CONTEMPORARY ISSUES IN SUPPLY CHAIN AND LOGISTICS: A CASE STUDY OF HONDA MANUFACTURING COMPANY
Course: AMSC700 Contemporary Issues in Supply Chain and Logistics Management
Assessment One and Two: Case Study
Instructor: Imran Ishrat
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1. Research Question
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
In summary, this report has discussed the supply chain and logistics value stream mapping concept, seeking to promote Honda Company objectives to be more productive and more responsive to customer demands. In order to realize this, the report has focused on the following major areas: performance operation in supply chain and logistics, value mapping in internal and external processes, and value chain generation. All these concepts increase essential tactics in the field of pricing, transportation, warehousing, and production as all add up, developing a viable supply chain process in the Company. All this knowledge aims to increase the competitive advantage of the Toyota Company through the supply chain concept.
3. Introduction
3.1. Industry background
Considered as one of the leaping giants of Motor Vehicle production, Honda Manufacturing company has been in existence since 1948. Its founders were 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 manufacturing. He was very enthusiastic about delivering to the public an inexpensive way of carrying 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 business assembles better and quicker machinery, cylinders of race bikes with different denominations.
Honda started as a motorcycle producer, but by 1964, they had started manufacturing cars. By 1991, Honda was one of the prevalent and celebrated car manufacturers all over the world. 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 four carburetors.
During the late 1960s, Honda was producing further conformist household wagons. Nowadays, Honda is 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 market and presented the Accord. From that time, Honda has remained on-course with the needs of its clients by continuing unabated manufacture of SUVs and vans along with cars. Currently, the corporation endures making better the Honda Accord and Honda Civic.
3.2. Organization background
Currently, the Company has its headquarters in Tokyo, Japan. Nevertheless, it still provides a worldwide service. It has over 450 subsidiaries and affiliates who are accounted under its equity. The Company is not only limited to automobile production but also mechanical water pumps, lawn and garden equipment, robotics, jets, jet engines, and thin-film solar cells. In the recent past, the Company has been recognized as among the top largest automobile manufacturers in the world.
4. Supply Chain Process Cycles
The Supply chain management function of Honda focuses on integrating all of its departments and 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. There has been enhanced connectivity throughout the task-supporting rubrics of the Company, thus has helped Honda to handle such a global basis. This has helped in effecting the competitiveness of the Company on a global perspective. The overall supply chain management of Honda works through the following process:
Buying Policy:
As of a global setting, Honda makes use of a simple buying strategy that can be labeled by the belief that “Honda will purchase from the maximum modest dealers in demand to achieve client gratification.”
Client Gratification:
The belief is founded on the impression that Honda’s dealers are not just trading their parts to us; they are retailing their parts to our clients by us. Honda imagines every dealer to grow the equivalent assurance and client pleasure as they have. To achieve purchaser contentment, what Honda needs of dealers is effectiveness.
Quality:
In a bid to ensure client gratification, quality is the utmost significant feature. Honda considers 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.
Cost:
Increased competition between manufacturers has led to a cost-benefit analysis eagle-eye; thus, Honda is dogged to deliver yields at modest values and worth for the currency. Dealers are likely to attain marks in terms of enhanced output plus combined hard work, with Honda focusing on value manufacturing and value exploration. Honda will rate dealers for their raw substantial so that they are capable of adjusting the rate of every little amount of effort, which is put into making diverse model vehicles.
Delivery:
Honda focuses on a just-in-time marking scheme in order to respond rapidly to clients’ requests, which is growing daily, acute to yielding merchandise while undeviating from likely lead times. Dealers ought to have a dependable and stretchy manufacturing organization that can reply in comparatively small lead time and can be coordinated with the meeting lines. Just in time decreases portfolio, removes leftovers, and likewise ensures manufacturing effectiveness. Implementing just in time slender manufacturing will increase dealers’ keenness in rate and excellence.
Development:
In reacting to forever, altering buyer needs as well as desires and delivering great excellence; however, rate modest merchandises; Honda depends deeply on recognized dealers as a basis for growth and enhancement of knowledge. In the sequence of progress, importance is placed on individuality. They bank on individuality in strategy and requirement is a fragment of attractiveness. It is this exclusivity that marks its invention modestly. Dealers are likely to have the aptitude to understand these requests of exceptionality over their machinery and experience an expansion in an opportune way with a great budget presentation.
Management:
It is vital for a dealers’ managing group to be powerfully customer-oriented and to offer real management for the whole business. Such organization exertion endorses joint faith among the dealer and Honda.
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5. Operations and Performance
Outsourcing parts
At Honda, many parts that are used in its products are sourced from suppliers and transported to their plants. Then, they are incorporated into the Company’s products, and the completed models are sent directly from the plants to dealers. In addition to this, parts are also transported between plants, and parts for services and repairs are sent to dealers. As such, due to the extremely large volume of transportation that takes place throughout the manufacturing process at Honda, increasing efficiency, reducing environmental burden, compliance, and risk management in logistics are becoming critical issues. Honda transcends conventional divisional and regional boundaries to ensure the integrated control of logistics and is conducting management from an environmental, social, and governance (ESG) perspective.
Cutting-edge technology
Their fundamental design philosophy seeks to maximize space and comfort for people while minimizing the space required for mechanical components. With this aim in mind, Honda’s activities include product-specific development and fundamental research.
Management policy
Honda works to ensure that the products and services result in 3 joys: Joy for people who buy them. Joy for those who sell them and Joy for people who produce them. Honda makes use of the TQM methodology of management. Total quality management or TQM is an integrative philosophy of management for continuously improving the quality of products and processes. TQM functions on the premise that the quality of products and processes is the responsibility of everyone who is involved with the creation or consumption of the products or services offered by an organization. In other words, TQM capitalizes on the involvement of management, workforce, suppliers, and even customers, in order to meet or exceed customer expectations.
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Integration Considerations
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Value Generation
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Conclusion
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References
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Appendices (if any: Tables, Figures, workings or other relevant data)
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