Globally, there is an uncountable number of companies and services which are registered annually. These companies are registered in different industrial domains which are characterized by high competition. For this reason, most of them do not survive. Researchers have pointed out that lack of effective and efficient management systems is the main reason for the collapse of many startups business as well as existing companies (Gil et al. 2010, p. 312). This trend is observed in all industrial domains including the automotive industry. Additionally, it cuts across all the types of industries including service-oriented, manufacturing-oriented among others. Currently, the automotive industry is one of the largest economic sectors by revenue. This implies that it has an enormous number of competitors which facilitates continuous improvement regarding logistics, supply chain management, and operations (Christopher, 2016, p. 78).
This paper aims at understanding the logistics, operations and supply chain management of Honda motor company. In particular, it aims at analyzing two areas of logistics, operations and supply chain management. First, it will dwell on the aspect of managing quality and the issues arising. Secondly, it will focus on managing business relationships in supply chains. Furthermore, the paper will review potential areas of improvement using SWOT and PESTLE analysis.
Honda motor company is a global corporation which is based in Japan. They are known for manufacturing of motorcycles and automobiles. The company was founded in 1984 by Takeo Fujisawa and Soichiro Honda (Casadesus-Masanel and Heilbron, 2016). Currently, it is the most extensive world maker of motorcycles. The company has expanded its services to more than 30 countries in the world. In the United Kingdom (UK), its subsidiary is known as Honda of the UK manufacturing Ltd. The backbone for the success of Honda is continuous innovation and competitive management strategies. Currently, Honda's market share in the globe is 10.2%, and it is ranked number 5 in the UK market. Honda has a mission of supplying quality products that satisfy customer needs at an affordable price (Andersen and Zaelke, 2017, p.104). It also has other systems aimed at ensuring operational, logistical and effective supply chain management. This makes it a more recognized automotive industry in the world.
The first topic is on managing quality. As mentioned earlier, Honda is well known for its high-quality products. This implies that the company has set great and elaborate strategies towards improving and maintaining the quality of their products. According to Davis and Goetsch, enactment of management systems is aimed at allowing companies to manage their inter-related business parts, to obtain a common goal. For this reason, the management system has other subsystems including DMAIC, managing quality, total quality management among others (Goetsch and Davis, 2014). Honda utilizes a holistic approach that incorporates the attitude, culture, and organization of the company to ensure continuous production of high-quality products that meets customer expectations. This approach is known as total quality management (Ross, 2017). Specifically, Honda aims for 120% quality of products. It believes that letting even 1% of their customers get dissatisfied with their products, is enough to hamper their reputation. They, therefore, aim at achieving the 120% quality to ensure customer focus. To achieve the objective, the company has implemented global quality standards including ISO 9001 and ISO/TS16949. These standards are based on eight quality core principles namely; leadership, continual approach, customer approach, people involvement, system approach, process approach, mutual benefits supplier relationship and factual approach to decision making (Septiyawan and Amboningtyas, 2017).
Honda manages quality through a quality cycle that begins from the development of products to after-sales services. During designing and development, the company implements quality assurance by creating designs that facilitate quality manufacturing. At the production stage, the company builds manufacturing control techniques which limit the variability of the process. Additionally, it also conducts rigorous inspections of finished or parts of the vehicles to ensure no damage. At the sales stage, issues arising are dealt with by dealership which obtains the response from customers in a timely and effective way. The company has established a quality center that gathers quality-related data from dealers and customers thus preventing quality issues or quickly detecting and resolving issues whenever they occur. Additionally, policies and measures are then developed based on quality issues identified to prevent future occurrences (Septiyawan and Amboningtyas, 2017).
The company also has a quality management education system aimed at training employees and associates to improve their quality assurance skills. The training is based on the level of quality control responsibilities as well as on in-house qualifications. These courses are not only available for associates but also to suppliers with an objective of accustoming those Honda quality management principles. In summary, the Honda's holistic approach of quality management is based on Honda's quality cycle, improving quality based on customer feedback, quality management education and implementation of global quality standards (Septiyawan and Amboningtyas, 2017).
Unfortunately, despite the company having elaborate and concrete strategies that ensure management of quality, several related issues arise. First, the SWOT analysis of the company indicates that one of its weaknesses is that the accountability of quality is left to dealers and employees to safeguard its superiority. Although this is a positive strategy, it also has its negative implications. This is because alteration of promise by a dealer at any level of the organization might lead to interrupted progress excellence. It is, therefore, recommendable that the company should develop a supervisory scheme that ensures that all dealers obtain training related to Honda's quality principles and to ensure adherence.
Another hurdle of the company is the repeated airbag recalls. This has caused their customers great concerns and inconvenience. Although the company has placed top priority on the safety of the customers, this issue has not been eradicated. One of its efforts was replacing the serially Takata ammonium-nitrate in airbag inflators not containing desiccant. The potential solution to this issue entails the establishment of a timely and effective complaint management system to address any related-issue that arises. The system would allow them to maintain and enhance their quality as well as overcoming existing issues. Additionally, other necessary measures such as ensuring sufficient supply of replacement inflators should be implemented as quickly as possible.
In general, the approach utilized by Honda in managing quality cut across many theories of quality management. For instance, Honda's quality management systems can be related to Crosby's theory of total quality management. In a similar way to Deming's theory, Crosby asserts that quality is the defining factor for the success of any business (Wheaton and Schrott, 2018). Additionally, like Honda motor company, Crosby maintains that Zero defects is the only performance standard of quality. They both agree that quality is well ensured through prevention and adherence to requirements. Furthermore, it is related to the European Foundation for Quality Management (EFQM). EFQM advocates for a model that refrains from utilizing only one methodology but instead recognizes the diverse nature of methodologies to ensure quality management (Ross, 2017). For Honda motor company, the utilization of different strategies including the quality circles, training program, global quality standards is a clear reflection of the EFQM framework. In other words, different management systems have allowed Honda Company to develop completely and become exceptionally competitive.
The second topic is about managing business relationships in supply chains. Hugos defines supply chain management as a business function that has a purpose of linking internal functions with external suppliers and distributors (Hugos, 2018). Based on its definition, it can be asserted that it focuses on satisfying the end customers and in managing the entire chain effectively. For these reasons, relationship management within any organization has effects on all areas of supply management and hence a greater impact on performance. In a supply chain relationship that is ideal, both customers and suppliers are allied in ways that ensure ease of demanding data, exchanging data and enhanced visibility of status (Hugos, 2018). The relationship is usually based on the resilience and flexibility of the suppliers and customers. According to behavioral theory, gaining positive business relationships with customers is fundamental to foster their (re)purchasing decision (Touboulic and Walker, 2015). In other words, positive relationships dictate the behavior of customers in the consumer goods markets. A positive relationship means that products or services are delivered at right quantity, quality, price, and flexibility in terms of delivery time and specifications (Forsgren and Johanson, 2014).
Furthermore, effective supplier or buyer relationships entails the notion of efficient distribution. It involves efficient transportation of finished products to desired locations for sale. This has particularly been enabled through technological development such as E-business and E-commerce. Technological advancement has replaced traditional trade thus having impacts on capacity, inventory, and distribution. Additionally, it has fostered fast and efficient communication between companies and their customers. As a result, a bond is formed which makes customers trust these businesses hence loyalty. The commitment-trust theory asserts that for a relationship to be successful, it has to incorporate both the elements of trust and commitment (Mukherjee and Nath, 2007, p. 1180).
Honda motor company builds long-term relationships with its suppliers. However, it does not utilize institutional mechanisms such as supplier associations and family relationships. It intervenes directly in purchasing activities carried out by its component makers. It does this by arranging the purchase of raw materials for many components in 2 or 3 tiers along the supply chain. This enables suppliers to attain the benefits of quality and price. At the same time, Honda dispatches experts to offer support to suppliers and solve problems related to quality and delivery. This partnership assures a continuous supply of materials at a reasonable cost as well as facilitating improvement and innovation through the involvement of suppliers (Mohammed, A. A., (2013).
A striking point is an appeasement with both multiple and single resourcing strategies. For instance, Honda purchasing 2 distinct types of seats from separate suppliers. As such, the company gains the advantage of a single supplier and multiple suppliers. In the process, long-time partnerships can be established, and deliveries can easily be scheduled. Additionally, there can be flexibility in volume, better price and the risks of disrupted supply are avoided (Cuaresma et al. 2015, p.193). The company also has a conscious distribution network that ensures that it penetrates unrepresented territories and new markets. It has established connecti...
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