Hero Honda Motors the worlds major maker of two wheelers

The company is a jv between India's Hero Group and Honda Engine Company, Japan that began in 1984.

In 2001, the company achieved the desired position of being the largest two-wheeler developing company in India and the 'World No. 1' two-wheeler company in terms of unit volume level sales in a calendar year by an individual company. Hero Honda has retained that sought after position till night out.

Today, every second street motorcycle sold in the country is a Hero Honda motorcycle. Every 30 a few moments, someone in India will buy Hero Honda's top-selling motorcycle - Splendor.


The Hero Honda story began with a simple eyesight - the vision of a mobile and an empowered India, powered by Hero Honda. This eyesight was influenced by Hero Honda's dedication to customer, quality and brilliance, and while doing so, maintaining the best criteria of ethics and societal duties. Hero Honda is convinced that the most effective way to carefully turn that aspiration into possible is by left over centered on that eyesight.


In the 1980's Hero Honda pioneered the introduction of fuel-efficient, environmentally friendly four-stroke motorcycles in the country. Today, Hero Honda is still technology pioneer. It became the first company to unveiling the Fuel Shot (FI) technology in Indian motorcycles, with the launch of the Glamour FI in June 2006.


The company has been consistently investing in brand building utilizing not only the new product introduction and new marketing campaign introduction opportunities but also through ground breaking marketing initiatives revolving around cricket, entertainment and surface- level activation.

Hero Honda has been actively promoting various sports such as hockey, cricket and golfing. Hero Honda was the name sponsor of the Hero Honda FIH Hockey World Cup that was played in Delhi during Feb-March 2010. Hero Honda also companions the Commonwealth Games Delhi 2010.

What is Lean Development system?

The lean systems are an operations system that essentially maximizes the value added by each of a company's activities by pairing pointless resources and wait from them. Fundamentally lean system includes the business's functions strategy, process design, quality management, constraint management, design design, supply chain design, technology and inventory management and can be used by the both service and making firms. Such as a manufacturer, each of the service business organization first take the order from the clients, then deliver the services and at last collect the earnings of their customers. Every service company buys services or items, receives and will pay for them, and hires and compensates employees. The identical activity can be held in a manufacturing firm. In addition they contain a huge amount of waste material.

Lean systems impact a firm's interior linkages between its core and supporting operations and its exterior linkages using its customers and distributor. The using of the low fat system is vital for the various department and useful area across the organisation. The machine is used in the all functional section of the company like, marketing, human being resource, engineering, functions, and accounts as well. The top management must accept the lean school of thought and make it a part of organisational culture and learning.

Q1. Critically measure the use of slim production and/or lean services in your chosen

Organisation (10 markings)

Hero Honda production system:-

Now at present time Hero Honda is the king of the street from 1983 in India. Hero Honda goal young era as well as the old generation by providing all of the product and service. Than some issues have been happened that is management problems, competition and tough economy. The company was rescued with a sympathetic buyer and a well-operated version of Trim Manufacturing system. In 1983 acquired an 80% market share but this fallen about 53% 20 years later? In the period of downturn in 2003 the sales reduced nation-wide as well as Hero Honda market shares also reduced. Than the CEO Brijmohan Lall persuaded lenders to restructure their plan strategy. That's based on the "Japanese management principals" who have an impact on mainly the Hero Honda production system or the low fat making system. After minimizing tariff the large numbers of imported motorcycles did a dramatically changes in their share price. The program was becomes successful. Among 1983 and 2007 the company possessed increased inventory changes from 5 to 20, reduced inventory by 75%, reduced scrap by 68%, and reduced making space requirements by 25%. In the same manner the improvements were made to the marketing and product development attributes of the business.

Hero Honda, Inc. employs about 23, 000 people in India. Inside the improvement process it is very critical to process the worker involvement. It required an ultimate, unique and trusting marriage with the union. The union always looked at management as a partner and it the management responsibility that they tried out to "in-source" as much are possible to assist in improving worker employment potential which is very proved them by the company management team. In Hero Honda the staff always responded by embracing and getting quality and continuous improvement.

Material forecasting and replenishment:-

Hero Honda used materials replenishment and forecasting used to reorder regularly stocked their products. It includes evaluation of the need for material or components, communication of certain requirements of the dealer, and fulfilment of the required by the provider.

Evaluation of the just- in- time (JIT) Creation system in Hero Honda:-

The term just- in- time (JIT) can be used to refer to an procedure system in which materials are shifted through the system and services are provided with precise timing in order that they are supplied each step of the process just because they are needed. A highly coordinated, repetitive manufacturing or service system designed to create a high volume of output very few resources than more traditional repetitive system, but with the ability to cater to more variety than traditional system. The slim operations essentially high quality techniques in particular place. Quality is the inner area of the lean procedures; without the product quality lean businesses can't exist in any company. The JIT basic methods to developing planning, control and the materials necessity planning (MRP). JIT performs over a "yank", or demand basis whereby work is taken from each step in process to another step when next thing has a demand for it, rather than pressed on to the next step when the task is completed currently step.

The blocks of the JIT system in Hero Honda are the following:-

Product design:-

Standard parts.

Modular design.

Highly capable development system with quality built in.

Concurrent engineering.

Process design:-

Small lot sizes.

Setup time lowering.

Manufacturing skin cells.

Quality improvements.

Production flexibility.

A well balanced system.

A little inventory system.

Fail safe methods.

3. Staff /organisational elements:-

Workers as belongings.

Cross trained workers.

Continuous improvement.

Cost accounting.

Leadership/ project management.

4. Manufacturing planning and control:-

a) Level loading.

b) Draw system.

c) Visible system.

d) Limited work in progress.

e) Close supplier relationship.

f) Reduced purchase processing.

g) Preventing maintenance and housekeeping

Q2. Discuss and recommend how throw away is/can be been able along your selected organisations

Value string (20 grades)

According to the JIT there will be the six types of the wastes in Hero Honda which can be the following:-

Waste from overproduction.

Waste of holding out time.

Transportation misuse.

Processing waste material.

Inventory throw away.

Waste of motion.

Movement waste.

Waste of underutilized people.

Recommendation to control the waste

Waste from Defects

The simplest form of waste materials is components or products that not meet the specification. In such a form of waste Hero Honda need to assign inspection team at the end of every process in their supply chain to guarantee the quality of product because using this method Hero Honda can reduce the level of waste products from flaws in their creation house which will make a product close to perfection.

Waste from Over-Production

A key factor of JIT was making only the number required of any aspect or product. This challenged the Traditional western premise of the Economic Order Quantity (EOQ) that was built on popularity of fixed buying costs, built around set-up times, and thus the need to spread these set costs over large batches.

Waste of Hanging around Time

Time not being used effectively is a throw away - we are incurring the cost of wages and all the fixed costs of hire, rates, lighting and warming so we ought to use every minute of every day productively. On this waste products Hero Honda need to assign somebody who can screen the action in production house and need to make sure that many people are working and need to fill the Gap which will make the waiting line in the resource chain. Thus we have learnt about preventive maintenance and the creation of stream through our factories with the focus on tact time, the pace at which a component or product steps to another stage.

Transportation Waste

Items being shifted incur an expense, if it is merely the energy had a need to initiate the activity - such as the electricity absorbed by a fork lift vehicle. Of course, movements brings another cost, which is less noticeable but more significant. In this kind of waste a manger or a supervisor need to check that the Transportation process is moving properly or not in resource string and need to fill the linkage/ gap which create the transportation process gradual like assigning of next available drivers if the key driver is unable to run the vehicle due to any reason.

Movement Waste

On a related word, people spending time moving around the vegetable is evenly wasteful. Enough time a machine operator or fitter wastes walking to the tool room or the stores for a fixture or a component could be much better utilised if our plant design and housekeeping were geared around having everything that's needed is close to side.

Inappropriate Processing Waste

The most clear example of unacceptable processing from my own experience relates to surface surface finishes that required components to be transferred to grinders for completion, when in truth such finishes served no purpose. A simple concept of the TPS is doing only what is appropriate.

Inventory Waste

The aspect that Traditional western industry immediately targeted upon when confronted with JIT was the cost reduction available from positioning less inventory. We have now know that stock hides problems and that problems are pearls in that locating a problem is an excellent thing - now we can solve it, which we couldn't until it arrived to light! So director need to check the Inventory level on regular basis which will make a business to held inventory at right level which satisfied the customer demand level.

H) Misuse of underutilized people

This kind of throw away can cause reduce the speed to provide chain, company provides income to their worker to work at their best and in cases like this a administrator need to check on his team work level in case he find any staff is unable to perform certain work within the desired time, he need to assign to that place where he is capable of doing well, such as a employee is taking so enough time to process one work in manufacturing surface, here a manger need to assign him compared to that place where he can perform well. Manager can take certain action here like they can trained that worker that assist him to perform well or stimulate him so that he is capable of doing well.

Q 3 Measure the impact that your suggestion will have on your organisation's resources,

and justify how your advice will ensure increased competitiveness, long term

sustainability and corporate and business communal responsibility (30 markings)

Hero Honda Group performs a just-in-time which works to achieve the goals of removing the wastes and also to solve the related problems through the source chain system. Some individuals feel that JIT is the system of minimizing the inventory wastes. The primary goal of the JIT in Hero Honda is to maintain a supply chain excellence.

After operating the JIT system in Hero Honda it place a great effect on the supplier section process in order that they have the ability to produce the right product, at right volume and quality mainly when they needed, and in the same manner that Hero Honda requires those to be supplied. Hero Honda and their suppliers simplify and standardize their products as more as you can. And they achieve success in the products and process useful to manufacturing the merchandise. The concentration of the Hero Honda JIT environment provides a supply chain that is very useful to minimizing the wastes, boosts flexibility, reduce inventory and to minimizes the entire business lead time for the material substitutes. Hero Honda generates its material for Original Equipment's parts which is using the Grasp Production Agenda (MPS) which is utilized to create by the Functions Planning Team in linking with information provided by Marketing, Production, Fund, and Purchasing. The Grasp Production Routine also arrange for the plants inside capacity with exterior sales demand while producing products that assist us in reaching Hero Honda financial goals.

Results of Hero Honda's JIT execution

Inventory levels lowered 75%.

Increased efficiency.

Total unit sales of 46, 00, 130 two-wheelers, progress of 23. 6 %.

Total world wide web operating income of Rs. 15860. 51 Crores, development of 28. 1 per cent.

Net income after taxes at Rs. 2231. 83 Crores, progress of 74. 1 %.

Final dividend of 1500% or Rs. 30 per share on face value of each share of Rs. 2.

EBIDTA margin for the entire year 17. 4 %.

EPS of Rs. 111. 77, development of 74. 1 %.

Recommendation will ensure increased competitiveness, long term sustainability and commercial interpersonal responsibility.

Reduced Setup Times: All installation tactics are wasteful because they add no value plus they connect up labour and equipment. By forming methods, using carts, and training staff to do their own setups, Hero Honda were able to slash installation times from a few months to hours or even minutes.

Small-Lot Development: Producing things in large batches leads to huge set up costs, high capital cost of high-speed dedicated equipment, larger inventories, expanded lead times, and greater defect costs. Because Hero Honda has found the way to make setups short and inexpensive, it became easy for them to financially produce a variety of things in small volumes.

Employee Participation and Empowerment: Hero Honda sorted out their staff by forming team and offered them the duty and training to do many special tasks. Clubs are also given responsibility for housekeeping and small equipment repair. Each team has a leader who also works as one of them at risk.

Quality at the foundation: To get rid of product defects, they need to be learned and corrected at the earliest opportunity. Since workers are at the best position to find a defect and also to immediately correct it, they are assigned this responsibility. When a defect cannot be readily set, any staff member can halt the entire line by tugging a cord (called Jidoka).

Equipment Maintenance: Hero Honda operators are assigned major responsibility for basic maintenance since they are in the best position to defect signs of malfunctions. Maintenance specialists diagnose and fix only complex problems, improve the performance of equipment, and train employees in maintenance.

Pull Creation: To lessen inventory keeping costs and lead times, Hero Honda developed the move creation method wherein the amount of work performed at each level of the procedure is dictated solely by demand for materials from the immediate next level. The Kamban system coordinates the stream of small containers of materials between periods. That's where the term Just-in-Time (JIT) originated.

Supplier Involvement: Hero Honda treats its suppliers as associates, as integral components of Hero Honda Production System. Suppliers are been trained in ways to lessen set up times, inventories, flaws, machine breakdowns etc. , and take responsibility to provide their finest possible parts.

Lean methods are applicable not only in production, but also in service-oriented industry and service environment. Every system is made up of waste material, i. e. something that will not deliver value to your customer. Whether you are producing a product, digesting a materials, or providing a service, there are elements which are considered 'waste material'. The approaches for analysing systems, figuring out and reducing waste materials, and concentrating on the customer are applicable in virtually any system, and in any industry.

Only executives who've a direct participation with finding, keeping, or growing customers as well as key support personnel - accountants, tax, legal and human resources people - should stay. Others can be rehabilitated by sending with an operating product.

PEST examination for Hero Honda

Political forces

Important factors

Potential impact on business

Unstable condition of the middle-east and the politics instability like the Indian warfare with Pakistan, china and Bangladesh war

Upwards of 8 million automobile have been recalled in the India, amid reports of Hero Honda's vehicles accelerating quickly.

The Indian federal bring Hero Honda into trial over the problem which may influence on Hero Honda's brand image.

The Indian government's stakes in Yamaha and TVS may effect the investigation and discriminate against its direct competitor.

Economic forces

Important factors

Potential impact on business

Steep increase in crude olive oil price.

Global demand has exceeded global petrol creation. India growing at 8-10% yearly have put a huge demand on olive oil in the global market keeping prices constant.

The price of fuel, driven by resource concerns and increasing demand will provide to increase the elegance of vehicle options like plug in Electronic Motorcycle that are less dependent on gasoline.

Governmental tax rises and duty credits on gas will improve the desirability of plug in Electronic Bikes

Socio-cultural forces

Important factors

Potential effect on business

The development of cultural markets can be relevant. In several countries, the cultural mix of consumers is changing due to immigration and other factors.

The result of an increased quantity of women working within the last decades.

This will be mirrored in changing needs for various goods, not only from the precise ethnic group but from other consumers whose likes have been afflicted by them. Furthermore, as ethnic groups immigrate to other countries, their own likes can affect those of consumers in the number nation.

This has been raised household incomes, enabling more frequent buys of new vehicles.

Technological forces

Important factors

Potential impact on business

Technological breakthroughs related to components and systems.

Development of leading-edge components and systems ahead of competitors.

4. Using Porter's value chain as a template, develop a framework that will assist a newly

employed first-line director in your company with the next

a. Identify the types wastes in both main and support processes

b. The 'danger signals' of every waste

c. How exactly to react to the 'threat signals'

(30 marks)

Main Top features of Porter's Five Causes Analysis

The original competitive makes model, as suggested by Porter, identified five forces which would impact on an company's behavior in a competitive market. Included in these are the next

The rivalry between existing sellers on the market.

The vitality exerted by the clients on the market.

The impact of the suppliers on the vendors.

The potential threat of new sellers joining the market.

The threat of alternative products becoming available for sale.

The ten guiding principle of lean processing can be prcised

1. Eliminate waste

2. Minimize inventory

3. Maximize flow

4. Pull development from customer demand

5. Meet customer requirements

6. Still do it the first time

7. Empower workers

8. Design for fast changeover

9. Partner with suppliers

10. Build a culture of continuous improvement (Kaizen)

The unique Hero Honda management system was contributed by higher management, who also developed the Hero Honda Production System. The Upper management summed up the idea behind the management of Hero Honda as, 'work' identifies the production of perfect goods only. When a machine is not producing perfect goods, it isn't 'working'. "

Hero Honda's Competitive Advantage

Hero Honda's competitive advantages is dependant on a corporate idea known as the Hero Honda development system. The system depends in part on a recruiting management strategy that stimulates worker creativity and loyalty but also on a highly effective network of suppliers and components manufacturers.

CSR Coverage- Contribution towards Sustainable Development

CSR Insurance policy: Contribution towards Sustainable Development (adopted in 2003 and revised in 2008) talks about how Hero Honda adapts the Guiding Rules with regards to social obligations to stakeholders. HERO HONDA MOTOR'S and their subsidiaries, take effort to donate to harmonious and ecological development of population and the planet earth through all business activities that perform in each country and region, predicated on Guiding Ideas. Hero Honda complies with local and national regulations as well as the soul thereof and conducts business businesses with honesty and integrity. In order to contribute to ecological development, Hero Honda think that management interacting with its stakeholders is of appreciable importance, and Hero Honda will Endeavour to generate and maintain sound interactions with stakeholders through wide open and good communication. Hero Honda needs business partners to support this initiative and act relative to it.

The lean and TPS does work in Hero Honda because so many years which will make it the India's best retailer company. Hero Honda has an operating model for his or her business and everyone in the business knows about it. So long as they stick with their plan Hero Honda maintained an extremely strong quality system.

There are some potential disadvantages of lean creation. Delays in deliveries of stock when working with just in time system can influence the next stage. Adhering to quality standards may take extra time and folks which all add costs to businesses. However, if maintained carefully, the advantages of adopting a lean methodology to production for outweigh the drawbacks.

PORTER's ValueChain Template

Firm infrastructure -general management, legal, funding, planning management and accounting.

Inbound logistics

Type of wastes

Danger signal

How to respond to danger signal



Inventory control






Raw material


Average delivery time

Phone supplier

Ask for reason

If ongoing repeated source take natural material from another supplier.






Not full finished

Manufacturing defects

Consistent improvement in technology used in printing, processing and completing goods

Human resource





Not full utilisation of manpower

Lack of knowledge

Proper training to new as well as existing employees for company growth perspective.

IT infrastructure

Technology development

Server down

Continuous improvement in IT infrastructure

Primary activiti


Secondary activities


The main goal of the JIT is to accomplish a balanced, smooth flow of production. Promoting goals include reducing disruptions to the systems, making the system flexible, and eradicating the waste. Trim system requires the eradication of resources of potential disruption to the even circulation of work. High quality is vital because problems with the product quality can be disrupting the process. Quick low cost setups, special layouts, allowing work to be taken through the machine rather than pressed through, a spirit of cooperation are important tools of the slim systems.

The benefits of the JIT/trim systems are reduced inventory levels, high quality, and flexibility, reduced lead times, increased output and equipment utilization, reduced amount of scrap and rework, and reduced space requirements.

Careful planning and much effort are had a need to achieve smoothly functioning systems where all resources needed for the production come together at precisely the right time throughout the process. Raw material and purchased parts must be appeared when needed. Teamwork and co-operation are always the important tools at all the levels, as are problem resolving ability of employees and behaviour of continuous advancements.

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