&
SEC A
TERM REPORT
ON
“HINOPAK”
Submitted to:
OGSM:.......................................................................................................................................................12
How Hinopak Develops Its OGSM:..........................................................................................................13
Benefits Being Reaped By Hinopak..........................................................................................................14
OGSM Next Steps......................................................................................................................................14
A Live Document:......................................................................................................................................15
Some Changes to Focus On.......................................................................................................................37
Reasons to Test Changes...........................................................................................................................38
STEP 1: PLAN......................................................................................................39
STEP 2: DO..........................................................................................................39
Try out the test on a small scale..................................................................................................................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 learnt from the test......................................................................40
HinoPak's product range has been designed and built in Hino's traditions of
automotive excellence to be the leader in its 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. 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.
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
Objective, Goals, Strategies & Measures (OGSM) of their business. The
output is a clear, simple and concise (ONE page) strategic plan:
The mission of Hinopak Motors Limited is: “To provide the society with safe,
economical, comfortable and environment friendly means of transportation by
manufacturing and supplying commercial vehicles and services.”
Hinopak also develops multiple OGSMs that all link to one another. This
ensures their different businesses / divisions (3S Dealership) are united
under a single objective and that cohesive strategies exist between them.
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 and any changes in the macro-environment / consumer trends,
then update the goals, strategies and measures accordingly.
OBJECTIVE
Be the leading facilitator of commercial vehicles and services
MEASURES (by 2012
GOALS (by 2012) STRATEGIES
latest)
Markets, Channels,
• 8% profitability Categories - ≥60% revenue from
($11M) Canada and USA
Focus on (key priorities): - Focus on Distribution
• $140m sales Pakistan, USA, and Australia operations
TARGET MARKET:
1. Institutions:
These are the main customers including:
MARKET NEEDS:
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 of human ingenuity and passion for comfort, fastness, safety and a
better quality of life.
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 five-
year average of 25.8%.
The following are more specific areas that could be corrected to improve
efficiency:
Objectives
Suppliers
Since JIT is a stockless production and does not allow room for defects or
error having trustworthy reliable suppliers is an important factor. When
choosing a reliable supplier, consider their location and prior occurrences
with labor issues such as strikes. Once a reliable supplier is found, creating a
good relationship is the next step. This is a two way relationship in that both
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 to delivery schedules. Also the supplier must
have a back-up plan incase for emergencies such as strike, weather
conditions, and any other problem that many arise. The supplier gets a long
term contract, constant demand for their product, and a good constant
price.
There are many advantages of that Hinopak can receive from JIT. Listed
below are some of the advantages:
Disadvantages
Conclusion
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
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 requirement. It is basically a Procedural segmentation. When there is
a need, customers come to them with different requirements. The 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.
1. Institutional Customers:
Description:
These are the main customers. They include Pakistan Army, Pakistan Air
Force, Pakistan Navy, Shell, Total, Caltex, City District Government
Karachi, NED, KU, CNG Bus owners and others.
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.
They buy products with customized body. For e.g. some client might
need bowzer with high density.
The objective of customers while buying the product is that the 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.
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
government purchases due to political instability. The government is not
building infrastructure as it was in the past. Therefore, they are buying less.
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:
Use of product:
Objective:
As the brand image is big, the company uses it in selling the product. Hino is
known for its reliability and availability. They use this image in selling their
product.
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 Aug'08 Sep'08 Cumulative
Prod. 209 133 155 497
Hino
Sale 180 176 149 505
TRUCKS
July'08 Aug'08 Sep'08 Cumulative
Prod. - - - -
Dong Feng
Sale - - - -
Prod. 99 27 26 152
Master
Sale 48 41 24 113
Prod. 68 35 23 126
Isuzu
Sale 40 36 15 91
BUSES
July'08 Aug'08 Sep'08 Cumulative
Hino 84 54 12 150
- - - -
Nissan
- - - -
- - - -
Dong Feng
- - - -
- - - -
Master
- - - -
24 6 18 48
Isuzu
11 2 1 14
TRUCK
BUS
Big vehicles, like trucks and buses, are bought when there is a special need
on special requirement. Hinopak basically has Procedural segmentation.
When there is a need, customers come to them with different requirements.
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.
Hinopak Motors Ltd. has reduced its chronic waste by 18% and as a result its
annual plant capacity has increased to 10,000
• Eliminate Waste
o Remove any activity or resource in the organisation that does not add
value to an external customer/patient
• Improve Work Flow
o This is an important way to improve the quality of service provided by
any process
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
PDSA CYCLE
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.
Step 1: Plan
Step 2: Do
Step 3: Study
Set aside time to analyse the data and study the results
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 charts, Run charts, Pareto charts, Check sheets, Cause and effect
diagrams, Opportunity flow diagrams, Control charts, Failure mode and effect
analysis, Design of experiments
SWOT ANALYSIS
HELPFUL HARMFUL
(to achieving objectives) (to achieving objectives)
I STRENGTHS WEAKNESSES
• 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.
Just-in-Time (Takt-Flow-Pull)
Left Pillar 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 &
Right Pillar machine using intelligent automation.
Implement low-cost automation, error-proofing,
equipment upgrades and reliability improvement.
Heijunka (Leveling)
Foundation Stabilize production schedule variability
Reduce total Lead-time, coordinate sales,
scheduling, and customer needs
Start by identifying one or two strengths and one or two OFIs for each
Criteria category. For those of high importance, establish a goal and a plan of
action.
Category 1—Leadership
Strength
1.
2.
OFI
1.
2.
Strength
1.
2.
OFI
1.
2.
Strength
1.
2.
OFI
1.
2.
Strength
1.
2.
OFI
1.
2.
Strength
1.
2.
OFI
1.
2.
Strength
1.
2.
OFI
1.
2.
Category 7—Results
Strength
1.
Points
S.No Category Description
Out Of Obtained
1. Category 1 Leadership 120 110
2. Category 2 Strategic Planning 85 80
Customer and Market
3. Category 3 85 83
Focus
Measurement,
Analysis, and
4. Category 4 Knowledge 90 85
Management
Human Resource
5. Category 5 85 80
Focus
6. Category 6 Process Management 85 80
7. Category 7 Business Results 400 390