STRATEGIC MANAGEMENT OF IT SERVICES

A STUDY OF SIS
OF
HONDA MOTORCYCLE AND SCOOTER INDIA LTD.

Submitted To:
Proff D.P Goyal

Submitted By:
Abhinav Sharma(01)
Ankush Charagi(07)
DIganta Choudhary(13)
Rehan Ahmed Khan(30)

ABBREVIATIONS & DEFINITION

PR

Purchase requisition

PO

Purchase Order

PPC

Production Planning & Control

GRN

Gate receipt Note

MRN

Material Receipt Note

CR

Cheque Request

A purchase request (or purchase order

request) is a document generated by an
organization to notify the purchasing
department of items it needs to order, their
quantity, and the time frame for completing
the order. It may also contain the
authorization to proceed with the purchase.
A purchase order (PO) is a commercial document and
first official offer issued by a buyer to a seller,
indicating types, quantities, and agreed prices for
products or services. Acceptance of a purchase order
by a seller forms a contract between the buyer and
seller, so no contract exists until the purchase order is
accepted. It is used to control the purchasing of
products and services from external suppliers
Deptt of PPC responsible for controlling the budget
linked with manufacturing
A note prepared by the security of HMSI at the gate
to ensure that all the documents are available and
correct item is in sound condition
Note prepared by the store of the deptt showing that
the item is received at the store and is ready to be
issued
A request submitted to the Finance for payment

*Assumptions have been made wherever necessary. The data shown in the report does not breach
the confidentiality of HMSI in any manner.

INTRODUCTION TO HMSI & ITS STRATEGIES

Strategic information systems (SIS) are information systems that are developed in response to corporate
business initiative. They are intended to give better and more transparent approach to the process. They
may deliver a product or service that is at a lower cost that is differentiated, or is innovative.

ABOUT HMSI
Honda is the worlds largest manufacturer of two Wheelers , Recognized the world over as the symbol
of Honda two wheelers , the Wings arrived in India as Honda Motorcycle and Scooter India Pvt. Ltd.
(HMSI ), a 100% subsidiary of Honda Motor Company Ltd., Japan ,in 1999. Since its establishment in
1999 at Manesar, District Gurgaon, Haryana, Honda has lived up to its reputation of offering the highest
quality at the most reasonable price. Despite being one of the youngest players in the Indian two-

wheelers market, Honda has become the largest two wheeler manufacturer as well as the second largest
two-wheelers company in India.
Honda is also the fastest growing company in country today. With a host of facilities under its wings, the
first factory of HMSI is spread over 52 acres including a covered area of about 100,000 sq. meters in
Manesar, District Gurgaon, Haryana with an annual capacity of 1.65 million units. To meet the ever
increasing demands of the products, Honda has started operations of its second plant in Tapukara,
District Alwar, Rajasthan. Expanding to full operations , Honda production capacity has jumped 30%
year on year to 2.8 million per annum in FY 12- 13.
Hondas third plant at Narsapura Industrial Area near Bengaluru, Karnataka is equipped to manufacture
1.2 million units. Utilizing production technologies refined at Manesar & Tapukara plants as starting
point, the 3rd plant is employed with state-of-the-art manufacturing, automation and environment
friendly technologies to deliver quality products.
On October 16 2014, Honda announced the Worlds largest only scooter plant" at Vithalapur Gujarat.
Fourth plant will become operational by end of 2015 with annual capacity of 1.2 million units. The new
plant will employ approximately 3000 people within first 2 years of commercial production and will
entail INR 1,100 crores investment.

PHILOSOPHY
HMSI operates on a principle, which is followed worldwide by all Honda companies. Maintaining a
global viewpoint, we are dedicated to supplying products of the highest quality, yet at a reasonable price
for worldwide customer satisfaction. Honda's philosophy is based on the company's guiding principle
and advocates 2 fundamental beliefs:
Respect for the Individual
Honda recognizes and respects individual differences. The respect for individual stems from the
following three points:
Initiative
Equality
Trust
It is the contribution from each individual in the company that has made our company what it is today
and that, which will take us into the future.

The Three Joys

In line with Honda's Philosophy, HMSI conducts all its daily activities in pursuit of the following joys:
The joy of buying high quality products.
The joy of selling high quality products.
The joy of creating high quality products.

STRATEGIES
PEST ANALYSIS

Political

Social:

Economical
Government
support for
increasing
penetration in
India, Tax
benefits, Lower
import rates,

Booming Indian
Economy,
Increasing
spending power,

Akshay
Kumar,Tapsi
Pannu as brand
ambassdor
enables better
penetration,
Intensive CSR
activities

Latest
technology being
used, Lighter
material enables
better
performance Technological

PORTERS 5 FORCES
,

New Entrants:
(Moderate)
High Capital
Investment.
High
Technological
Players

Supplier : (High)
Large supplier
base.

Competitors:
(High)
Low entry
barriers
Huge Market.

Substitutes: (High)
Metro,Public
transport,
Skyroketing fuel
prices,Pollution,Ri
sk of accidents

Buyer:(Incresing)
Presence of Multiple
Players
Substitution effect
prevails

SWOT ANALYSIS

Strengths
Supply chain
Advertisement &
Promotion
No 1 growing
company
Huge reach

Opportunities
Growth in two wheler
demand
Increase of popularity
of skooty among boys

Weakness
Waiting time
Unable to meet the
demand
Higher costs

Threats
Older Indian Players
Increasing
accessibility of public
transport

OBJECTIVES OF THE PROJECT

The objective of the project is:

To understand the mission, goals, and strategies of HMSI.

Role of IT in HMSI operations
To identify bottleneck and its link with IT.
To propose new SIS solutions.
To give feasibility of the proposed SIS

SCOPE OF THE PROJECT

In the project, we will focus on the planning and controlling part of the operations at HMSI. We will
discuss, how IT plays indispensable role in the operations and the issues faced.

METHODOLOGY APPLIED
Study Goals

Study Process
Information
Analysis
IS Solutions

Implementation

Plan

ANALYSIS
BUDGETAPPROVAL PROCESS
The budget is prepared on the basis of payment to be done i.e. For item X, the payment has to be done
in nth month, then the item will be depicted in the nth month in the cash flow and planning for that item
will be done accordingly

*For format, refer attachment #1

PURCHASE REQUISITION PROCESSING

For nth month item in the budget (cash flow hereafter), ordering is done in (n-1) month.

Since the amount is large and it is necessary to adhere to the cash flow to meet strategic planning of the
organization, it becomes necessary to have a close, precise and accurate monitoring of the cash flow.
Thus, it becomes important to ensure the tracking of the item and know the status of the item at a given
point of time. This would help in accurate controlling of the item.

FINDINGS
With the study and analysis of data for the last 6 months, following data is achieved:

MONTH

ACHIEVEMENT

Mar15

85%

Apr15

106%

May15

70%

June15

95%

July15

108%

Aug15

58%

100%

106%

95%

85%

108%

70%

Mar15

Apr15

May15

58%

June15

July15

Aug15

The statistics depict that the process is highly uneven and critical at the same time.
On further analysis through brainstorming sessions & meetings with various shops, purchase and
finance, it is found that the root problem is that there is no firm system to monitor and there is always an
ambiguity regarding the status of the document.

RECOMMENDATIONS
The processes defined above are carried out in SAP. The recommendation is to prepare a dashboard
where, the stages of an item are reflected. The system would help in identifying the bottleneck in the
system and thus, proper follow up can be taken. This would help in timely achieving the cash flow.

BENEFITS

Reduced manpower costs

Reduced cycle time
Better decisions
Better controlling of budget
Improved analysis of gap
Identification of bottleneck

COST ESTIMATES
As the process has to be completed at minimum cost, most of the systems are tried to be prepared in-house
Costs (in k)

Year 1

Business Analyst Fee

Year 2

Year 3

Year 4

Year 5

Consultant Fee
Software Cost

Remarks
In house
consultation
In house
consultation

35
In house
manufactured

Hardware Cost
Team Member Cost

6.6

7.3

8.8

Training Cost

Benefits (in k)

43

9.6

10.3

11

11.8

Reduced Inventory Costs

10

10

10

10

Reduced Carrying Costs

Reduced workforce

5.5

6.1

6.7

Reduced cycle time

(91.3-85.7)/85.7*100=6.5%

Does not impact

the product
directly

FEASIBILITY STUDY
Technical Feasibility
Hardware: To be prepared in house
Software: 3 quotations will be received and the minimum of the 3 will be considered.

Legal Feasibility
As there will be a replica of SAP database which will have to be created, thus an NDA will be signed
with the software provider and will be ensured that it complies with the HONDA confidentiality norms.

Operational Feasibility
Since the system will directly impact the strategic planning of the organization and there is not much
investment, it wont be a problem getting approval from the management. Moreover, the management is
also involved in the issue of adherence of the cash flow.

ROI
=

REFERENCE
The case has been taken from real time issue being faced at an automobile giant.

Attachment #1