Supply Chain of Honda Essay
Supply Chain of Honda
The supply chain encompasses all activities associated with the flow and transformation of goods from raw material stage (extraction), through to the end user, as well the associated information flow.
Material and information flow both up and down the supply chain.
Supply chain management emphasizes the logistics interaction that take place among the functions of marketing, logistics, and production within a firm and those interaction that take place between the legally separate firms within the product-flow channel.
It is important to note that supply chain management is about the coordination of product flow across functions and across companies to achieve competitive advantage and profitability for the individual companies in the supply chain and supply chain members collectively .It is difficult, in practical way, to separate business logistics management from supply chain management. In so many respects, they promote the same mission:To get the right goods or services to the right place, at the right time, and in the desired condition, while making the greatest contribution to the firm.
SOURCE-R.BALLOU, 2004,”BUSINESS LOGISTICS/SUPPLYCHAIN MANAGEMENT”5 the edition, pg-6.
RESOURCESSupply chain/ logistics is a collection of functional activities ( transportation, inventory control etc), which are repeated many times throughout the channel through which raw material are converted into finished products and consumer value is added.
Because raw material sources, plants, and selling points are not typically located at the same place and the channel represents a sequence of manufacturing steps, logistics activities recur many times before a product arrives in the marketplace .even then, logistics activities are represented once again as used product are recycled upstream in the logistics channel.
Logistics is the part of supply chain process that plans, implements, and controls the efficient, effective flow and storage of goods, services, and related information from, the point of origin to the point of consumption in order to meet customer’s requirement.
WAREHOUSE TRANSPORTATION CUSTOMERSTRANSPORTATIONINFORMATION FLOWFACTORYTRANSPORTATIONWAREHOUSING TRANSPORTATION VENDORS/PORTS/PLANTSSOURCE-R.BALLOU, 2004,”BUSINESS LOGISTICS/SUPPLYCHAIN MANAGEMENT” 5 the edition, pg-8.
Although it is easy to think of supply chain as managing the flow of product from the point of raw material acquisition to end customer, for many firms there is a reverse logistic channel that must be managed as well. The life of the product, from a logistic viewpoint, does not end with the delivery to the customer. Products become obsolete, damaged, or non-functioning and are returned to their source points for repair or disposition. The reverse logistic channel may utilize all or a portion of the forward logistic channel or it may require a separate design.
IMPORTANCE OF SUPPLY CHAINIt is about creating value- value for the customer and suppliers of the firm, and value for the firm’s stakeholder. Value in logistics is primary expressed in terms of time and place. Products and services have no value unless they are in the possession of the customers when (time) and where (place) they wish to consume them. For example- concession at a sport event have no value to customers if they are not available at the right time and place that the event is occurring. Good logistics management views each activity in the supply chain as contributing to the process of adding value.
Cost are significant- cost of logistics is second to the cost of productLogistics customer services expectation are increasingSupply and distribution lines are lengthening with greater complexitySupply chain / logistics is important strategy to increase salesSupply chain / logistics adds significant customer valueCustomers increasingly want quick, customised responseSupply chain / logistics in nonmanufacturing areas•Service industry•Military•EnvironmentPRINCIPAL ACTIVITIES OF SUPPLY CHAIN MANAGEMENTSource-R.BALLOU, 2004,”BUSINESS LOGISTICS/SUPPLYCHAIN MANAGEMENT”5th edition, pg-29.
PRODUCT AND ITS KEY CHARACTERISTICSHonda CIVIC is a car manufactured by Honda .It was introduced in July 1972 as a two door couple, followed by three door version. With transverse Engine mounting of its 1169 cc engine and front drive. The car provides good interior space despite overall small dimensions.
Early models of the civic were typically outfitted with the basic AM Radio, a rudimentary heater, foam -cushioned plastic trim, two speed wipers and painted steel rims with a chromed wheel nut cap.
The current CIVIC has become much more luxurious with satellite-linked navigation, a six speed manual transmission , air conditioning , power locks and power windows.
IN United States of America, the civic is the second longest continuously-running nameplate from the Japanese manufacturer, only TOYOTA COROLLA, introduced in 1968, and has been longer production. (Toyota Corolla History, 2008, Corolla key features)AWARDS-In 1972 to 1974 – “CAR OF THE YEAR JAPAN”In 1974- “1974 CAR OF THE YEAR “(US Road Test Magazine, 1974)”TOP SAFTY PIDE- GOLD” award by The Insurance Institute for Highway Solution. (Torrance calif,USA,dec 5 2005,IIHS)Civic wins International Design Award “RED DOT : BEST OF THE BEST”(Honda, 27 March 2006, Honda Corporate Section)Japan Car Of The Year “Most Advanced Technology Award”CHANGES OVER LAST 35 YEARSHonda civic has got eight generation changes. These are made as per the demand of the customers within the country and worldwide. Civic is one of the most popular models of Honda automotive industry.
DEMAND FORCES FOR HONDA CIVIC:1)Domestic market demand -Japanese domestic market2)International market demand-North AmericaEuropeAsiaOthersCHANGES IN MARKET FROM DOMESTIC TO WORDWIDE.
Customised figure from dataSource-Takeo Fukui, 31 March 2006, Honda motor co. Ltd, CSR report, 31 march 2006CIVICS’ FIRST BREAKTHROUGH IN US MARKET: The Civics’ features allowed it to outperform American competitors such as the Chevrolet Vega and Ford Pinto. When the 1973 oil crisis struck, many Americans turned to economy cars. Reviews of American economy car quality were poor and getting worse due to spiralling costs for manufacturers. Japanese culture had a long-standing tradition of demanding high-quality economy cars, and the growing American desire in the 1970s for well-made cars that had good fuel mileage benefited the standing of Honda, Toyota, and Datsun in the lucrative U.S. market.
MAIN PROBLEMS FOR CIVIC IN INTERNATIONAL MARKET:•Need for strong supply chain interference with marketing and production•Need for strong supply chain management system•Information systems•Inventory management strategy•Strong logistics and Warehousing•Need of production facilities and distribution centres•Need for R&D centres to meet customers demand
HONDA’S IMPLICATION TO THE PROBLEMS OF CIVIC INTERNATIONAL MARKETING:
Supply chain organization and controlLocation strategyTransportation strategyFocused customer service goalInventory strategyPlanning and CollaborationTo achieve Honda’s goal to provide genuine satisfaction to customers around the world, Honda has developed worldwide operations based on the policy of manufacturing close to the customer.
It focus on what people all over the world truly need has taken us beyond simply providing the products and services required, and led us to establish production facilities and R&D centres in local communities. Honda manufactures at 134 Production facilities in 28 countries, has established 31 research and development centres in 15 countries, and draws strength from over 140,000 associates worldwide. Sales of motorcycles, automobiles and
power products now bring Honda into contact with, Over 20 million customers every year. They empower their global operations by hiring many associates locally, procuring parts locally and collaborating with members of local communities in a wide range of philanthropic activities.
Honda’s global operations: expansion through localizationSALES AND PRODUCT FACILITIESRESEARCH AND DEVELOPMENT FACILITIESSALES OFFICES PRODUCTION FACILITIESSource-Takeo Fukui, 31 March 2006, Honda motor co. Ltd, CSR report, 31 march 2006.
THE PROGRESS:But as time progresses ,Honda has introduced civic models from first generation to the latest eight generation model , which is advanced and very popular throughout the world. The company started his global distribution of civic Honda and made changes as per the demandSALES FACT AND FIGUREDuring fiscal year 2002 to 2006, Strong sales of the redesigned Civic occurred. In particular, the Company anticipates an increase in unit sales, based on full-year sales of the Civic, the introduction of the redesigned Step WGN, a brand-new 1.3-liter small car with the new i-DSI (Dual & Sequential Ignition) gasoline engine, as well as the all-new CR-V and Integra.
Source-Takeo Fukui, 31 March 2006, Honda motor co. Ltd, CSR report, 31 march 2006How product is used:Honda civic has a mixed users depending upon location, purpose, comfort need and a symbol of dignity and status.
In developing and underdeveloped countries, it is use as a luxurious car. People only use the civic for special outings and on special trips. In these countries it’s a symbol of dignity and status. They don’t use it frequently.
While on the other hand, in the developed countries it is a daily use car for offices, markets, visits to places etc. Here it is not a symbol of dignity or status, but a car which is purposefully used for comfort, quality of engine, features and for its good safety features. It is frequently used in the developed countries.
Product used for:It is an on road car specially used for travelling between cities and within cities.
Honda civic is an executive deluxe car and largely used for travelling to offices, family outings, long drives etc. As it’s a deluxe car, it provides better comfort and ease of driving to the customers. Safety features allows Honda civic to be most popular among the customer.
As Honda civic is implementing changes in it from last 35 years, this strategy attracts customer over a long period of time.
CONCLUSION:Supply chain management strategy is typically formed around three goals- cost reduction, capital reduction, and service improvement .depending upon problem type, strategy may range from long to short time periods. Planning usually takes place around four key areas: customer, location, inventories and transportation .the network of links and nodes serves as an abstract representation of the planning problem.
1)R.BALLOU, 2004,”BUSINESS LOGISTICS/SUPPLYCHAIN MANAGEMENT”5 THE EDITION, PG-6.
2)TAKEO FUKUI, 31 MARCH 2006, HONDA MOTOR CO. LTD, CSR REPORT, 31 MARCH 20063)TAKEO FUKUI, 31 MARCH 2006, HONDA MOTOR CO. LTD, CSR REPORT, 31 MARCH 20064)R.BALLOU, 2004,”BUSINESS LOGISTICS/SUPPLYCHAIN MANAGEMENT”5TH EDITION, PG-29.
5)TOYOTA COROLLA HISTORY, 2008, COROLLA KEY FEATURES6)US ROAD TEST MAGAZINE, 1974)7)TORRANCE CALIF, USA, 2005,IIHS8)P.DUCKER, MACMILLAN, 1969″PHYSICAL DISTRIBUTION: THE FRONTIER OF MODERN MANAGEMENT”PG-4.
9)WWW.HONDA.COM10)WWW.WORLD.HONDA.COM,11) WWW.AUTOS.HONDA.COM12)HANDFIELD ROBERT AND ERNEST NICHOLS JR, 1999,”INTRODUCTION TO SUPPLY CHAIN MANAGEMENT” PRENTICE HALL PUBLICATION