Business Environment 1 Project: TATA Nano Supply Chain Analysis

This project delves into the supply chain management of the TATA Nano, a groundbreaking initiative by TATA Motors to produce the world's most inexpensive car. It begins with an introduction to supply chain management, emphasizing its importance in today's dynamic business environment, and outlines the research objectives, questions, and limitations. The study investigates the supply chain of the TATA Nano, examining the strategies employed to keep costs low while maintaining quality. It analyzes the challenges faced by TATA Motors during the implementation of the supply chain, drawing upon secondary data and literature reviews. The project explores the core elements of supply chain management, including manufacturing, inventory, location, transportation, and data, and how they were applied in the context of the TATA Nano. The research also considers the impact of efficient supply chain management on reducing the vehicle's cost, providing insights into how TATA Motors achieved its goals. The project concludes with findings and recommendations based on the analysis of the TATA Nano's supply chain.

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Table of Contents
1. Introduction ..................................................................................................... 3
1.1. Research Objectives ........................................................................................................ 3
1.2. Research Questions ......................................................................................................... 3
1.3. Limitations of the study................................................................................................... 4
1.4. Research Hypothesis ....................................................................................................... 4
1.5. Review of Literature........................................................................................................ 4
2. What is Supply Chain? .................................................................................... 6
3. TATA Nano ...................................................................................................... 8
4. Supply Chain of TATA Nano .......................................................................... 9
5. Challenges faced by TATA ............................................................................ 14
6. Findings & Conclusion ................................................................................. 15
7. Bibliography .................................................................................................. 16

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1. Introduction
In toda s fast moing and olatile orld, suppl chain management is one of the ke
components of every business operation and it has the poer to make or break a compans
future. Supply chain management refers to synergising all the supply chain functions of
supplier selection, procurement, distribution, financing, etc. Modern supply chain management
goes beyond the traditional functions and also includes functions like product design and
customer service. TATA Motors is India s biggest indigenous automaker and have some of the
most complex and advanced supply chain management systems in the world. TATA Motors
encapsulated the best supply chain management practices from all over the world and clubbed
that with their experience from the commercial vehicle market to develop and manufacture the
TATA Nano. TATA Nano is considered a suppl chain marel as it is the orlds most
inexpensive car, costing ~INR 1,00,000 at launch.
The aim of this project is to study what a supply chain is and what consists of modern supply
chain management. It is to examine the supply chain of the TATA Nano and the challenges
which were faced by TATA Motors while implementing it. Lastly, it is to understand how
TATA Motors was able to keep the cost of the vehicle so low, despite the quality of the product
being on par with its expensive competitors.
1.1. Research Objectives
To understand the meaning of Supply Chain & Supply Chain Management.
To examine the supply chain of Nano and the challenges faced while implementing it.
To understand how TATA Motors managed to keep the cost of the Nano low using
efficient Supply Chain Management techniques.
1.2. Research Questions
What is Supply Chain & Supply Chain Management?
What was the Supply Chain Management technique used by TATA Motors for the
launch of Nano?
What were the challenges faced while implementing the Supply Chain of Nano?

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1.3. Limitations of the study
The study is limited to secondary data collected which may lack authenticity and cannot be
fully trusted. Primary data could not be collected due to time and circumstantial restraints.
1.4. Research Hypothesis
H0: Efficient supply chain management did not play a significant role in reducing the cost of
the TATA Nano.
H1: Efficient supply chain management played a significant role in reducing the cost of the
TATA Nano.
1.5. Review of Literature
Shi a Pakhi, S abh Jhi, Sh bha G a & M id Sha a i A d f E i
ad F e f S Chai Maage e talk about the basics of supply chain and supply
chain management. They start by talking about the origins of supply chain and how it was used
in the armies of famous emperors who conquered the world and the importance of it. Further,
they talk about the 1900s and how businesses started applying the same fundamental supply
chain management techniques and garnered results from it. The authors also discuss various
definitions of supply chain and supply chain management coined by academic scholars and
experts in the field. The authors briefly discuss the difference between logistics and supply
chain management and towards the end, they discuss the five core elements of supply chain
management.
D J. Paahi ka i S aegie f High V e S Chai i I dia talks about the
supply chain management of TATA Motors and PepsiCo India. The author starts by talking
about the similarities between the automotive industry and the fast moving consumer goods
(FMCG) industry and how both the industries face similar challenges when it comes to supply
chain management. The author then goes in detail about PepsiCos suppl chain management
in relation to their flagship product Pepsi. The author then talks about TATA Motors strateg
in India and how it is similar to the strategy used by General Motors (GM) and other Japanese
companies. TATA Nanos suppl chain is discussed in detail ith the creati e solutions hich

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were suggested and implemented in the process. The author also talks about TATA s ertical
integration strateg and ho beneficial it as in keeping the Nanos price as lo as it as.
S ai Si gh & Ma j Jhi i Ne Make C eai ia I ai : A d TATA
Na start by talking about what inspired Ratan Tata to come up with the idea of TATA Nano
and its unique take on the automotive industry. The authors then discuss how TATA Motors
was able to keep the price of the vehicle law through various innovations like new material,
central instrument cluster, and making it a front-wheel drive (FWD) instead of a rear-wheel
drive (RWD). The distribution strategy of TATA Nano is then discussed in detail. The authors
examine how TATA leveraged its subsidiaries like TATA Sky, Chroma, and Westside to
promote the Nano amongst the working class. Lastly, the authors present a survey with 123
respondents to substantiate their claims.
S ai Si gh & Pa ai S i a aa i The T a d f TATA Na Reinventing the
Whee talk about ho TATA s initial launch, positioning and marketing backfired and
resulted in decreased sales. They discuss the various aspects of the car which made the car
unappealing to the lower income group along with the various safety issues encountered after
the launch of the vehicle. The authors then highlight how TATA Motors was able to recognize
the mistakes, learn from them and turn around the cars image. Some of the strategies include
launch of the ne F-Class shorooms of TATA Motors hich ere specifically designed for
the Nano and various insurance and financing schemes launched in collaboration with the
banks and insurance companies. Lastly, the authors discuss the new and fresh challenges faced
by TATA after they managed to turn-around the fate of Nano. Some of the challenges included
rising price of raw materials which made it impossible for the company to produce and sell the
car profitably at INR 1,00,000.
Pe e We i The TATA Na : he g ba a e ege ad he i icai f
adi i a a i e i d egi examines how TATA was able to launch such a
disrupti e product in the Indian market. The author then discusses the iabilit of such alue-
for-mone product in the European Automoti e Market hich hinges on sophisticated tech,
rich looks, premium branding and safety. The author discusses the different innoations or
cost-cuttings made b TATA Motors in the process of building the TATA Nano but from a
very unique point of view.

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2. What is Supply Chain?
Amateurs talk strategy, professionals talk logistics
All of the equipment used to design, manufacture, and deliver a finished product or service are
included in the supply chain. To prosper and get the most out of a company's money, it depends
on the supply chain to meet all of its needs. Any business, large or small, is involved in the
supply chain process. In today's volatile, uncertain, complex, and ambiguous (VUCA)
environment, it's critical for companies to understand Supply Chain Management and their
position in it. Businesses that master supply chain management have an advantage over their
rivals. The fundamentals of supply chain management are focused on ideas that haven't
changed in decades. Napoleon once said, An army marches on its stomach. Unless the soldiers
are fed, the army cannot move. Napoleon is regarded as one of history's greatest strategists,
and this comment demonstrates his appreciation of the value of a well-functioning supply
chain. A general may speak about his plans and manoeuvres, but none of them would be
possible if the army's daily needs for food, lodging, ammunition, and fuel were not met. In
business, a manager can talk about his big plans to grow his company, but this is impossible
without effective supply chain management.
The term "supply chain management" was coined in the 1980s and became common in the
1990s. Supply chain management was previously defined using words like "logistics" and
"company operations management." In their book "Fundamentals of Logistics Management,"
Lambert, Ellram, and Stock describe supply chain as "something that places in place the
businesses and procedures needed to get a product or service to market." A supply chain
comprises not only manufacturers and distributors, but also intermediaries such as transporters,
warehousers, retailers, and customers 1. Supply Chain Management on the other hand, can be
defined in the words of Mentzer, De Witt, Deebler et al. in their article Defining Supply Chain
Management’ in the Journal of Business Logistics which said that supply chain management
is the process of integrating conventional business practises such as manufacturing, location,
inventory, transportation, and distribution among the supply chain's other participants in order
to maximise resource efficiency and utilisation and thereby improve the long-term success of
1 Shilpa Parkhi, Sourabh Joshi, Shubham Gupta & Mridu Sharma, A study of Evolution and Future of Supply
Chain Management, 9 AIMS INTL. J. MNGMT. 95, 95-106 (2015).

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companies. Its goal is to make the supply chain more effective. The traditional concept of
logistics and the new concept of supply chain management are vastly different. On the one
hand, logistics refers to activities that occur within an organisation, while supply chain refers
to activities that occur between several organisations in order to deliver a product to the
consumer. Logistics has traditionally dealt with conventional procurement, maintenance, and
delivery operations, while supply chain deals not only with traditional logistics but also with
finance and customer service.
Unlike in the past, tasks such as funding, promotion, and product creation are now perceived
to be activities performed to meet the needs of customers. Supply chain management puts
together various supply chain operations in a systems approach in order to control and
coordinate the flow of competing business requirements in a more productive manner, with the
ultimate customer in mind. A business's criteria are often contradictory, such as the need to
maintain a high level of customer service necessitates maintaining a high level of inventory,
but the need to function efficiently necessitates maintaining a lower level of inventory. A
effective supply chain management system considers all of the competing needs and criteria to
find the ideal balance that does not jeopardise customer experience or the organization's
internal operational performance. In this case, customer care entails filling all orders, shipping
them on schedule, and minimising return rates. Internal operational efficiency is described as
lowering operating and sales costs while retaining or rising the return on investment on goods
and services provided. 2 Every supply chain faces its own set of challenges and demands, but
the five core elements of manufacturing, inventory, location, transportation, and data are all
present. Along with tasks like quality management, workload juggling, and maintenance,
production deals with what needs to be produced, how much needs to be produced, and by
when it needs to be produced. Inventory management refers to the amount of raw materials,
semi-finished products, and finished goods that must be kept on hand at each point of the supply
chain. The location of production and inventory, as well as whether or not new facilities will
be constructed and whether or not current sites are optimally situated, are all factors to consider.
Transportation is concerned with the transfer of goods from one location to another and the
method of transportation used to do so. Finally, information refers to the amount of data that
must be gathered and exchanged in order to make accurate and informed decisions.
2 ARMAN JABBARI & PHILIP KAMINSKY, BLOCKCHAIN AND SUPPLY CHAIN M ANAGEMENT 1 (College Industry
Council on Material Handling Education 2018).

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3. TATA Nano
Tata Motors is India s largest indigenous automobile manufacturer in terms of commercial and
passenger vehicle. Tata Motors was established in 1945 and reported revenue of $34.7 Billion
USD for the fiscal year 2020. It is an undisputed leader in the commercial vehicle market,
having a market share of 37.26% as on December 2020. On the passenger motor front, TATA
motors have a 7.07% market share as on October 2020. TATA Nano's tale begins in the 1990s,
when multinational car manufacturers began to expand into Asian markets such as China, India,
Indonesia, and Malaysia. Multinational corporations primarily targeted the upper and upper
middle classes, for whom they could easily adapt goods already on the market in developing
countries. TATA, Mahindra & Mahindra, and Maruti Udyog, for example, followed in the
footsteps of global automakers, failing to understand the needs of the middle and lower middle
classes. Companies that did introduce inexpensive cars did so with a watered-down version of
their more luxurious models, with little or no features that did not meet the needs of the public.
Instead of watered-down versions of luxury vehicles, the middle and lower middle classes
desired cars that were specifically tailored and sold to them.3
On a cold rainy day, Ratan Tata, then chairman of TATA Motors, saw a family of four on a
two-wheeler motor bike and had the idea for TATA Nano. One child stood in front of the
vehicle, while the father drove the vehicle and the mother sat on the pillion. Ratan Tata saw
them and felt compelled to provide them with a safe and affordable vehicle, which he dubbed
the "people's car." He was especially interested in serving the needs and desires of those at the
bottom of the economic ladder who could only afford a two-wheeler motorcycle rather than a
vehicle. The planned car was expected to cost less than half as much as any other car on the
market in India and around the world. Ratan Tata wanted to create a new niche market that
didn't exist before, but he faced significant challenges due to the significant cost difference
between making a two-wheeler and a four-wheeler, particularly when the car's target price was
set at 1,00,000 INR. It was an engineering achievement that the car was designed without
compromising on the materials used, safety standards, or emission standards. The project,
which began in 2003, was finally realized when the product was unveiled at India's 9th Auto
Expo in 2009. The cars proportions ere perfect to seat four adult passengers.
3 Swati Singh & Manoj Joshi, New Market Creation via Innovation : A study on TATA Nano, 19 AWESHKAR J.
87, 87-99 (2015).

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4. Supply Chain of TATA Nano
TATA Nano's supply chain was divided into three tiers: tier 1, tier 2, and tier 3, which included
OEM Manufacturers, Engine & Transmission OEM Suppliers, third-party distributors, and the
automaker itself. While TATA's supply chain is similar to that of Toyota and General Motors,
it has some distinguishing characteristics that set it apart from the rest of the automakers. These
one-of-a-kind features were added to help explain the car's high price by lowering the cost of
production and distribution.
Figure 1.0 is the visual representation of the supply chain followed by TATA Motors in the
production of the aforementioned TATA Nano.

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The four major elements of the TATA Nano supplier chain were:
Proimit of the suppliers to the automakers assembl location.
Local sourcing of parts.
Sourcing parts and financing from TATA group subsidiaries.
Using two & three-wheeler market suppliers to supply parts for the TATA Nano.
TATA Nano's suppliers were chosen with great care, with approximately a hundred tier one
suppliers. TATA had invited nearly a thousand suppliers, with a hundred being chosen based
on their experience, skills, and dependability. TATA Nano's tier one suppliers also participated
in the design process through its distinct 3Ps initiative, which was a unique feature of the supply
chain:
Production
Preparation
Process Methodology
These vendors were also told to locate their operations near the TATA Nano assembly plant in
Singur, West Bengal. Fifty of the hundred suppliers were confirmed to have moved near the
Singur site, with twenty of them having facilities integrated with the TATA Nano assembly
plant. The rest of the suppliers were close enough; for example, TATA Steel's facilities were
about 250 kilometers away from the Singur plant but had excellent rail connections. TATA
was able to achieve this proximity with suppliers by offering long-term contracts and a large
purchase volume commitment.4 Just 3% of the parts used in the car were imported from outside
the world, and the suppliers that were eventually chosen were single sources for that segment.
TATA made certain that the companies to which it outsourced design components had a local
presence in the country in order to make the partnership as easy as possible. TATA, for
example, worked with Bosch on the Nano's engine. Despite being a German firm, Bosch had a
presence in Bengaluru, India. TATA also awarded contracts to its own subsidiaries, including
TATA Steel for the car's frame, TATA AutoComp Systems for technology, and HV Axles for
the transmission.
Another important aspect of the TATA Nano supply chain was the use of two- and three-
wheeler suppliers for TATA Nano components. TATA, for example, sourced gearboxes for the
TATA Nano from Kinetic Motors, India's largest Continuous Variable Transmission (CVT)
4 Swati Singh & Pallavi Srivastava, The Turnaround of TATA Nano – Reinventing the Wheel, 16 V IS. J. BIZ.
PERSPECTIVES 45, 45-52 (2012).

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automatic transmission gearbox manufacturer. Kinetic Motors previously only sold two-
wheeler scooter gearboxes in India. Caparo, a supplier in India that used to make the material
for the body of two- and three-wheeler vehicles, was also tapped to make the material for the
TATA Nano's body. This assisted them in not only lowering material costs but also in perfectly
tailoring the aforementioned parts to TATA's requirements. TATA had previously used this
tactic to enlist the support of TVS Motors and Caparo for their flagship commercial vehicle,
the TATA Ace. The integration of suppliers in TATA Nano's design process was the most
distinguishing characteristic of the TATA Nano supply chain. TATA was able to reduce the
vehicle's cost and price it at INR 1,00,000 by working with suppliers to develop a simple design
that was cost efficient. Any changes to the basic design came at a price. TATA Nano had a
critical design team that was not only creative but also multi-functional in order to save money
from bumper to bumper. The car's architecture was essential to the reduced car, and the entire
process of design inputs and idea development was carried out by TATA Motors employees
and suppliers. To bring creativity and fresh design to the product, they enlisted the aid of
students and rookie engineers from Indian Institute of Technology (IIT) Kharagpur and
Jadavpur University, who were included in the Memorandum of Understanding (MOU) signed
with the West Bengal government.
Nano's architecture clearly reflects these advances and fresh thinking. To keep costs down,
Nano's body construction was made of a combination of steel and composite metal rather than
pure steel. Nano's wheels were also made of pressed steel rather than alloy to keep costs down
while maintaining a stylish appearance. The TATA Nano's engine was also made small enough
to fit in the back of the vehicle, similar to an auto-rickshaw, allowing TATA to expand the car's
interior in the front and have plenty of leg room for the passengers. TATA also made the Nano
Front-Wheel Drive (FWD) rather than Rear-Wheel Drive (RWD) to save money because a
FWD was cheaper and more effective in shifting power to the front of the car with the engine
in the back. TATA also used multifunctional parts in the Nano to save money by producing
two parts for the price of one, such as the Nano's seats, which had an attached headrest rather
than a separate adjustable one. 5 TATA also chose to put the Nano's instrument cluster in the
middle of the dashboard, rather than the conventional left or right, to avoid having to design
and manufacture different cars for domestic and export markets. Finally, to save money, TATA
5 Peter Wells, The TATA Nano: the global ‘value’ segment and the implications for traditional automotive industry
regions, 3 CAM. J. REG. ECON. SOC. 443, 443-457 (2010).

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used the same door handles on the left and right doors instead of separate ones. These design
advances, developed in partnership with suppliers, resulted in substantial cost savings.
TATA's own teams were in charge of the Nano's engines and manual transmission. They were
also in charge of the vehicle's assembly and paint job. Singur, Pune, Jamshedpur, Uttarakhand,
and Lucknow were all home to TATA Motors. TATA took the knowledge acquired from
producing door panels for Mahindra cars in Pune and Mercedes-Benz paint jobs in Jamshedpur
and applied it to the TATA Nano. TATA Motors' Singur plant was initially ruled out for the
development and assembly of the TATA Nano, but was later reconsidered due to its strategic
position. The West Bengal government provided TATA with a slew of incentives to help them
develop their Nano plant in Singur. For land acquisition, the West Bengal government was set
to obtain USD $200 million over a hundred years, in thirty-year instalment blocks. TATA was
offered a very low interest rate, which resulted in a savings of USD $175 million in interest.
TATA offered blue collar employment and indirect business opportunities for the residents of
Singur village in exchange. TATA also aided the government's women empowerment initiative
by providing entrepreneurship opportunities to the women of Singur village, with one group of
women even opening a cafeteria inside the TATA Motors factory. TATA Motors also hired
freshmen and students from IIT Kharagpur and Jadavpur University, resulting in lucrative job
opportunities for the state's youth. TATA offered many opportunities for the Singur
Community to thrive in exchange for the USD $175 million saved.
TATA had previously used this technique in their commercial project TATA Ace, which
included a deal with Uttarakhand, which was then a newly established state. The Uttarakhand
government offered generous investment incentives if the factory, which was located in the
Pant Nagar district of Uttarakhand, provided local jobs and infrastructure growth. TATA had
leveraged their strength in one segment (commercial vehicles) to build a new market in another
segment, as shown by the similarities between the two (passenger vehicles). TATA Ace
followed a similar supplier selection procedure to TATA Nano, in which TATA enlisted the
support of two- and three-wheeler manufacturers.
In the production of TATA Nano, TATA adopted the Japanese manufacturing process of
continuous improvement. All TATA Nano employees were trained in the Japanese method,
and even the smallest steps were taken to ensure greater productivity and quality. One of the
most important aspects of the TATA Nano's manufacturing process was the use of the "make
to assemble" manufacturing method. This procedure was implemented as a result of the long

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wait times that Indian customers had become accustomed to over time. In India at the time, the
average waiting time for a regular car was 2 to 3 months. To address this issue, TATA mass-
produced the car's standard INR 1,00,000 variant while taking orders for customized variants.
The car's personalized models were more expensive and needed a longer wait time. TATA was
able to save money by not having to keep a surplus inventory of parts on hand and instead
ordering parts based on the specifications and orders placed. As a result, the car's regular
version had little or no wait time.
TATA Nano had a distribution network that included both franchised and first-party company-
owned dealerships. TATA initially sold the TATA Nano to established commercial vehicle
dealerships. Established dealerships were given priority over new dealerships in the application
process. Since they retain car inventory and buyers take the car out of the dealership directly
after financing, the TATA dealership network allows dealers to have large land holdings. There
were no rules in place at the time about the amount of control a business may have over
dealerships, so TATA not only owned many of them, but also only gave a 3-4 percent profit
margin on car sales. TATA incorporated the existing dealerships in a unique and modern way
by developing an app that enabled dealers to send orders, updates, and customizations to the
TATA sales team in real time. 6 TATA sold Nano through their retail and electronic stores of
Chroma and Westside because the target audience for the TATA Nano was the lower income
community, and they were found to be hesitant to step into the current large TATA Motors
showrooms. TATA also uneiled ne F-Class' showrooms operated by the company, which
featured only the Nano and had a low-key appearance. TATA Nano was also available for test
drives via these shorooms, and these F-Class' showrooms were located in places where
typical automaker dealerships did not exist. TATA has collaborated with 18 banks and non-
banking financial companies (NBFCs) to provide customers with a variety of booking options
for the Nano. Customers could also book the Nano for as little as INR 3500 via the banks that
have partnered with the company. TATA partnered with five insurance companies to create
innovative and imaginative insurance schemes in order to improve customer service and scope.
New finance schemes with 0% interest rates and a 4-year guarantee were introduced at a cost
of INR 99 to increase customer confidence in the brand.
6 Don J. Palathinkal, Strategies for High Volume Supply Chains in India, MASSACHUSETTS INST. TECH. 52, 52-71
(2009).

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5. Challenges faced by TATA
Manufacturing the cheapest car in the world is not an easy job and TATA faced its fair share
of challenges on the way. TATA was able to overcome these challenges through creative and
critical problem solving. The two main problems faced by TATA Motors in the supply chain
of the Nano were:
Lack of transportation infrastructure
Lack of supplier expertise
Transportation was one of the most serious problems plaguing the Indian economy at the time.
One of the main reasons why Indian car buyers had to wait months for their vehicles was a lack
of decent infrastructure. Automakers were confronted with massive demands shortly after the
vehicle's launch, which they were unable to meet, resulting in revenue losses. The
transportation of unassembled car parts from manufacturers and OEMs to the assembly plant
also slowed vehicle delivery times. TATA Motors overcome this obstacle by nitpicking tier
one suppliers and forcing them to move their plants near TATA's new Singur facilities. This
not only helped to minimize costs, but it also helped to greatly reduce transportation time.
TATA also had a lot of influence over the third-party franchise dealerships that marketed and
sold the Nano. These third-party dealerships were built with large land holdings to ensure that
they could keep inventory of cars until the vehicle's launch, so that buyers could drive away
with their cars right after the financing was done.
The second issue TATA Motors faced was a shortage of supplier knowledge. The project began
in 2003, when the Indian four-wheeler market was dominated by multinational foreign
automakers who used imported components, but TATA was unable to do so with the Nano due
to cost constraints. TATA opted to use suppliers from the indigenous two- and three-wheeler
industry to supply parts for their four-wheeler rather than contracting inefficient and
inexperienced local four-wheeler component suppliers because the indigenous two- and three-
wheeler industry was thriving. TATA has used vertical integration with the TATA Group to
get around this issue. TATA's own subsidiaries, such as TACO IPD, Johnson Controls, TATA
Toyo Radiators, Visteon, TATA Ficossa, TATA Yazaki, GS Yuasa batteries, and TATA Steel,
were awarded contracts for the Nano. This move ensured that TATA could not only obtain the
Nano's parts at a low cost, but also that the suppliers could be trusted with the quality and
delivery of the parts.

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6. Findings & Conclusion
TATA Nano was a supply chain management marvel and there is a lot to learn from the
experience which can be used by the other companies aiming to target the lower income
segment. TATA had to come up with various unique and creative solutions to tackle the cost
constraint. Supply Chain Management is synergizing the activities of production, location,
inventory, transportation and distribution among the other participants of the supply chain to
maximise the efficiency of the organisation as a whole. TATA did that by coming up with
unique ideas at every stage of the supply chain. Starting with the suppliers, TATA had an
extremely selective process to select one hundred tier one suppliers who were either connected
ith TATA s Singur plant through some sort of transport or ere read to re-locate next to or
integrate with the assembly plant. TATA also contracted many two & three-wheeler suppliers
who had expertise in their offerings to provide parts for their four-wheeler vehicle instead of
contracting inexperienced local vendors. The entire TATA Nano was locally sourced, with only
3% of the parts being imported from outside the country, helping in keeping the cost low. One
of the distinct features of the Nano supply chain was that TATA included the suppliers at every
stage of the Nano. From the design, to the production, the suppliers were always consulted in
various capacities to improve the vehicle and its effectiveness. Consulting the suppliers in the
design process is one of the key reasons why they were able to keep the cost of the vehicle low
as the suppliers pitched ideas which could easily be recommended, right from the source.
For the manufacturing and assembling of the Nano, TATA set up their plant in Singur, West
Bengal at a cost of USD $200 Million over hundred years in thirty years instalment blocks.
TATA was able to strike a deal with the West Bengal Government which helped them save
USD $175 Million in investments. In return, TATA provided blue collar jobs to the locals of
Singur and also promised infrastructural development. TATA also used rookies and students
from two reputed universities of West Bengal to bring fresh and innovative ideas to the Nano.
The distribution network of the Nano was a very tight knit one with company owned and
franchise dealerships. TATA was able to keep the margins low due to their stakes in the
franchise oned dealerships. Ne F-Class dealerships ere also set-up to make the low
income population more comfortable while purchasing the Nano. New insurance and financing
schemes were also introduced in collaboration with banks and NBFCs to cater specifically to
the low income population who wanted to own a four wheeler.
Overall, TATA Nano was a work of state of the art supply chain management. It played a very
significant role in keeping the cost of the vehicle low.

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7. Bibliography
Shilpa Parkhi, Sourabh Joshi, Shubham Gupta & Mridu Sharma, A study of Evolution and Future of Supply Chain
Management, 9 AIMS INTL. J. MNGMT. 95, 95-106 (2015).
ARMAN JABBARI & PHILIP KAMINSKY, BLOCKCHAIN AND SUPPLY CHAIN MANAGEMENT 1 (College Industry
Council on Material Handling Education 2018).
Swati Singh & Manoj Joshi, New Market Creation via Innovation : A study on TATA Nano, 19 AWESHKAR J. 87,
87-99 (2015).
Swati Singh & Pallavi Srivastava, The Turnaround of TATA Nano – Reinventing the Wheel, 16 VIS. J. BIZ.
PERSPECTIVES 45, 45-52 (2012).
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