Agglomeration

Agglomeration means a mass or collection of things
In economics it is used to refer to the phenomenon of forms being located close to one another i.e. clusters of population or business activity if all the suppliers are near the manufacturing plant it can help increase productivity, decrease transportation cost, don't have to worry about environmental factors(like what happened to Toyota when they were hit by an earthquake they had to stop there production for a month if all their suppliers were nearby they wouldn't had to stop there production) Tata also used agglomeration with there nano production plant, all the suppliers were in there nearby vicinity because of which they were able to cut the cost by a lot, they also didn't had to pay a lot for stocking their inventory, they asked the suppliers to prepare the materials/parts and keep it in stock when ever Tata required any of it they would just simply tell them to deliver it, this was one of the factors that helped them decrease the cost of Tata nano.

Credit - nber.org, Wikipedia, study.com