Hinopak Production Managment

 

PRODUCTION OPERATIONS MANAGEMENT &

 

SEC A

TERM REPORT ON

“HINOPAK”

th

5

JAN ‘09

Submitted to:

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TABLE OF CONTENTS ............................ ............................ ............................. ............................. ............................ ............................ ............................ ............................ ............................. .................... ......... ....12 12 OGSM:.............. How Hinopak Develops Its OGSM:.............. ............................ ............................ ............................ ............................ ............................. ...................... ............ ........... ......... ...13 13 Benefits Being Reaped By Hinopak ........................... ............. ............................ ............................. ............................. ............................ ...................... ............. .......... ......... ....14 14 OGSM Next Steps ............................ .............. ............................ ............................ ............................. ............................. ............................ ............................ ............................ ..................... .......14 14 A Live Document: .............. ............................ ............................ ............................ ............................. ............................. ............................ ............................ ............................ ..................... .......15 15 Some Changes to Focus On.............. ............................ ............................ ............................ ............................ ............................. ............................. ....................... ............... ........... .....37 37 Reasons to Test Changes............. ........................... ............................ ............................ ............................ ............................. ............................. .................... ........... .......... ........... ......... ...38 38 STEP 1: PLAN ................... ...................................... ...................................... ...................................... ..................................... ........................ ........ ..39 39

STEP 2: DO................. .................................... ...................................... ..................................... ............................... ................... ............ ............ ........ .. 39 Try out the test test on a small small scale............. ........................... ............................ ............................ ............................ ............................ ........................ ............... .......... ........... ........... .....39 39 STEP 3: STUDY ................... ...................................... ...................................... ................................... ...................... ............ ............ ............ ........ .. 39 Set aside time to analyse the data and study the results.............. ............................. ............................. ........................ ................ ........... .......... .......... .......39 STEP 4: ACT ................... ...................................... ...................................... ..................................... ............................. ................. ............ ............ ...... 40 Refine the change, based on what was was learnt from the test test.............. ............................ ............................ ............................ .................... ........... ........ ...40 40

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LETTER OF ACKNOWLED ACKNOWLEDGEMENT GEMENT

We are truly indebted to Dr. MUFAD MUF ADDA DAL L MIR MIRZA ZA fo for r giv givin ing g us this incredible opportunity to gain exemplary experience of pr prep epar arin ing g a To Tota tall Qu Qual alit ity y Plan for a real world company. He showed commendable gesture of  beli be lie evin ing g in our po pote ten nti tia als and guided us throughout the completion of this project. He had faith in us which helped us overcome all the obstacles and an d de deve velo lope ped d pa pass ssio ion n wi with th regard to the project.

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EXECUTIVE SUMMARY

Hinopak is one of the matc ma tchl hles ess s ma manu nufa fact ctur urer er of  trucks, buses and spare parts headquartered in Karachi which launched itself in a maturing market. Hinopak’s offering combines exclusive services price.

products and at value-added

They have targeted specific segm se gmen ents ts in th the e co cons nsum umer er and business market, taking advantages of opportunities indicated by higher demand for tr trans anspor portat tation ion fa facil ciliti ities es

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INTRODUCTION Hi Hino no Moto Motors rs Ja Japa pan n and and Toyo Toyota ta Ts Tsus usho ho Corporat Corp oration ion in collabora collaboration tion with Al-Futtaim Al-Futtaim •

Group Grou p of UAE UAE and and PACO PACO Paki Pakist stan an form formed ed Hinopak Motors Limited in 1986. In 1998 1998,, Hi Hino no Moto Motors rs Lt Ltd. d.,, and and Toyo Toyota ta Ts Tsus ush ho Cor orpo porrat atio ion n obt bta ain ined ed maj ajo ority rity shareholding in the company after disi disinv nves estm tmen ents ts by th the e ot othe herr two two foun foundi ding ng sponsors. This decision to invest in Hinopak at a time when the country's economy was passing through a depression and the sale of commercial vehicles was at an all time low reflects the confidence their Principals have in the company and their commitment commitment to the Pakistani market. Hinopak is the trusted market leader with over 65% share in the Pakistani Truck and •

Bus is ded a vital of foreign The industry. compan company y Hinopak was founded foun in contributor 1985 1985 and in is saving headqu headquart artere ered d inexchange. Karac Karachi, hi, Pakistan. Hinopak Motors Limited assembles, manufactures and markets world renown ren owned ed Hino Hino diesel diesel trucks trucks and buses buses,, and and spare spare par parts ts pri prima maril rily y in Pakistan. The Company has held the top position in the domestic market for mediu medium m and and heavy heavy-du -duty ty vehicl vehicles es for for 17 conse consecut cutive ive years years an and d is highly acclaimed for quality and technological excellence. excellence.

•

Hinopak is first in commercial vehicles sector to start the establishment of 3S Dealership network, which offers Sales, Service and Spare parts facilities all under one roof. This comprehensive network of 

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offic of fices, es, Servic Ser vice e Deale De rsuntr and Spa par parts tsany Dea Dealer lers s arily are ar e strat st egica cally lly loca locate ted d 3S th thro roug ugho hout ut th the ealers coun co try. y. Spare The There co comp mpan y pr prim imar ily oper oprategi erat ates es in Pakistan, Japan, Australia, New Zealand, Thailand, Canada, and the US. It is headquartered in Karachi, Pakistan and employs 313 people. The company recorded revenues of PKR7, 826.8 million (approxim (appr oximately ately $129.3 $129.3 million) million) during during the fiscal fiscal year ended ended December December 2007. The net profit was PKR590 million (approximately $9.7 million) in fiscal year 2007. •

Hinopak Motors Limited engages in the assembly, manufacture, and mark ma rket etin ing g of Hi Hino no di dies esel el truc trucks ks and and buse buses, s, and and spar spare e pa part rts. s. It manufactures manufactur es bus chassis and various types of bus bodies. The company’s

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bus product line includes Roadliner Shangrila luxury bus for long journeys, Citiliner Intercity buses, Citiliner urban buses, and luxury Senator coach

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and Rapidliner Deluxe coaches. It also manufactures and sells specialized vehicl veh icles es that that are are used used for hauli hauling ng of variou various s suppli supplies es,, such such as food, food, equipment, and machinery. These products include prime movers, high wall dumpers, dumpers, cargo carriers carriers,, garbage garbage collecto collectors, rs, scho school ol buses, buses, mob mobile ile kitchens, beverage carriers, water/fuel browsers, mobile eye clinics, NLC trucks, and mobile registration vans. •

Hinopak firmly believes: o

o

In Total Quality Management; Management; a process for managing quality; it mustt be a continuo mus continuous us way way of life; a philoso philosophy phy of of perpetu perpetual al improvement improveme nt in everything they do Everyo Ever yone ne ca can n impr improv ove. e. A pr prob oble lem m oc occu curs rs wh when en so some meon one e believes that everyone else, excluding them needs to change.

 

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SITUATIONAL ANALYSIS Backed by Hino's expertise Hinopak has achieved standard of quality and excellence that rival the best in the region. With over 39,000 vehicles on road, roa d, Hinop Hinopak ak has has gained gained over over 65% market market share share makin making g it the larges largestt manufacturer in medium and heavy-duty truck and bus industry in Pakistan. HinoPak's product range has been designed and built in Hino's traditions of  automotive excellence to be the leader in its i ts category and the main emphasis has been given to passengers' safety & comfort. Hinopak also offers a complete in-house facility for designing and building buses, ambulances, cargo trucks, dumpers, water boozers and a wide range of specialized superstructures. superstructures. Unlike small body makers who spray paint the vehicles, Hinopak actually uses baked paint to give a longer life and better finish to the vehicles. Even the 36-foot long Rampliners and Roadliner buses are baked in the gigantic ovens at the Body operations plant.

In the face of growing competition, Hinopak is resolved to achieving total customer satisfaction by providing quality products at competitive prices and supported by the best after-sales service in the commercial vehicle market. This quest for excellence is evidenced by the fact that Hinopak is the only manufacturer to succeed in exporting complete built-up buses to the Middle East and African countries.

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Hinopak Hinopa k delive delivers rs only only the safest safest mo most st re relia liable ble pro produc ducts ts and and remain remains s th the e Pion Pionee eerr in supp supply lyin ing g th the e la larg rges estt numb number er of Urba Urban n Buse Buses s th thos ose e are are successfully successf ully facilitating the commuters of Punjab and Sindh. Hinopak is fullyequipped to design and manufacture a wide range of Bus Chassis and all types of Bus Bodies. Hinopak is the first Pakistani commercial vehicle manufacturer to introduce a comple com plete te ra range nge of enviro environm nment ent fri friend endly ly vehicl vehicles. es. It has been been espec especial ially ly developed and designed keeping in mind the rugged terrain in order to meet the requirements of the diverse Pakistani automobile market.

Hinopa Hino pak k is Paki Pakist stan an’s ’s firs firstt au auto tomo mobi bile le co comp mpan any y to export its buses to Middleast and African countries. After successfully establishing itself as the market leader at home, Hinopak pr proc ocee eede ded d to expl explor ore e it its s pr prod oduc uctt potential for the export market. This entry into the export market was an important impor tant mileston mile stone e for Hinopak lead Pakistan into an exciting new and era for the automoti automotive ve industry industry,, fulfilling fulfilling Hinopa Hin opak’s k’s commit commitmen mentt toward towards s the economic growth of Pakistan. The year 2007 marked the year of great success, as Hinopak Motors broke reco record rd in th thre ree e fi fiel elds ds:: volu volume me of sa sale les, s, ch chas assi sis s asse assemb mbly, ly, and and body body fabrication.

Following are the highlights of Hinopak's ongoing achievements, which make Hinopak Motors Limited the leading manufacturer of  trucks and buses in Pakistan. • share. 'Market 'Market Leader' Leader' in Pakistan/ Pakistan/ holding holding over 65% of the Truck Truck & Bus market • First Pakistani automobile company & Hino affiliate to receive ISO-9001 certificate in 1997. First automobile company in Pakistan to obtain ISO14001 Certification on its i ts Environmental Management system. • Listed among the "Top 25 Companies" at Karachi Stock Exchange. • First company to export buses from Pakistan. • Firs Firstt auto automo moti tive ve comp compan any y to in intr trod oduc uce e "3 "3S" S" co conc ncep eptt in heav heavyy-du duty ty commercial commerc ial vehicles market in Pakistan. • Firs Firstt comp compan any y to supp supply ly buse buses s unde underr "U "Urb rban an Tran Transp spor ortt Sche Scheme me"" in Pakistan.

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• Recipient of Employers Federation of Pakistan's Golden Jubilee Award for best HR/IR practices. • Recipient of Corporate Excellence Award from Management Association of  Pakistan. • Recipient of Employer's Federation of Pakistan's Golden Jubilee Award for "Excellence in Productivity". Hinopak Hinopa k has has moder modern n plants plants equip equipped ped with with advanc advance e facili facilitie ties s for for veh vehicl icle e assembly and fabrication of buses and superstructures. These comprise of  mode mo dern rn pain paintt boot booths hs and and baki baking ng oven ovens, s, axle axle asse assemb mbly ly sh shop ops, s, ch chas assi sis s assembly line, trim line, and engine assembly shop, which strictly adheres to high Japanese standards. Hinopak also houses a comprehensive engineering and design design section section with highly qualified qualified professiona professionals, ls, prom promising ising the best solutions to their wide range of customers' requirements.

Hinopak's Hinopa k's pro produc ductt lin line e has thr three ee dis distin tinct ct seg segmen ments ts i.e i.e.. Trucks/ Buses and Specialized vehicles.

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APPLICATION OF ‘OGSM’ PHILOSOPHY AT HINOPAK  Hinopak uses the OGSM methodology to help build a strategic plan for its automobile business.

OGSM: A strategic planning framework that uses a top-down approach to define the Obje Ob ject ctiv ive, e, Goal Goals, s, Stra Strate tegi gies es & Meas Measur ures es (OGS (OGSM) M) of th thei eirr busi busine ness ss.. Th The e output is a clear, simple and concise (ONE page) strategic plan: •

Objective: The objective / vision for their business

“Total Customer Satisfaction”  a set vision for the company.   To T o pr provi ovide de th thee socie society ty wi with th saf safe, e, econo eco nomi mical cal,, com comfor forta tabl blee and en envi viro ronm nment ent fri friend endly ly me means ans of tr tran anspo sport rtat atio ion n by manufacturing and supplying commercial vehicles and services.” 

The missi mission on of Hi Hino nopa pak k Moto Motors rs Limi Limite ted d is is::

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Goals: Trans Translat lation ion of their their vision vision into into speci specific fic go goals als e.g. e.g. tur turno nover ver,, profit, market share, professional organisation etc.

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Hinopak’s goals for year 2009: • • •

Decrease turn over by 6% Increase production by 8% Increase sales by 11%

Strategie Strate gies s & Measur Measures es: What What stra strate tegi gies es (i (i.e .e.. ‘c ‘cho hoic ices es’) ’) will will be necessary in order for you to achieve the goals (& ultimately the vision) and the specific measures (milestones) used to track progress. •

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To achieve the mission they commit themselves: themselves: To the their ir ind indivi ividual dual,, ins instit tituti utional onal and int interna ernati tional onal cust custome omers: rs: to delive deliverr hig high h qualit qua lity, y, safe, safe, durabl durable, e, reliab reliable, le, comfor comfortab table, le, env enviro ironm nment ent–fr –frien iendly dly and economical products and services to their total satisfaction. To their employees: to foster corporate culture of mutual trust; respect for fundamental human rights at work; opportunities for professional growth and personal welfare so that they are proud of being a member of the “Hinopak Family”. To th thee co comm mmuni unity ty and th thee na nati tion on::  to contr contribu ibute te in econo economic mic an and d socia sociall develo dev elopm pment ent by provid providing ing means means of trans transpor portat tation ion and by progr progres essiv sive e localization of the vehicles. To the shar sharehol eholders ders:  to act act in comp compli lian ance ce with with th the e norm norms s ex expe pect cted ed of a subs subsid idia iary ry of th the e Toyo Toyota ta Grou Group p of comp compan anie ies s and and make make a mean meanin ingf gful ul financial return to the shareholders. shareholders.

The OGSM methodology makes a clear distinction between the ‘business’ ‘business’ and the ‘organisation’ i.e. people. In this respect, goals, strategies & measures are developed for both the business and organisation (but united under a single overall objective). How Hinopak Develops Its OGSM:

Following the philosophy – helping businesses build themselves – Hinopak’s OGSM is developed in full partnership with themselves: •

2 day off site ‘event’ (location & logistics to be decided by client)

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On your side: represen representatio tation n from every function function of your business business (ideally 10-20 people) Full OGSM training provided by The Hinopak Group Professional Professio nal facilitator / moderator from Hinopak Post Po st even event: t: full full writ writee-up up by Hi Hino nopa pak k – a ON ONE E page page OSGM OSGM and and recommended ‘next steps’ 

Benefits Being Reaped By Hinopak

The primary purpose of an OGSM is to guide their business to long-term success. An OGSM ensures that they have a medium- to long-term strategic plan pla n that that can can guide guide their their short short-te -term rm choice choices s & target targets s across across th their eir tot total al business busi ness e.g. annual annual sales sales targets, targets, brand acquisiti acquisition on strategy strategy / portfolio portfolio rationalisation, investments in the organisation etc. Hinopak also develops multiple OGSMs that all link to one another. This ensure ens ures s their their differ differen entt busin busines esses ses / divisi divisions ons (3S (3S Dealer Dealersh ship) ip) are uni united ted under a single objective and that cohesive strategies exist between them.

OGSM Next Steps

Many actions emerge following an OGSM, such as: •

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Deploymen Deploy mentt to wider wider organi organisat sation ion: if de depl ploy oyed ed effi effici cien entl tly, y, an OGSM can unite their whole organisation behind a common business objective. This helps ensure their people are focused on achieving the big big pict pictur ure e and and NOT NOT wast wastin ing g ti time me on nonnon-va valu luee-ad addi ding ng work work.. Deplo De ploym yment ent to their their wider wider organ organisa isatio tion n could could tak take e th the e form form of a deployment ‘event’, or a series of training workshops. Deployment Deplo yment to stakeholde stakeholders rs: by shar sharin ing g th thei eirr OGS OGSM with with key key stakeholders e.g. distribution companies, this allows key influences of 

their business to be aware of and be aligned to their objectives and strategies.

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•

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Transla Trans lati tion on in bala balanc nced ed score scoreca card rds s: usin using g Kapla aplan n / Nor orto ton n methods. Development & implementation of measuring tools : some goals are easy to measur measure e e.g. e.g. turno turnove ver. r. For other goal goals s e.g. e.g. having having a profess prof essional ional organisa organisation, tion, Hinpak Hinpak designs designs and implemen implements ts effectiv effective e measuring tools to track progress. For example, cost-effectiveness of  their methods. Re-ali Realignm gnment ent of organi organisat sation ion: once Hinopak is clear on its objective, goals and strategies, they review their organisation to align it fully to the developed OGSM.

A Live Document:

Hinopak believes that an OGSM is a live document and should be reviewed regularly, i.e. annually. The objective of each review is to take into account progress prog ress and any changes changes in the macro-en macro-environ vironmen mentt / consume consumerr tren trends, ds, then update the goals, strategies and measures accordingly. accordingly.

HINOPAK MOTORS LTD. - OGSM: Highly Confidential

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OBJECTIVE Be the leading facilitator of commercial vehicles and services MEASURES (by 2012 STRATEGIES GOALS (by 2012) latest) Markets, Channels, Categories - ≥60% revenue from 8% profitability Canada and USA ($11M) Focus on (key priorities): - Focus on Distribution Pakistan, USA, and Australia operations $140m sales Serve 250M consumers in Pakistan, Japan, Australia, New Zealand, Thailand, Canada, and the US

Focus on distribution Grow retail operations Exit non-profitable Communications operations (outsource)

Focus on luxury (vs prestige Be facilitator for specialized commercial  / mastige)

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- 5 year transition plan in place - 15%-20% CAG (support focus specialized vehicles expansion) - All catogories ≥ 8% profitability

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vehicles

Actions to Take -Forge strategic partnership to outsource logistics -Invest in BIC I.T. operations -Improve efficiency by leveraging technology -Understand the consumer -Invest in market data -Maintain positive cash flow -Keep inventory at manageable levels -Drive customer and consumer satisfaction culture -Build, document, implement and review BIC systems & processes -Drive Hinopak brand amongst key stakeholders (NOT consumers)

- Identify strategic partner - All logistics &  warehousing outsourced by end 2009 (except US) - Automated payment for collectables / receivables ≥90% cash flow (reduction in cash handling) - 0.5% sales revenue invested in consumer research - Build telemarketing unit (200 operators) by Q3 2009 - For key markets (Japan, Canada, USA) buy data for all categories worth $30M+ (on-going) - +ve cash flow with no external finance (across group) (on-going) - Max. 45 stock days (group average) - All business units to have customer satisfaction measurement tools in place by End 2009 - Satisfaction (surveys): 90% “satisfied” or “very satisfied”  - Key systems &  processes reviewed, documented &  implemented (trained) by End 2009

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Efficient, well trained and motivated organisation

Building the Organization Invest in training

- Corporate Training Department in place by end 2009 (with clear -Comprehensive overview of  deliverables) evaluation & compensation - Minimum 5 working system days per year per employee invested in training -Leverage diversity as key - Training plan in place &  competitive advantage tracked for 100%

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-Create healthy work / life balance -Review and live “Hinopak Culture” 

-Invest time in creating well-motivated organization -Leverage Intranet as a key organizational tool -Activity build / support the communities in which we serve

employees - By mid 2009; clear job descriptions / work plans and reporting lines for 100% employees - New system in place by End 2009 - Compensation directly linked to performance that build the business AND organization - 50% local talent / 50% expatriate - 30% women. At band 5 and above (inc. Board level) 2/10 positions filled by women - Maximum 50 hours working week - Culture of “take 100% holiday entitlement – undisturbed”  - Hinopak culture – mission, values, principles etc. reviewed and approved by board (mid 2009) - All senior management trained to promote culture across whole organisation (Q3 2009) - Employee survey: key measures (e.g. perfection, integrity) top scores (on-going) - Job satisfaction (survey): 90% “satisfied”  or “very satisfied”  - Formalise / standardise informal rewards &  recognition programme (end 2009) across group - BIC Intranet tool that promotes networking and learning culture in a transparent environment - 2% profits donated to  “charitable causes” / each legal entity to support charitable cause

BIC = Best In Class Hinopak is the leading manufacturer of automobiles

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MARKET SUMMARY  TARGET MARKET : 1.

Institutions: These are the main customers including: •

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Educational centers (universities, schools and colleges). Pakistan Army. Pakistan Navy. Pakistan Air Force. Government.

• • • • • • •

MNCs (Shell, Caltex, Coca Cola). Transport Companies. Pakistan Cricket board. Town Municipal Administration. Administration. Police. Water supplying corporations. corporations. Oil Companies.

Order from Coca Cola Beverages The quality of the vehicle speaks for itself, &  this is the reason why it has been receiving repeat bulk orders from various institutions on regular basis. The Company has received re repe peat at order ers s fr fro om le lea adi ding ng Bever verage age manufacturerr “Coca Cola Beverages Pakistan manufacture Ltd.”, which placed an order of 57 units of  Beve Be vera rage ge ca carr rrie iers rs on Hi Hino no Dutr Dutro, o, Hi Hino no FG1JKPB &Hino SG1JDP, truck models. Thes Th ese e repe repeat at or orde ders rs demo demons nstr trat ate e th that at existing customers are benefiting from their adoption of the Hino technology.

 

Hinopak Delivers Citiliner buses to Institute of  Management Science Hinopak recently delivered 02 units of Hino Citiliner buses to Institute of Management Scienc Sci ences, es, Peshaw Peshawar. ar. Mr. Faridu Faridulla llah h Khan Khan Manager Sales & Product Support handed over ov er th the e buse buses s to Mr. Mr. Nase Naseer er Al Alii Khan Khan,,

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Director Institute of Management Sciences, Peshawar. Dr. Naseer Ali Khan on the occasion said, their steady growth now calls for expansion of th thei eirr tr tran ansp spor ortt fl flee eet, t, wher where e th they ey will will incl includ ude e high high perf perfor orma manc nce, e, hi high gh qual qualit ity, y,

Hinopak Delivers Hino Pakistan Cricket Board

comfo comforta rtable ble and and durabl durable e vehicles like Hino buses.

Senator

Coach

to

Recently Recent ly Hinopa Hinopak k delive delivered red Hino Hino Senator Coach to Pakistan Cricket Board. The handing over ceremony of one of these Coaches was held at National Cricket Stadium, Karachi. Mr. Mohsin Khan, regional GM Sindh, PCBreceived the symbol sym bolic ic key of the vehicle vehicle from from Mr.M. Irfan Shaikh, Director Sales & Marketing.

Order of 10 units of Hino Dutro from TMA, Bin Qasim In order to tackle the problem of  solid waste management TMA(Town Municipal Adm Ad minis inistr trat atio ion) n) Bi Bin n Qasi Qasim m has has rece recent ntly ly plac placed ed th the e or orde derr of 10 unit un its s of Dump Dumper ers s on Hi Hino no Dutr Dutro o Truck Tru ck Chass Chassis. is. The Hino Hino Dum Dumper per

la las stin ing g veh vehicle icles s will ill ful ulfi fill ll the the dem de mandi anding ng ta task sk of so soli lid d wa wast ste e management in an economical and efficient manner.

trucks have been supplied in a very short time to meet the customer’s urgent requirement. These dumpers are specially designed to carry maximum load and are able to mane maneuv uver er in co cong nges este ted d and and narrow roads. The robust and long

Repeat Order from Punjab Police Recently Recent ly Punjab Punjab Police Police place placed d an order of 10 units of Troop Carrier on Hino DUTRO chassis. The above

optimum optimu m price price in pre previo vious us order order,, high quality units delivered well in time and the best product service.

or orde derr was was awar awarde ded d to Hin ino opak pak becau bec ause se of the perfo performa rmanc nce e and

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2. Individuals: The indi The indivi vidu dual al cust custom omer ers s buy buy th the e pr prod oduc uctt to earn earn mone money y dire direct ctly ly by operating their product. It is their main business.

MARKET NEEDS: Pakistan is a nation with a diverse economy that includes textiles, textiles, chemicals chemicals,, food processi processing ng,, agriculture and and ot othe herr in indu dust stri ries es.. It is th the e 25 25th th larg larges estt economy in the world. world. Approximately 49% of adults are literate, and life expectancy is about 64 years. The population, about 168 million in 2007, is growing at about 1.80%. Bus is a relatively cheap and easy method of transport, with services run by both public and private companies. With th With the e rebu rebuil iltt of nati nation onal al hi high ghwa ways ys,, co cons nstr truc ucti tion on of Makr Makran an Coas Coasta tall Highway, the construction of Motorways such as M1, M2, M3 etc, grew the demand of buses and trucks for transportation and commercial purposes.

MARKET TRENDS: Mobility has been an important objective for mankind since the beginning of  time. The invention of the wheel about the year 3000 B.C. was the first great achievement. Then in the 18th century the steam engine, one of the greatest gifts of the Industrial Revolution made a major impact on the life-style of the human race. The mating of the 'wheel' with the 'engine' made it possible to transform animal driven carriages into automobile. From the 18th century to the 20th century the history of the automobile is a tale tal e of human human ingen ingenuit uity y and and passio passion n for for comfor comfort, t, fas fastne tness ss,, safety safety and a better quality of life. Heavy truck demand is driven by growth in the agriculture, manufacturing, construction, and retail sectors. Bus demand is driven by growth in the number of  school-aged children and investment in public transportation systems. The industry is capital-intensive.

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MARKET GROWTH: In the year ended December 31, 2007 Hinopak made the highest ever profit in its history. The production and sales revenue have also been the highest. While the sale of locally manufactured trucks declined nationally, Hinopak was able to claim a larger share in the reduced numbers.

National Sales: The national growth in Large Scale Manufacturing in 2007 fell to 8% from 9% in 2006 and an average of 11.6% over the last five years. In the automotive sector it fell more steeply. In 2007, it grew only by 3.8% against the fiveyear average of 25.8%.

The increased freight movement because of growth in industrial production and exp export orts s ha had d su subst bstant antial ially ly inc increa rease sed d the dem deman and d for tru trucks cks in rec recen entt years. The benefit of this increase however all went to the second-hand or illegally imported (later regularized) heavy and medium duty trucks. The sale of lo loca call lly y pr prod oduc uced ed tr truc ucks ks of th this is ca cate tego gory ry in 20 2007 07,, ir iron onic ical ally ly,, fe fell ll to 2544units from 3154 in2006. The sale of light duty trucks however increased increased from 1404 to 1554.

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The sales of buses increased by 16% from 928 in 2006 to 1078 in 2007 as the sales tax was reduced to zero towards the end of 2006. However, it still fell considerably considerably short of the level of 2004 when when1411 1411 buses were sold. The bus sa sales les,, it se seems ems,, wil willl rem remain ain dep depre ress ssed ed til tilll the tim time e th the e se secon cond-h d-han and d imports are altogether stopped and the policy incentives for urban transport, under consideration since long, are announced by the federal and provincial governments.

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OUR RECOMMENDATION TO HINOPAK TO USE “JIT MANUFACTURING” Just Just-i -inn-ti time me (J (JIT IT)) manu manufa fact ctur urin ing g is a way way of mana managi ging ng manu manufa fact ctur urin ing g systems that could could reduce waste, waste, and lower cos cost, t, thus increasing increasing profit. In its most most basic basic explan explanati ation on and pr princ incipl iple e JIT is eve every ry compon component ent in the manuf man ufact acturi uring ng system system arriving arriving just in time time for for it to be use used. d. Since Since th the e products arrive just in time there is no need for stock holding facilities of any kind. The most common common industry industry using JIT manufacturing manufacturing is the automobile automobile industries. Therefore, it’s advisable for Hinopak as well to apply JIT principle in its production system. The following are more specific areas that could be corrected to improve efficiency: •

overproduction - waste from producing more than is needed

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•

•

•

• •

time spent waiting - waste such as that associated with a worker being idle whilst waiting for another worker to pass him an item he needs (e.g. such as may occur in a sequential line production process) transportation/movement - waste such as that that as ass sociat iated with ith transporting/moving items around a factory processing time - waste such as that associated with spending more time than is necessary processing an item on a machine inventory - waste associated with keeping stocks defects - waste associated with defective items"

Objectives

An overall objective is to limit resources used in the manufacturing manufacturing system to only those needed. needed. There are six other other objectives that are a key part part to obtain the overall objective. •

•

•

•

•

•

The fir first st is to optim optimize ize each each indivi individua duall step step of th the e manuf manufact acturi uring ng system. syst em. In other words words make part as efficient efficient as poss possible ible to get the most from the least. Second Seco nd is to make make a product product with no flaws or defects. defects. This ens ensures ures that each part of the production line will go as planned. Third is to reduce the manufacturing cost, the cheaper it is to make the product the larger the profit for the company. Fourth is to make make a product that that is demanded demanded by consum consumers. ers. If there is no demand then there is only money lost. Fifth there needs needs to be flexibility in the system. Things will not always go as planned and there needs to be a flexible enough system so that it can be modified easily. Sixth, there needs to be a strong and reliable relationship between custome cus tomers rs and suppliers suppliers.. Since Since JIT technique technique has virtually no extra stock or materials the companies need to rely on each other to be reliable and on time.

These objec These objectiv tives es need need to be taken taken into into consi consider derati ation on by Hinopa Hinopak k to integrate JIT, and are crucial to being successful successful in the integration. Keys to Implementation and Integration

Just-in Time manufacturing is difficult to setup because each company needs to personalize for their type of company to fit their specific needs. Although many companies seek help from consultant firms for the difficult task ahead, there are many key points that they can address themselves. Changing over the current output production in the company’s factories to limite lim ited d or const constant ant quant quantity ity is a good good start start in th the e proces process s to deter determi mine ne exact exa ctly ly how how many many re resou source rces s are are going going into into making making a certai certain n amou amount nt of  products. Setup time is an issue issue that each company company can look to improve its

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efficiency. A good rule is to be able able to change the setup setup in a single digit time time frame. fram e. Schedule Schedule meeting meetings s on a regular basis with the workers workers to gather information on problems as well as possible solutions, and other suggestions. suggestions. This will make the workers feel involved in the implementation, and may resu result lt in a posi positi tive ve atti attitu tude de abou aboutt th the e ch chan ange ge over over.. Th This is co coul uld d mean mean redesigning several several areas such as the product product or the process process itself. Once a reduc red uced ed setup setup time time is achiev achieved ed the system system now has the ability ability to more more efficientl effic iently y produce produce smaller smaller batches batches of products products.. However However,, this will require require delive del iverie ries s of material materials s to be more more often. often. Reduc Reducing ing time in betwe between en the transport trans portation ation of the individual individual parts can also improve improve the efficiency. efficiency. To accomplish this, work stations can be moved closer together. As well as the amount of time a part is waiting to be processed at an individual station can be lowered. lowered. Finding Finding a supplier supplier closer closer to the factory factory or convinci convincing ng one to relocate reloc ate closer closer will also reduce lead time. time. Using Using down time is also another way to help with productivity productivity and efficiency. efficiency. While a worker or machine machine is wait wa itin ing g for for ot othe herr part parts s of th the e sy syst stem em to be us used ed main mainte tena nanc nce e ca can n be performed on the machinery. machinery. This makes the most most of the workers workers time and can help to prevent future future breakdown breakdowns s do to lack of maintena maintenance. nce. Provide Provide the workers with more more responsibilities responsibilities and training. This can include training training on several machines, ability to maintain the machines, and perform correct inspection. This will make the companies work force more versatile and can help with issues of of absences. absences. Although the kanban system is not required in a JIT system it is a good organizational tool to help eliminate misunderstandings misundersta ndings and increase increase communication. communication. These points are things things the company can control and improve to help the successful integration of the JIT system.

Suppliers

Since JIT is a stockless production and does not allow room for defects or errorr having erro having trustwor trustworthy thy reliable suppliers suppliers is an important important factor. When When choosing a reliable supplier, consider their location and prior occurrences with labor issues such such as strikes. Once a reliable supplier is found, found, creating a good relationship relationship is the next step. step. This is a two way relationship relationship in that bot both h the company and supplier get some positive out of it. The company gets products or material with no errors or defects, a quality partnership, and gets everything on time according according to delivery schedules. schedules. Also the supplier must must have ha ve a back back-u -up p pl plan an in inca case se for for emer emerge genc ncie ies s su such ch as stri strike ke,, weat weathe herr conditions, and any any other problem that m many any arise. The supplier gets a long long term ter m contra contract, ct, const constant ant deman demand d fo forr their their produ product, ct, and a good good const constant ant price.

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 Advantages

There are many many advantages advantages of that Hinopak Hinopak can receive receive from JIT. Listed Listed below are some of the advantages: • • • • • • • •

Possible increase in profits Quality products Quicker setup Eliminates costs of storage facilities More flexible employees Quality relationships with suppliers Elimination of waste No down time

Disadvantages

Although the advantages outweigh the disadvantages, the disadvantages can have a negative effect effect on the company. company. Listed Listed below are some of the disadvantages: • • • •

Long term commitment Possible large initial cost with no short term returns Problems with supplier can cost company large amounts of money Risk of never successfully implementing JIT

Conclusion

Just-in-t Just-i n-time ime manufa manufactu cturin ring g can be a positi positive ve influe influence nce on Hinop Hinopak. ak. However there are many risks associated with attempting to implement JIT manufacturing manufacturin g techniques. techniques. When looked at at it appears to be a very simple simple,, quick, and easy thing thing to do. In reality it is a very complicated complicated technique technique that takes long term a initial cost with no guarantee of success. If implemen impl emented ted commitment success successfully fully and it would wou ld eliminate elim inate waste, make the company company more mo re pr pro oduct ductiv ive e and and more more ef effi fici cien ent. t. It do does es th this is th thro roug ugh h shor shorte terr transport trans portation ation and increase increased d communic communication ation.. Although Although there are many companies that are successful, successful, m many any companies are are not. Even though there there are are en enor ormo mous us ri risk sks s many many stil stilll cons consid ider er impl implem emen enti ting ng JIT JIT for for it ma many ny advantages.

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MARKET SEGMENTATION Hinopak’s customers: Those people who are looking to make money by operating their product. Like CNG bus owner will buy CNG bus from them because this bus will carry

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passengers from one point to another and thus earn money through fares charged to the passengers. They have done Behavioral Segmentation. Unlike cars these Buses and trucks are very expensive. They are bought when there is a special need on special It isto basically a Procedural segmentation.The When there is a need,requirement. customers come them with different requirements. Sales force attracts them and then the customers usually give their specifications and the structure they want on the chassis. For e.g. a customer might want a High wall trailer built on FM2PKPA 6X4 Prime mover but with changes in standard specification.

TWO TYPES OF CUSTOMERS 1. 

Institutional Customers: Description: 

These are the main customers. They include Pakistan Army, Pakistan Air Force For ce,, Pakist Pakistan an Navy, Navy, Shell Shell,, Total, Total, Caltex Caltex,, Cit City y Distri District ct Gover Governm nment ent Karachi, NED, KU, CNG Bus owners and others. 

Behavior:  These are the customers who buy in Bulk.



They want to add buses to their fleet. For e.g. CNG bus owner would like to add new CNG buses to his existing fleet. 

These customers have different specifications, specifications, deals, and different sort of requirements which is required by their business.  They buy products with customized body. For e.g. some client might need bowzer with high density. 

Special attention is paid to these customers as they buy in bulk and buying effects their business. 

Deliveries are made over a period of time as it requires time to complete the paperwork, and then assemble the product according to the demand of the customers. Delivery depends upon who came first and the number of trucks or buses already in the queue for the production. 

What they want and the use of product:

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The institutional customers buy the product to earn money indirectly by operating their product. In other words it helps them in their main line of  business.  Reliability & Availability Customers look for reliability and availability of parts. 

The auto be easily available in the market and they should be parts able toshould get service in remote areas.  Objective: The objec objectiv tive e of cust custom omers ers while while buying buying the produc productt is tha thatt the cost cost should be minimal, the product should be helpful in overall business and the most important factor is that the operating cost should be low. Also the initial cost should be low.  Price

sensitivity:

Institutional clients are more price sensitive then the individual clients. You cannot dictate them. The product has to be very good. 80% of the times customers demand low price and they are looking for lowest tender. Percentage (%) of sales:

The sales of Hinopak overall increased in the past. The ratio of Institutional to Individual customers is 80-20 %. As in past the purchases of Institutional customers increased with the increase in purchases of the government and the armed forces. But in the past few months the ratio has changed to 60-40%. This is because of the increase in the purchase of individual customers and the decline in governme gove rnment nt purchase purchases s due to political political instabilit instability. y. The governm government ent is not building infrastructure infrastructure as it was in the past. Therefore, they are buying less. So the sale to this segment, i.e. Institutional customers, is 60-65% of the total sales. As in September 2008 Hinopak sold 149 trucks, 89.4 trucks (estimated as 60% of 149) were sold to institutional customers. Also because of the high inflation all the customers are holding money and thus the sales of the industry has declined as buying of such vehicles is not everyday task and involves high investment.

2. 

Individual Customers: Description:

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Dealers, people who want to make money while using the product. 

What they want:

The customers in this segment want a product which is profitable. They 

look forcost profitability of less. the product. Operating should be  The auto parts should be easily available in the market and they should be able to get service in remote areas.  Service: Hino has specialized mechanics and they are given free training as well paid training. These mechanics come for training to Hinopak from all over Pakistan. Since the service is available to customers everywhere in Pakistan, so customers are happy. capacity:   Loading The capacity a truck/ bus can carry is also an important factor which is infl influe uenc ncin ing g the custo ustom mer ers s. As we know know that hat the the publ public ic Bus Buses everywhere in city are overloaded and this also happens in the case of  trucks that high they loading are over loaded.asSo the look for trucks which have capacity well ascustomers it can takedo overload.  A product which has a high resale value and can be easily sold. 

Use of product:

The indivi individua duall custo customer mers s buy the the pr produ oduct ct to earn earn mone money y direct directly ly by operating their product. It is their main business. They buy these products for commercial use. 

Objective:

The objective of customers while buying the product is that it is profitable as th the e us use elook of for th the e profitability. pr prod oduc uctt is They to make ma ke pr prof it out out of cost. it by Itrunn rushould nnin ing g be it, it, customers look forofit Operating less.  Percentage (%) of Sales:

The ratio of Institutional to Individual customers is 80-20 %. But due to decrease in buying of institutional customers as well as the increase in purchasing of individual customers, who buy from authorized dealers, the sales ratio has changed to 60-40% recently. This was the ratio some years back. For example, the sales of trucks in September ’08 were 149 so approximately 60 trucks were sold to individual customers. Selling Strategy:

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The selling is done by using using the advantage advantage Hino has in the market market of being the market leader and the favorable opinion market has about the products of Hino. As the brand image is big, the company uses it in selling the product. Hino is known product.for its reliability and availability. They use this image in selling their Also, the goodwill is high. They have free service camps in which they give service free of cost to the customers; they are given free oil change and a new filter. A new filter usually cots around Rs.7000. so it’s a big thing for the customers. The price of Hino’s products are relatively higher than their competitors, this is because their product is of good quality. They easily use this image. The quality of the competitor’s products is lower mainly because they sell low quality products

COMPETITIVE ANALYSIS July'08 Hino

209

Prod. Sale

180

Aug'08

Sep'08

Cumulative

133

155

497

176

149

505

TRUCKS  

July'08

Aug'08

Sep'08

Cumulative

Prod.

209

133

155

497

Sale

180

176

149

505

Prod. Sale

116 79

48 34

54 11

218 124

Prod.

-

-

-

-

Sale

-

-

-

-

Prod.

99

27

26

152

Sale

48

41

24

113

Prod.

68

35

23

126

Sale

40

36

15

91

  Hino   Nissan   Dong Feng

Master   Isuzu BUSES Hino

84

July'08 54

Aug'08 12

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Sep'08

Cumulative 150

32

 

41

64

43

148

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

  Nissan

Dong Feng

Master

Isuzu

TOTAL BUSES

24

6

18

48

11

2

1

14

Prod.

108

60

30

198

Sale

52

66

44

162

ANNUAL PLANT CAPACITY TRUCK

 

Hinopak Motors Ltd.

10,000

Ghandhara Industries Ltd.

3,000

Sind Engineering Ltd.

3,000

VPL Limited

500 ****

Master Motor Corporation Ltd.

8,050

BUS

 

Hinopak Motors Ltd.

2,000

Sind Engineering Ltd.

1,000

Ghandhara Industries Ltd.

1,800 ***

Ghandhara Nissan Ltd.

-

Capacity Planning at Hinopak

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  Process Flowchart

APPLICATION OF TOTAL QUALITY MANAGEMENT AT HINOPAK  1. Pursu Pursuing ing New Strate Strategic gic Think Thinking ing

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Firs Firstt in co comm mmer erci cial al vehi vehicl cles es sec ecto torr to star startt th the e es esta tabl blis ishm hmen entt of 3S Dealership network, which offers Sales, Service and Spare parts facilities all under one roof. This comprehensive network of offices, 3S Service Dealers and Spare parts Dealers are strategically located throughout the country. Hinopak's product line has three distinct segments i.e. Trucks/ Buses and Specialized vehicles. Knowin wing g their their Custo Customer mers s 2. Kno

Big vehicles, like trucks and buses, are bought when there is a special need on specia speciall re requi quire reme ment. nt. Hinopa Hinopak k basic basicall ally y has Proce Procedur dural al segme segmenta ntatio tion. n. When there is a need, customers come to them with different requirements. 3. Setti Setting ng True True Custom Customer er Requir Requirement ements s

Custom Cust omer ers s have have di diff ffer eren entt sp spec ecif ific icat atio ions ns,, deal deals, s, an and d requirements which is required by their business.

diff differ eren entt

so sort rt of 

Sales force attracts attracts custome customers rs and then the customers customers usually give their specifications and the structure they want on the chassis. For e.g. a customer might want a High wall trailer built on FM2PKPA 6X4 Prime mover but with changes in standard specification. Concentrat entrating ing on Preven Prevention, tion, Not Not Correction Correction 4. Conc

Unlike small body makers who spray paint the vehicles and then later receive numerous customer complaints, Hinopak actually uses baked paint to give a longer life and better finish to the vehicles. 5. Red Reduci ucing ng Chro Chronic nic Was Waste te

Hinopak Motors Ltd. has reduced its chronic waste by 18% and as a result its annual plant capacity has increased to 10,000 6. Pursu Pursuing ing a Continu Continuous ous Improvem Improvement ent Strategy Strategy

Hinopak’s approach to continuous improvement:  “The best approach is to dig out and eliminate problems where they are assumed not to exist.” 

7. Using Structu Structured red Methodolog Methodology y for Process Improve Improvement ment

Hinopak believes in using structured methodology for process improvement. Improv Imp roveme ement nt effort efforts s in Hinop Hinopak ak genera generally lly focus focus on impro improvin ving g proces process s

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productivity, quality, and cycle time. Intangible customer needs (ease of use, trust, etc.) are quantified, Critical Success Factors (CSFs) are determined, and performance is evaluated. The process is mapped and quality issues are examin exa mined. ed. Brains Brainstor tormin ming g is us used ed to resolv resolve e issues issues,, elimin eliminate ate non-v non-valu alue e added activities, and reduce cycle times. Action plans are developed for high priority recommendations.. recommendations.. Hinopak Hinopa k applie applies s Afte Afterr-Ac Acti tion on Re Revie view w (A (ARR RR)) pr proc oces ess s for for co cont ntin inuo uous us improvement, improvemen t, which is actually Lean Six Sigma (LSS) in disguise.

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Reduci ucing ng Vari Variati ation on 8. Red

Hinopak follows the following steps in reducing its undesirable variations

Some Changes to Focus On

Eliminate Waste o Remove any activity or resource in the organisation that does not add value to an external customer/patient customer/patient Improve Work Flow •

•

o

This is an important way to improve the quality of service provided by any process

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Stock Control o Stock of all types is a possible source of waste; understanding where stock is stored is the first step in finding opportunities for improvement improvement Focus on Variation o Redu Re duci cing ng va vari riat atio ion n im impr prov oves es th the e pr pred edic icta tabi bilit lity y of ou outc tcom omes es an and d •

•

reduces the frequency of poor results We suggested Hinopak to use PDSA cycle for testing a change. Once a team has set an aim, established its membership, and developed measures to determine whether a change leads to an improvement, the next step is to test a change in the work setting • •

The Plan-Do-Study-Act (PDSA) cycle is shorthand for testing a change This is a scientific method for action-oriented learning

Reasons to Test Changes • •

• • •

• •

Increase your belief that the change will result in improveme improvement nt Decide Dec ide whi which ch of se sever veral al pro propos posed ed cha chang nges es wil willl lea lead d to the des desire ired d improvement Evaluate how much improvement can be expected Decide whether the proposed change will work in the real world Decide which combinations of changes will have the desired effects on the important measures of quality Evaluate costs, social impact, and side effects Minimise resistance upon implementatio implementation n

PDSA CYCLE

The "Plan-Do-Study-Act" (PDSA) cycle is shorthand for testing a change — by planning it, trying it, observing the results, and acting on what is learned. This is the scientific method, used for action-oriented learning. Use of PDSA cycles is a way of testing an idea by putting a change into effect on a temporary basis and learning from its potential impact. This approach is quite different from the approach traditionally used in healthcare settings, where new ideas are often introduced without sufficient testing. A PDSA cycle involves testing change ideas on a small scale. By building on the learning from these test cycles in a structured and incremental way, a new idea can be implemented with a greater chance of success.

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There are four stages to a PDSA cycle: Step 1: Plan

Plan the test or observation • •

•

State the objective Make Mak e pre predic dictio tions ns abo about ut wh what at wil willl happen and why Develop a plan to test the change. (Who? What? When? Where?)

Step 2: Do Try out the test on a small scale

•

Carry out the test Document problems and

•

unexpected observations Begin analysis of the data

•

Step 3: Study Set aside time to analyse the data and study the results • • •

Complete the analysis of the data Compare the data to your predictions Summarize and reflect on what was learned

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Step 4: Act Refine Refi ne th the e chan change ge,, base based d on what what was was lear learnt nt from the test • •

Determine whatfor modifications Prepare a plan the next testshould be made

9. Usi Using ng a Balan Balanced ced Appr Approac oach h

We als also sugge ugges sted Hin inop opa ak to use use a bala balanc nce ed approach by using two systems for improvement. Two Systems for Improvement

Both th Both the e Le Lean an and the Six Sigma methodo methodolog logies ies have proven proven tha thatt it is possib pos sible le to ach achiev ieve e dra drama matic tic imp impro rovem vement ents s in co cost, st, qu quali ality ty an and d tim time e by focusing on process performance. Whereas Six Sigma focuses on reducing vari va riat atio ion n an and d im impr prov ovin ing g pr proc oces ess s yi yiel eld d by fo foll llow owin ing g a pr prob oble lemm-so solv lvin ing g approach using statistical tools, Lean is primarily concerned with eliminating waste and improving flow by following the Lean principles and a defined approach to implement each of these principles. However, using either one of  them alone has limitations: Six Sigma will eliminate defects but it will not address the question of how to optimize process flow; and the Lean principles exclude the advanced statistical tools often required to achieve the process capabilities needed to be truly 'lean'. Most companies embarking embarking on Lean and Six Si x Si Sigm gma a cr crea eate te th thei eirr ow own n co comb mbin inat atio ion n - pi pick ckin ing g an and d ch choo oosi sing ng wh whic ich h elements to emphasize. However, we suggest Hinopak to embrace the basic methodology of each system. Six Sigma (6σ) "This big myth is that Six Sigm Sigma a is abou aboutt quality control control and statistics. statistics. It is that - but it's much more. Ultimately, it drives leadership to be better by providing tools to think through tough issues. At Six Sigma's core is an idea that can turn a company inside out, focusing focusing the organization outward on the customer."

A process that is in Six Sigma control will produce no more than two defects out of every billion units. Six Sigma uses many statistical tools but applies them in a clear 5 stage project oriented cycle: Define, Measure, Analyze, Improve, Control (DMAIC). Tools used in the Six Sigma approach include Flow Flo w cha charts rts,, Ru Run n cha charts rts,, Par Pareto eto ch chart arts, s, Che Check ck sh sheet eets, s, Cau Cause se an and d eff effect ect diagrams, Opportunity flow diagrams, Control charts, Failure mode and effect analysis, Design of experiments

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Lean

Lean is ai Lean aime med d at th the e el elim imin inat atio ion n of wa wast ste e in ev ever ery y ar area ea of pr prod oduc ucti tion on including customer relations, product design, supplier networks and factory management. managemen t. Its goal is to incorporate less human effort, less inventory, less time to develop products, and less space to become highly responsive to customer demand while producing top quality products in the most efficient and economical manner possible. The keys to Lean are understanding where the value in your process lies, identifying all non value adding activities as was wa ste and de devi vis sin ing g pl pla ans to re rem mov ove e th the e wa was ste fr fro om the pr pro oces ess s. Flowcharting is a core tool of Lean - as flowcharting provides a visual image of a process enabling waste identification to take place. This flowcharting is known as value stream mapping. Lean considers that there are 7 wastes Defects, Defe cts, Over Overprod producti uction, on, Tran Transpo sportati rtation, on, Waiti Waiting, ng, Inve Inventory ntory,, Motio Motion, n, and Proces Pro cessin sing g (DO (DOTWI TWIMP) MP).. The wor worst st of all th the e 7 was wastes tes is ove overpr rprod oduct uction ion because it includes in essence all others and was the main driving force for the Toyota JIT system Ohno and Shingo were smart enough to tackle this one to eliminate the rest.

| Project Management | Play Factory 

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10.

Apply to to Al All Fu Functions

We then recommended Hinopak to apply Continuous improvement strategy, PDSA cycle, Six sigma and Lean to all functions in order to maintain lifetime competitive edge in the market place.

SWOT ANALYSIS

I N T E R  N A L

•

HARMFUL (to achieving objectives)

STRENGTHS

WEAKNESSES

Hinopak has 65% market Hinopak market share. share. It is already at the pinnacle.

•

•Listed among the "Top 25 Comp Co mpan anie ies" s" at Kara Karach chii St Stoc ock k Exchange. •

•

•

•

O R  I G I N

HELPFUL (to achieving objectives)

•

•

•

The only Pakistani Pakistani manufact manufacturer urer to succeed in exporting compl omple etely tely buil builtt-u -up p bus buses to Middle East and Africa. Highly acclai Highly acclaime med d for qualit quality y and technological technologic al excellence.

•

•

Has from beginning been an expan xpandi din ng company pany.. In curr urrent environment it must adapt to consolidating. Smalll vari Smal variat atio ions ns in cert certai ain n vehi vehicl cle e model mo dels s make make th them em redund redundan antt and unnecessary. Not enou Not enough gh focu focus s vehicle department.

for for

sp spec ecia iali lize zed d

Environment friendly low emission standa sta ndard rd engine engines s EURO EURO engin engines es produced. Highly developed state of the art Technica Tech nicall training training centre centre ranging ranging from mechanics to managers. 3S Deal Dealer ersh ship ip netw networ ork, k, whic which h offers off ers Sales, Sales, Servic Service e and Spare Spare parts facilities all under one roof. First Pakistani automobile company & Hino affiliate to rece receiv ive e ISOISO-90 9001 01 cert certif ific icat ate e in 1997. Hinopak has modern plants equipp equ ipped ed with with advanc advance e facili facilitie ties s for vehicle assembly and fabrication of buses and superstructures.

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E X T E R  N A L O R  I G

OPPORTUNITIES •

•

•

With infr With infras astr truc uctu ture re al alre read ady y in place pla ce,, branch branching ing out out into into oth other er pr prod oduc ucts ts migh mightt be advi advisa sabl ble e to offset low vehicle consumption. Buy ot Buy othe herr manu manufa fact ctur ures es at lo low w cost cost while while econo economic mic situat situation ion is gloomy  to increase market share.

THREATS •

•

Oil price fluctuation production forecast risky.

makes

World Ec World Econ onom omy y recess recession ion makes makes business tighter than usual.

•

Multinationals leaving Pakistan decreasing potential business.

Constr Cons truc ucti tion on of Chin China a Corr Corrid idor or kara ka rako kora ram m hi high ghwa way. y. Hi High ghwa way y which links China to middle east through GWADAR port.

I N

Customer Relationship Management

Organize Organi ze and and make make access accessibl ible e a databa database se of inf inform ormati ation on on indivi individua duall customer needs, preferences, contacts, purchase frequency, and satisfaction. Examp Exa mple: le: Conta Contact ct custom customer ers s every every time time a new new produc productt launch launch,, featur feature e enhancement, or upgrade is undertaken in a vehicle Make it easy for customers to reach appropriate company personnel and express their needs, perceptions and complaints Customer Relations Customer Relationship hip Manageme Management nt enables enables real-time real-time availability availability checks, checks, contract cont ract manageme management, nt, billing billing manageme management, nt, fulfillme fulfillment nt visibility, visibility, and order order tracki tra cking, ng, giving giving the compan company y the featur features es and funct function ions s necess necessary ary for for marketing planning, campaign management, management, telemarketing, lead generation, and custom customer er segm segment entati ation. on. In additi addition on,, CRM CRM allows allows Hinopa Hinopak k to offer offer ongoing ongo ing custome customerr care across all channels channels – with a customer customer-inte -interact raction ion center, cent er, Web-bas Web-based ed custome customerr self-serv self-service ice capabiliti capabilities, es, service service and claims claims management, managemen t, field service and dispatch, and installed-base management. management.

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CRM helps the business: • • •

Provide better customer service Make call centers more efficient Cross-sell products more effectively

•

Have sales staff close deals faster Simplify marketing and sales processes Discover new customers Increase customer revenues •

• •

Custom Cust omer er Rela Relati tion onsh ship ip Mana Manage geme ment nt goes goes beyond beyo nd sales, sales, marketin marketing g and custome customer-se r-service rvice applicatio applications ns into business business intelligen intell igence, ce, analytics analytics,, hosted hosted applicatio applications, ns, mobile mobile capa capabilitie bilities s and much much more! By thinking more insightfully about what the customers are worth, the company can focus its resources on attracting and keeping the right type of  customers. This focus, in turn, will make the CRM efforts more productive and position the company better for innovation and growth.

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RECOMMENDATION TO APPLY GEMBA AT HINOPAK  Five Golden Rules of Gemba :

Golden Rule One: When a problem (abnormality) arises, go to gemba first'. So what's gemba? It's the shop floor, or equivalent. Once there, you apply Rule Two. Golden Rule Two: check with gembutsu (relevant objects). Golden Rule Three: take temporary counter-measures counter-measures on the spot. Golden Rule Four: find the root cause. Golden Rule Five: standardise to prevent recurrence. Standardisation is the managing part of getting good gemba. Hinopak also needs good housekeeping (that includes cleaning machines) and muda, the elimination of waste. To be truly efficient in operations, operations, Hinopak must GO TO GEMBA!

The aim of TPS is to eliminate all muri, mura, muda (overburden, unevenness, waste) from the o operations. perations. It is a system that that uses the the PDCA approach to involve everyone in solving problems and improving quality, cost, delivery, safety, and morale.

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TPS continues to evolve evolve today. Toyota people are beginning beginning to call TPS the "Thinking People System" instead of of the Toyota Toyota Production Production System. System. TPS is always improving. TPS is the Operational Blueprint for a Lean Enterprise

The organizations that have implemented Lean most successfully have adopted TPS as their operational operational blueprint. They have studied studied and understood the system, system, renamed it to take ownership ownership of it as their own system, and adopted as pure a form of TPS as possible •

• • • •

•

Make what the customer needs, when it is needed, and in the right amount Minimize inventories Separate machine work from human work and fully utilize both Build quality into the process and prevent errors from happening Reduce lead-times to allow for rapid, flexible scheduling Produce a high mix of low volume products efficiently

The GRPS house shows how to build a world class production system that continuously improves by eliminating waste.  

Left Pillar

Right Pillar

Foundation

Just-in-Time (Takt-Flow-Pull) Eliminate the 7 Wastes of Production Create a smooth flow of product and information, minimize inventory and space. Jidoka (Autonomation)

Build quality into the process, separate man &  machine using intelligent automation. Implement low-cost automation, automation, error-proofing, error-proofing, equipment upgrades and reliability improvement. Heijunka (Leveling) Stabilize production schedule variability Reduce total Lead-time, coordinate sales, scheduling, and customer needs

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APPLY Malcolm  OUR RECOMMENDATION TO HINOPAK TO APPLY Malcolm  Baldrige Criteria for Performa Performance nce The Baldrige Baldrige Criteria Criteria for Performanc Performance e Excel Excellence lence prov provide ide a systems systems perspe per specti ctive ve for for under understa standi nding ng perfor performa mance nce manage manageme ment. nt. They They reflec reflectt

validated, leading-edge management practices against which Hinopak will be able to measure itself. With their acceptance nationally and internationally as the model model for perfor performa mance nce excell excellen ence, ce, the Crite Criteria ria repre represen sentt a comm common on language for communication among organizations for sharing best practices. The Crite Criteria ria are also also the the basis basis for the the Malcol Malcolm m Bal Baldri drige ge Nat Nation ional al Qua Qualit lity y Award process.

If Hinopak applies for the Baldrige Award, it will be judged by an independent board of examiners. Recipients will be selected based on achievement and impr im prov ovem emen entt in se seve ven n ar area eas, s, know known n as th the e Ba Bald ldri rige ge Crit Criter eria ia fo for r Performance Excellence:

1. Leadership: How upper management leads the organization, and how the organization leads within the community. community. 2. Strategic planning: How the organization establishes and plans to implement strategic directions. Custom tomer er and mar market ket foc focus: us: How the organ organiza izatio tion n build builds s an and d 3. Cus maintains strong, lasting relationships with customers. customers. 4. Measurement, analysis, and knowledge management: How the or orga gani niza zati tion on uses uses data data to suppo upport rt key key pr proc oces esse ses s an and d mana manage ge performance. n re reso sour urce ce fo focu cus: s: Ho Human How w th the e orga organi niza zati tion on empo empowe wers rs an and d 5. Huma involves its workforce. 6. Process management: How the organization designs, manages and improves key processes. processes. Busi sine ness ss/o /org rgan aniz izat atio iona nall perfo pe rform rman ance ce resu re sult lts: s:  How 7. Bu the organizat orga nization ion performs performs in terms terms of custome customerr satisfact satisfaction, ion, finances finances,, human hu man re resou source rces, s, suppl supplier ier and and partn partner er per perfor forma mance nce,, op opera eratio tions, ns, gove go vern rnan ance ce and and soci social al resp respon onsi sibi bili lity ty,, and and how how th the e orga organi niza zati tion on compares to its competitors. We designed a Self-Analysis worksheet for Hinopak, which it can use to assess itself after adopting Baldrige Criteria for Performance

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SELF-ANALYSIS WORKSHEET FOR  HINOPAK

While insigh While insights ts gaine gained d from from exter external nal Examin Examiners ers or rev review iewers ers are always always helpful, you know your organization better than they will. You are currently in an excellent position to identify your organization’s key strengths and key opportunities for Criteria improvement (OFIs). Having responses to the Baldrige Baldrige Crite ria question questions, s, you can just accelerat accecompleted lerate e youryour improve improvement ment   journ journey ey by doing doing a self-a self-anal nalysi ysis s of your your respon response ses s to all seven seven Criter Criteria ia Categories using this worksheet. Start by identifying one or two strengths and one or two OFIs for each Criteria category. For those of high importance, establish establish a goal and a plan of  action. For High-Importance Areas Criteria Category

Importance (High, Medium, Low)

Stretch (Strength) or Improvement (OFI) Goal

What Action Is Planned?

By When?

Who Is Responsible?

Category 1—Leadership Strength 1. 2. OFI  1. 2. Category 2—Strategic Planning Strength 1. 2. OFI  1. 2. Category 3—Customer Focus Strength 1. 2.

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For High-Importance Areas Criteria Category

Importance (High, Medium, Low)

Stretch (Strength) or Improvement (OFI) Goal

What Action Is Planned?

By When?

Who Is Responsible?

OFI  1. 2. Category 4—Measurement, Analysis, and Knowledge Management Strength 1. 2. OFI  1. 2. Category 5—Workforce Focus Strength 1. 2. OFI  1. 2. Category 6—Process Management Strength 1. 2. OFI  1. 2. Category 7—Results Strength 1.

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GRADING OUR PM INC. SUBSIDIARY BASED ON MBNQA We, four members, worked as a team and came up with valuable recommendations recommen dations for Hinopak what will assist the company have a life time competitive edge in the marketplace.

This is how we grade our PM Inc. subsidiary based on MBNQA:

Points S.No

Category

Description Out Of

Obtained

1.

Category 1

Leadership

120

110

2.

Category 2

Strategic Planning

85

80

3.

Category 3

85

83

4.

Category 4

90

85

5.

Category 5

Human Resource Focus

85

80

6.

Category 6

Process Management

85

80

7.

Category 7

Business Results

400

390

Customer and Market Focus Measurement, Analysis, and Knowledge Management

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