Page 172 - DMGT523_LOGISTICS_AND_SUPPLY_CHAIN_MANAGEMENT

Unit 7: Inventory Management

Notes
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Case Study TATA Motors CVBU

T ATA Motors Commercial Vehicle Business Unit enhances balanced scorecard with
COVENARK Strategist.
®
Tata Motors is the largest and most prominent market leader in the manufacture of
commercial business vehicles in India. In the year 2000, its Commercial Vehicles Business
Unit (CVBU) suffered its first loss in its more than fifty years history. This loss was
massive. It was in the tune of $ 108.62 Million. This prompted Tata Motors to take a
profound look into itself; to find reason in this debacle.
Subsequently, the executive director of CBVU, Mr. Ravi Kant, called for stringent cost
cutting across unit operations, supported by more effective formulation and execution of
strategy. To augment this process, the management of Tata Motors resolved to adopt the
Balanced Scorecard and Performance Framework as the key tool in the endeavour to
rebuild the Organisational Performance Chart. The challenge here was to undertake
deployment of the Balanced Scorecard across all the functional units and departments of
the CBVU.
Soon, however, with the process underway, the real problem revealed itself. It turned out
that the manual nature of the review procedures of such a huge structure was well neigh
impossible, being, at best, extremely difficult to implement and incredibly time consuming.
A watertight solution was needed; quickly. After further examination of the situation, a
decision was taken to implement a Balanced Scorecard Automation Tool that would
centralise, integrate and collate the data, providing rapid review and analytical functionality
and presenting a rapid and comprehensive one view picture of organisational performance.
Commencing this process, the CVBU management reviewed many solution providers
and evaluated each of them upon the basis of a variety of diverse factors. At the end of this
exhaustive process, a solution was decided in the form of COVENARK Strategist, a
®
prominent Balanced Score Card Automation Tool developed by MPOWER Information
Systems to integrate with the existing ERP and legacy systems with the help of data
integration suite.
The results were immediate and spectacular. Within two years of this, CVBU had turned
over to register a profit of $ 107 Million from the loss of $ 108.62 Million, accounting for a
whopping 60% of TATA Motors inventory turnover. The success path of Balanced Score
Card did not stop here. In the beginning CVBU has started the Balanced Scorecard with
only Corporate Level Scorecard; at this time they have expanded it to six Hierarchical
Levels with three hundred and thirty one Scorecards, additionally looking forward to
proliferate it to the lowest level of organisational structure. In this way, MPOWER, through
®
COVENARK Strategist played a vital role in the success story of TATA Motors CVBU.
Question
Analyse the case and write down the case facts.
Source: www.mpower.com

7.7 Summary

 The ideal inventory process consists of manufacturing a product to a customer’s
specifications once an order is placed.

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