Building Quality Organisations: Honda Company - Case Study Example

BUILDING QUALITY ORGANISATIONS Name: Course: Instructor: Institution: City: Date: Table of Contents Introduction 3 The Quality Journey for Honda 3 Strategic Targets Set by Honda 4 Honda Quality Philosophies 5 The Use of Quality Tools, Measurements, and Benchmarks 6 The Current Quality Management System 6 The Existing Deficiencies Workplace Quality Problems 7 Conclusion 8 References 9 Introduction Having been in the motorcycle manufacturing business for more than six decades now, Honda stands out as one of the most renowned motorcycle manufacturing companies in the world. Besides being the world leader in the manufacture of motorcycles, Honda also prides itself with massive production of internal combustion engines with its annual production standing at approximately 10 million. As a Japan-based company, Honda is the third largest manufacturer of automobiles in Japan. The existence of this company is attributed to its original founders – Soichiro Honda, a mechanical engineer, and Takeo Fujisawa, an investor; who set up the company back in 1948 in Japan (Berger, 2011). With its primary business being in the manufacture of motorcycles, Honda has now ventured into other related areas such as in the manufacture of power generators, farm equipment, and motor vehicles. Even though the company’s target market has been the United States of America, the latter years have seen it spread its marketing and distribution around the globe in virtually all continents (The Honda Motor Company, 2015). The Quality Journey for Honda As Honda Co. rolled out its products to various markets globally, there was dire need for it to set quality standards with a view to fully satisfying its customers’ expectations of their products. This resolve was driven by three main imperatives i.e. the economic imperative, the social imperative, and the environmental imperative with regards to the numerous recalls of the Vezel Hybrid and Fit Hybrid in Japan. First, with such product recalls, the company feared that the inconveniences caused to their loyal customers was going to redirect them to Honda’s competitors. As a matter of fact, customers are becoming more and more selective by day, and any deficiency in quality of a product by a company is likely to drift them away from their product manufacturer (Berk & Berk, 2000). In the event that this happens, the company in question (Honda Co., in this case) is bound to lose its clients, hence depriving it of its economic stability through profits. Fully aware of this fact, Honda decided not to take any chances but to move swiftly and implement quality standards. Secondly, there was the social imperative in which Honda felt that as a company, quality deficiencies in its products could lead to poor interaction between the company and the society at large (Nersesian, 2000). Ideally, the recalls of Honda’s automobiles caused uproar from its customers, and they generally were disappointed. For that reason, Honda had to embark on fixing its quality issues. Finally, the environmental imperative also triggered Honda into reinventing its quality standards. In Thailand, for instance, the company has adopted the eco-friendly manufacturing procedures through its Green Factory where environmentally-friendly processes are the order of the day. Accordingly, the company realized that most consumers are indeed becoming sensitive to eco-friendliness of products to the effect that environmental sustainability has become a key parameter in quality standards of many companies (American Society for Quality Control, 1993). Very recently, Honda has embarked on producing automobiles whose carbon emission is relatively low in its quest to comply. Strategic Targets Set by Honda In order to respond to its customer complaints as regards quality, Honda Co. put certain strategies in place. These are discussed below: To begin with, the company has streamlined its operations such that it has improved its system of evaluating the quality of its manufactured products. In order to realize this, it has resolved to bring even more quality evaluation experts that are not only qualified, but that are also extremely experienced in quality evaluation. Secondly, one of Honda’s strategy and long term goals is in the administration of an efficient and reliable customer feedback/ satisfaction system. This strategy is aimed at ensuring that the company benefits from the feedback from its clients regarding the quality of their products (Mohanty, 2008). After all, it is customers that get to enjoy the products (Charantimath, 2006). Depending on the trend of feedback collected, it can then take normative decisions as to whether to adjust a quality problem or maintain the quality of products being manufactured. Honda also discovered that with time, some of its suppliers supplied the company with defective parts that ended up causing quality concerns in the company’s end products. In order to counter that, it resorted to improving its quality assurance for all parts bought from its suppliers (Nigam, 2005). The company has also moved to implement an integrated vehicle control system in which most of the control systems such as the engine and the vehicle body will be designed, assembled, and verified from one source. That way, Honda hopes to avoid being supplied with defective parts from its variant suppliers. Honda Quality Philosophies According to Berger (2011), the emphasis on quality at Honda has been strengthened by the two key philosophies that were coined by the company’s founder – Soichiro Honda i.e. The Three Joys and Respect for the Individual. The Three Joys philosophy in Honda is taken to mean total satisfaction for every stakeholder in the buying, selling, and manufacture of the company’s products. In relation to quality, this philosophy implies that as long as Honda continues to deal in quality products, its production team will feel satisfied with their own products, the end consumers will be happy with the quality of the products they buy, and the dealers and distributors will be confident in dealing with Honda’s products (Berger, 2011). The Respect for the Individual philosophy, on the other hand, fosters the spirit of valuing every stakeholder in Honda’s business chain. This respect is reflected in the quality of products being produced, distributed, and sold to the company’s customers. According to this philosophy, dealership in poor quality products amounts to disrespect to the dealers, customers, partners, and the community at large (Berger, 2011). In contrast to Deming’s theories of quality management in which respect for employees was emphasized more, Honda’s philosophies give equal measure of respect to every stakeholder in the business. In relation to Philip Crosby’s principle of “The Definition of Quality is Conformance to Requirements” (Charantimath, 2006), Honda’s two philosophies fit quite well. Other gurus in quality management also emphasized the same. Most importantly, however, is that for organisation’s philosophies to be effective there is need for communication of those philosophies to the stakeholders (Daft, & Daft, 2007). Honda communicates its two philosophies to its employees by outlining them in all departments and sections in the company across all its subsidiaries. The Use of Quality Tools, Measurements, and Benchmarks In order to effectively track its processes, Honda Co. uses Statistical Process Control. Through such tests as the Door-Closing Speed Test, Honda managed to see through potential quality problems way before they even occurred, particularly during the manufacturing process. Another quality tool for Honda is benchmarking. According to Mito (2012), in order to meet its quality standards, the company began benchmarking mainly German luxury vehicle manufacturers for such features as the internal finishing and vehicle body design. In particular, it has benchmarked the Audi A3 luxury car. In view of Honda’s two principle philosophies explained above, Honda has been able to develop a House of Quality (HoQ) in which it clearly defines the interaction between what the customers want and what the company actually produces – quality. In its quest to implement six sigma technique of manufacturing, Honda introduced the Takai flexible production method in half a decade ago in which it uses efficient reprogrammable robots in its production system (Berger, 2011). Other proposed quality tools at Honda (though not yet in full use) include the Pareto Charts and Baldrige Awards. The Current Quality Management System As was rightly mentioned previously, the Honda Co. has put certain strategies in place to enhance its quality agenda, and these include improvement of their evaluation system, establishment of an integrated vehicle control system, streamlining the company’s quality assurance for parts bought from suppliers, setting standardized quality specifications, and establishment of a customer satisfaction identification system. Having realized that some of its suppliers sold it defective parts, Honda Co decided to implement supplier development in its supply chain. The company hoped to achieve this by stiffening its quality assurance of its auto parts it bought from its suppliers. Specifically, it accomplished this through coordinating with all its parts suppliers with the view of ensuring that they clearly understood the company’s parts specification in details even prior to an order being placed by Honda (Mito, 2012). Secondly, Honda set out to establish a centralized and integrated vehicle control system in which the design and verification of all vehicle control systems were to be done in an integrated manner. Specifically, it achieved this by establishing a parallel organisation whose sole purpose was to design and reliably test all the systems of a car as well as parts both during and after their manufacture (Mito, 2012). Thirdly, through a skill based quality management, the company was able to establish an effective and highly professionally qualified evaluation system of both its hardware and software engagements in production (Mahadevan, 2010). Fourth, one of Honda’s strategy and long term goals is in the administration of an efficient and reliable customer feedback/ satisfaction system. This strategy is aimed at ensuring that the company benefits from the feedback from its clients regarding the quality of their products (Mohanty, 2008). After all, it is customers that get to enjoy the products. Depending on the trend of feedback collected, it can then take normative decisions as to whether to adjust a quality problem or maintain the quality of products being manufactured. Finally, and perhaps more importantly, Honda adopted the Global Honda Quality Standard (G-HQS) in April 2005 through which all Honda products all over the world would be able to be thoroughly and uniformly certified (Berger, 2011). In order to conform to the internationally set standards for quality, Honda’s G-HQS had to be ISO 9000 certified. Moreover, the company adopted a Total Quality Management (TQM) system in which Honda embraced complete quality assurance in virtually all its sections and departments ranging from the supply, production, all the way to distribution. According to the company, their quality standards are aimed at seeing to it that uniform certification of all Honda products globally is applied so that at any given time, customers can expect to have unvaried products in terms of quality. The Existing Deficiencies Workplace Quality Problems Despite its resolve and strive to implement quality management strategies in its operations, Honda still experiences some deficiency in a few respects. For instance, the company seems to have a weak organisational culture which is evident in the high employee turnover. It is recommended, therefore, that Honda fosters this culture through annual meetings in which employees can get to celebrate being part of the company. Secondly, the company has not had a specific customer feedback monitoring system despite having emphasized on improving their customer satisfaction knowledge base. It is tempting to conclude that there is almost no solid strategy that the company has adopted to help implement its customer feedback monitoring. For that reason, it is recommended that it sets specific means of collecting customer feedback through such methods as online questionnaires, online chat rooms, and online customer reviews. It is also evident that Honda’s management is largely founded on the management principles of its founders – Soichiro Honda and Takio Fujisawa. Whereas their management principles were alright, they might not necessarily flow well with the current organisational needs. With the changing times, it is recommended that this management system be slightly modified in order to suit the current management needs in organisations. Accordingly, the company should consider adopting different organisational management schemes in its various divisions worldwide since different geographical regions will require management styles that are not necessarily similar (Nersesian, 2000). Additionally, it was previously mentioned that Honda gave a general approach to the issue of employee affairs management. Unlike Deming’s proposition where the welfare of employees should be highly considered in order for them to give their best in terms of quality production, Honda equally handles all quality management parameters (Berger, 2011). It is recommended that the company an employee motivation and appraisal plan through which employees can feel more appreciated in the company. In fact, this as well is a better way of reducing staff turnover in the company. Conclusion Evidently, the Honda Company’s journey to achieving quality standards has been long. Even though the company has already put in place strategies to ensure quality is achieved, it is never enough. Much still has to be done since quality improvement is a continuous process in the organisation (Mukherjee, 2006). Moreover, the business demands keep changing with time. In such a case, therefore, it is imperative that the company metamorphoses to suit the current needs of the Honda business model. This is partly as a result of the ever changing global business trends as well as the recent technological advancements. References American Society for Quality Control. (1993). The Quality management journal. Milwaukee, WI, American Society for Quality Control. Berger, A. (2011). Global Corporate Strategy - Honda Case Study. München, GRIN Verlag GmbH. http://nbn-resolving.de/urn:nbn:de:101:1-201107181258 Berk, J., & Berk, S. (2000). Quality management for the technology sector. Boston, Newnes. http://public.eblib.com/choice/publicfullrecord.aspx?p=314015 Charantimath, P. M. (2006). Total quality management. New Delhi, Pearson Education. Daft, R. L., & Daft, R. L. (2007). New era of management. Mason, Ohio, Thomson South- Western. Mahadevan, B. (2010). Operations management: theory and practice. Upper Saddle River, Pearson. Mito, S. (2012). The Honda book of management: a leadership philosophy for high industrial success. http://site.ebrary.com/id/10804999 Mohanty, R. P. (2008). Quality management practices. New Delhi, Excel Books. Mukherjee, P. (2006). Total quality management. New Delhi, Prentice-Hall of India. Nersesian, R. L. (2000). Trends and tools for operations management: an updated guide for executives and managers. New York, Quorum Books. Nigam, S. (2005). Total quality management: an integrated approach. New Delhi, Excel Books. The Honda Motor Company. Available at: http://www.honda.com/ Read More