The Honda Manufacturing company, a leaping titan in automotive manufacturing, has been in existence since 1948. It was a strong effort of two engineers: Soichiro Honda and Takeo Fujisawa, which led to its growth and illustriousness. Being a lover of racing, Mr. Honda dreamt of a company that would be a mainstay during the chaos after World War II. His adventurous personality and inventiveness spearheaded the birth of the Honda company. His initial plan was to improve the methods used in the manufacture of pistons. Used to think about enhanced, cost-effective ways of manufacturing piston rings. He established a little business, and before long, he began producing. He was very enthusiastic about delivering to the public an inexpensive way of hauling merchandise, notwithstanding their location. He started small by constructing unadorned motorcycles, reckoning one built-in 1949 commonly known as the D-Type Dream. Consequently, his Company converged its focus on the manufacture of better and efficient equipment.

Although met by various hindrances in the past, Honda Motor Company cruised through the formally unexplored sea of motorcycle-making to conquer the title of the world’s biggest motorcycle manufacturer. Following the dissolution of World War II, the first motorcycle built by Honda had anxiously been waited for due to the significant shortage of gasoline and the high public demand for available transportation. Honda created two-stroke engine bikes to curb the urgent need for a transport mechanism in a bid to solve problems for himself and others. By October 1946, his trivial garage in Hamamatsu was developing complete, makeshift motorized bikes with patented cycle mounts. Limited access to petrol gave rise to Honda’s modified vehicles, which ran on Turpentine, a self-purified fuel that he annexed from pine plants. Nevertheless, Turpentine was proven unfit for driving motorbikes, due to the need for vigorous pedaling to warm the locomotive up to an appropriate level before the vehicle could operate. Nonetheless, the Company sold a number of its cars to its eager clients.

Currently, the Company has leaped to greater heights, still focusing its attention on the client needs, the cost of production, the cost of distribution, the logistics involved, and the most optimal guidelines to enhance output and performance.

Does Value Stream Mapping offer valuable guidance in the quest of HONDA to become more productive and to increase responsiveness to customer demand?

2. Executive Summary

Discussion about supply chain and logistics may be constant when initiated. Nevertheless, this report has tried to explore the value stream mapping concept, seeking to promote Honda Company objectives to be more productive and more responsive to customer demands. Theoretically, the report has focused on the following significant areas: supply chain processes and logistics, operations and performance, integration consideration, and value chain generation. This collection of concepts will highlight essential tactics that should surface in the area of valuation, warehousing, hauling, and production. As each adds up, fostering efficient supply-chain processes is inexorable. This report incorporates essential collective knowledge, which pursues to ideally create an undisputable margin of success between the Honda Company and other companies globally, in regards to the concept of supply-chain management.

3. Introduction

3.1. Industry background

Considered as one of the leaping giants in Motor Vehicle production, Honda Manufacturing company has been in existence since 1948. It was a brain-child of two engineers: Soichiro Honda and Takeo Fujisawa. For the love of racing, Mr. Honda’s dreamer personality and creativity saw the birth of the Honda company. He always thought of better ways of manufacturing engines, and with the help of his coadjutor, they began building. Mr. Honda was very enthusiastic about developing an inexpensive way of transporting goods irrespective of their location. This led them to focus on constructing simple motorcycles. He also made efforts towards the publicity of racing machines. Because of this, his Company creates better and quicker machinery, including race-bike cylinders, which come in different dimensions.

Honda started as a motorcycle producer, but by 1964, it had begun manufacturing cars. By 1991, Honda had extended its production wings worldwide. When they began car manufacturing, their first cars were small minivans and a one of a kind chain-driven sports vehicle, run by powerful four racing tube machines and an equivalent number of carburetors.

Several years after they started producing cars, Honda began to build better and more efficient household wagons. Nowadays, Honda remains recognized for being keen on creating fuel-effective cars that are helpfully economical and also are of better ecological value. During the span of 1970s, Honda started to get out of the small and low-level car production and started focusing on building a better model, the Accord. Since then, Honda remained on-course, handling the various needs of its clients by continuing the unabated manufacture of SUVs and vans alongside cars. Currently, the corporation endures making better the Honda Accord and Honda Civic.

3.2. Organization background

Now, the Company has its headquarters in Tokyo, Japan. Nevertheless, it still provides worldwide service. It has over 450 subsidiaries and affiliates who are accounted for under its equity. The Company is not only limited to automobile production but also mechanical water pumps, lawn and agricultural equipment, jet-powering machinery, thin-film solar cells, and even robotics. In the recent past, the Company has surfaced among the leading automotive manufacturers around the globe.

4. Supply Chain Process Cycles

This cycle is essential to create a visual image of the production process and supply chain. It also shows a change in the organizational structure of a company to a newer kind of connectivity of processes. A value stream process links the processes involved in the manufacture of products to customers. This creates a new form of efficiency. It creates a shift from the system efficiency perspective to a more consumer-based efficiency perspective.

Honda’s supply chain is based on a client-centered perspective. The core business of Honda is to create a better producer to the consumer communication channel, to increase productivity. Each of its supply chain management units is based on this point of view. Below is a summarized highlight of the broad perspective of a visualized supply chain management unit of Honda:

4.1. Client Gratification:

The belief is established on the opinion that by trading with us, Honda’s dealers are indirectly selling their merchandise to our clients through us. Honda envisions that client gratification is increased through an equal dealer assurance. To attain consumer contentment, Honda needs to consider the effectiveness of their dealers.

4.2. Quality:

In a bid to ensure client gratification, quality is the utmost significant feature. Honda regards upholding excellence during creation and all through the manufacturing procedure. Superiority is safeguarded by all dealers and every employee at every level of production and delivery. This keenness to detail is crucial in the progressive excellence from the highest organizational hierarchy to the least.

4.3. Cost:

Increased competition between manufacturers has led to a cost-benefit analysis eagle-eye; thus, Honda is pertinacious to supply yields at an unexceptional market price and worth for the money. Dealers are likely to earn gradings in terms of supplemented output and combined with hard work, with Honda focusing on value manufacturing and exploration. Honda will rate dealers for their raw corporeal so that they can adjust the cost incurred in each little amount of effort, which is put into making a different replica of the automobile.

5. Operations and Performance

5.1. Outsourcing of parts

Many parts used in production at Honda are usually sourced from other manufacturers who transport them to their plants. Afterward, the segments are integrated into the Company’s merchandise, after which the finished models are dispatched directly from the plants to suppliers. Moreover, some parts can be shipped between plants, and other parts that require servicing and refurbishing are sent to dealers. The large scope of transportation involved during moving of parts and products throughout the manufacturing process at Honda, critical issues that arise include enhancing productivity, increasing eco-friendliness, cost-effective compliance, and risk management in logistics.

5.2. Revolutionary technology

Honda’s central design viewpoint tries to augment liberty and luxury for people through diminishing the space taken by essential mechanical pieces of machinery. Driven by this objective, Honda’s focuses on realizing product-centered growth and enhancing primary research. The use of this kind of technology works towards minimizing utility space and cost – both production and consumption costs.

5.3. Management policy

Honda’s management policy aims at ensuring that its products and services are centered on the feelings of the client, the distributor, and the producer. The CEO of Honda emphasizes the use of an integrative viewpoint of management, referred to as Total Quality Management. This management methodology operates on the assertion that it is the obligation of each unit involved in the conception or consumption of the merchandise or services rendered through an organization to objectify high-quality products and processes relentlessly. This methodology exploits the participation of management, personnel, dealers, even consumers to come into consensus with or even surpass client prospects, thus bridges the gap between the target and the existing state of affairs. This is useful in the pursuit of cost-effective production and distribution.

Honda makes use of the various key performance gauges to quantify its outcome, such as Production cost vs. Budget; Schedule fulfillment; Production cost per constituent; Material shortfall; Progression Time; and Production capacity.

6. Integration Considerations

6.1. Supply chain integration

For more than two decades, Supply chain integration has been the pillar and support for logistics and supply chain management business philosophy for over, where physical, information, and financial flows are integrated between supply chain members internally. Supply chain integration harbors great benefits. Nevertheless, it has exhibited itself a difficult task to bring about on a long-term basis (Mortensen & Lemoine, 2008) since no supply chain integration can either be distinctly 100% integrated or strictly 0% integrated. The integration is a measure of how much the Company’s supply chain has been integrated, from the Company’s perspective.

6.1.1. Internal Integration

This is a scheme with adverse effects on the internal managerial logistics in an organization. This internal scheme can be perceived as the management practices that are instigated in a given establishment.

The Supply chain management unit of Honda focuses on merging all of its departments thus comprehensively distributing all tasks among them. The Company has clearly defined the individual roles of different employees together with their supervisors. This move has helped to establish an effective flow of work thus has subsequently increased productivity. Enhanced connectivity throughout the task-supporting rubrics of the Company has helped Honda to take charge of a large global footing. This has positively affected competitiveness of the Company on a global perspective.

The goal of internal integration is to increase delivery, production cost, product worth and production agility. These factors can be realized through creating a mechanism for optimizing the necessary tools needed to achieve optimal operation cost, at every stage of production, from conception to consumption. Every cost required to create merchandise should be analyzed right from the pre-processed state of raw material to the final piece of merchandise.

Due to its outsourcing methodology of manufacturing machinery, Honda company presents a need to come up with a way of evaluating every cost incurred in production of each piece of merchandise, beginning with the supplier, the dealer, the internal organs involved in manufacture, all the way to the client. This will ensure effectiveness in maximizing profit and creating achievable pricing tags for every merchandise they produce. Having a better idea of the cost incurred in carrying out the different processes and other considerations will give a better appraisal of decisions at the various levels of decision making.

6.1.2. External Integration

This entails the active involvement of external factors in the active planning and logistics of the Company. In this kind of integration, a company must be keen on the kind of association it creates with the outside world. The suppliers and consumers are usually the external factors that can be considered for integration into the Company’s decisional structure. With regards to outsourcing, the selection process of a supplier for outsourced goods needs to be evaluated keenly by determining the current productive capacity of the Company and mapping the result to its prospected future capabilities. This will create a bedrock for deciding whether the gaps can be filled by restructuring internal integration components, making acquisitions or entrusting an external supplier.

A step-by-step guideline has to be followed to select an appropriate supplier based on the established corresponding needs of the Company, considering the competitive environment of the Company. Every essential detail should be collected with regards to the logistical expenses that may be incurred in ensuring the receipt and delivery of the merchandise to and from the Company.

Honda has categorically endeavored to include its external factors of production in its supply chain management and logistics rubrics. In order to reduce lead times, Honda utilizes the Just-in-time marking scheme. The dealers are rated against a set performance measuring tool. The dealer will not wish to be graded at their lowest, hence rate excellence has been highly maintained. This has rally rounded dealer keenness and consequently increased effectiveness by synchronizing dealers’ delivery to the subsequent client demand.

The internal integration scheme has also been of great help in the development of products. The availability of raw materials and outsourced goods will totally depend on the ability of suppliers to deliver in an on-time basis. In a bid to enhance productivity, Honda has banked on independence in approach. This selective approach has created a discreet contraption of more ideas that have ascertained its high position in the production market.

Right from the grassroots, the CEO of Honda, Soichiro Honda has placed emphasis on the involvement of consumers in the manufacturing process. This has greatly helped Honda to fully achieve its objectives of creating brands that are customer-oriented. In return, the strategy has greatly reduced cost of production and thus increased efficiency. The Company has also gained from customer insights, which have greatly shaped the internal strategies of the Company. Honda creates high quality products and sells to its customers at relatively lower prices as compared to their competitors.

7. Value Generation

The value created by supply chain operations depends on various underlying organizational strategies that are in place. Value creation is based on a multidirectional focal point of view. There is need to create a value that is affordable to the consumer of the good, increasing operational performance and efficiency, and at the same time focus on being lenient towards the value held by the shareholders. There is an equilibrium that needs to be achieved in the quest of realizing these tradeoffs. The operational cost should intersect with the clients’ contentment with the finished product as they pay to get the necessary services.

Due to the indubitably wide network of operations and varied nature of its personnel, Honda has been facing boundless number of issues which have made it difficult to create a comprehensive and manageable inventory. Nevertheless, the Company is making an effort to curb wastage of funds by exploring beneficial methodologies. The following methodologies are ways in which Honda seeks to reduce wastage and consequently increase value creation:

Focus on quality

The Company has put all desirable efforts to create quality products that are more powerful and efficient. They have majorly relied on consumer feedback, and this has significantly paid off by placing them among the world’s top-selling manufacturers, as their products have been focusing on consumer needs.

Value relevance

The channels used to deliver goods and services to the customer is essential in determining the productivity and progressive value addition in terms of profit realization. A wider communication gap between the clients can pose a great challenge to the production process, and this can consequently lower the market grip of a well-established firm. Honda tries to address this vital issue by creating regional replicas of the main firm. This creates a smaller disparity between the Company and its worldwide clientele. Also, the Company has an online system that expedites communication between clients and the head office; thus, clients can easily and comfortably access the same service online, which they would have accessed by physically visiting the Company. Taking the production line to the doorstep of the clients is a breakthrough in shielding and personalizing a diverse database of clients.

Consumer Engagement

Honda has maximized its value generation through consumer engagement in critical production phases. By employing this tactic, Honda has paid attention to its customers and their contemporary compelling needs. The information acquired from its clients over the years can be used to create neoteric models with better understanding of the consumer’s tastes and preferences. Having a customer support mechanism also enhances the creation of a valuation model that can be used to provide the customer with a better way of making choices of the various products the Company has to offer.

Consumer Value vs Revenue

Most companies find it hard to select their priority between revenue and the consumer. As a long-serving manufacturer, Honda has had its roots founded on a client-first approach. Putting the needs of a client-first has proved to be a value generator for Honda, while at the same time, it has kept its sales inundated.

Human wants are termed to as insatiable. As more competitors create more complex merchandise, companies with similar products will experience a great shift in the production of more competitive machinery. The value of a previously developed merchandise will significantly drop. The Company has to create alternative routes to take when such events occur. Due to this, Honda’s integrated operation model encourages input from different parts of the organization to come up with more improved products that will stand the test of time.

Company Customs

Honda’s tradition has always revolved around efficiency, cost-effectiveness, and quality production. Most of these qualities from the traditional perspective are still in practice even today. Although the methods are valid, the changing needs of clients and technology will more often necessitate a change in the valuation of production cost. New models will require further design prototypes, and will consequently lead to replenishment of existing machinery. As the world moves towards a green economy and eco-friendly methods of production, the Company is prepared to face the consequent paradigm shift in manufacturing.

Conclusion

In conclusion, the report has unremittingly pointed to the fact that value stream mapping offers valuable guidance in the quest of HONDA to become more productive and to increase responsiveness to customer demand. Through value mainstream mapping, Honda will not only actualize the satisfaction of its consumers but will also increase its cost-effectiveness and productivity.

As has been shown, the Honda company has rooted its productive performance in a client-based approach. Value mainstream mapping seeks to ensure the effective delivery of goods and services to clients, in favor of the client’s needs. Although this practice involves the client, it is not only centered on the clients’ satisfaction, but also the underlying rubrics that are intertwined to achieve the production of relevant products. Both external and internal factors in supply chain management are considered with the goal of producing reliable goods and services.

The Company’s production line needs to be well structured to create effective operations and performance toolkit that caters to the value incurred in outsourcing goods, the cost incurred in delays as a result of transportation logistics, and the negative impacts of spoilt products and merchandise. This will give the Company a better viewpoint of their investment and the benefit they have realized from the whole production process. It will also shed light on the shortfall that the Company incurs in production, and this can help in the decision-making mandate of the company management.

During mapping, the Company has to meticulously evaluate its internal and external costs of production, right from the conception of raw materials to the production and sale of consumable goods and services. Also, the focus should not only be central management, but each level of production needs to play their part in realizing cost-effectiveness in the production line. Besides, selecting an appropriate supplier based on the established corresponding needs of the Company will help the Company maintain its competitive ground. The best approach for achieving this has been outlined as the Total Quality Management (TQM) approach, where each unit pursues the endeavor of making a relative reduction in the cost of production from their point of manufacture.

The value of mainstream mapping should not only follow the internal and external channels. Still, it should also give attention to the general need of the Company to perform value generation procedures, which will foster the realization of successful, cost-effective reduction for the greater good of the supply chain.

Application of Value Stream Mapping for Increased Productivity and Responsiveness to Customer Demand in Honda Company

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1. Research Question