A

PROJECT REPORT ON

“EVALUATION OF CONTRACTORS AND TRANSPORTERS FOR THE PERIOD 2005-06 & 2006-07”

ATTATA MOTORS LTD, PIMPRI

PUNE

BY

BALI RAJAT KANTI SHIVA(Batch 2006-2008)

UNDER THE GUIDANCE OFDr. SHARAD JOSHI

SUBMITTED TO

UNIVERSITY OF PUNEIN PARTIAL FULFILMENT OF THE REQUIREMENT FOR THE AWARD OF THE

DEGREE OF MASTER OF BUSINESS ADMINISTRATION (MBA)

THROUGHVISHWAKARMA INSTITUTE OF MANAGEMENT

PUNE-48

MAHARASHTRA

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ACKNOWLEDGEMENT

I have great pleasure in submitting this project report titled “Evaluation of

contractors and transporters for the period 2005-06 & 2006-07” at TATA MOTORS

LIMITED to Pune University.

During the preparation of this project, I got valuable help and co-operation.

Firstly, I would like to thank the Personnel and Material Planning and Purchase of TATA

MOTORS LIMITED.

I would like to sincerely thank Mr.Mene (Head CVBU) Finance and Mr.

Panchbhai, Sr. HR officer for providing me with this opportunity.

I would also like to thank Mr. Banerjee M K, Divisional Manager (Material

Planning and Purchase), who conceived the idea of this Project and were my guide, Mr.

Khandare K M, Sr. Manager (Material planning and purchase), Mr. Wani A W, manager

who instrumental in the completion of this project and.

It is worthy to mention my special thank to the Institute Directors, Dr. Sharad

Joshi. who always gave me valuable guidance.

I would also like to express profound gratitude to the following people who were a

constant source of encouragement and constant input.

Mr. S.P.Mehendale, Manager, Excise and Sales Tax Accounting Department

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Mr. Avachat Prakash Anant, AGM (Auto Prod Plg & control) Auto commercial

vehicle- PPC

All the members of contract cell, TATA MOTORS Pune.

Faculty of V.I.M. Pune.

I also thank all those employees in whose contact I had come, with whom I have

worked, learnt and whose support and keen interest, resulted in the successful completion

of this report.

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CERTIFICATE

This is to certify that this project titled “EVALUATION OF CONTRACTORS AND

TRANSPORTERS FOR THE PERIOD 2005-06 & 2006-07” done at

TATA MOTORS, PUNE. is a bonafide work carried out by BALI RAJAT KANTI

SHIVA of MBA marketing of Vishwakarma Institute of Management in the partial

fulfillment for the degree of Master of Business Administration, University of

Pune.

He has worked under my guidance and direction. His work is found to be good

and complete in all respect.

Dr. Sharad L. Joshi Dr. Sharad L. Joshi(Director) (Project Guide)Date: Date:Place: VIM, Pune Place: VIM, Pune

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LIST OF FIGURES

Figure:1 Codes of the purchase group are entered to extract The transactions done by them.

Figure:2 Codes of the vendors are entered to extract the transactions done with them.

Figure3: Document dates / period are entered to extract the transactions done during that period.

Figure:4 Data extracted. Which was converted into an excel work book.

Figure:5 Part data

Figure:6 Detailed DATA

Figure:7 Vendor based table

Figure:8 Executive agency based table

Figure:9 Vendor order based on the amount of the total business done by each

Figure:10 Data obtained out of 65,

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LIST OF CHARTS:-

Chart: 1 Information about the performance of the contractors.

Chart:2 Grades obtained by the vendors

Chart:3 Percentage of total evaluated vendors falling under different category

Chart:4 Distribution of the marks percentage obtained by different vendors

Chart:5 Satisfactory or unsatisfactory level of the executive agencies

Chart:6 A suitable format

Chart:7 Grade obtained by the transporters

Chart:8 Percentage marks obtained by the transporters

Chart:9 Areas where the user agency is generally unsatisfied or generally highly satisfied

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LIST OF TABLES:-

Table: 1 Eight parameters evaluation

Table: 2 Parameters of evaluation in the format obtained in the data extracted from the system

Table: 3 The parameters of evaluation and weightage

Table: 4 The partial result and analysis of the transporters evaluation

Table: 5 Grades

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INDEX

CHAPTER NO. CONTENTS PAGE NO.1 Executive summary 2

2Theory related to topic

4

3 Company profile 174 Department profile 24

5Research methodology

33

6Introduction

35

7Process of the contractors’ evaluation

36

8 Process of evaluation of transporters 459 Comments by the executing agencies 51

10Comment of the contract cell.

51

11Suggestion and recommendation.

52

12Bibliography:

53

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EXECUTIVE SUMMARY

The project title is “Evaluation of contractors and transporters for the period

2005-06 & 2006-07” this project is important due to three reasons,

1. Its pre requisite to rate vendors to achieve vendor rationalization and do vendor

development.

2. To meet OSHAS compliance it is mandatory for TATA MOTORS to keep record

of the performance of all those parties to whom they have out sourced their non-core

activities

3. TATA MOTORS follow a SHE policy i.e. SAFETY, HEALTH AND

ENVIRONMENT policy, so it is required to evaluate the Safety Practices followed by its

vendors and transporters.

I am proud to associated with this project in TATA MOTORS because,

1. It was a live project; based on which TATA MOTORS will be making its future

plan of VENDOR RATIONALISATION and VENDOR DEVELOPMENT.

2. It gave me a chance to meet more than 50 managers/Sr. managers/ AGM at

TATA MOTORS Cvbu , Pcbu, Foundary, Pimpri And Chinchward, Pune. And interact

with them in the process to interview them to collect their rating for their concerned

vendors.

3. TATA MOTORS Pune is a large and dynamic unit so there was lot of scope to

learn.

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4. TATA is a symbol of quality, trust, honesty. TATA MOTORS is always abreast

with the latest technology and business techniques, so the experience of 70 days was a

great learning experience.

To carry this project I spend few of my early days at TATA MOTORS studying

the process of procurement of services of contractors and service providers and

transporters where I got an idea about the types of service and transport contract the

process and the significance of each step of the process.

Then with the guidance of my project guide, the parameter of evaluation, the

weightages, the scoring system, etc were decided.

The data about each purchase orders that was valid in the period April 2005-

March 2007, was extracted from the company data base using the SAP based system.

Vendor list was made which had the data about all the purchase orders of that vendor,

their total business with TATA MOTORS in that period. And all the executive agencies

whom they served.

All the ex agencies are interviewed in person to get the vendors and transporters

evaluated, for some the data was retrieved from service entry sheet (S.E.S.) The scores

were collected , compiled, averaged, and presented along with supporting charts and

documents.

The result obtained showed the grades of vendors based on which their

elimination or continuation or any other action will be decided. It also indicated that areas

where special attention was required.

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THEORY RELATED TO TOPIC

In the competitive world of today, it is difficult for any Industry to have expertise

in all areas. The Companies engage themselves in their core competence and take help

from others foe non-core business or allied activities. Who have developed their expertise

in it. Therefore, it is observed that the industries are outsourcing more and more those

allied activities, which were traditionally being done in-house.

 

Thus, in order to cope up with the increased competition, the Management has

following alternatives:

 

A)   Out source Sub Assemblies in which the others have expertise.

B) Work in House – for the core-product by engaging ones own employees

C) Work in the premises on some essential but allied activities by availing

Contractor’s Services who has expertise in low skill level. 

 

Availing Contractor’s Services, appear to be very attractive proposal due to low

cost, however, one has to strictly abide by the Contract Labour Regulation & Abolition

Act 1970 (CLRA) and the Factories Act. Here, the definition of worker becomes very

important and puts certain legal bindings and duties on the employer.

 

      As per CLRA act, the Company in whose premises the manufacturing work is

going on is considered as a Principal Employer and he is responsible for ensuring the

minimum wages, to the contract labour. Ensuring the adherence to provisions regarding

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working hours, minimum wages, leave, overtime wages, bonus, Provident Fund, ESI, is

also his responsibility.

 

“As per the Factories Act, the definition of Worker is very wide; “Worker means a

person (employed, directly or by or through any agency (including the Contactor) with or

without the knowledge of Principal Employer, whether for remuneration or not) in any

manufacturing process or in cleaning any part of the machinery or premises used for a

manufacturing process or in any other kind of work incidental to or connected with, the

manufacturing process or the subject of the manufacturing process.”

The Government and legal Authorities always view the contract work with

suspicion, as many times, under the facade of contract (for low cost involved) the workers

are exploited. The work is directly supervised by the principle employer but workers are

shown as contractors’ laborers.

Definition for Vendor Rating

a system for recording and ranking the performance of a vendors in terms of a

variety of issues, which may include delivery performance and the quality of the

items/services. A process of vendor rating is essential to effective purchasing. When

conducted before contract is made, it is known as vendors evaluation. When undertaken

after the fulfillment of an order, it is called vendors rating, or vendors appraisal.

What is SERVICE?

Intangibility of sevice

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In order to understand as to what difference as to what difference this increasing

orientation to service is going to make in the production/operation decisions, one ought to

understand what services are all about. One distinguishing feature about any service is

that it is not tangible like physical goods. This implies that a service is mostly ‘felt’ i.e. it

is mostly a characteristic connected with the mind or psychology of the person.

This characteristic has tremendous implication regarding ‘quality’ aspect of the

service. In other words the, the service quality cannot be measured wholly by physical

specification alone. In the control of quality of physical good, it was assume that the

complete hold over the product specification was all that was required in order to offer

Consistent quality to the customer. But now, consumer‘s / customer’s mind comes into

the evaluation of the quality of a product, as much as the product ‘physical characteristics.

Thus the ‘service product’ consists of:

1. physical items of facilitating goods,

2. sensual benefits or explicit services, and

3. Psychological benefits or implicit services.

Thus all the above three are important.

Determinants of service quality

Reliability Consistency of performance and dependability. It means the firm

honours its promises and delivers the service at appointment time.

responsiveness Timely prompt response to the service needs of the customer.

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Readiness of the employees (of the firm) to provide service.

Competence Includes knowledge and skill of not only the contact person but also

of the support personnel.

Access Involves the approachability and ease of contact. Includes

convenience of location of the service facility, its hours of operation,

its communication and logistics facilities, as also the attitude of

approachableness on the part of the people in service organization.

Courtesy Politeness , respect and consideration for the customer and

friendliness of contact personnel of the entire organization.

Communication Communicate to the customer about the service, about the agreed

terms, about the service organization, so that there is no ambiguity

and the customers are properly informed and reassured. Similarly ,

perhaps more importantly the communication channel should be

open to listen and understand the customer.

Credibility Trustworthiness of the service company. This can come from the

company’s reputation and brand name. Most importantly it comes

from basic honesty of the service firm and the same honesty

exhibited its contact personnel.

Security Involves:

a) Physical safety.

b) Financial security.

c) Confidentiality ( some services rendered need to be kept

confidential; e.g. Psychiatrist’s councelling.)

Understanding

the customer

This consists of understanding customers’ specific requirements,

needs and expectation. This aspect is central to service quality. It

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deals with not only communication channel but also the attidude of

service firm and its people.

Tangibles Consists of physical aspects of service- the physical evidence of

service; physical facilities, equipments used, appearance of people

delivering the service.

PURCHASING RESEARCH

Another function of purchasing is that of purchasing research. In many large and

well managed organizations like TATA MOTORS, there is a group of people doing

formal purchasing research. This is not only the study of substitute materials or services,

to get over a recent problem of procurement, but also a long range study of the

requirements of present and anticipated product or works. Research, understandably also

has the task of studying the trends and future forecast of the cost of various in put

materials; and also of general economic conditions, industrial conditions and national and

international developments of interest for the task. Purchasing research will have to

interact with the R & D and the engineering departments of the company on a continual

basis. The idea is that when the crunch comes in future the company should not crumble

under pressure. The other tasks of purchase research include, make or buy studies, studies

of alternative vendors, studies in developing vendors( in terms of their technical, financial

capabilities and needs), etc. in short , purchasing research includes short and long range

studies of internal company requirements and external supply market. This is an

important aspect of purchasing, and all organizations that can afford it, should launch

formal purchasing research programs.

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VENDOR RELATIONS:

An important objective in purchasing management is that of maintaining good

relation with vendors. A good vendor is an asset to the company; and, therefore, just as

customer goodwill is considered important, a good relationship with the vendor should

also be treated likewise. A vendor who supplies a proper quality material/ service in

proper amounts and in proper time is not very easy to find. More over there are many

situations where there service is required in emergency , there are situations of short

supply , in all such situation good relationships with the vendors pay dividends. This may

entail: personal relationship, professional relationship.

(a) by helping the vendors in the time of stress and strain with financial aid, technical

aid, by providing management skills if necessary. and

(b) maintaing a healthy relationship by fair negotiation, fair evaluation and fair

compensation.

The modern management theory and world class manufacturing call for long-term, almost

lifetime association with vendors. This also means that there will be fewer vendors but

these will be DEDICATED VENDORS- Almost as a part of organization family.

SELECTION OF VENDORS:

1) The competency of the vendor.

a) Capacity to supply the required manpower of the desired skills in the asked

quantity.

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b) Capacity of future expansion in capacity.

(1) The understanding or knowledge of the vendor regarding the buying

company and its needs.

2) The financial soundness of the company:

i) The vendor’s company’s capital structure.

ii) Whether it belongs to large group of companies; whether it is a private ltd. or a

public ltd. Company.

iii) The past profitability record of the company.

iv) The expansion plan of the company in the future.

3) Technical capabilities of the company (these are mostly regarding the quality

capabilities.

i) Whether the available equipments are capable to do the required task? What

are the future plans of the vendors.

ii) Whether they have enough technically skilled manpower?

iii) Whether there is a proper research, design and development facility available

with the vendor?

iv) What is the record of vendor in filling the orders of other buying company in

the same business?

v) What has been the consistency in the quality produced by the vendors?

4) Other considerations:

i) What are the working conditions in the vendors’ company?

ii) How are the industrial relations in the vendor company?

iii) Whether there is any possibility of disruption of service supply in terms of

quality and quantity due to any human relation problem in the vendor

company?

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VENDOR RATING OR PERFORMANCE MONITORING

Although prior evaluation is necessary, vendors who are on the regular list should

be periodically appraised for their performance. This performance appraisal, which is and

should be done as a continuous monitoring exercise, is termed as vendor rating.

Vendors can be rated on various characteristics:

1) Delivery ( to deliver on time as per order )

2) Quality (to deliver as per he quality specifications).

3) Price ( to supply the materials at low a price as possible)

4) Other factors such as:

i) Capability to meet emergency orders and

ii) Help in various other aspects such as supplying useful market information,

readiness to try out new jobs and orders. etc.

In vendor rating system one usually gives weightage to these various

characteristics and measures the performance of the vendors periodically on the basis of

certain norms or standards. The total of the vendors performance is thus calculated and

based on this information the vendor is coaxed, cajole or sometimes dropped from the

company’s approved vendors list. The vendor rating system used for this project is

explained later in his report in the section “process of vendor evaluation”.

Vendor rating is a beneficial device not only for buying company, but also for

Supplier Company. As the supplier company gets the information of its own performance

as compared to that of its competitors. It is fair since the rating is based on facts and not

opinion. The supplier company can know its short comings, thus try to improve them.

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Some suppliers even use a good vendor rating, by some of the large reputed companies as

a sort of merit certificate to deal with other companies.

VENDOR DEVELOPMENT:

It has to do with creating or making new vendors( and not selecting out of the

already established once in the market). This is a continual important activity of

purchasing manager. Traditionally one of the reasons for developing new vendors is to

build more competition in the supply market (eliminating monopoly or oligopoly).the

company can then buy a material from a number of sources another traditional reason for

such multiple source buying ( and ,there fore , also for vendor development) is to spread

the risk of non availability or shortage of input material or men over a number of

suppliers incase , one of the suppliers employees go on strike ( o rif there is explosion or

fire in the supplying company), the other supplies can be relied upon to compensate for

this shortage. Therefore , in traditional organization, which most Indian organization aare,

spreading risk over anumber of suppliers is the main motive behind vendor development.

However , international standards are premised, on the thinking that single source

buying provides some advantages which multiple source buying does not. One of the

obvious advantages of the single source buying is that of close rapport between two

companies and the loyalty established with the supplier. This goodwill might yield

benefits in number of ways in times of difficulties or crises for the buying company and

therefore, keep it appraised of the recent market trend. ( what may be termed as

“intelligence” ). Responsibility, lack of uncertainty , quick and faithful response to the

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needs and ,therefore, a general improvement in quality and reduction in inventory and

purchase related cost or he long term benefits for both the organization.

Vendors development involves helping or building up vendors by various means

such as:

1) Lending money for part of his capital equipment, working capital requirement etc.

2) Lending technical help by making company engineers and technicians available to

vendors to help him tide over the initial technical problems.

3) Help in R & D/ by again lending technical help to not only establish the company /

but also to help improve its products and service on continuous basis.

4) Guaranteeing him certain amount of business. (This is particularly needed during

initial stages of setting up the vendor)

Such efforts on the part of the buying companies will produce a kind of goodwill

and rapport between the two companies. Such a vendor will be willing to listen to the

special problem of the buying company. And, therefore , will be an asset to buying

company.

Some of the vendor companies may be large and establish companies who may

not need financial technical or R & D assistance but such companies can still be

cultivated in many other ways. By collaborating with them in various projects of interest

to them , jointly investing in a project to produce common raw material required by both

supplying and the buying company etc.

NEGOTIATION: A PART OF PURCHASERS ROUTINE

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Negotiation is a part of the buyers’ routine task. Although much of this belongs to

the behavioural sciences, a great deal of the success of negotiation. Whether the

negotiation is for cost, or quality, or for quantity much home work needs to be done by

the Purchasing executive prior to the negotiation. They should have detailed cost data and

technical data regarding his own company and hi supplier companies. He should have

information regarding the economic trades in the region or in country, and also the

technological trade. Backed by such detail data the purchaser is in a better position to

support his position and demands. This homework is necessary not only to argue

effectively for the buying company, but also to understand the supplying companies’

difficulties and problems. so that, during the negotiation the buyer does not rub the

vendors the wrong way and thus spoil an established relationship. Many effective buyers

backed by purchasing research, or in a position to suggest ways of reducing cost,

improving quality, delivery of the performance of the vendor companies; and this is

appreciated by the supplying companies.

Auto companies on VENDOR RATIONALIZATION drive

EVEN though the increasing success of MNCs outsourcing from the domestic

auto components industry may be hogging the limelight at the moment, there has been a

persistent trend of Indian vehicle manufacturers reducing the number of component

suppliers.

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In other words, the trend of rationalization of the Indian automotive components

industry is gaining pace, primarily due to the increasing pressure on margins faced by

vehicle manufacturers.

This combined with an increased focus on quality is also resulting in consolidation

in the domestic components industry, with domestic players focusing on only their core

competencies and exiting from "non-core" areas.

According to an ICRA report on the Indian auto components industry, leading

OEMs (original equipment manufacturers) such as Maruti, Tata Engineering and Bajaj

Auto are already pursuing vendor rationalization programs.

Tata Engineering, the country's largest commercial vehicle manufacturer, has, for

instance, decided to deal with only Tier I suppliers for outsourced components and

assemblies. The company has already brought down the number of vendors from 1,200 to

700 and plans to cut the figure further to 450.

Maruti Udyog too has indicated that in a bid to improve quality and generate

economies of scale it has reduced its vendor base from 370 as of March 31, 2000 to 299

as of March 31, 2003. The company intends to continue to reduce the number of vendors

even further.

According to the ICRA report, vendor rationalization reduces the cost of dealing

with multiple vendors besides making the process of quality control easier. Also, it

enhances the efficiency of supply chain management. "Further, by increasing the order

size per vendor, the OEMs can help the vendor operate at a higher scale of operation and

thus increase the vendor's efficiency," the report says. Also, this provides greater

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incentive to pursue technological improvements and enhance systems and processes to

meet the quality standards set by the OEMs.

The report forecasts that the process of vendor rationalization is likely to be

implemented by many more players in the automotive industry in the medium term.

TATA MOTORS to capture 80% operations from vendors

The Financial Express — February 23, 2006

Buoyed by its success in outsourcing major components to vendors in the

production of its Ace model, Tata Motors Ltd has drawn up a strategy to off-load and

procure over 80% of its operations from its vendors. The company plans for a supplier

base of 250-300 vendors with whom long-term relationships can be established. "The

outsourcing strategy has worked in favour of the company," said MV Raja Rao, vice

president, manufacturing, Tata Motors. "The production of the Ace model has crossed

25,000 units in last six months and there have been no customer complaints.

"For Ace, over 75% was sourced from vendors. We intend to use this strategy for

other company products. Vendors will play an important role in helping to ramp up

volumes," he said. Volumes have gone up from 20 units per day to 150 units per day with

this strategy. By May 2006, the company hopes to touch the 250-mark production on a

daily basis. Tata Motors is pursuing vendor rationalization aggressively. "We will invest

only in certain areas like engine assembly and testing, cab and cowl fabrication and paint

shops besides assembly operations. The rest of the operations will be outsourced to

vendors subject to cost, quality and delivery requirements," he said.

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BENEFITS OF VENDOR RATIONALISATION:

The study found that reducing the number of vendors would provide a better

insight into costs and cost Reduction opportunities and lead to a number of possible

benefits:

• Reduced prices. The VENDOR RATIONALISATION process has resulted in price

reductions.

• Reduced labour costs in accounts payable. A 10–15% cost reduction was achieved

through

The reduction of VENDOR numbers, as fewer resources are required in the process;

• Improved contract management. For instance, in order to better manage paper

recycling and

Shredding expenses and ensures TML is getting value for money, the number of

agreements is being reduced. Vendors are also being given an ID number to be registered.

Allowing easier verification of VENDOR invoices. A reduced number of vendors would

also make it Easier for AMP to assess and monitor the environmental credentials and

performance of their Suppliers; and

• Reduced risk of fraud. Fewer vendors and an expense classification field in the

Accounts Payable system will increase visibility into the nature of payments made. This

subsequently Reduces the risk of incorrect invoicing and fraudulent claims.

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Scope for Contractor’s Services     

    .   

A) Non manufacturing activities

1)   Canteen

2)   Conservancy

2)   Horticulture

3)   Security

4)   Transport

5)   Operation of ETP & Central Hazardous waste facility

6)  Segregation of hazardous scrap at all scrap yards (this includes activities such as

chipping hardened paint from tins, etc.)

7)    Removal of floor grills from Paint Booth & cleaning by open burning.

8)    Removal of dipping baskets from Spare Part Dispatch & cleaning by open

burning.

9)   Maintenance of Paint Booths- removal of sludge, booth cleaning using thinner

etc.

B) Relating to Manufacturing but low value / unskilled activities

 1)     Logistical support in stores (unloading, unpacking, loading on trolleys, disposal of

packaging waste)

2)     Tyre & tube assembly

3)     Assembly of canopies / temporary cabin no chassis

4)     Packing of 'Tool Kits' ready to be dispatched along with chassis / vehicle

5)     Maintenance, (equipment cleaning, machine cleaning, etc.) carried out on weekly off

days. No direct supervision from TML employees.

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6)     Fabrication,

7)     Shifting or Transport chassis one place to another, etc.

Legal safeguards while contracting out any work

1)     The Company must ensure that it has a registration certificate from the competent

authority as provided under section 7 of the Contract Labour (R & A) Act 1970,

before proceeding to engage the Contractor’s Services.

 

2)     The Company must ensure that they issue certificate in Form V to the Contractor for

obtaining license as provided under section 12 of the Act.

 3)     It must be ensured that the Contractor has a valid license issued in his name by the

competent local authority as provided under the Act.

 4)     Contractors must have their own Provident Fund / ESI code numbers & also have

W.C. policy drawn from authorized Insurance Company under these Acts.

 5)     The payment of wages to the Employees employed by the Contractor is disbursed to

his Employees by the Contractor himself or his nominee and Principal Employer

has to depute his representative to be present and sign the payment register in token

of having disbursed the salary in his presence by the Contractor.

 6)     No advance should be paid by the Principal Employer to the Contractor’s

Employees directly. Only Contractor must regulate the same.

 7)     Leave to the Contractor’s Employee must be sanctioned by the Contractor and not

by the Principal Employer.

 8)     There should not be any supervision and control by the Principal Employer in

respect of Employees employed by the Contractor to fulfill the obligation of the

Contract.

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9)     Discipline of the Contractor’s Employee must be regulated by the Contractor and

not by the Principal Employer.

10) Contract should not specify the number of persons required, but must quantify the

work itself.

11) As far as possible the activities to be contracted out should be carried out in an

isolated, covered premise.

 12) The activities being contracted out should not be carried out by any of the Company

Employees.

 13) The Contractor should have similar work in other Industry, so that he can transfer his

Employees whenever work at our end is over.

 14) The Contractor should revise their Employee wages periodically.

 15) It should be ensured that the Contractor engages Employees possessing minimum

educational qualification and adequate work skills to perform the activity. The

Employee must physically fit to perform the activity. The Contractor should engage

Employees of age between 18 and 60 years only.

 16) If any hazardous job is off loaded, concerned Div / Dept should obtain clearance

from Safety / Environment Dept.  The obligations under various statutes in respect

of the Contractor’s Services, in hazardous process be strictly complied.

 17) Maintenance of all type of records in respect of the Employees employed by the

Contractor, should be his own responsibility and Principal Employer should ensure

that the Contractor is maintaining the same.

 18) Ensure that returns in prescribed forms under the applicable laws are sent to the

registering officer within the prescribed time frame by the Contractor.

 19) Contractors name should be included in the Registration Certificate of the Company

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 20) The Contractor should provide all Personal Protective Equipments (PPEs), Identity

Cards (suitably displayed on uniform), Uniform of different colour than Principal

Employer.

Principal employer to further ensure

That Contractor should submit the bills in printed form duly signed.

The contractor should be insisted to submit photo copies of Challans and Returns

submitted to ESI, PF, Professional Tax, Labour Welfare Fund authorities along

with the bill.

That contractor should maintain record through his staff or Service Provider and

not by the staff of Principal Employer.

That the Contractor’s Employees should do only the specific work allotted to

him.

That the Contractor should issue the photo identity card to his Employees under

his name, trade, style and signature.

Essential ingredients of an Agreement Between Principal Employer and the

Contractor.

 

That the Agreement should be drafted and executed on non – judicial stamp paper.

Our Purchase Order is treated as Agreement.

That the Agreement must disclose the names, addresses of the Contractors and the

Principal Employer.

That the Agreement must contain the rights and obligation of both the parties.

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That the agreement must disclose the place of work, time of working, rate of

compensation (towards consideration) and the consequences arising out of breach of

Contract and the procedures for termination by either of the parties to the Agreement.

That the Agreement must carry out objectives of statutory provisions and judicial

pronouncements.

That the agreement should be between the Contractor and Principal Employer and

should be witnessed by two witnesses

That the agreement must disclose the scope of work, deployment of manpower in

number , period of validity, compensation , security deposit and terms of payment of bills.

TYPES OF CONTRACT:

1. ANNUAL RATE CONTRACT- repetitive in nature

2. ANNUAL WORKS OCNTRACT – sudden / not likely to be repeated

3. JOB CONTRACTS

4. ANNUAL MAINTAINANCE CONTRACT-

a) BREAKDOWN,

a. Comprehensive

b. Non-comprehensive

b) PREVENTIVE.

NEED TO OUTSOURCE TRANSPORTATION CONTRACT:

Third-party logistics (3PL) refers to outsourcing transportation, warehousing and

other logistics-related activities to a 3PL service provider that were originally performed

in-house.

More and more corporations across the world are outsourcing their logistics

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Activities due to various reasons, some of which are outlined in the below, in next

paragraph. Due to globalization, corporations across the world are increasingly sourcing,

Manufacturing and distributing on a global scale making their supply chains very

Complex for them to manage. Hence they have to outsource their logistics activities to

experienced 3PL providers. Today s 3PL providers with their sophisticated IT capabilities

and state-of-the-art transportation and material handling equipment and warehousing

facilities offer complete supply chain solutions. Logistics outsourcing is used to

complement the logistics activities the Corporations do not have competency in, and also

to increase the geographic reach. When a corporation expands business overseas, it may

not be conversant with the customs duties, tax structures, rules and regulations,

import/export policies of the government, and culture of the foreign country. A 3PL

provider, who has long been operating in that country, will be better able to carry out the

logistics operations. Logistics may not be one of the core activities of a corporation. So,

inefficiency may creep in if it is looked upon as a secondary activity. By outsourcing

logistics, Corporations may focus on their core competencies.

Logistics outsourcing may also reduce costs as the 3PL providers can get the

Advantage of the economies of scale, which is otherwise not available to the

corporations. Since the 3PL providers are now offering a number of value-added services

such as customs clearance, freight forwarding, import/export management, distribution,

after sales support, reverse logistics and so on, corporations can outsource all these

activities, and concentrate on their core business operations.

Due to an incredible growth in electronic retailing since the late 1990 s, many

Firms around the world with virtually no distribution systems rely heavily on the 3PL

Providers for delivery of the merchandise at the customer s doorstep. This has resulted in

a significant growth in the order fulfillment sector of the 3PL service industry.

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Third party logistics is the activity of outsourcing activities related to Logistics and

Distribution. The 3PL industry includes Logistics Solution Providers (LSPs) and the

shippers whose business processes they support.

Companies opt for Third Party Logistics for the following reasons:

Focus on core competence

Resource constraints

Cost saving / cost optimization

For large coverage

For more professional and scientific approach to logistical problems

For improvement in service levels with improved response time

Efficient management of inventory resulting in better utilization of working

Capital

Using a 3PL provider allows a company to: -

Concentrate on its area of expertise, leaving the problem of logistics to the

Professionals.

Create greater competitive flexibility release working capital.

Provide nimbleness to compete.

Service providers can ensure better know- how and develop scale efficiencies.

A good 3PL provider ensures an all India network, efficient and reliable service

and efficient IT system that is capable of tracking every consignment.

Over the years, World Wide Logistics emerged as a leading 3PL and Integrated

Logistics

Solution Provider due to its flexible solutions and a host of other value added

services.

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6.4 Outsourcing logistics is the new weapon in the corporate arsenal. It is an easy access

To World-Class Logistics capabilities and better control over the distribution system

Through an external agency offering specified services, which could be constantly

Improved upon. This would mean: Revenue maximization by tapping promising

Opportunities and fending off competition through effective and improved services.

Cost reduction can be achieved by availing to the benefits offered by the

Specialist. This translates into reduction in operating cost, interest cost and increase

Business focus. Companies could get their services done at lesser costs, because an LSP

(Logistics Service Provider) would pass on to the company benefits of specialization and

economies of scale. Reduce inventory levels and storage cost would translate into a chain

of benefits, namely- reduced operating cost, interest cost and to increase business focus,

even manufacturing cost.

Outsourcing helps the company to focus on its core competencies and better

Utilize its financial and non- financial resources. By investing its valuable time on core

functions, the management can now identify and respond to bottlenecks. What s more an

LSP can also help the company overcome those bottlenecks within given parameters. The

LSP also provides some augmented services which are incidental to its main line of

business. It provides value added services like inventory information, handling excise and

sales tax matters, doing the tagging and MRP labeling.

Scope of Outsourcing: Logistics forms a vital cord in the company s operation. Efficient

logistics performance has rightly been recognized as a source of competitive advantage

and a crucial strategic imperative for the success of firms. This is because, beyond a

certain level, improvements in manufacturing alone are not sufficient.

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MAJOR TYPES OF TRANSPORT CONTRACT IN TATA MOTORS PUNE,

1. Local trip contract for LCV

2. Local trip contract for truck

3. Contract for three wheeler Rickshaw for internal use.

4. Local milk route contract

5. Kolhapur milk route contract.

6. Jamshedpur route from pimpri / chinchward

7. One point loading / unloading

8. Multi point loading/ unloading.

9. Part load dispatch

10. Lucknow route

11. Trailers for SUMO cabs/ 407 cabs etc.

12. Double Decker trailer contract.

13. Normal FTL contract

14. Part load dispatch contract

15. Kolhapur milk route contract

16. SUMO ambulance contract

17. Contract for warranty materials dispatches

18. Collection of materials received from railways / taxis etc.(railway incoming

contract)

19. Railway outgoing consignment contract.

20. Surface courier contract

21. Contract for part load dispatches to various stations.

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22. Contract for logistics provider for TCL Engines from Jamshedpur.

23. Transportation of foundry casting to Jamshedpur.

24. Contract for Trailers RSO Kolkata.(Bangladesh export)

25. MSTB Dispatches to spring manufacturers.

26. Collection of material from Mumbai Air Port.

27. Transportation of CNG cascades for CNG collection.

28. Transport contract for Pune- Mumbai- Pune contract.

29. Transport contract for LDO.

30. Contract for Gas collection from Mumbai.

31. Contract for Gas collection from local sources.

32. Oil barrel collection.

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COMPANY PROFILE:

INTRODUCTION

TATA MOTORS was established in Jamshedpur in 1945 to manufacture steam

locomotives. The company entered into collaboration with Daimler-Benz of Germany in

1954 for the manufacture of Commercial Vehicles. The collaboration ended in 1969. By

this time Tata Motors had developed capabilities to independently design and

manufacture Medium Commercial Vehicles (MCVS). Today Tata Motors is recognized

as an automobile Giant with global capabilities. Tata Motors is India’s leading

Automobile Company and is among the top ten manufacturers in the world. Tata Motors

is India’s most reliable, dynamic and futuristic automobile manufacturer with more than

130 models spanning a wide range of Commercial Vehicles, Passenger Cars and Multi-

Utility Vehicles.

Passenger car Division:

The passenger car division was born out of a vision to offer the Indian customer

all the comfort of a big car, at the price of a small car. The Indica was formally launched

in 1998 and has rewritten the rules of Indian car industry ever since then. The latest

addition to the Tata Motors family after the launch of Indigo which is designed to deliver

never- before levels in luxury, safety, power and comfort on Indian roads is the New

Indica V2. Refreshingly different, with a sporty new look, stylish interiors, and more. A

sleek fascia with a chrome lined grill, clear lens illumination, muscled flares, flexible

seating and electronic instrumentation with tacho, come as standard. Driven by a 1400cc

high performance petrol engine and a fuel-efficient diesel engine, even nature can’t resist

its fresh appeal.

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Commercial vehicle:

More than half a century of impressive presence and Tata Motors continues to

provide India with top of the line commercial vehicles. Tata Motors is India’s largest and

among the worlds top ten commercial vehicle manufactures. A vehicle for every

application. From 2 ton LCVs to 40 ton tractor-traliers and buses that can seat 12 people

to as many as 60. From Tippers to special Purpose Vehicles, to 6x4 and 4x4 off road

vehicles and Defense Vehicle.

An Overview:

With a long heritage of 139 years and a constant endeavor for the National

progress, the Tata Business house is one of the most widely known and trusted business

house in India. A group comprising of 80 diversified companies and 3 million

shareholders, the Tatas have been a pioneer in varied fields that include Steel, Power

plant, Civil aviation, Insurance, Quartz Watches, Chain of Luxury Hotels, Passenger Cars

and Labour Welfare Activities as well.

The story of the establishment of the empire began in 1868 when Jamshetji

Nusserwanji Tata laid the foundation of the house of Tata by starting a private trading

firm. Since then there has been no looking back.

The coming years saw the realization of the dreams of a great visionary and a

philanthropist, J.N. Tata who dreamt of taking his country to new heights. Initially Steel,

Hydroelectric Power and higher education formed the Core areas of the Tata Group. Over

the years, the Tatas have explored into every field that had the potential for promoting

National growth. The emphasis has been on building not just Assets but internal resources

for the Nation. The Tatas have succeeded in inculcating a new paradigm for growth and

as a result have infused a new business culture, a culture that is committed to giving

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Value for Money as well as to the practice of good corporate citizenship. Social concern

has been a prime motivator, as the Tatas believe that the community is the Stakeholder.

Milestone:

It has been a long and accelerated journey for Tata Motors Limited India’s leading

Automobile Manufacturer. Some significant milestones in the company’s

Journey towards excellence and leadership are given below:

Sr. No Year Event

1. 1945 Tata Engineering & Locomotives Co Ltd. Was established to manufacturing

Locomotives &other Engineering Products.

2. 1948 Steam road roller introduced in collaboration with Marshall sons (UK)

3. 1954 Collaboration with Daimler Benz, AG West Germany, for manufacturer of

Medium Commercial Vehicles. The first vehicles rolled out within six months

of the contract.

4. 1959 R&D centre set up at Jamshedpur.

5. 1961 Exports began with the first Truck being shipped to Ceylon, now Sri lanka.

6. 1966 Setting up of the Engineering Research Centre at Pune to provide impetus to the

Automobile Research & Development.

7. 1971 Introduction of DI engine.

8. 1977 First Commercial Vehicle manufactured in Pune.

9. 1983 Manufacture of Heavy Commercial Vehicle commences.

10. 1985 First Hydraulic Excavator produced with Hiachi collaboration.

11. 1986 Production of first Light Commercial Vehicle- Tata 407, indigenously

designed, followed by Tata 608.

12. 1989 Introduction of Tata Mobile 206-3rd Light Commercial Vehicle Model.

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13. 1991 Launch of the first indigenous Passenger Car Tata Sierra. TAC 20 crane

Produced. One-Millionth Vehicle rolled out.

14. 1992 Launch of Tata Estate.

15. 1993 Joint venture agreement signed with Cummins Engine Company incorporation

for manufacture of high horsepower and emission friendly Diesel Engines.

16. 1994 Launch of Tata Sumo- The Multi utility Vehicle. Launch of LPT-709-a full

forward control, Light Commercial Vehicle. Joint venture agreement signed

with M/S Daimler- Benz/ Mercedes- Benz for manufacture of Mercedes Benz

passenger cars in India.

17. 1996 Tata Sumo Deluxe launched.

18. 1997 Tata Sierra Turbo launched.

19. 1998 Tata Safari- India’s first sports utility vehicle launched. 2 millionth vehicles

rolled out. Indica India’s fully indigenous passenger car launched.

20. 1999 115000 bookings for Indica registered against full payment within a week.

Commercial production of INDICA commences in full swing.

21. 2000 First consignment of 160 Indicas shipped to Malta Indica with Bharat stage

2(Euro II) with Multi Point Fuel Injection Petrol Engine launched.

22. 2001 Indica V2 Launched-2nd generation Indica wheeled out. Launch of Tata Safari

EX. Indica V2 become India’s number one car in its segment.

23. 2002 Unveiling of Tata Sedan at Auto Expo 2002. Petrol version of Indica V2

launched. Launch of EX series in commercial vehicles. Launch of Tata Sumo

‘+’ series. Launch of Tata indigo.

24. 2003 Launch of Tata Safari Limited Edition The Tata Indigo Station wagon unveiled

at the General Motors show.

25. 2004 New Tata Indica V2, Sumo Victa and Indigo Marina launched. Tata Motors

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completes acquisition of Daewoo Commercial Vehicle Company. Tata Daewoo

Commercial Vehicle Co. Ltd. launches the heavy- duty Truck ‘NOVUS’, in

Korea.

26. 2005 Tata Motors rolls out its 500,000th Passenger Vehicle. The Tata X over unveiled

at the75 Geneva Motor Show. Braded Buses and Coaches – star bus and Globus

– launched. Tata Motors acquires 21% stake in Hispano Carrocera SA, Spanish

Bus Manufacturing Company. Tata Ace, India’s first mini Truck launched.

27. 2006 Tata Motors Tata Motors unveils new long wheel base premium Indigo & X-

over concept at Auto Expo 2006. Indica V2 Xeta launched. Passenger Vehicle

sales in India cross one million mark. Tata Motors and Marcopolo, Brazil,

announce joint venture to manufacture fully built buses & coaches for India &

markets abroad

28 2007 Tata Motors launches the longwheel base Indigo XL, India's first stretch

limousine

Tata Motors' integrated Customer Relationship Management (CRM) - Dealer

Management System (DMS) initiative crosses the significant milestone of

covering 1000 locations in India and abroad.

Tata Motors introduces Magic & Winger - creates new segments in urban and

rural passenger transportation

Position in the Global Scenario:

The collaboration with Daimler-Benz ended in 1969 and thereafter TATA Motor’s

began marketing vehicles under the TATA brand name carrying the famous “T” emblem.

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Is the country’s leading commercial vehicle manufacture and has significant presence in

the multi-utility & passenger car segment. The widely successful TATA Indica, a Euro

three compliant vehicle, Is the country has first indigenously designed, developed and

manufactured passenger car TATA Engineering followed that up with the TATA Indigo,

a sedan that was launched in Dec 2002.The company also make’s several other passenger

vehicle’s, including the Safari, Sumo and Sierra.

The company’s product have received wide acceptance not only in India but also

in the Middle East, Asia, Africa, Australia, Latin America & Europe.

Reason behind success of the company:

Success in today’s competitive environment demand’s technologies & work

processes that are result oriented. Incorporation these technologies into all manufacturing

processes, TATA Motor’s has focused its manufacturing strategy on developing world-

class manufacturing facilities & a high level Indigenization. TATA Motor’s has three

manufacturing facilities that utilize state-of-the-art equipment & processes. Located at

Pune, Jamshedpur & Lucknow. These facilities cater to the ever-increasing demand for

TATA vehicles.

Collaboration’s of the company:

The company has technical tie-ups with the Institute of Developing in Automotive

Engineering (IDEA), S.P.A., for assistance in small car body design, styling & Le Moteur

Moderne, France for the development of diesel & petrol engine for passenger cars.

Subsidiaries of the company:

TATA Motor’s also has several subsidiaries engaged in the business of

manufacture & sale of earthmoving equipment, machine tool’s, automotive axles &

transmission as well as providing information technology services. It is one of the

flagship companies of the TATA Group, which has a leadership position in Engineering,

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Material’s, Energy, Consumer Product’s, services & communication, Hotel’s &

information systems.

Subsidiary companies:

1. TATA Daewoo Commercial Vehicle Company Limited (TDCV)

2. Telco Construction Equipment Company Limited (TELCON)

3. TATA Technologies Limited (TTL)

4. TAL Manufacturing Solution’s Limited (TAL)

5. HV Transmissions Limited (HVTL) & HV Axles Limited (HVAL)

6. Sheba properties Limited

7. Concorde Motor’s Limited (CML)

8. Telco Dadajee Dhackjee Limited (TDDL)

Products of TATA Motor’s:

About the vehicles of TATA Motors, In case of commercial vehicle, the

commercial vehicle sale’s is 2, 09,591 vehicles witnessed a 28.5% growth & the

passenger vehicle sale’s is 1, 89,975 vehicle witnessed a 25.7% growth.

Products:

Tata Motors is India’s only Vehicle Manufacturer with product offering in all three

segments-

Commercial Vehicles

Utility Vehicles

Passenger cars.

Car’s:

It includes Indigo, Indica V2, Indica_V2_petrol, and Indica CNG etc.

Truck’s, Buses:

It includes medium, heavy & light and small commercial vehicle.

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Utility vehicle:

It includes TATA safari, TATA sumo deluxe etc.

Manufacturing Plant:

Tata Motors owes its leading position in the Indian automobile industry to its

strong focus on indigenisation. This focus has driven the Company to set up world-class

manufacturing units with state-of-the-art technology. Every stage of product evolution-

design, development, manufacturing, assembly and quality control, is carried out

meticulously. Our manufacturing plants are situated at Jamshedpur in the East, Pune in

the West and Lucknow in the North.

Jamshedpur:

This was the first unit of the Company established in 1945 and is spread over an

area of 822 acres. It consists of 3 divisions - Truck, Engine (including the Gear Box

division) and Axle. The divestments in March 2000 hived off the Axle and Engine plants

into independent subsidiaries. The Truck Division boasts of two assembly lines. The main

assembly line, measuring 180 metres in length, has 20 stations with a vehicle rolling out

every 8 minutes while the other line is dedicated to Special Purpose Vehicles (SPVs).

State-of-the-art facilities like a Centralized Paint and Press Shop with a set-up of a 5000

tone Siempelkamp press line and a cut-to-length line for strip preparation purchased from

M/s. Kohler of Germany makes it a fairly advanced production outfit.

Lucknow:

Established in 1991 and covering an area of 600 acres, the Lucknow Plant was

established to assemble Medium Commercial Vehicles (MCVs) to meet the   demand in

the Northern Indian market. In 1995, the unit started manufacturing bus chassis of Light

Commercial Vehicles (LCVs) and Tata Sumos. The unit is also equipped with facilities to

manufacture spare parts. It also deals in FBV (Fully Built Vehicle)

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Pune:

The Pune unit is situated in twin city of Pimpri and Chinchwad, Pune and has a

combined area of around 510 acres. It was established in 1966 and has a Production

Engineering Division, which has one of the most versatile tool making facilities in the

Indian sub-continent. It houses a Vehicle manufacturing complex which is one of the

most integrated automotive manufacturing centers in the country producing a large

variety of individual items and aggregates. It is engaged in the design and manufacture of

sophisticated press tools, jigs, fixtures, gauges, metal pattern and special tools, as well as

models for the development of new ranges of automobile products. Its capabilities have

enabled Tata Motors to introduce new products and improve existing ones without

resorting to imports of dies or fixtures.

Over the years, this division has developed expertise in design and manufacture of

automated dies, fixtures and welding equipment. Its large design group is fully conversant

with state-of-the-art CAD facilities and manufacturing facilities comprising of light and

heavy CNC machine shops, jigs boring room, plastic template shop, wood pattern and

model pattern shop, five axis precision machine tools and laser control machines. To cope

with such a diverse range, four assembly lines have been established, one each for MCVs

and HCVs, LCVs, Utility vehicles and one for Passenger Cars (Indica and Indigo).

The Passenger Car Division in ‘K’ block executes the entire process of car manufacture

over five shops - the engine shop, the transmission shop, press and body shops, paint shop

and the trim and final assembly shop. The shops are fully automated ensuring that there is

minimal chance for error in the manufacturing processes.

After the car is completely assembled, it goes through several checks like wheel

alignment, sideslip test, brake test, shower test, and a short test run before it is ready for

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dispatch. All systems such as materials management, maintenance and other activities are

computerized, enabling smooth operations and minimum inventory needs.

The Electronics Division is engaged in the production of a wide variety of

Machine Tool Controllers, PLCs, and Test rig instrumentation, Servomotors, Proximity

Switches. In addition, it has developed a number of components such as flashers, horns,

timers that are used in Tata Motors’ vehicles.

Industry experts rate the fully automated Foundries at Chinchwad and Maval

among the best, worldwide. The Iron Foundry produces 30,000 Tons of high precision

castings per year at Chinchwad and Maval Foundry produces 12000 Tons per year of

spheroidal Iron castings. These include Cylinder Blocks, Cylinder Heads, Gear Box

Housing, etc. Aluminum Foundry with an annual capacity of 1200 Tones has also been

established.

Quality Policy:

Tata Motors is committed to maximizing customer satisfaction and it strives to

achieve the goal of excellence by continual improvement through ongoing design and

development, manufacture and sale of reliable, safe, cost-effective, quality products and

services of international standards by using environmental sustainable technologies for

improving levels of efficiency and productivity within its plants and ancillaries. Tata

Motors also has a commitment towards improving work practices and social welfare

schemes.

Environmental Policy:

Tata Motors reaffirms its commitment to minimize the adverse impact of its

products operations and services on the environment. Towards this end, it strives to:

Establish sound environmental objectives and targets and a process of reviewing them.

Comply with all applicable legal/ regulatory and other environmental requirements.

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Reduce the emission levels of the vehicles in full compliance of the regulatory norms and

proactively work with the industry, the government and other related industries and

agencies to bring in international best practices.

Use of environmentally sustainable technologies and practices for prevention of

pollution and the continual improvement in environmental performance.

Conserve natural resources and energy by minimizing their consumption and wastage.

Minimise waste generation, enhance recovery and recycling of material and develop Eco-

friendly waste disposal practices.

Building awareness of our work force, customers and Vendors on environment issues.

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Company Structure:

The Pune plant is organized by various Division / Departments. A brief

description about the activities, which are carried out in these Divisions, are mentioned

below:

Automobile Division:

The Automobile Division, which is the Major part of the plant, is engaged in the

machining of many components and assembly of the various aggregates that go into the

final chassis. Some of the important activities of this Division are production of a range of

Engines, Gear Boxes, a variety of Axles, Cabs, Cowls, Propeller Shafts, Mechanical and

Power Steering.

Production Engineering Division:

This Division was one of the few Divisions to start manufacturing activities at the

pimpri works. Here high level of precision technology is employed to manufacture press

tools, Jigs and Fixtures, Gauges, Metal patterns. It has a light and heavy machine shop, a

jig boring room, plastic template shop, wood pattern shop.

The CAD network in the Production Engineering Division has been connected directly to

sophisticated CNC machines so that the Die geometry could be directly downloaded.

Engineering Research Centre:

The Engineering Research Centre employs highly skilled Technicians, Engineers

Scientists, all of who are engaged in design and development of a wide range of

Automobile products.

This Research and Development Centre has a modern styling studio and facilities

for crash tests; wading tests, gradient test and a CAD centre to help their Engineers to

conceive and develop vehicles comparable to International standards.

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Electronics Division:

This division is engaged in producing a wide variety of PLC’s for machine tools,

test rig instrumentation, proximity switches, etc. In addition it has developed a number of

components that are used in their vehicles such as Flashers, Horns, Timers, etc.

Foundry Division:

This division in Chinchwad has the unique distinction of being acclaimed as one

of the cleanest and highly Automated Foundries in the country. This Division produces

high grade thin-walled Grey Iron Casting, SG Iron Castings and Aluminium Castings.

These Casting include Cylinder Blocks, Cylinder Head, Gear Box Housing etc. Tata

Motors also owns a Foundry in Maval Taluka.

Quality Assurance Division:

Quality has always been the Hallmark of Tata Motors products. This Division not

only operates in the field of Primary Inspection, Metallurgy, Metrology, Line Inspection,

and Statistical Quality Control but it is also involved in improving the Quality Standards

of suppliers at their factory sites. Tata Motors has also set up a Quality Aid Centre outside

their pimpri plant to enable suppliers to avail of the expertise developed by Tata Motors.

Car Project (Indica Car Plant):

The green field Tata Indica car Plant was set up in a record time of 31 months at

an expense of Rs. 1800 crores. The company has invested in state-of-the art technology to

enable production of a World- class vehicle. The entire plant has been planned for an

output of 500 cars a day on a two- shift basis at International Productivity levels. The car

plant engages 2100 employees which includes a team of about 275 competent Engineers

involved in various functions like Manufacturing, Quality Audit and Process

Management, Technical and Productivity services, Material Procurement and Vendor

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Development. Indica (which is now available as Indica –V2) has been designed and

manufactured indigenously. It comes in two versions that is Diesel and Petrol.

The Indirect Ignition (IDI) Diesel Vehicle, which boasts of a very high fuel economy are

manufactured in 3 variants:

DL (standard)

DLE (economy)

DLS (with Power Steering) and DLX (Deluxe).

The powerful Multi-point fuel injection (MPFI) petrol engine vehicle is available in the

lei (standard) and LXE (Deluxe) variants. Both the engines meet the stringent Euro II

norms for environment pollution.

Training Division:

This Division trains the fresh entrants in technical trades. It prepares them to meet

new challenges in the area of advanced technologies. It conducts training programs for

operatives and supervisors in technical as well as behavioral areas. This has paid excellent

dividends in terms of building an efficient work force.

Technical and Services:

The Manufacturing Divisions of Tata Motors are supported by other service

functions that ensure the growth and smooth running of their operations. Among these are

the Planning, Construction, Productivity System, Maintenance, Plant Engineering and the

Material Teams. The production facilities technical services are backed by various teams

of professionals in the area of Finance, Personnel, Human Resource Development,

Internal Audit, Medicine and Industrial Health etc.

Community Development:

The company has encouraged its employees to create new employment

opportunities outside Tata Motors by forming industrial co-operatives and voluntary

48

agencies that cater to a variety of Tata Motors needs such as condiments for Canteens,

Stationery Material for office purpose and Uniform for the Employees.

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DEPARTMENT PROFILE:

CONTRACT CELL:

In the year 1997 an internal audit reviewed the process of finalization and

execution of contracts at TATA MOTORS Pune, from the point of control and

compliance of legal requirement, and then they recommended the creation of central

contract cell for having better management control and monitoring legal compliance.

The acceptance of this proposal led to the formation of CONTRACT CELL under MPL

& P Dept.

Which will is responsible for:

i) Registration of new contractors and maintaining data of approved contractors.

ii) Rate negotiation, Raising of Purchase order and certification of bills for Payment.

iii) Co-ordination with contractors and carry out checks as advices by HR for insuring

compliance of requirements of laws/ Acts governing contract workers (i.e. Minimum

Wages, PF, ESI, Contractor Labour act etc.)

The user department & executing agency will be responsible for guiding contract cell on

legal matters and liasoning with Govt. agencies/ court etc.

The contract cell will have two wings

i) Legal wing- responsibilities - registration of new contractors and maintaining

list / data of approved contractors, guide purchase wing/ executing agencies/ contractors

for legal compliance. Carry out checks to ensure legal compliance, preparation of reports

etc.

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ii) Purchase wing- responsibilities – Rate negotiation, selecting contractors, seeking

contractors' committee approval, raising of purchase orders, payment certification and

development of new contractors.

Transportation cell:

This cell works in co-ordination with MPL & P and the contract cell. As clear

from the name this cell is responsible all the third party logistic service required for all

internal, external and other transportation need of TATA MOTORS Pune.

ROLES BY VARIOUS AGENCIES IN TML:

 Executing Agency (EA),

A. Productivity Services Division (PSD) / Technical Services / Industrial

Engineering,

B. Contracts Cell,

C. Contracts Committee,

D. Finance / Shared Services,

E. Human Resources (HR),

F. Security Department / Protection & Intelligence, etc.

G. Administration / PRO

H. Construction Division

I. Legal Cell

J. Safety Department

K. Environment Department

L. Medical / Industrial Health

 

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EXECUTING AGENCY (EA)

 1.     Ensure that the proposed Contractors to execute the job are approved contractor.

2.     The proposed Contractors are regularly showing the compliance records to Contracts

Cell and taking Gate-pass clearance.

3.     The proposed Contractors are having appropriate skills and experience to execute the

job.

4.     The proposed Contractors have adequate and skilled manpower.

5.     The Contractor takes appropriate clearance from Safety Dept before starting the job.

6.     Ensure that the Contractor is trained about the precautions that should be taken by

his Staff as per established and documented ISO-14001 EMS of that Shop.

7.     Ensure that adequate equipment (dumper bins, barrels, containers, crates/plastic bins,

tools, lifting equipment, barrel trolleys, lighting etc.) is provided to Contractor to

enable his staff to follow the necessary ISO-14001 Work Instructions.

8.     Provide the necessary documentation (Scrap Memo, Non-Returnable Gate Pass,

Hazardous Waste Manifest etc.) to the Contractor, to enable his staff to dispose the

wastes resulting from the activity as per the relevant ISO-14001 Work Instructions.

(Environmental Laws)

9.     Inform the Contractor about the possible implications (legal and physical) to TML in

case he violates any of the ISO-14001 Work Instructions.

10.  Take suitable action against Contractor who violates any of the ISO-14001 Work

Instructions.

11.  If applicable, the Contractor should be made aware of his role and responsibility in

the event of an environmental emergency (fire, explosion, heavy leakage/spillage,

pipe burst, tank overflow etc.). i.e. where the impact is NOT ONLY on the persons

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but also on the environment. Necessary training inputs to be arranged by EA

through Environment or Safety as per the nature of the potential emergency.

12.  Ensure that the Contractor follows all safety and fire rules. The Contractor’s

employees are provided with safety equipments.

13.  Ensure that the Contractor is having valid Purchase Order.

14.  Do not allow any Contractor to work without ESI and PF enrolment.

15.  The Employees deployed for work by the contractor posse’s adequate

prequalification required for execution of the work .i.e. an Employee required to

drive a vehicle posses a valid driving license and has permission to drive from

Contractor or a Employee required to welding, gas cutting etc posses the Welders

certificate from ITI or equivalent institute or a Employee required to repair

electrical connection posses Electricians license from the appropriate authority or

equivalent institute.

16.  Ensure that the Contractor have obtained necessary gate-pass clearance from

Contracts Cell in appropriate format. The Executing Agency should authorize the

Contractor to bring appropriate no of employees required to execute the work given

by the EA in the Gate-pass Clearance form only. Visitors Gate-pass should not be

issued to Contractor Employees.

53

17.  Ensure the Contractor displays the Minimum Wages currently paid, Duty hours,

Weekly Off and Wage disbursement day at the site. (Minimum Wages Act,

Factories Act)

18.  Ensure the Contractor’s Employee wears uniform and safety shoes. In absence of the

proper uniform for all employees, the supervisor should not be allowed to start the

work.

a.      Black Trouser, Check half sleeve shirt (any color adopted by Contractor common

for all his employees), Yellow apron (clean and neat) with Name of Contractor on

Back and Front in Red color, Identity Card displayed on right upper pocket of the

apron.

b.     Safety shoes are part of Uniform.

c.      Every supervisor should wear Name Plate

d.     The Identity Card should be appropriately laminated and of standard size having

details of Name of Employer, Name of Employee, Employee ID, date of birth,

Blood group, ESI No, PF no, Address, Identity card size latest photo, Employee and

Employer’s signature, etc. The details on card should be decently printed and with

readable letter font. 

19.  While processing the contract requests, minimum three competitive quotations

should be obtained from capable, competent Contractors by giving proper enquiry

(RFQ) with scope of work with minute details.

20.  Wherever possible and high value contracts should be settled through

e _Procurement.

21.  Instead of small value contracts in large nos., the activities should be clubbed to

reduce on processing cost.  22.  Instead of more no of small Contractors, the work

54

should be given to reputed Contractors, who have similar contracts in other

industries.

23.  Executing Agency should keep record of Contractor wise approximate man-days

utilized.

24.  Service Entry Sheet (SES) should be immediately certified and sent to Shared

Services Department along with Contractor’s Bill.

25.  Executing Agency should keep track of all Contractors working with them of having

obtained the gate-pass clearance for next month by 20 th of earlier month. Incase the

Contractor fails to obtain such clearance EA should prevail upon the Contractor to

do so. Alternatively EA should start looking for alternate Contractor to ensure

uninterrupted work flow.

26.  Executing Agency should ensure legal compliance in line with Contracts Cell of the

Contractors / Equipment manufactures / Franchise / service provider working for

installation / commissioning of the new equipment in their area.

 

PRODUCTIVITY SERVICES DIVISION (PSD) / TECHNICAL SERVICES

 

1.     Repetitive nature jobs are not done through one time (Works Type) contracts. This

will reduce the repetitive estimation.

2.     The Complete scope is spelt out along with Contract request / Service Master

Updating request.

3.     For repetitive type jobs the scope suitable for estimating the job is given and

estimate is put on the Updating form.

4.     Ensure the manpower already allocated to do the job internally is appropriately

deployed some where else.

55

5.     The estimate is appropriately documented and updated in the system immediately.

6.     Repetitive Activity estimate should be periodically reviewed (after 3-5 years) to take

care of process improvements, productivity and revised minimum wages.

7.     While calculating the Minimum Wages PSD should consider cost of Uniform and

Safety Shoes in the estimate.

8.     Wherever the competitive rates (rates evolved out of online negotiation, e_Bidding

or common rates finalized at Mumbai Office) are available and where PSD estimate

is not feasible, the weighted average rate should be entered in the system as PSD

estimate for comparison purpose.

 CONTRACTS CELL

 – Legal Compliance Checking

 1.     The following types of Contractors are expected to work on TML premises.

 

a.      Regular Contractors – These are those Contractors who work on our premises

almost every day for various contracts. Their compliance records should be verified by

Contracts Cell every month.

b.     Service Providers – Those maintaining our Equipments. Contracts Cell should

maintain separate list of such Contractors.

                                                              i.     OEMs – Should submit at least copies of ESI

& PF returns, copy of renewed Workmen Compensation Policy.

                                                            ii.     Authorized Service Agents / sub Contractors /

Franchise of OEMs – should submit details at least once in a quarter.

                                                          iii.     Low frequency Contractors - should submit

details at least once in a quarter or depending upon frequency of their visits.

 

56

2.     Check the details as below for every Contractor every month;

 a.      Minimum Wages – Minimum Wages Act ---- Minimum wages are revised twice a

year by Labour Commissioner effective 1st Jan and 1st July.

 

These revised wages applicable to Engineering Industry should be informed to all

the contractors as soon as the circular is received from the appropriate agency. Contracts

Cell should ensure that the wages paid are as per the Minimum wages under the

appropriate heads like Basic, Spl Allowance, House Rent Allowance, etc.

  Wages should be paid to every Employee by the Contractor on 7 th of the following

month by an account payee cheque. If the wages are paid in cash the disbursement should

be in presence of TML Officer and the endorsement should be taken in Wage Register.

  Arrears of minimum wages should be paid along with next wages after revision in

minimum wages is published by the Labour Commissioner.

 

b.     ESI – Every Employee working on our premises and drawing gross wages less than

Rs 7,500/- per month should be covered under ESI (Employees State Insurance ).

 

Contractor should enroll the Employee before deploying to work on TML

premises and write the ESI no on the Employee’s Identity card as well as Gate-pass

clearance request. The Contractor should deduct 1.75% of the gross wages (Basic + Spl

Allowance + HRA + OT). The total contribution 6.5% of gross wages (Employee’s

contribution 1.75% deducted and 4.75% Contractors’ contribution) should be deposited

with ESI authorities latest by 21st of the month. The acknowledged Challan photo copy

should be submitted to Contracts Cell.

57

  ESI returns must be filed by the Contractor every six months before 12 th May for

the period 1st October to 31st March and before 11th November for the period 1st April to

30th September. The photo copy of acknowledged ESI Return must be submitted to

Contracts Cell immediately.

 

ESI contribution should be deducted on the arrears paid and deposited

immediately with the authorities.

 In absence of the above compliances the Contractor may not be issued gate-pass

clearance.

 c.      Employees drawing gross wages more than Rs 7,500/- per month should be covered

under Workmen Compensation Policy from any Nationalized Insurance Company or

equivalent. The valid policy document should be submitted to Contracts Cell time to time.

The Policy no and Validity date should be mentioned on the Identity Card and gate-pass

clearance request.

d.     PF – Provident Fund Act -----.  The Contractor should deduct 12% of Basic + Spl

Allowance from the wages of every Employee every month. The Contribution deducted

(12%), Employers Contribution (12%) and processing fees of 1.61% totaling to 25.61%

of Basic + Special Allowance should be deposited latest by 15th of the month with

appropriate authorities. The details of account wise deposit as below properly specified in

12A3A Challan as below;

The photo copy of acknowledged PF Challan and 12A3A Challan should be deposited to

Contracts Cell every month.  PF returns must be filed by the Contractor every year before

11th April for the period 1st March to 28th / 29th February. The photo copy of

acknowledged PF Return must be submitted to Contracts Cell immediately.

58

PF contribution should be deducted on the arrears paid and deposited immediately

with the authorities.

 In absence of the above compliances the Contractor may not be issued gate-pass

clearance.

 e.      Contract Labour License - The Contractor should obtain establishment wise

separate Contract Labour License as soon as the no of employees exceed 20 and renew it

every year. For renewal the contractor should submit the application latest by 31st

October and submit the acknowledged copy to Contracts Cell immediately. Contractor

must obtain the renewed license latest by 31st December and submit two photo copies to

Contracts Cell immediately.

 In absence of the above compliance the Contractor may not be issued gate-pass

clearance.

 f.       Ensure that Contractor maintains Wage Register, Wage Muster, PF Register (for),

ESI Register (form), Advances Register in appropriate format and updated periodically.

g.      Contract Employee should have completed 18 years of age and should not be in

service after completion of 60 years of age. The Contractor should keep photo copy of

birth date certificate / school leaving certificate / board / university certificate as an

evidence on every site and produce the same on demand to TML Officer for inspection.

h.      Professional Tax Payment –

i.       Labour Welfare Fund payments –

j.       The Contractor should pay wages to their employees on site and on fixed working

day. The wages should be paid by cheque or by cash in presence of Principle Employer.

The Officer (from Principle Employer) witnessing the wage distribution (in cash) should

endorse the Wage Register.

59

k.      The Contractor should pay wages to all the Employees for three National Holidays

(26th January, 1st May and 15th August).

l.       The wages declared by Labour Commissioner are for the month. Daily wages

should be equally distributed over the days in the calendar month.

m.    In absence of the compliance by the Contractor, Contracts Cell may advise Shared

Services to stop all payments to the Contractor with immediate effect and block the

Vendor temporarily or permanently.

   

CONTRACTS CELL – Service Master Updating

 

1.     The service Master is properly maintained. The title (Short Text - 40 Character long)

of the Service / Activity is appropriately worded (Action + Object + Condition).

2.     The Complete and elaborative scope is updated in the system.

3.     Ensure Unit of Measure for the activity is carefully selected and included in the title

as well as scope.

4.     The scope of Work is with minute details and is updated in Long Text of the

Service / Activity.

 

CONTRACTS CELL – Contract Request Processing

 1.     Contracts Cell will receive the Requests, study and process based on PSD estimate

as guideline cost.

2.     Contracts Cell will ensure that all Purchase rules are followed:

 a.      Minimum three quotations are attached by the Executing Agency.

b.     The quoted rates are properly entered in the system and the comparison is

appropriate.

60

c.      Appropriate justification is given for the single quotation requests and for the cases

settled by off-line negotiation.

d.     Encourage Executing Agency for settling the prices through e _procurement.

 

 

CONTRACTS CELL – New Contractor Approval

 

Contracts Cell should verify the following documents of Contractor before approval:

 

1.     Establishment registration photo copy. Type of organization, name of Proprietor,

name and address of Partners, Directors. Copy of registered Partnership Deed,

registration with Registrar of Industries.

2.     Photo copy of ESI, PF code allotment letter.

3.     Photo copies of contribution payment Challan of last 7-8 months for ESI & PF and

latest Returns to asses the timely payments to these authorities.

4.     Photo copy of Latest inspection report by ESI & PF authorities.

5.     Contractor should execute a bond indemnifying Tata Motors Ltd as a principle

employer for any defaulted payments and assurance from the proposed Contractor

to rotate their employees in others Industries for similar contracts. Contractor should

not delay the Employee wages, payments to ESI & PF authorities, irrespective of

delay in payments by Tata Motors Limited for the work completed.

6.     List of customers and jobs executed by the Contractor.

7.     Use of computerization for Legal documentation, quotations and Billing system.

8.     Relation declaration by Contractor that, “The Proprietor / Partners / Directors /

Beneficiaries do / do not have relatives working with Tata Motors Ltd”.

61

ADMINISTRATION:

 Administration Department will follow similar steps as Contracts Cell for legal

compliance for Employee Transport Contractors.

 CONSTRUCTION DIVISION:

 Construction Division will follow similar steps as Contracts Cell for legal compliance for

Construction Contractors and their sub Contractors.

CONTRACTS COMMITTEE

 Contracts Committee should arrange meetings of the members periodically and issue

guide lines to improve the approval process.

FINANCE / SHARED SERVICES

 Ensure timely payment for services. The Payments should be released on priority to the

Contractors who are doing perennial nature of jobs.

 LEGAL CELL

 Legal Cell should publish amendments to this documents based on the periodic reviews

of changes / amendments in Government rules and rulings given by the court orders

related to Contract Labour.

 HUMAN RESOURCES (HR)

 Collect data required for application to renew registration of Tata Motors Ltd with labour

office. Application should reach to the labour office every year before end March.  HR to

ensure renewal by 1st April.

 SECURITY DEPARTMENT / PROTECTION & INTELLIGENCE

 Security should not allow any Contractor Employee to enter our premises without valid

gate-pass clearance from Contracts Cell. No Contractor Employee should be allowed

against visitor’s gate-pass. Audit check should be conducted for laminated Identity Cards,

62

uniform, ESI, PF and or valid Workmen Compensation Policy of Contractor Employee

entering our premises.

Security should also conduct audit checks for fire hazard at work place.

Contractor Supervisors and Contractor’s marketing personnel are required to visit many

agencies for follow-up, work estimates, marketing and commercial matters. To reduce the

travel time and fatigue Contractors insist up on Vehicle passes to their Employees.

Security Department should give separate vehicle passes to Contractor Employees against

recommendation from EA, valid driving license of the Employee and undertaking by the

Contractor that the traffic rules will be strictly observed. The undertaking should clearly

indicate that, in case of any lapses by the user the fine decided by the Security is

acceptable and the Contractor will honor the debit note in this regard. In case any lapse is

observed by the Security, the concerned Security officer should withdraw the facility

given and advise Shared Services to debit amount which Security feels appropriate

depending up on the severity of the lapse.     

 SAFETY DEPARTMENT

 Audit checks to be conducted periodically to ensure safe practices followed and use of

approved equipments by the Contractors.

Safety departments should check and approve the Equipments used by Contractor.

Conduct training sessions for Contractor Employees for safe working practices. 

 ENVIRONMENT DIVISION

1.     In co-ordination with Executing Agency (EA), ensure that training sessions are

conducted for the Contractor and his staff periodically, with emphasis on the

environmental issues associated with that particular activity.

63

2.      Ensure that Audits are carried out on Contractor’s Working Area specifically during

weekly-off working and shut down maintenance period. Feedback of such Audits to be

given to Executing Agency (EA) for review and improvement.

3.     Report EMS violations observed during such Audits to Top Management for review

and improvement across all areas.

4.     Assess and highlight resource/infrastructure shortfalls and requirements to Top

Management, in the absence of which, the Contractor cannot ensure adequate control over

the harmful environmental impacts

 MEDICAL DEPARTMENT / Industrial Health :

The first-aid facilities shall be provided.

Rest Room – In every place wherein the contract labour are required to halt at night in

connection with working of establishment in which employment of contract labour is

likely to continue for three months or more shall provide and maintain rest room or other

suitable alternative accommodation.

Separate rooms shall be provided for women employees

64

Research Methodology

Research Methodology is a way to systematically solve the research problem. It

may be Understood as a science of studying how research is done scientifically. It is also

stated as A careful investigation or inquiry especially through search for new facts in any

branch of knowledge.

Research Methodology explained by Redman and Mory are as follows

systematized effort to gain new knowledge Research Methodology is original

contribution to the existing stock of knowledge making for its advancement. It is the

purist of truth with the help of study. Observation, comparison, and experiment. In short

also covers the Systematic method of finding solution to a problem is research. It also

covers the Systematic approach concerning generalization and the formulation of the

theory. Different stages involved in research consists of enacting the problem,

formulating a hypothesis, collecting the facts or data, analyzing the facts and reaching

certain conclusion either in the form of solution towards the concerned problem or in

generalization for some theoretical formulation. We can say that research methodology

has many dimensions and research methods do constitute a part of the research

methodology. The study of research methodology gives the student the necessary training

in gathering materials required, and also training in technique for the collection of data

appropriate to particular problem. It helps in the use of statistics, questionnaire and

controlled experimentation and in recording evidences, sorting it out and interpreting it.

Knowledge of research Methodology is helpful in various fields. Research methodology

plays key role in project work. It consists of series of actions or steps necessary to

effectively carry out Research and the desired sequencing of these steps.

In Research Methodology mainly Data plays an important role.

65

The Data is divided in two parts:

a) Primary Data.

b) Secondary Data.

Primary is the data, which is collected directly by direct personal interview, interview,

indirect oral investigation, these are collected afresh and for the first time, and thus

happens to be original in character.

Secondary is the data, which is collected from the various books, magazine and material,

reports, etc. The data that have already been collected by someone else and which have

already been passed through the statistical process.

Unless the data is collected no project can be complete. So both these data is very

important in the project.

As the nature of work done by some vendors for some agencies were different for other

vendors who served some other needs of some other user agencies

After consulting with concerned authorities most suitable and common evaluation

parameters for most of the vendors, and most suitable weightages for these various

parameter decided.

As no related INPUT data is readily available, it has to be extracted from the company

data base using the SAP program. So the complete project is work on PRIMARY DATA.

This data is then suitably filtered and converted into a meaningful information, For the

user agencies to fill their markings.

It is shown in the section explaining the process of evaluation below

66

RESEARCH INSTRUMENT

The research instrument used here is structured tabulated questionnaires.

The questionnaire are of following types.

i. Closed ended: These are the questions that specify all the possible answers

that are easy to tabulate & interpret. Further sub-types used are

a. Dichotomous questions: These are the questions with only 2 possible

answers.

b. Multiple choice questions: These are the questions with more than 3

or more answers.

c. Rating scale: It is a scale that rates some attribute from poor to

excellent

ii. Open ended: These type questions allow respondents to answer in their own

words & often reveal about how people think. They are especially useful in

exploratory research where researcher is looking for insight into how people

think rather than how many people think in a certain way. The sub-types used

are

a. Unstructured questions: Respondents can answer in unlimited no. of

ways.

b. Word association: Respondents mention what comes to their mind

when the hear the brand name

11.4 SAMPLING

Sample is small group taken under consideration from total customer population. This

small group represents the total population.

67

In this project the sample are the those who come in direct contact with the vendor and is

know about their performance.

68

Aims and Objectives of the study:

Evaluate the vendors and transporters, to improve their performance.

To assist vendor rationalization.

To help in vendor development.

To find the major vendors

To highlight the expectation of the user agencies from the vendors and transporters.

To point out the underperforming vendors and find if they have some substitutes.

To study the working of CONTRACT CELL

69

INTRODUCTION

According to the SHE policy i.e. Safety, Health and Environment policy followed

by TATA MOTORS Pune, and OSHAS it is mandatory to annually rate the Vendors

(Labour contractors and transporters), on their performance, safety, efficiency, legal

compliance etc.

Importance of topic:

This project aims at evaluating labour contractors and transporters for the period

of 2005-06 and 2006-07,

Based on the results ,analysis and findings of this project a meeting with the

labour contractors and transporters will be held and where the management of TATA

MOTORS PUNE will discuss the issues of labour contractors and transporters to improve

their performance and those who have very poor rating will be eliminated from the

company’s Approved vendor list. The good performers who have the capacity to expand

will be helped in their development.

70

PROCESS OF THE CONTRACTORS’ EVALUATION

The contractors are to be evaluated by those executive agencies that use or had used their

services. They are evaluated on eight parameters mentioned below.

Table: 1

Sr no.  

Vendor Code

Vendor Name  

Sum of P O Value  

Technical Knowledge capacity 10

Workmanship / Labour quality tools available 12

Commitment/ fulfillment of schedule 12

Communication 5

Response /Flexibility in emergency 5

Safety practices followed, accident cases description 10

shortage of men if any 3

observance of various laws 8

SUB TOTAL 65

%  

PART OF TOTAL BUSINESS  

PSD

1. response to Negotiation (5)

2. Transparency/Punctuality (5) 10

Contracts Cell

1. Legal compliance (17)

25

71

2. Commercial matters (8)

Grand Total 100

Table: 2

FULL

MARKS CRITERION

Pers.

rsp. int.SAFETY

PRECAUTION 15.00

1.FREQUENCY RATE & sevierty rate2.

previous accident records in TML,3

conditions of equipments & vehicles 4.

safety audit result & recommendations by

safety dept

External

number COMMITMENT 15.00

fulfillment of schedules, communication &

flexibilities in emergencies

Pers.

rsp. ext. WORKMANSHIP 20.00

Labour , Quality, Tools ,supervision,

Technical knowledge, Capability

Location DESCIPLINE 10.00 adherence to various laws

72

The rating of some agencies were extracted from the system had a different format

which was proportionately converted into the required form, the available form in the

service entry sheet is as below.

Each of the above parameters is given a Weightage depending on the importance

of the parameter. The data about the vendors is collected from the SAP system. By

running a query for the all the purchase orders that were passed during the period 2005-06

& 2006-07. And were valid in that period.

The following figures show the images of the said process.

Figure 1 SAP, the figure shows the codes of the purchase group are entered to extract

the transactions done by them.

73

Figure 2 SAP, the figure

shows the codes of the vendors

are entered to extract the

transactions done with them.

Figure 3 SAP, the figure

shows the document dates /

period are entered to extract

the transactions done during

that period.

Figure 4 SAP, the figure

shows the data extracted.

74

The data thus obtained was

converted into an excel

work book.

This figure 5 represents a

part(because of the huge

size) of that data

The DATA obtained is very detailed so the unnecessary data is eliminated.

The following details are required.

1. Vendor codes.

2. Vendor Names.

3. Executive agencies.

4. Amount of PURCHASE ORDER.

Figure: 6

75

Two Tables are made with the obtained data.

1. Vendor based table- this is made for the final representation of the Results.

2. Executive agency based table- this is made so that it become convenient for the

agencies to locate and fill their marks.

Sample of both the tables are given below.

Vendor based

table Figure:7

Executive

agency

based table

figure 8

76

The data which is collected is converted into the Vendor based table using the

Pivot table. Function.

The obtained DATA is averaged for each parameter for each vendor, and then the

data is represented in the consolidated form in a descending order based on the amount of

the total business done by each vendor.

Figure: 9

the final

DATA looks

like the

following.

Figure: 10

77

till this stage the data obtained is out of 65, further the vendors is evaluated by the

contract cell for 20 marks, and out of 15 by the PSD(work and time study department).

The vendors are graded based on their score out of 100.

Table 5-

85 & ABOVE Good A GRADE

75 – 84.99Must

improveB GRADE

50 - 74.99 Poor C GRADE

BELOW 50 Very Poor D GRADE

Depending on the grades action is taken, the exercise of vendor rationalizations is done.

e ANALYSIS of the compiled data gives the following information about the

performance of the contractors.

Chart 1

portion in total business

9%

8%

7%

6%

5%3%3%3%

2%2%

2%2%

2%2%

1%

1%1%1%

1%1%

1%1%1%1%1%1%1%1%1%1%1%1%1%1%1%1%1%1%1%1%1%1%1%1%1%1%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%

BVG INDIA LTD

TATA ELXSI LIMITED

SHAPOORJI PALLONJI & CO L

SAI ENTERPRISES

TRIMURTY INDUSTRIAL CO-OP

ARMED FORCES EXOFF MULTISERVICE COO

S H VISHNOI

MAKS INDIA

CHAITANYA EMPLOYEES IND CO-OP SOCIE

SMART PROCESSORS

AREVA T & D INDIA LTD

S R ENGG & ELECTRICAL WORKS

BHARAT VIKAS PRATISHTHAN

NAVNATH AND CO

AUTOCREATES (INDIA) PVT LTD

MULTI ENGINEERING SERVICE

DECENT DECORATORS

MAYUR ENGINEERS

IBM INDIA PVT LTD

ARMED FORCES EXOFF MULTIS

SONALI ENTERPRISES

VOLT-AGE ENGINEERING CO

KHADILKAR FABRICATORS

PRATIBHA ELECTRICALS

S3 LOGISTICS

SUREKHA ENVIRONMENTAL CONSULTANTS

DAS CONSTRUCTION PROJECT

KUNHU & SONS

KALOKHE TRANSPORT

VOLTAS LTD

78

The above figure shows the part of the total out sourced business done by each vendor,

we absorb that there are numerous small vendors working for TATA MOTORS Pune, and

thus it can be a difficult task for the company to manage them. So, those vendors who do

not serve uniquely to some requirement, and if their performance rating is also poor, their

elimination from company’s approved vendors’ list can be given a serious thought, as a

part of vendor rationalization exercise, whose benefits are already explained in the theory

section.

More over, from the report it is noticed that 20% vendors did 82 % of the total business,

which gives strong signals that at this stage VENDOR RATIONALISATION is

necessary.

chart: 2

Bar graph representing the Grades obtained by the vendors.

79

numbers of vendors

40

101

54

10

20

40

60

80

100

120

> 85% 75-84.99% 50-74.99 % <50 %

SATISFACTORILY GOOD MUST IMPROVE POOR VERY POOR

GRADE A GRADE B GRADE C GRADE D

numbers of vendors

The above figures Proves the necessity of VENDOR RATIONALISATION, as we can

clearly see that 55 vendors out of 196 evaluated vendors are underperforming.

The chart displayed below gives a visual of the percentage of total evaluated vendors

falling under different category

chart: 3

The figure below represents the distribution of the marks percentage obtained by different

vendors.

chart: 4

pecentage

0

20

40

60

80

100

120

%

80

20%

51%

28%

1%

GRADE A SATISFACTORILY GOOD > 85%

GRADE B MUST IMPROVE 75-84.99%

GRADE C POOR 50-74.99 %

GRADE D VERY POOR <50 %

chart: 5

average of all parties

0.00 2.00 4.00 6.00 8.00 10.00 12.00 14.00

Technical Knowledge capacity

Workmanship/Labour quaity toolsavailable

Commitment/ fulfilment ofschedule

Communication

Response /Flexibility in emergency

Safety practices followed,accidentcases discription

shortage of men if any

observance of various laws

parameters

marks

marks obtained

full marks

The above figure represents in general the over all satisfactory or unsatisfactory level of

the executive agencies , in various areas.

The figure shows there is need to develop the vendors to improve their performance

equally in all the eight areas.

81

PROCESS OF EVALUATION OF TRANSPORTERS:

Different executing agencies use the services of transporters in different routes, for

different type of logistics need to and from all over India.

So each transporters are evaluated for each time separately for each route even if they

serve only one executive agency.

Thus a suitable format as shown below, showing the

Chart: 6

parameters of evaluation and weightage points are as follows.

Vendor code

Vendor Name

Executing Agency

E A -CVBU

ROUTE

82

Table :3

  Vendor

  Vendor Name  

PA

RA

ME

TE

RS

FO

R E

VA

LU

AT

ION

OF

TR

AN

SP

OR

TE

RS

BY

EX

EC

UT

IVE

AG

EN

CY

FO

R 2

005-

2006

Executing Agency

E A -CVBU 

ROUTE  

WEIGHTAG

E POINTS

TIMELY PLACEENT OF VEHICLE FOR

COLLECTION / DELIVERY5

OBSERVING SAFETY WHILE LOADING /

UNLOADING 10

MAINTAINING TRANSIT TIME AGREED 10

SAFE TRANSPORTATION W/O DAMAGE /

ACCIDENT10

COMPLIANCE OF TRANSPORT RULES

AS PER RTO & CMVR NORMS (viz. PUC,

Licence, Permit, RCTC, Insurance, First Aid

Box,& TREM Card, Valid explosive Licence,

Fire Fighting Cylinder, Spark Arrestor for

exhaust for vehicle carrying petroleum

products.)

5

SUBMISSION OF MCF IN TIME 5

83

MAINTAINING DISCIPLINE WITHIN

COMPANY PREMISES AND COMPLYING

WITH DOCUMENTATION FORMALITIES

5

ACTUAL EVALUATION POINTS OF THE

PARTY OUT OF TOTAL 50 POINTS T1/50

PA

RA

ME

TE

RS

FO

R E

VA

LU

AT

ION

OF

TR

AN

SP

OR

TE

RS

BY

MP

L &

P F

OR

200

4-

2005

TIMELY PLACEENT OF VEHICLE FOR

COLLECTION / DELIVERY5

PROVIDING VEHICLE TRACKIG (E_MAIL

/ TELEPHONE)10

MAINTAINING TRANSIT TIME AGREED 10

SAFE TRANSPORTATION W/O DAMAGE /

ACCIDENT10

FLEXIBILITY & TIMELY RESPONSE 10

MAINTAINING DISCIPLINE WITHIN

COMPANY PREMISES AND COMPLYING

WITH DOCUMENTATION FORMALITIES

5

ACTUAL EVALUATION POINTS OF THE

PARTY OUT OF TOTAL 50 POINTST2/50

CUMULATIVE AVERAGE

GRAND

TOTAL

(T1+T2)

RATING RATING

84

The partial result and analysis of the transporters evaluation is as follows

Table: 4

Ven

dor

Nam

e

TIM

EL

Y P

LA

CE

EN

T O

F V

EH

ICL

E F

OR

CO

LL

EC

TIO

N

/ D

EL

IVE

RY

OB

SE

RV

ING

SA

FE

TY

WH

ILE

LO

AD

ING

/ U

NL

OA

DIN

G

MA

INT

AIN

ING

TR

AN

SIT

TIM

E A

GR

EE

D

SA

FE

TR

AN

SP

OR

T S

AF

E T

RA

NS

PO

RT

AT

ION

W/O

CO

MP

LIA

NC

E O

F T

RA

NS

PO

RT

RU

LE

S A

S P

ER

RT

O &

SU

BM

ISS

ION

OF

MC

F I

N T

IME

MA

INT

AIN

ING

DIS

CIP

LIN

E W

ITH

IN C

OM

PA

NY

PR

EM

ISE

S A

ND

CO

MP

LY

ING

WIT

H D

OC

UM

EN

TA

TIO

N

AC

TU

AL

EV

AL

UA

TIO

N P

OIN

TS

OF

TH

E P

AR

TY

OU

T

OF

T

OT

AL

5

0 P

OIN

TS

REACH CARGO MOVERS 4.00 7.25 7.50 7.00 3.00 3.00 3.00 34.75

SOUTH EASTERN

CORPORATION P LTD3.00 8.00 8.00 8.00 4.00 3.00 4.00 38.00

SATISH CARGO MVOERS 4.00 8.00 8.00 7.00 4.00 4.00 4.00 39.00

COMMERCIAL

CARRIERS P LTD3.00 7.00 8.00 7.00 3.00 4.00 4.00 36.00

BEST ROADWAYS 3.00 7.00 6.00 6.00 3.00 3.00 3.00 31.00

KAILASH TANSPORT 2.60 6.60 7.60 7.60 3.80 3.40 3.20 34.80

KALE'S GOODS

CARRIERS4.00 8.00 7.00 8.50 4.50 4.50 4.50 41.00

KGC LOGISTICS 4.00 8.00 8.00 8.00 4.00 4.00 3.00 39.00

MARUTI FREIGHT

MOVERS4.00 7.00 7.00 7.00 4.00 3.00 4.00 36.00

ASSOCIATED ROAD

CARRIERS3.00 6.00 5.00 6.00 3.00 3.00 4.00 30.00

85

SACHIN

ROADLINES3.00 7.25 6.75 6.50 4.00 3.25 4.00 34.75

STEEL TRADE

INTERNATIONAL4.00 8.00 7.00 8.00 4.00 4.00 3.00 38.00

COMMERCIAL

CARRIERS4.00 7.00 6.00 2.00 3.00 3.00 3.00 28.00

SATISH CARGO MOVERS 3.00 6.00 6.00 6.00 4.00 4.00 4.00 33.00

G. J. LOGISTICS 3.00 7.00 7.00 7.00 3.00 3.00 3.00 33.00

PENOSH TRANSPORT 4.00 6.00 7.00 6.00 3.00 3.00 3.00 32.00

SILVER ROAD LINES 3.00 5.00 5.00 5.00 3.00 3.00 3.00 27.00

Figure below shows the grade obtained by the transporters:

chart: 7

0

2

4

6

8

10

12

14

16

A GRADE B GRADE C GRADE D GRADE

86

Figure below shows the percentage marks obtained by the transporters.

chart: 8

PERCENTAGE

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

90.00

PERCENTAGE

For grade information refferTable 5

chart: 9

5.00

10.00

10.00

10.00

5.00

5.00

5.00

3.56

6.96

6.86

6.71

3.62

3.51

3.54

0.00 2.00 4.00 6.00 8.00 10.00 12.00

marks obtained 3.56 6.96 6.86 6.71 3.62 3.51 3.54

fullmarks 5.00 10.00 10.00 10.00 5.00 5.00 5.00

TIMELY PLACEENT OF VEHICLE FOR COLLECTION

OBSERVING SAFETY WHILE

LOADING / UNLOADING

MAINTAINING TRANSIT TIME

AGREED

SAFE TRANSPORTATI

ON W/O DAMAGE / ACCIDENT

COMPLIANCE OF TRANSPORT

RULES AS PER RTO & CMVR

SUBMISSION OF MCF IN TIME

MAINTAINING DISCIPLINE

WITHIN COMPANY

87

The above graph points out those areas where the user agency is generally unsatisfied or

generally highly satisfied.

It indicates the following three areas need more improvement.

OBSERVING SAFETY WHILE LOADING / UNLOADING

MAINTAINING TRANSIT TIME AGREED

SAFE TRANSPORTATION W/O DAMAGE / ACCIDENT

88

COMMENTS BY THE EXECUTING AGENCIES ON VENDORS, VENDOR

RATING AND VENDOR RATIONALIZATION .

1. most of the vendors working in Tata motors have tere god father here in TATA

MOTORS on in politics , so no vendor rationalization can actually help, till such a

system exists.

2. the company is in more need of the vendors than vice versa.

3. if a vendor was not good how and why did it get selected by TML.

4. Vendors pay more attention the big orders, and are negligent about small order.(so

in this evaluation to have a fair picture equal Weightage is given even to small

user group)

5. vendors have become choosy they don’t accept jobs of complex nature or jobs

with lesser margin.

6. the payment process of Tata motors is very discouraging for the vendors.

7. manual process of PO generation and payment was faster than the present

computerized form.

8. the sap has no provision to inform the status of PO.

COMMENT OF THE CONTRACT CELL.

1. the vendors repeatedly so mistakes in filling and submitting the required

documents.

2. the user agency is also not completely aware of the generating RFQ and PO,

if the documents are complete, and all requirements are met correctly, lesser work

will be wasted for rework thus the process of CONTRACT CELL can be much

faster.

89

SUGGESTION AND RECOMMENDATION.

There should not be gap between the planned and action, the previous hindrances

in vendor rationalization must be recognized and overcome.

The user agency must be encouraged to fill in their feedback in the system so that

those errors in evaluation due to recentivity may be reduced. This will also delay

due to the time wasted in data collection.

The contract cell should have the authority to access the evaluation data form the

system, this will reduce the dependency on other departments which will reduce

the analysis time.

90

BIBLIOGRAPHY:

www.TataMotors.com

www.google.com

o http://tata.com/tata_motors/media/20060811.htm

o www.icmr.icfi.org/casestudies/catalouge/operations/OPEA003.htm

o http://www.thehindubusinessline.com/2003/06/10/stories/

2003061002010200.htm

o http://tata.com/tata_motors/media/20060223_vendors.htm

o http://web.uct.ac.za/depts/aims2/purchasing.htm

The Financial Express-February 23, 2006.

The Economic Times- August 11, 2006.

Material And Logistics Management—Prof L C Jhamb.

Manufacturing And Operation Management- Prof. L C Jhamb

Production And Operation Management (Third Edition) –S N Charry

Process Manuals And Internal Circulars Of Tata Motors, Pune.

*Note- the analysis done in this project report represents the conclusions derieved from partial data, this

is so as not to disclose the internal data of TATAMOTORS, PUNE, as this analysis is for the present year

(05-06 and 06-07)

The final and complete results were submitted to the company , after which the certificate was

awarded.

Thankyou!

91

92