Value Engineering Project
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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)! 222! 2(22)! Log-1[hypcos 2(22!)]
= = = =
16,777,216 1.1205 x 10426 ∞ ∞
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 electricversion. 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 othernations. The enthusiasm is even higher than that for the petrolversion
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 semiurban areas. Its Also attract the small cars buyers like maruti 800.
THE ORDER QUALIFIERS It must be a safe car. ad Must meet the mandatory Safety Standards. h nd so a t d u n o ta . t It should not emit poisonous fumes. l e den rms p s i o v y n l e r y a ery norms. Must meet the mandatory lEmission r e o t c v a l u ry as e g v e w er e I should be able to sit comfortably in it with my r m h e s t i w tic ll s a family. n p o e o t i c t ta e s form c h oadequate It should space to at least 4 n pe . have T x c e t e o e t persons. Th be m ad o car h t It should look like a car and not a contraption. the 17 To have a good ergonomic shape.
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 yet e L n 1 a i f d maintaining its basic functionality. e of e be d t The Alternatives are: ly ure loca to . r s a l ad ive t e a c l c tru be t h a Reduce Consumption y of Material being used. e rn r t s to e m e v os t a l e s s vgetesame a material at a n c to Alternate Suppliers a e w h bl h t t e s e giv nt nd ila g less prices. e e a va ar hematerials. Use alternate t n o ic e a e nt p h r th i T m p h o ofmMaterial. Eliminate t c use g i n e u w th i s m i du x Eliminate ve maaieprocess. h c a Or a Combination of the above. 19
THE COST REDUCTION PARADIGM Locational Imperatives:
The Guiding factor was that the tax structure, ll a re must on materials and manufacturing, e h w support the final cost of Rs 1 Lac on ed. i t a iev The Decisions were: c lo ch g a n i e r tu ld b c a free u zone. Establish factory in auftax o n sc a m age a t ant c Get the etax le dadvantages on infrastructure v s a rt the development. o h s Get In the suppliers to establish base near the factory. Get special concessions from State Govt. 20
THE COST REDUCTION PARADIGM Supply Chain decisions:
f o e p v i i t h c s e Guiding factor was that the ssuppliers r , to be p e n er r t e r p pacceptance a eth selected on the basis of their to e f og h t o t t work on tight cost guidelines. m u ro e o wim n. f G The Decisions points were: N s g o s I K er era of uati i l N I p lev ive sit S p Suppliers’ Technical capability to tweak the design. u t F s c N m O t e WI u j c N b e m l i o O I e x he WIN T a Theirrt swillingness S a part of the to be m ht E a o g U t h g i n i Q s n w i prestigious t O In eriv rly project. a N e r d willingness a Their toBE establish their facilities near c e l c O plant. T the car manufacturing D A H E Their willingness R to work on tight cost and time E H T 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
t c i d
c a r l e v 1 l Weight reduced by 2naKg. Cost reduction 200 s R i F S Rs. And in line with modern vehicles e T h T OS
C R A Instrument console in the centre C E 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 taxbreaks, 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 HOW
Easy
TRANSPORTATION
Low Cost
WHY
Supporting Functions Comfortness Assure Convenience
To Satisfy customer
Better control
Better Look APPERANCE
Safety
Facilitate Application
Prevent Road accidents While Driving Improve Efficiency
Better Mileage
Less Fuel Consumption
Customer Oriented FAST (TATA NANO)
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
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)! 222! 2(22)! Log-1[hypcos 2(22!)]
= = = =
16,777,216 1.1205 x 10426 ∞ ∞
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 electricversion. 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 othernations. The enthusiasm is even higher than that for the petrolversion
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 semiurban areas. Its Also attract the small cars buyers like maruti 800.
THE ORDER QUALIFIERS It must be a safe car. ad Must meet the mandatory Safety Standards. h nd so a t d u n o ta . t It should not emit poisonous fumes. l e den rms p s i o v y n l e r y a ery norms. Must meet the mandatory lEmission r e o t c v a l u ry as e g v e w er e I should be able to sit comfortably in it with my r m h e s t i w tic ll s a family. n p o e o t i c t ta e s form c h oadequate It should space to at least 4 n pe . have T x c e t e o e t persons. Th be m ad o car h t It should look like a car and not a contraption. the 17 To have a good ergonomic shape.
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 yet e L n 1 a i f d maintaining its basic functionality. e of e be d t The Alternatives are: ly ure loca to . r s a l ad ive t e a c l c tru be t h a Reduce Consumption y of Material being used. e rn r t s to e m e v os t a l e s s vgetesame a material at a n c to Alternate Suppliers a e w h bl h t t e s e giv nt nd ila g less prices. e e a va ar hematerials. Use alternate t n o ic e a e nt p h r th i T m p h o ofmMaterial. Eliminate t c use g i n e u w th i s m i du x Eliminate ve maaieprocess. h c a Or a Combination of the above. 19
THE COST REDUCTION PARADIGM Locational Imperatives:
The Guiding factor was that the tax structure, ll a re must on materials and manufacturing, e h w support the final cost of Rs 1 Lac on ed. i t a iev The Decisions were: c lo ch g a n i e r tu ld b c a free u zone. Establish factory in auftax o n sc a m age a t ant c Get the etax le dadvantages on infrastructure v s a rt the development. o h s Get In the suppliers to establish base near the factory. Get special concessions from State Govt. 20
THE COST REDUCTION PARADIGM Supply Chain decisions:
f o e p v i i t h c s e Guiding factor was that the ssuppliers r , to be p e n er r t e r p pacceptance a eth selected on the basis of their to e f og h t o t t work on tight cost guidelines. m u ro e o wim n. f G The Decisions points were: N s g o s I K er era of uati i l N I p lev ive sit S p Suppliers’ Technical capability to tweak the design. u t F s c N m O t e WI u j c N b e m l i o O I e x he WIN T a Theirrt swillingness S a part of the to be m ht E a o g U t h g i n i Q s n w i prestigious t O In eriv rly project. a N e r d willingness a Their toBE establish their facilities near c e l c O plant. T the car manufacturing D A H E Their willingness R to work on tight cost and time E H T 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
t c i d
c a r l e v 1 l Weight reduced by 2naKg. Cost reduction 200 s R i F S Rs. And in line with modern vehicles e T h T OS
C R A Instrument console in the centre C E 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 taxbreaks, 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 HOW
Easy
TRANSPORTATION
Low Cost
WHY
Supporting Functions Comfortness Assure Convenience
To Satisfy customer
Better control
Better Look APPERANCE
Safety
Facilitate Application
Prevent Road accidents While Driving Improve Efficiency
Better Mileage
Less Fuel Consumption
Customer Oriented FAST (TATA NANO)
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
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