Wednesday, September 4, 2013

Tata’s Nano Vs Bajaj’s RE 60 : Innovative Product Designs and Similar Supply Chain Strategy
A comparison of product design and supply chain of the two automobile giants in India – Tata and Bajaj, at a time when both are entering a niche space of low priced cars.

Product Design: Though Bajaj doesn't brand itself as a car company, it is launching what it calls the quadricycle (and not a car); the “RE 60” – a low cost (approx. $2000), high mileage, small build and eco-friendly quadricycle similar to the Nano or maybe even a little better than the Nano due to the different look given by the body colored bumpers, stylish wheels and other features like the folding front windows, central speedometer cluster, prominent seatbelts, 44-litre boot space etc,. It will also have the digital twin spark tech engine that is expected to deliver decent performance on all types of terrains and the new water-cooled DTSi 4 (Digital Twin Spark Ignition) engine that will help it accelerate to 70 kmph”.4 These features seem a little better than those of Nano but given all this, will the RE 60 still make it big in the Indian and overseas market? This is a difficult question to answer because with a groundbreaking product that creates a new category, quantitative predictions don’t work because there is nothing to base them on. 5  This was one of the reasons Tata Nano did not live up to media expectations. The discussion brings us to an important point about product design being ‘emotionally resonant.  The low success of Tata Nano could be attributed to the fact that consumers did not want to be noticed travelling in a low price car. Will RE 60 get better at this?

The Supply Chain:  While Tata is moving towards standardization and fewer business partners; Bajaj on the other hand has also taken a similar move by cutting down to 125 suppliers from nearly 1000 suppliers in the past. This revelation forced me to think about these two companies deciding to compete in the same niche and also having a similar supply chain strategy. They are focused on consolidating volumes with lesser number of suppliers who are expected to supply 'on-line, in-time.' Also their supply would be divided into categories that are homogeneous and will reflect similarity in innovation, development and manufacturing skills. I was wondering if this is the scenario with other industries too. If so, then it would be surprising because the previous article we read about HP speaks about the risks of restricting major portion of supplies to a fewer number of manufacturers whereas these articles on Tata and Bajaj, on the contrary, talk about defining a "sourcing structure with no more than two suppliers for a given family of assemblies3.” Does this significant reduction in number of suppliers suggest something more than just the optimization of supply process? Is it creating a trend? Will this trend eventually lead to innovation in SCM globally?

1: Bajaj RE60 Vs Tata Nano Vs Maruti 800
2:  The Quadricycle wins. So does Rajiv Bajaj by Ashish Mishra

3 : Bajaj Auto to revamp supply chain by Nandini Sen Gupta & Rajiv Nagpal

5. Bajaj's RE 60: an auto, a car, a nano killer?

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