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Tata Motors, IBM in talks for small car project

If the deal comes about, the Tatas and the IBM are expected to extend their alliance to a new realm, reports Venkatesh Ganesh.

india Updated: Dec 12, 2006 20:02 IST

The Tatas and the technology giant IBM are engaged in talks in order to become partners in the ‘Rs 1 lakh small car’ project targeted at the Indian masses. Preliminary level talks have commenced between senior executives of both companies for a supply chain project. This is for developing technology solutions.

“We had preliminary talks with Tata Motors officials to partner in the small-car project. We are in discussions to provide technology solutions for managing the supply chain,” said a senior IBM India official at the sidelines of a seminar organised by the US-based IT major in Bangalore. For cars to be priced so low, the key is to have an efficient supply chain distribution system that can bring the cars faster into the market, provide after-sales and support, and interact with vendors and suppliers of auto component makers, claim industry sources.

If the deal comes about, the Tatas and the IBM are expected to extend their alliance to a new realm. IBM is now managing the data centre and IT infrastructure for the Tatas.

When contacted the Tata Motors spokesperson said: “Tata Technologies Limited (TTL) provides all the engineering and business applications required by Tata Motors. IBM has been engaged by Tata Motors to provide data centre services and IT infrastructure maintenance for the company.” He, however, added that IBM has not been engaged on any service with regard to the small car project.

Tata Technologies is the group company where Tata Motors holds a 94.31 per cent stake. Tata Motors, in August this year, acquired Incat International through Tata Technologies. Incat is an UK-based company providing software solutions to the automotive, aerospace and the durable goods sector.

While, Tata Technologies used to undertake a lot of IT-related work for Tata Motors, the company is now seeking to partner with IBM for customised solutions and the management of IT supplies chain needs for the Rs 1 lakh car.

Earlier, the Tatas had said that instead of relying on regular dealerships, their aim was to establish small units, where some cars could be assembled, sold and serviced.

The company is also likely to encourage local entrepreneurs to invest in these units. These local entrepreneurs would be trained to assemble the fully knocked down or semi-knocked-down components sent to them.

All this could increase the complexity and needs a different kind of supply chain solution says a source from IBM who did not wish to be named. IBM left India in 1978 and re-entered in 1992 in a joint venture with Tata IBM.
Subu D, senior VP, manufacturing and automotive, Satyam Computer Services, pointed out the importance of supply chain management.

“Given the complexities of the supply chain, even a small error can create chaos and disrupt the entire supply, thereby risking the company and stakeholders. This could be at various levels such as the ancillary units, sales and dealer network, and customers too,” he said.

“Dealers enjoy a big advantage with this kind of system as they can place orders online. This could be for things such as spares or in cases of an emergency order, as against placing them through phone, fax or paper, which used to be the scenario earlier.

Also, reconciliation of funds can be done online and is fully automated,” says Viveck
Marwaha, country manager, UGS, a software provider for the engineering segment. He adds that the dealers can track delivery status such as the truck numbers with the chassis numbers of cars dispatched online using such a system.

First Published: Dec 12, 2006 20:02 IST