VALUE ENGINEERING

PROJECT
TATA NANO
PRESENTED BY:
Kartik Ayyar (PRN 08020771001)
Arpit Desai (PRN: 08020771002)
Abhishek Kumar (PRN 08020771003)
Deepak Kumar (PRN: 08020771004)
 What is Value Engineering?
 The systematic application of recognized
techniques that
 a) identify the function of a product or a service
 b) establish a monetary value for that function,
and
 c) provide the necessary function reliably at the
lowest overall cost
 A process that can improve quality,
constructability and lower life-cycle costs
 Why do Value Engineering?

 To identify and remove unnecessary

costs without compromising the
quality and reliability of the design.
 It can be applied during conceptual
design (top down)or design
refinement (bottom up).
 Value Engineering Is:

 Systematic problem solving process

 Multi-discipline team approach
 Value oriented
 Function-based analysis
 Free of normal design restrictions
 Value Engineering is Not:
 A Design Review or Plan Review
◦ It is not intended to correct omissions and errors in the
design, nor to review calculations made by the designer.
 A Cost Cutting Process
◦ It does not cut cost by sacrificing quality, reliability, or
performance.
 Routinely Done on all Designs
◦ It is not part of the normal design process, but a formal
cost and function analysis of select projects.
 What is the biggest
number you can make

using three 2s?

 Common Answers
 2+2+2 =6
 2 x 2 x 2 =8
 [(2)2]2 = 16
 22 + 2 = 24
 22 x 2 = 44
 222 = 222
 222 = 484
 222 = 4,194,304
 Outside the box answers
 2(2x2)! = 16,777,216
 222! = 1.1205 x 10426
 2(22)! = ∞
 Log-1[hypcos 2(22!)] = ∞

And for value engineering we need to think

outside the box…….
x
 Description about Nano
 The project has literally become India's claim-for-fame in
the international-media due to Tata Motors' innovation in
developing the car, as well as keeping it low in price.
 The car itself is expected to boost the Indian Economy,
create entrepreneurial-opportunities across India, as well
as expand the Indian car market by 65%.
 The car was envisioned by renowned industrialist, Ratan
Tata, Chairman of the Tata Group and Tata Motors, who
has described it as an eco-friendly "people's car".
 Nano has been greatly appreciated by many sources and
the media for its low-cost and eco-friendly initiatives which
include using compressed-air as fuel and an electric-
version.
 Tata Group will mass-manufacture the Nano in very large
quantities, particularly the electric-version, and, besides
selling them in India, to also export them world-wide.
 Competencies of Tata Nano
 Pricing strategy
Tata initially targeted the vehicle as "the least expensive
production car in the world"— aiming for a starting price of
100,000 rupees or approximately $2300 US despite rapidly
rising material prices
 Export expectation
 Being worlds cheapest car it is expected that not only India demand for
Nano will go rise at global level. Since it meeting Euro-4 norms at this
price so this is taking as a future of small car segment .
 Reputation and Acceptance of Tata After launch
“TATAs have shown the world what Indian engineering is truly
capable of delivering highly competitive products. ”
 Enthusiastic support
Tata Motors is receiving preliminary and some very
enthusiastic support in the media and officials, even from
Europe, for the electric-version from India as well as other-
nations. The enthusiasm is even higher than that for the petrol-
version
 Target Market
• The low-cost car is clearly
intended for the masses.
For the family of four that
would otherwise ride on a
scooter, precariously
balancing a tiny tot on the
front and a baby on the
wife’s lap. For the first-time
car buyer in India - a huge
market despite the
increasing number of cars
in the urban and semi-
urban areas.
• Its Also attract the small
cars buyers like maruti
800.
 THE ORDER QUALIFIERS
 It must be a safe car.
Must meet the mandatory Safety Standards. h ad
a nd so
u t n d
 It should not emit poisonous fumes. l t o ta .
p e den rms
y s v i n o
Must meet the mandatory lEmission r l
a ery norms. e y
e t o r
c v l a
e ry as g u
 I should be able to e v w er e
e r sit s mcomfortably
t h in it with my
w tic i ll
family. n s p o a
ti o c e t
c ta e s form
It shouldx pe . have
T h oadequate
c
n space to at least 4
e e e t o
persons.
Th be m ad t
to car h
 It should look like a car and not a contraption.
the
To have a good ergonomic shape. 17
THE ORDER WINNER

PRICE TAG
OF
Rs 1 Lac

18
 THE COST REDUCTION PARADIGM
Value Engineering Alternatives:
The Guiding factor was that the costhhas at alto l be
t
d ac
minimised for each component
e L yet
fi n 1 a
maintaining its basic functionality. d e of t d
e be
The Alternatives are: r ly ure loca to s .
l e a c t a l ad ive
 Reduce Consumption y c tru be h a t
e of Material
r t s to beinge rnused.
v os e a m lt e
s
a n c to vgetesame s a material at
 Alternate Suppliers w h a h bl e
t e
e giv nt nd ila s t
less prices.g
ar hematerials.
 Use alternate
t n e e a va
h e nt p o ic e a
T i m p r th
t
 Eliminate
i h c
useo ofmMaterial.g
w th e u s i n
x m
i du
 Eliminate maaieprocess.
ve
c h
a Or a Combination of the above. 19
 THE COST REDUCTION PARADIGM
Locational Imperatives:
The Guiding factor was that the tax structure, a ll
on materials and manufacturing, e re must
w h
support the final cost of Rs 1 Lac i on ed.
The Decisions were: t
a iev
c
lo ch
i n g a
r
tu ld b e
 Establish factory in auftax c
a free u zone.
n sc o
a
m age
a
t ant
 Get the etax c
le dadvantages
v on infrastructure
s
rt the a
development.
h o
s
In the suppliers to establish base near the factory.
 Get

 Get special concessions from State Govt.

20
 THE COST REDUCTION PARADIGM
Supply Chain decisions: o f
i v e p
c t h i
Guiding factor was that the ssuppliers p e e s
r , to be
e r r tn er
selected on the basis of their e p pacceptance
a eth to
th o f og
work on tight cost guidelines. m u t t
The Decisions points were: f ro e o wim n. G
s g
er era of uati s o K I N
l i
p lev ive sit I N
 Suppliers’ Technical u p capability
t to tweak F S
the design.
t s u m j c
e WI N O
l e c i m o b O N
e
 Theirrt swillingness a x he WIN T I
o m ht a to be E S a part of the
s h i n g i t n g Q U
prestigious
In eriv rly project. w a t i O
 Theird willingness
a c r e toBE N
establish their facilities near
c l e
the car manufacturing T O plant.
A D
E H
 Their willingness
E R to work on tight cost and time
T H
deadlines.
21
 THE CAR PER SE
 Engine Capacity Bosch 624 c.c. twin cylinder
Low capacity, Lighter ,sufficient with better
Power weight ratio
 Rear Engine to reduce the transmission
length using a balancer shaft.
 4 Speed Manual Gear Box

 All Aluminum Engine

Higher thermal conductivity than cast iron,
Lighter and so better mileage
 Engine Management System by Bosch
Superb control over emission and smooth
22
 THE CAR PER SE
 Dimensions L: 3.1m, W: 1.5m, H: 1.6m
Less length but more inner cabin space due
to height. Comfortable leg room.

 Independent Front & Rear Suspension

Mcpherson Strut in Front & Coil spring &
trailing arm in rear.
Better ride than Maruti 800.
 Single piece ribbed steel body with safety
features such as crumple zones, intrusion
resitant doors, seat belts, strong seats &
anchorages.
Safety requirements are adequately met. 23
 AN EPITOME OF SMART ENGINEERING
 Single Wiper in place of two.
Cost effective yet functionality is met

 Tube less Tyres c t

d
r
i
l a c
v e 1
Weight reduced by 2naKg.l Cost s reduction 200
F i S R
Rs. And in line ewith modern
T vehicles
T h
COS
A R
E C
 Instrument console in the centre
H
Elegant to Tlook at and can be used both in
Left Hand & Right hand version.

The list goes on and on. 24

 What makes it so cheap !
 The Tata Nano uses plastics and adhesives
rather than welding.
 introducing the car with an artificially low
price through govt-subsidies and tax-
breaks, or
 using vertical-integration, or
 partially using inexpensive polymers or
biodegradable plastics instead of a full
metal-body.
 It has no AC, no power steering, no power
windows, no power bells and whistles.
 Techniques used
 Creative thinking
 Life cycle cost
 Creative thinking
 Thinking outside the patent box
 How could Tata Motors make a car so inexpensively?
 It started by looking at everything from scratch, applying
what some analysts have described as 'Gandhian
engineering' principles - deep frugality with a willingness to
challenge conventional wisdom.
 A lot of features that Western consumers take for granted -
air conditioning, power brakes, radios, etc - are missing
from the entry-level model.
 More fundamentally, the engineers worked to do more with
less. The car is smaller in overall dimensions than the
Maruti, but it offers about 20 per cent more seating
capacity as a result of design choices such as putting the
wheels at the extreme edges of the car.
 A modular design revolution
 The Nano is constructed of

components that can be built and

shipped separately to be assembled
in a variety of locations
 In effect, the Nano is being sold in

kits that are distributed, assembled,

and serviced by local entrepreneurs.
Costing
 Basic Functions Easy

HOW TRANSPORTATION
WHY
Low Cost

Supporting Functions
Comfortness
Assure
Convenience Better control

To Satisfy
customer Better Look

APPERANCE Facilitate Application

Prevent Road accidents

Safety Customer Oriented
FAST
While Driving
(TATA NANO)
Improve Efficiency
Better Mileage
Less Fuel Consumption
 Future of Nano (conclusion)
 Emerging markets are a fertile ground for innovation. The
challenge of reaching dispersed, low-income consumers in
emerging markets often spurs significant innovation.
 As customers gain more power, they will demand more
tailoring and value-added service to meet their needs.
Companies that innovate on this dimension are likely to be
richly rewarded.
 World is getting tougher day by day being unique is a
competitive advantage. Expectations to Nano has proved
this .
 After 100 years to Henry Ford , Tata has proved him again
not only he came out of the expectations but also came out
with a platform for Indian auto sector .
 So this as per this project conclusion can be draw
as a future car not only of Indian but also if
exported than could be to the world.
Key Risks
Key risks to our rating include:
· Delay in the launch of small car ‘Nano’
· Unanticipated increase in the prices steel,
aluminium, other non-ferrous
metals, rubber, and engineering plastics
· Fluctuations in auto loan interest rates