Networking helps Tata Motors improve efficiency

Networking helps Tata Motors improve efficiency
1 Sep, 2007, 0151 hrs IST,Irshad Daftari, TNN

MUMBAI: When Tata Motors suffered a record loss of nearly Rs 500 crore in 2000, it searched for ways to become a more efficient operation. An online customer relationship management system and a dealer management system were among the ideas that came up, and the first took off in 2003.

Recently, Tata Motors connected the 1,000th dealer to its online integrated Customer Relationship Management-Dealer Management System (CRM-DMS). This milestone, coupled with the monitoring of the service to more than 25,000 customers, makes it the largest implementation of a CRM program in the automobile industry anywhere in the world, according to Siebel and Tata Motors.

Says Shyam Mani, vice-president for sales and marketing at Tata Motors, “We were clear that we would drive CRM more as a tool, and the primary benefit had to come to customers.” But that wasn’t the way CRM was envisaged worldwide by the auto industry. When the CRM-DMS was first mooted in 2002, KR Sreenivasan, the project head, found virtually no global precedent. He says, “Globally, CRM was largely restricted to ‘lead management,’ or follow-ups to enquiries for purchasing a vehicle.” Tata Motors now has nearly 1,200 dealers connected online, and will scale this up to 1,600 in a few months. At the dealer level, Tata Motors monitors both finances and inventory, and at the customer level, it monitors services, spares, replacements etc. The project has cost Tata Motors in excess of Rs 35 crore to date.

Tata Motors has derived some clear benefits from this initiative. Mr Mani says customers like the online solutions to their needs and are quite happy with the service levels they receive at workshops. SM Bafna, chairman of Bafna Motors, and the first dealer to hook up to Tata Motors’ system, says: “We think that nearly 65-70% of our existing customers come back, either to replace their old vehicles or to buy new ones.”

Since all dealers and factories are on the same platform, the inventory costs get reduced significantly, for both dealers and company. A few years ago, Bafna Motors, in Nerul, had to work with an inventory of nearly 100 days. After the implementation of the CRM, the maximum inventory that Mr. Bafna holds today is a 16-day stock. He says, “I can just put in a requisition to any part of the country if I’m running short on a particular model of truck, and I can order it from the factory or dealer that has it.” For both company and dealer, time lost due to such non-availability is a loss of revenue, albeit notional. For Mr. Bafna, cutting down inventory means there is less money and resources tied down to it. Moreover, the turnaround time for trucks has reduced from 6 hours to just two, since monitoring has become better.

For Tata Motors, it also provides rich data by region and by brand instantly, rather than at the end of a month or a quarter. Says Mr. Mani, “I know that there is a high sales activity in Pune, so it makes sense for me to set up a stall and do some promotional activities near.” On-ground activation, coupled with analytics and information about the competition has worked out to be far cheaper than advertising - for a few thousand Rupees, Tata Motors could potentially reach their target customer, according to Mr. Mani.

One of the project’s objectives had been to reduce operating costs by 10%. Though the company managed to meet that target, both Mr. Sreenivasan and Mr. Mani insist that it’s a function of an overall increased efficiency rather than directly attributable to the CRM-DMS. In another two years, Tata Motors wants to scale up the total number of dealers on the system to 2,000.