Savings all around

Mumbai: Four specific areas were identified as the target zones of the cost-erosion fusillade that Tata Engineering launched in April 2000.

Direct material costs
Since materials accounted for a bulk of the company's expenses, getting the initiative on track here was crucial. It started with Ravi Kant, Tata Engineering's executive director (commercial vehicles division), assembling a team of 23 young achievers (average age 30) in April 2000 and giving them three days to come up with ideas on how to reduce direct materials costs by 10 per cent a year for 2000-2001 and 2001-2002.

Atul P Renavikar, currently the senior manager (e-procurement, materials pricing committee), was one of the young guns picked for the exercise. "We burnt plenty of midnight oil and [after three days] we were ready with ideas and proposals," he says. "We had a road map." Kant liked the group's ideas enough to give the go-ahead for a pilot cost-reduction project.

The team, comprising engineers, managers and shop-floor workers, was pared down to eight members for the pilot project, which essentially involved exploring ways to minimise Tata Engineering's costs on vehicle parts supplied by vendors from across the country.

The team started with three major models, one each from the light commercial vehicle, medium and heavy commercial vehicle, and passenger car families. This made sense because the cost-reduction possibilities identified with these could be applied to a whole lot of variants in the three vehicle categories