Tata Motors to capture 80% operations from vendors
The Financial Express — February 23, 2006

Buoyed by its success in outsourcing major components to vendors in the production of its Ace model, Tata Motors Ltd has drawn up a strategy to off-load and procure over 80% of its operations from its vendors. The company plans for a supplier base of 250-300 vendors with whom long-term relationships can be established. "The outsourcing strategy has worked in favour of the company," said MV Raja Rao, vice president, manufacturing, Tata Motors. "The production of the Ace model has crossed 25,000 units in last six months and there have been no customer complaints.

"For Ace, over 75% was sourced from vendors. We intend to use this strategy for other company products. Vendors will play an important role in helping to ramp up volumes," he said. Volumes have gone up from 20 units per day to 150 units per day with this strategy. By May 2006, the company hopes to touch the 250-mark production on a daily basis. Tata Motors is pursuing vendor rationalisation aggressively. "We will invest only in certain areas like engine assembly and testing, cab and cowl fabrication and paint shops besides assembly operations. The rest of the operations will be outsourced to vendors subject to cost, quality and delivery requirements," he said.