Supply chain and logistics management is one of the most significant practices of the operations management of an organization. Looking at the changing trends and competition in the industries, it is very important for the companies to focus on its supply chain issues and develop strategies accordingly (Monczka, et al, 2015). The major objective of this essay is to analyze the supply chain processes and operations of the chosen organization i.e. Honda.
The essay incudes the discussion about two selected areas of operations and supply chain management i.e. quality management and managing people in supply chain and operations in context of Honda Company. Honda Motors is one of the leading manufacturers of automobiles that have its operations all over the world including United Kingdom. Different theories and techniques are applied to analyze the supply chain and operations of this automotive company. Moreover, the essay applies triple bottom line approach in order to analyze economic, social and environmental factors. At the end, recommendations are provided which can be practiced by Honda to overcome its operational and supply chain issues and to improve its supply chain processes.
Brief Overview of the Company and Critical Review
Honda Motors is one of the major players in global automotive industry that is operating its business across the world. Primarily, the company is engaged in manufacturing of automobiles, motorcycles, aircrafts and power equipment. It is a Japanese multinational conglomerate entity that has been the largest manufacturer of motorcycles since the year 1959. The company was 8th largest automotive manufacturer all over the world behind Toyota, Volkswagen, Hyundai, General Motors, Ford, Fiat and Nissan in the year 2015. With the passage of years, the organization has ventured into many sectors and now it is manufacturing the robots and jets. Honda has implemented effective practices in its supply chain management so that it can manage its operations and processes (Honda Motors, 2018).
Here, two of the most important areas of operations management are selected for the discussion i.e. quality management and management of people in supply chain process. In the supply chain, quality management is an important practice that ensures the products and processes of organization are consistent. Moreover, it is vital for the organizations to manage all the parties involved in supply chain process either directly or indirectly with the objective to meet the customer request. Supply chain process of a company does not only covers suppliers and manufacturers, but also warehouses, transporters, retailers and customers.
Both of the practices will be analyzed by using different techniques and theories. For managing the quality at Honda, Total Quality Management techniques will be applied and training and development will be implemented in context of Honda Motors. It is using different strategies and practices for managing the quality effectively. There are some areas which need improvement in the supply chain process of Honda like delivery time issue, quality issues, safety issues and issues in flexible selection of suppliers (Soble, 2015). Honda needs to focus on the above-mentioned issues so that it can manage its supply chain activities.
Summative Assessment
Analysis
Supply Chain Management of Honda Motors
Supply chain management is the process of managing the flow of goods and services and this includes all the practices which are used in transforming the raw materials in finished products (Monczka, et al, 2015). It can be stated that supply chain and logistics management includes the active streamlining of supply activities of business to maximize the value of customer and attain competitive advantage in market. Honda Motors is the best example that is using effective strategies and processes in its supply chain management (Alnasser, 2013).
The company works in partnership with the suppliers all over the world so that they can promote sustainable initiatives at its manufacturing and production sites. The company aims to adopt a supply chain that coexists with local society and a firm which community accepts. Honda strives to strengthen its supply chain in the areas of transportation and purchasing. Looking at the supply chain management, it can be stated that it builds long term relationship with the suppliers, but it does not use the type of institutional mechanism for instance supplier association and family relationship.
In purchasing processes, the company directly interferes in the activities which are carried out by the makers of its components. For various components, it arranges the buying of raw materials 2 or 3 tiers back along its supply chain that allows the suppliers to attain the benefit of quality and price (Brandenburg et al, 2014). On other side, it sends the experts to assist the suppliers and resolve the issues related to quality and delivery of components. This partnership guarantees constant supply of materials at affordable cost and engages suppliers to innovation and improvement of materials that facilitate the company to manufacture a wide range of products (Cuaresma, et al, 2015).
However, the company is very effective strategies and practices in its supply chain; still it has faced various issues in its supply chain related to late-customization, management of inventory position, inventory optimization and replenishment lead times. Moreover, its customers are facing the difficulties in finding and buying their required model of automotive vehicles. It is using Just-in-Time technique that causes issues; like in the peak season, it becomes very difficult to meet the orders and demands of customers (Dweiri, et al, 2016).
Managing Quality
In the competitive international business, managing quality has become very much crucial aspect for their business. Honda is producing parts and materials at international level hence they imply global quality management system and thereby ensuring 120% of the product quality. This company has made a Global Honda Quality Standard which ensures as a foundation for this. This company has been certified with ISO/TS 16949 and ISO 9001 criteria in different parts of the world (Hartley, 2017).
In order to ensure that it has improved the quality at each levels of the organization, they have ensured Total Quality Management empowered by G-HQS. This helps them in stopping any issues from recurring. Due to these efforts right now 54 Honda facilities have acquired ISO certifications. Taking TQM as an essential part of their operations, they have ensured that all their facilities are working with highest quality standards. In order to further improve the quality of their products and services, they set challenges based on the quality targets established in the organization-wide policy.
They change the policies and modify their operations so as to reflect the challenges found in different areas with countermeasures formulated for them (Luthra, et al. 2011). They manage this initiative along with information sharing at regular basis at the Global Quality Committee almost two to three times a year. It is headed by chief quality officer and is attended by all the people that are placed at different departments of the firm (Mitra, 2016).
In order to maintain the total quality management at the organization they have managed their quality cycle. They are applying and reflecting design and development expertise at the production preparation and in mass production stages so as to ensure that they are able to deliver enhanced quality by generating drawings that helps in facilitating manufacturing as well as developing manufacturing control techniques that limits process variability (Tamunu and Tumewu, 2014). Apart from this post-sale, swift-improvement is made to product quality on the basis of analysis of feedbacks from consumers. These improvements can be seen in their next round of design and development. Their quality life cycle is as follows:
Design and development: They are implementing quality assurance at every stage of the design i.e. from drawing stage by utilizing design and manufacturing knowledge to generate drawings which helps in manufacturing of quality products (Honda, 2018).
Production preparation: At this stage of the development of product, they prepare quality assurance in production processes by building manufacturing controls which is able to limit process variability.
Production: This is one of the most crucial stages as defined in the G-HQS for managing quality. Taking the help of the drawing design they start manufacturing where they implement manufacturing controls so as to limit the variability in the processes. They also conduct timely and thorough inspection of parts and the completed vehicles. They also take measures to ensure that no damage is done to the parts during its transportation at the manufacturing station and other places (Nautiyal, 2014).
Sales and services: The issues that they face in the market after sales are dealt with dealership. The dealers are responsible for collecting the quality information from consumers at regular intervals.
Analysis of the quality information collected: The feedbacks and the suggestions that are collected by the dealers received from different customers are analyzed to find the solution and it acts as a base for the design at the next time (Wold.Honda, 2016).
In spite of company’s rigorous efforts, they have quality issues in different products. They have promoted quality initiatives such as recalling. This has been done restore the trust in the Honda brand. They have recalled their Vezel Hybrid and Ft Hybrid in Japan. In order to ensure that this problem is not faced by the company, they undertook transient measures (Soble, 2015). Some of these measures are:
Managing people in operation and supply chains
It is one of the most complex tasks of supply chain management process to manage the people. The major reason behind this is that they have their own motivations and needs and to make them happy and acting with supply partners they are just connected with is a threat, specifically when making efforts to meet the deadlines and generate profits. The companies are using different HRM practices to manage people in supply chain and operation management. At Honda, there are various people and parties which are involved in its supply chain processes.
The company is using different practices and activities for effective management of its people. There are different parties which are involved in its supply chain like manufacturers, suppliers, transporters, retailers, warehouses, distributors and customers. The company has a global supply network with diverse workforce so it is very important to use effective practices (Jenkins and Williamson, 2015).
For managing the effective flow of the products among different parties, Honda has developed a chain in which it sources many of its auto parts from suppliers. The traditional method of collecting these parts has been to have every supplier ship these parts to the production facilities. The company believes that its dealers are not just trading parts to them but they are retaining to their clients. When the company develops a new product, product development team of Honda will pass the vehicle’s design to the suppliers.
Then, the suppliers will produce a sample for mass production in 3D CAD and pass it to Honda. The vehicles are manufactured in its factories for which it has hired the workforce with higher skills and capabilities. After successful production, it connects with the distributors so that they can deliver vehicles to final customers (López-Gamero and Molina-Azorín, 2016).
In order to make sure that each and every person engaged in purchasing operations of Honda shows their potential in promoting fair and honest initiatives, the company has arranged personal development programs and manuals in its every region. For instance, in United Kingdom, the company has taken up many topics via e-learning, seminars and on-the-job training programs. In its training course, Honda shares its approach in different areas like choice of suppliers and efforts to make the QCDD stronger.
Moreover, instructions are given in the Integrity Workshops on critical matters in creating long term and positive relationships with suppliers, including legal compliance and code of conduct. In this manner, the top management of Honda have conducted the programs all over the world which integrate social and cultural background of every location in addition to fundamental knowledge about the buying operations to give instructions for its involved employees (Alnasser, 2013).
In order to maintain the workflow in effective manner and improve the quality of communication which can assist in improving Honda’s supply chain management, different workshops, combined meetings and training sessions are conducted. All the employees from different cultural backgrounds and nations sit together and interact on different problems. It helps them in understanding each other and gets the ways to enhance the communication level.
These meetings assist the workforce to come in a better position so that they can understand the issues in supply chain management. Due to diverse workforce, the company is not able to establish an effective communication among different parties involved in supply chain. Sometimes, Honda is failed to manage its diverse network of workforce that include suppliers, distributors, employees, customers and retailers (Alnasser, 2013).
Triple bottom line – Economic, environmental and social factors
Triple Bottom Line approach is a framework that includes three types of factors i.e. social, environmental and economic factors. There are various organizations which adopt this practice to analyze their performance in wider perspective to develop a great business value. This approach measures an extent of company of economic value, environmental impact and social responsibility. Honda Motors is among the organizations that are using effective practices and strategies which enable it to attain triple bottom line goals. It operates its business under the fundamental principles of “Respect for the individual” and Three Joys i.e. Joy of selling, Joy of creating and Joy of Buying. These principles indicate that company is highly engaged in corporate social responsibility and environmental sustainability practices (Azevedo and Barros, 2017).
To become more sustainable, Honda Motors has introduced various eco-friendly vehicles like Avery Greene Honda, Acura Autos, Honda Powersports, Honda Power equipment etc. When it is about the environment, this firm designs its models in such a way so that it can reduce the emissions and enhance the fuel economy. Lightweight design, efficient engineering and manufacturing and adoption of updated technologies helped Honda to become one of the greenest companies in automotive market.
By using effective sustainability and CSR practices, Honda is able to manage the major components of bottom line i.e. People, Profit and Planet. Honda successfully converted its CSR practices into greater financial performance because it’s environmentally responsible and energy efficient vehicles are accepted by the customers and environmentalists. In context of economic factors, Honda is using effective techniques and practices in its operations and supply chain which enable the organization to reduce its cost of operations (Alnasser, 2013).
By decreasing the operational costs, Honda is investing the funds in sustainability and social responsibility initiatives such energy and resource conservation, environmental protection and waste reduction. For waste reduction, The Company is using different techniques in its manufacturing process like Just-in-Time and lean manufacturing. It has taken some initiatives in its purchasing processes like it has held a Six Regional Environmental Purchasing Meeting that was aimed at establishing a low carbon society across the global supply chain.
This meeting discusses and communicates the methods and policies of decreasing CO2 together with its suppliers in each and every location all over the world. All of these efforts assisted the company attracted the people who are concerned of environment and natural resources (Jamali and Karam, 2018). It has a positive impact on the economic growth of Honda Motors. It has led Honda in operating its business in long term social stability and higher productivity in its supply chain and economic performance in world automotive industry.
Conclusion
From the above based report, it can be concluded that Honda Motors is one of the biggest companies in the automobile industry. Effective operational management is very much necessary for the company of this global scale. They have an excellent infrastructure that boost up their supply chain. Their networks with suppliers and distributors have helped them in maintaining the balance between the demand and supply. Honda is aiming to implement a supply chain that coexist with the local society and a firm that is accepted by the community.
They are trying hard to strengthen their purchasing and transportation so as to improve the supply chain. In order to improve the quality at the workplace they have taken the use of Total Quality Management as a strategy in order to reduce the risk of quality failure. They have used G-HQS for improving the quality. They conduct regular information sharing initiatives for assuring the quality management. In order to maintain their image in the minds of the people, they recalled all their products that faced quality issues. Along with this, they are investing a lot of money in different initiatives related to sustainability. Triple bottom line approach has been maintained effectively to ensure sustainability in economic, social and environmental terms.
This company operates at the global level hence it can be recommended that it learns from its competitors like Toyota as to how they have reduced their supply chain cost as well as fastened the pace of product delivery (Hartley, 2017). Company should also consider more towards green supply chain management so as to reduce the wastage created in the whole supply chain process. Along with this they also need to strengthen their relationship with more numbers of suppliers. In terms of quality it is recommended that they should give preference to the communication so as to communicate the firm’s requirement to all the employees.
Traditional management method has to be removed completely. It is recommended that they integrate strategic quality and business planning into a single strategic process (Honda, 2018). They should also learn from their competitors so as to stay keep the pace of quality improvement. They must focus more at the design level where the designs must be made according to the feedbacks from the market. The changes should not be done so as to satisfy the customers or to erase the problem that their customer mentioned in their feedbacks. It needs to be checking the future development of the industry.
References
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