a customer standpoint since a decade does not seem like a lot to consumers and therefore they will think that Tata Motors is inexperienced car manufacturing. In addition to this, they are specialist manufacturer of Heavy Vehicles but not so for the cars. Nevertheless, some local companies are ahead to Tata manufactured cars in India. Those local companies are such as Maruti and Mahindra. It seems like that Tata Motors have made this as their strategy to produce cheap cars to capture substantial amount of customers. This is quite possible too as India capacitate a large number of middle class families and to them cheap cars are a good asset (Management Discussion and Analysis | Tata Motors Annual Report 2014-15. (n.d.)., 2017).
One of the major opportunities that Tata Motor have is that as of right now 90 percent of China and India's adult population do not own cars, partly because cars are costly and require more expenses after being purchased. Therefore, the market for a low-priced car is huge, which is beneficial for the Tata Motors perfectly since they produce the lowest priced cars in the market. This is a huge opportunity for Tata Motors because if they can get their feet into that market of people that do not have cars because they cannot afford them, then they will make large profits down the road.
The JLR acquisition is the other difficulties in Tata Motor, which has not performed as expected. In 2nd 2008, Tata Motor acquired the Jaguar Land Rover Business from the Ford Motor Company for a net consideration of $2.3 billion. Shortly after the acquisition in 2008, Tata Motors itself noticed that they are encumbered with a debt of Rs. 21,900 Crore, an unbearable situation for the company who were practically debt free. The product was not moving and the stock was hitting the bottom at Rs. 126.45 on 20th November 2008. Market capitalization was reduced than what it had paid for JLR. One of the Tata executives said that the “The global slowdown has put the company under tremendous pressure because the management of JLR had just separated from one big organization and was attaching itself to another not-so-big group and they were not yet kind of experienced living independently” (2010, November 14). That is when Ratan Tata made it clear that JLR acquisition was never a mistake and it would work out. The fiscal ended in March 2009 where the Tata Motors first showed its annual loss in last seven years. The JLR unit made a loss of Rs. 1800 crore. Cash was the No.1 priority for Tata as the JLR was haemorrhaging money and company needed to look help from outside of the world. Since, the JLR did not have cash management system of its own, Tata Motors turned to KMPG consultants (Sood, 2017).
After Tata had faced much more issues and JLR was unprofitable, the KMPG consultants then started observing, “cash started to be managed on an hour-to-hour basis— what cheque was going out, what cheque was coming in” (2010, November 14). Then during spring, March Munich- based Roland Berger Strategy consultants were to keep tab on the costs. Thus, the only aim for Roland Berger was very simple: make JLR profitable.
The last weakness is related to the leadership changes, which has also affected the sales of the company. Tata Group surprisingly removed Cyrus Mistry from the board. Ever since then, the Stock has fallen down in the range for 1 to 4 percent each. It was much higher than expected for the fall in the shares is higher than the marginal level (Rossolillo, 2017).
Slowly they gain profit as they have their own new ideas to develop. Nobody is making any interference, as everyone is silent because of the Chairman being out.
To conclude, these are the operations management issues of the Tata Motors, which is the largest organization in the market in various fields. There would definitely be problems and difficulties for any company. Tata Motors have had ups and as well as down to speak off. Tata Motors has its Statistics up and down for the past few years. It had also acquired the luxury JLR; the Nano is also another issue for Tata Motors, which has its own advantages and disadvantages. Last but not the least the leadership has also been a major factor for Tata Motors revenue. In Operations Management, there are many issues where the company or an organization faces its own problems because of the fact that the management is the relationship between the operations and the processes.
Management Discussion and Analysis | Tata Motors Annual Report 2014-15. (n.d.). (2017, April 05). Retrieved from tatamotors.com/investors/financials/70-ar-html/mda4.html: https://www.tatamotors.com/investors/financials/70-ar-html/mda4.html
Retrieved. ( 2017, April 05). Largest Indian Automobile Manufacturer. (n.d.). Retrieved from tatamotors.com: https://www.tatamotors.com/
Rossolillo, N. (2017, Apr 07 ). 3 Reasons Tata Motors' Stock Is Tanking." The Motley Fool". . Retrieved from www.fool.com/investing/2016/11/21/3-reasons-tata-motors-stock-is-tanking.aspx>
S L, G. (2012). sales and Operation management.
Shoshanah, C., & Joseph, R. (2005). Strategic Supply Chain Management.
Sood, V. (2017, April 07). How Tata Motors turned JLR around. Retrieved from https://www.livemint.com/Companies/UhROXPttBWa40lVOgtS6wL/How-Tata-Motors-turned-JLR-around.html