Sourcing Engineering Designs

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Sourcing Engineering Designs Components from
India
TECNOVA
Confidential This report is solely for the use of
client personnel. No part of it may be
circulated, quoted or reproduced for distribution
outside the client organization without prior
written approval from Tecnova India.
Tecnova India Pvt. Ltd., New Delhi
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Contents

• Agenda 3
• India Sourcing Opportunity 4
• India Sourcing Opportunity- Value
  Proposition 5
• Tecnova Advantage 6
• Shift from China 7
• Examples of shift of sourcing from China to
  India 8
• Key advantages of sourcing from India vis-à-vis
  China 9
• Indias Emergence in Outsourcing of Engineering
  Components 10
• Processes where India is emerging to be
  Competitive 11
• India Differentiator 12
• Examples of Successful Indian Vendors Who are
  global partners for sourcing 13 - 15
• Examples of Multinationals Sourcing Auto
  Components from India 16
• Indias Commitment to Quality 17
• Commitment to Quality 18 - 19
• Cost Analysis 20
• Cost Comparisons with China 21
• Logistics and Delivery 22
• Logistics and Deliveries 23
• Tecnova Services 24

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Agenda

• This presentation covers the following
• India Sourcing Opportunity
• What can Tecnova do to translate this opportunity
  for
• Client Name

4
India Sourcing Opportunity
India emerging as an important destination for
outsourcing
5
India Sourcing Opportunity- Value Proposition

• Sourcing from China will become costlier due to
  the following
• Currency risks
• Emerging trends of increasing costs.
• India is emerging as an important base for
  outsourcing engineering design and components.

6
Tecnova Advantage

• Significantly reduce gestation period for
  developing alternate source of supply by short
  listing capable vendors in India.
• Reduce transaction cost and risks of developing
  alternate vendors from India.

7
Shift from China
Multinationals already exploring sourcing
options form India as an alternate to China
8
Key advantages of sourcing from India vis-à-vis
China

• India offers total solution for product/component
  development. E.g. Bharat Forge has delivered a
  part made for the first time to exacting
  standards in just 9 days for a major truck
  manufacturer in America.
• Sundaram Clayton is involved in product
  planning (including designing and supply of
  components) for select models of Ford Motors to
  be launched in 2006.
• India is highly competitive in value added
  precision machined forgings and castings which
  are being preferred from India.
• These are also being exported to China.

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Examples of shift of sourcing from China to India

• Delphi has relocated part of supplies from
  Johnson Controls, China to Igarashi Motors plant
  in India for armatures of DC motors.
• Honeywell has shifted its entire requirement of
  US 40 Mn for detailed engineering work from
  China to Chemtex, India (for chemical plants) .

10
Indias Emergence in Outsourcing Of Engineering
Design Components
11
Processes where India is emerging to be
competitive

The above names are just a representative of the
industry and are not exhaustive
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India Differentiator

• Why do companies source from India?
• Total product development solutions including
  engineering design capabilities.
• Quality - India is the only Asian country having
  2,750 companies with ISO certification.
• Low volume high variety
• Precision machining of forged, cast besides sheet
  metal products.

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Examples of Successful Indian Vendors who are
global partners for sourcing

• Forgings - Bharat Forge
• Having the largest single location capacity in
  the world - 120,000 tpa.
• One of the only two companies in the world
  having two 16000 MT Weingarten Press Lines.
• No.1 axle component manufacturer in the world
  having 25 of the global market.
• Has been awarded the status of Preferred
  supplier to companies such as Toyota, Volvo,
  Daimler Chrysler, Caterpillar etc.
• Also supplying components to Honda, Cummins, Ford
  Motors, Renault, Mercedes Benz,
  Caterpillar-Perkins, Spicer, Isuzu, New Holland
  Ford.
• Exporting to China and has secured large orders
  including an OEM order worth US 15 million from
  a large Chinese Automotive company.

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Examples of Successful Indian Vendors who are
global partners for sourcing

• Auto Components
• Sundram Fasteners
• Principal Supplier of radiator caps to General
  Motors for its North and South American vehicle
  production.
• Have been awarded General Motors Best Supplier
  award for four years in a row - 1996, 1997, 1998
  and 1999.
• QS-9000 certified company besides having a ISO
  9002 certification.
• Customers include - Mercedes Benz, Behr, AM
  General, Caterpillar.
• Stampings - Jai Bharat Maruti (JBM)
• Delphi is sourcing stampings of US 5 Mn every
  year form JBM.

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Examples of Successful Indian Vendors who are
global partners for sourcing

• Brake Shoes - Rane Brake Linings Limited
• Is one among the 5 Indian companies which have
  been awarded Deming award.
• International customers include - TRW, Europe,
  USA and South Korea PACCAR, USA Federal Mogul
  , USA New Holland Lister-Petter, UK etc.

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Examples of Multinationals Sourcing Auto
Components from India
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Indias Commitment to Quality
India has 5 Deming Award winners while China has
none
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Commitment to Quality

• There are five Indian companies which have
  received the prestigious Deming Award in the
  recent past. These include the following
• Sundaram Brake linings
• TVS Motors
• Sona Koyo Steering Systems Limited
• Rane Brake Linings Limited
• Mahindra Mahindra (Farm equipment division)

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Commitment to Quality

• India is the only Asian country having 2750
  companies with ISO certification present in the
  manufacturing sector. Following table gives an
  indication of the Indian Auto Industry commitment
  to quality

20
Cost Analysis
India offers high quality products at prices
comparable to China
21
Cost Comparisons with China
22
Logistics and Delivery
Getting there with improved road and port
infrastructure
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Logistics and Deliveries

• Delivery including logistics is still an issue
  but India is getting there with recent changes
  which include
• Significant reduction in inland transportation
  time attributed to 4/6 lane highways being built
  with around 2,000 kms being added every year.
• For e.g. Toyota has been able to reduce the
  turnaround time for sourcing glass wipers from a
  distant location from 7 days to 3 days.
• Ports- Capacity of 11 major ports in India has
  been increased by 60 in the past 4 years.
  Present capacity is around 275 million tonnes.
• Increased efficiency - Average turnaround time at
  the ports has come down to 5 days from 7 days in
  the past.

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Tecnova Services
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What will Tecnova Do?

• Vendor Identification Phase - Identify and
  shortlist relevant vendors with capabilities
  already established and known to Tecnova
• Pilot Phase - This would include the following
• Conduct trials with multi vendors to meet clients
  technical specifications and quality standards.
• Conduct joint assessment analysis of the approved
  vendor(s) for final selection and order
  placement.
• Post Pilot phase - Assist in finalizing
  Commercial Agreements for sourcing form the
  short-listed vendor(s)

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Approach to Vendor Selection
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Approach to Vendor Selection (Contd.)
APQP (Advance Product Quality Planning)
Process flow diagram Central Plan AMEA
(Process Failure Mode Effect Analysis)
Tooling fixture/ Gauge Development
T1 Trail T2 Trial PPAP (Production Part
Approval Process
Containment
Run _at_ rate to establish production capacity
Production
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Tecnovas Capability

• In-depth understanding of Indian business
  environment including Regulatory Framework
• Sound technical understanding attributed to India
  Entry consultancy assignments carried out in
  diverse industries including engineering,
  industrial products, auto, steel, chemicals etc.
• Proven methodology for carrying out due diligence
  and audit among Indian companies.
• Understanding of critical success factors for
  finalization of agreements and strategic
  alliances.
• Established network of contacts across Industries
  ensuring competitive pricing and consistent
  deliveries.
• In house team of engineers with relevant
  experience and exposure to deal in international
  markets.

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Tecnova Value Proposition

• Significant reduction in gestation period for
  developing India as an alternate supply source.
• Reduce transaction costs and risks for developing
  alternate vendors from India.

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Who We Are.

• 19 years of Operation (started 1984)
• Services offered include Strategy Consulting,
  Outsourcing
• 125 Clients (35 current)
• 60 Fortune 1000
• 18 countries
• Long Engagement Assignment
• Maximum 12 years
• Average 18 months
• Service Performance Guaranteed

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Our Clients
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Our Clients