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Management report on HPML

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Management report on HPML

  1. 1. Iqra University Gulshan Campus
  2. 2. Submitted to: Ms. Ambar Raza Dated: December 5, 2008 Submitted by: Sheema Raza – 12936 Sheraz Hussain – Sidra Moin – 2817 Mona Sakhawat – Naima Maniar – 2462 Shehla Ejaz – 12247Page 2 of 39
  3. 3. FOREWORDThe findings essentially highlight all management functions being practicedat Hinopak with some recommendations in the end, as desired by you.Moreover, this report also reflects the impact of the crude industry of thecommercial vehicles on the management decisions of Hinopak. The basis ofthis report has been company promotional material, company website andnecessary inputs from few existing managers.We are grateful to you (course facilitators Ms. Amber Raza) for providing usinsightful guidelines and essential concepts regarding major features ofmanagement that really worked like a catalyst to materialize this report. Wemay not also forget the courtesy, knowledge, guidance and great piece of co-operation from management of Hinopak Motors Ltd. We are also muchobliged to Mr. Azher ul Ehsan, D.G.M Engineering & Development Division,Mr. Syed zafar Ali, D.G.M Production Division, Mr. Mehmood Ahmed Khan,Manager Technical & Product Compliance for being so instrumental in theirvalue added guidance, whenever needed, while shaping up this report.Although we left no stone unturned to have an exhaustive study and preparea comprehensive report on the said topic. Nevertheless, we would be glad tofurnish any additional information or supporting documents to further clarifyyour queries in the report.Dear Madam, the report is strictly confidential and most of it should not becopied or reproduced without prior permission of HinoPak Motor CompanyLimited.We hope that the report prepared is up to your expectations and look forwardto the same kind of support and valued guidance from you in future.Sincerely, Sheema Raza Sheraz Hussain Sidra Moin Mona Sakhawat Naima Maniar Shehla Ejaz Page 3 of 39
  4. 4. CONTENTS • EXECUTIVE SUMMARY • COMPANY PROFILE  COMPANYS HISTORY  HPML MARKET SHARES  HPML SHARE HOLDING  MARKET SHARE IN DIFFERENT CATEGORIES • PRACTICE TO IMPROVE PROCESS EFFICIENCY  To avoid 3Ms  KAIZEN  5S ACTIVITIES  BCG GROWTH-SHARE MATRIX PORTFOLIO STRATEGY APPROACH • GOAL FORMULATION & PLANNING  PLANNING PROGRAM  MISSION  VISION  MILESTONE  OBJECTIVES  GOAL FORMULATION  DEVELOPING STRATEGIES ∇ Increase of sales volume ∇ Smooth introduction of the new model series ∇ Cost reduction ∇ Profitability of Body Manufacturing Plant ∇ Enhancement of after sales service ∇ Enhancement of quality assurance ∇ Promotion of zero accident minds among all fellows ∇ Safety hazard • ORGANIZING  ORGANIZATION STRUCTURE  DECISION MAKING APPROACH & STYLE  ORGANOGRAM  TYPES OF DEPARTMENTALIZATION  VERTICAL CO-ORDINATION Page 4 of 39
  5. 5.  DEPARTMENTALIZING  ORGANIZATIONAL FUNCTION• FINANCIAL PROJECTIONS  BUDGET PLAN  OPERATING RESULTS  SALES REVENUE  GROSS PROFIT  DISTRIBUTION AND ADMINISTRATIVE EXPENSES  OTHER INCOME & EXPENSES  CAPITAL EXPENDITURE  CASH FLOW  STATEMENT OF VALUE ADDITION  DISTRIBUTION OF VALUE ADDITION  SOME FINANCIAL HIGHLIGHTS  OPERATING PROFIT  TOTAL ASSETS  SHARE PRICE CLOSING  EARNING PER SHARE  INVESTORS INFORMATION• LEADING  MOTIVATION  COMMUNICATION ∇ Methods used for communications ∇ Meeting ∇ Importance of communication in organization  DISCIPLINE  GROUP DYNAMICS ∇ Situations in which groups are superior to individuals ∇ Groups are performed better than individuals• CONTROLLING  FEEDBACK MECHANISM  CONCURRENT SYSTEM  CONTROL MECHANISM  WORK PLACE PRIVACY AND WORKPLACE VIOLENCE  TOTAL QUALITY MANAGEMENT  INVENTORY CONTROL  INTRODUCING ERP Page 5 of 39
  6. 6.  ISO IMPLEMENTATION  INTERNAL AUDITING• CONCLUSIONS & RECOMMENDATIONS• GLOSSARY• OTHER REFERENCES• APPENDIXES Page 6 of 39
  7. 7. EXECUTIVE SUMMARYHinopak Motor Limited has been a market leader since 20 years. In 2007, withthe market share of 56% it became the most sought vehicle company in thecountry. Hinopaks Market share stands at 76% in busses, 65% in heavy trucksand 49% in light duty truck, which clearly shows that it out beats all othercompanies in the country. Backed by Hinos expertise Hinopak has achievedstandard of quality and excellence that rival the best in the region. With over39,000 vehicles on road, Hinopak has gained 65% market share making it thelargest manufacturer in medium and heavy-duty truck and bus industry inPakistan.The gross profit increased to Rs. 1,388 million from last years Rs. 835 million.The distribution and administrative expenses increased to Rs. 409 millionfrom Rs. 308 million. The net increase in cash and cash equivalent was Rs. 300million. The year thus closed with a positive cash balance of Rs.156 million.The selling prices of vehicles are rising and "Deletion" because of falling valueof the rupee against dollar and yen.Total Customer Satisfaction, is a set vision for the company. Total QualityManagement or TQM is a philosophy of management driven by continualimprovement and responding to customer needs and expectations.Hinopak by utilizing its MIS system controls and keeps track of raw materialsinventory, work – in – process inventory and finished goods inventory. Just intime (JIT) approach is preferred to eliminate all sources of waste, includingany activities that do not add value by focusing on having the right part at theright place at exactly the right time.Hinopak is the only automotive company in Pakistan and the first Hinoaffiliate world wide to receive the ISO 9001 certificate.Hinopak is Pakistan’s first automobile company to export its buses toMiddleast and African countries. The company is in the process of negotiationwith Hino Japan that Hinopak will be made the center of all Hino export toAlgeria, U.A.E. and other African countries by 2010.In order to keep the checks and balances, to avoid errors and to detect frauds,the company has an internal auditor, whose responsibility is to make surethat the controls are implemented at all levels and there is proper segregationof duties and no teeming or lading takes place.Although Hino Pak is meeting the production targets, lack of support formthe government is creating problems in the efficiency of the company Page 7 of 39
  8. 8. Hinopak backed by Hino Japan has designed a CNG bus suited the operatingconditions in Pakistan. But lack of support from government makes it difficultto practice. Even though Hinopak Motors Ltd. is a well-managed organizationthere is still some span for improvement. The company will have to make itsdecision making and managerial practices more clear and transparent. A traceof double standards during hiring, promotion and foreign trainings ought tobe faded out to truly motivate the employees and retain the potentialemployees of the company. Moreover, structure of the company is to be linedup in such a way that the work channel and communication channel shouldnot affect the pace of the work. Page 8 of 39
  9. 9. COMPANY PROFILECOMPANYSHISTORYHino Motors Japan and Toyota Tsusho Corporation in collaboration with Al-Futtaim Group of UAE and PACO Pakistan formed Hinopak Motors Limitedin 1986.In 1998, Hino Motors Ltd., and Toyota Tsusho Corporation obtained majorityshareholding in the company after disinvestments by the other two foundingsponsors. This decision to invest in Hinopak at a time when the countryseconomy was passing through a depression and the sale of commercialvehicles was at an all time low reflects the confidence our Principals have inour company and their commitment to the Pakistani market. Hinopak is thetrusted market leader with over 65% share in the Pakistani Truck and Busindustry. Hinopak a vital contributor in saving of foreign exchange is alsoproviding jobs and plays a pivotal role for the development of the localindustry through its progressive manufacturing.By continuing to move forward and staying alert to the ever-changing market& social needs, Hinopak will continue to be a successful and respectedcorporate citizen of Pakistan, reflecting their commitment and belief in theHinopak corporate philosophy to "contribute to the development of a moreprosperous and comfortable society by providing the world with a new set ofvalues".Hinopak Motors Limited assembles, manufactures and markets worldrenowned Hino diesel trucks and buses in Pakistan. The Company has heldthe top position in the domestic market for medium and heavy-duty vehiclesfor 17 consecutive years and is highly acclaimed for quality and technologicalexcellence.Backed by Hinos expertise Hinopak has achieved standard of quality andexcellence that rival the best in the region. With over 39,000 vehicles on road,Hinopak has gained 65% market share making it the largest manufacturer inmedium and heavy-duty truck and bus industry in Pakistan.Hinopaks product range has been designed and built in Hinos traditions ofautomotive excellence to be the leader in its category and the main emphasishas been given to passengers safety & comfort. Page 9 of 39
  10. 10. HPML MARKET SHARESHPML SHARE HOLDING Public 11% Hino 76% TTC 13%MARKET SHARE IN DIFFERENT CATEGORIES Bus Dong Dong Feng Feng Master 0.0% Volvo 0.0% 1.6% Master Nissan Volvo Nissan 8.9% 0.0% 8.8% 0.0% 23.2% Isuzu 12.1% Hino 45.6% Isuzu 22.3% Hino Truck 77.5% Page 10 of 39
  11. 11. PRACTICE TO IMPROVEPROCESS EFFICIENCYTo avoid 3Ms: • Muda Waste • Mura Unevenness / Waviness • Muri Overburden / Impossibility Wastage of Material, Time, Energy, Muda Equipment, Human Potential etc. Some time there is (Waste) more work and some time its less then a person or a machine can handle. Mura Muri (Unevenness) (Overburden) Pushing a Person or a Machine beyond Natural LimitsKAIZEN:The Japanese term for Continuous Improvement is kaizen and is the processof making incremental improvements, no matter how small, and achievingthe lean goal of eliminating all waste that adds cost without adding to value.Kaizen teaches individuals skills for working effectively in small groups,solving problems, documenting and improving processes, collecting andanalyzing data, and self-managing within a peer group. It pushes the decisionmaking (or proposal making) down to the workers and requires opendiscussion and a group consensus before implementing any decisions. Kaizenis a total philosophy that strives for perfection and sustains ToyotaProduction System (TPS) on a daily basis. Page 11 of 39
  12. 12. 5S ACTIVITIES:"Implementation of 5S Activities to acquire a Neat & Clean environmentwhich gives Higher Productivity, Fewer Defects, and a safer execution"BCG GROWTH-SHARE MATRIXPORTFOLIO STRATEGY APPROACHA corporate portfolio matrix, such as the BCG matrix can be a useful strategicmanagement tool. It provides a framework for understanding diversebusinesses and helps managers establish priorities for making resourceallocation decisions.Below is the BCG portfolio categorization done on the basis of the knowledgeof current business situation pertaining to each product: Page 12 of 39
  13. 13. GOAL FORMULATION & PLANNINGPLANNING PROGRAMCompany’s Mission & Vision have been set by the top management withsome inputs from the principals and senior managers. Company’s Vision andMission statements are:MISSION"The mission of Hinopak Motors Limited is to provide the society with safe,economical, comfortable and environment friendly means of transportationby manufacturing and supplying commercial vehicles and services".VISION“Total Customer Satisfaction, is a set vision for the company. In pursuit,new concepts have been introduced such as a mobile workshops, 3S/2Sdealership facilities, and training and free service camps for the vehicleowners and drivers”.MILESTONE“Hinopak is Pakistan’s first automobile company to export its buses toMiddleast and African countries”.After successfully establishing itself as the market leader at home, Hinopakproceeded to explore its product potential for the export market. This entryinto the export market was an important milestone for Hinopak and leadPakistan into an exciting new era for the automotive industry, fulfillingHinopak’s commitment towards the economic growth of Pakistan.The company is in the process of negotiation with Hino Japan that Hinopakwill be made the center of all Hino export to Algeria, UAE, and other Africancountries by 2010.Other milestones are; • To secure strong No. 1 position in Pakistan • Defeating UD, Isuzu, Chinese and European • To achieve Hino global standard quality Page 13 of 39
  14. 14. • To reorganize 3S network and modernize sales • To function as export base of bus and truck for Middle East, Africa and Central Asia • To diversify into new businessOBJECTIVESGOAL FORMULATIONGoals provide the direction for all management decisions and actions andform the criterion against which actual accomplishments are measured. Goalsetting approach in Hinopak is traditional type; however, in variousdepartments like Marketing, Finance and HR, senior managers also use theMBO approach for setting annual goals to motivate the employees and makethem participative, productive and get the ideas out of them.A Traditional Goal setting approach includes: • Reviewing the organization’s mission • Evaluating available resources • Determining the goals individually or with input from others • Writing down the goals and communicating them to all who need to know • Reviewing results and whether goals are being met Strategi c 5 Years Tactical 1~2 Years MANAGEMENT SETTING Operational Less than 1 FUNCTION GOALS Year Page 14 of 39
  15. 15. The Management by Objectives (MBO) approach used in various otherdepartments of the organization refers to a system which integrates keymanagerial activity manner and is directed towards efficient and effectiveachievement of organizational and personal goals. The MBO process consistsof five steps: • Review organizational objectives • Set worker objectives • Monitor progress • Evaluate performance • Give rewardsDEVELOPING STRATEGIESWhen it comes to developing strategies, we would recommend that thecompany should now start focusing on something that is a mix of both longterm and short term strategies, reason behind the environment they arecurrently competing is a very dynamic one and to back their long termstrategies / goals they need some intermediary heads that can assist them inachieving the overall objective.This can only be possible if the top management commitment and concern isthere and they enforce the same to the bottom. In case the market dynamicsstart effecting the long term strategies the top management should be wellequipped and should be in a condition to take remedial measures / steps toovercome these challenges at a very fast pace.In addition to the above middle and low level employees are there toimplement the dreams & visions of the top management into execution.They need to inculcate a culture of a learning organization before they stepforth with any future plans as this is the most basic ingredient in the successof any company and an ingredient that is very much missing from the currentpractices.They targets set should not be virtual but should be both achievable andacceptable by all and from top to bottom everyone should be inline with thesame objectives and work in liaison to achieve the same.They also need to set proper performance benchmarking standards so as toreward the ones who perform and identify the weak links out. What this willdo is that it will promote an environment of continuous learning andcompetition within the team, due to which everyone will try to the optimumlevel to achieve the best for both themselves and the company.(Ref. Annexure-A, Corporate Objective 2008) Page 15 of 39
  16. 16. Increase of sales volume: • Promotion of direct sales • Enhancement of demand generating/proposal type business • UTS business (top sales) : 150 units/year • Promotion of export bus business: Bangladesh, UAE etc. • Tender business - government, UN, armed forces • Revision of dealer policy • Sales expansion by strengthening 3S • Preparation for export of bus and truckSmooth introduction of the new model series • Increase of variety of models (Junior Dutro, high powered Dutro and others) • Development of HMPL version models (modified PM and others) • Local parts procurement to satisfy ISDP standard • Enhancement of purchasing to comply with multi-sourcingCost reduction • Reduction of losses by leveling of production schedule • Reduction of direct manpower cost by TPS • Enhanced MIS - introduction of corporate wide LAN and various software to support operations. • Introduction of total cost control by model • Reduction of total stock (CKD kit total stock 4 months, synchronization of local parts with CKD kit etc.)Profitability of Body Manufacturing Plant • Improvement of body finish quality • Production planning aiming at leveling • Total revision of product quality and inspection proceduresEnhancement of after sales service • Establishment of new 3S and 2S dealers • Revision of parts sales policy • Technical training prior to every new model introduction • Procurement of spare parts for new model • End User service facility through free service camps • Dealer/user training utilizing new training facilities Page 16 of 39
  17. 17. Enhancement of quality assurance • Improvement of quality (local parts, body and completed vehicle) • Establishment and spiral-up of ISO14000 EMS activities • Continuation of ISO9001 EMS activitiesPromotion of zero accident minds among all fellowsSafety hazards Page 17 of 39
  18. 18. ORGANIZING“It is the process of creating framework for developing task,obtaining and allocating resources and co-coordinating workactivities to achieve goals. “ORGANIZATION STRUCTURE • Chairman • Managing Directing • Deputy Managing Director • Functional Directors • Senior General Managers / General Managers • Departmental Heads • Executives / assistants / coordinators • Section In-chargesDECISION MAKING APPROACH & STYLEMost of the times decisions taken by the management of Hinopak are result ofa blend of rationality and intuition. Managers use the historical trend theylearned from their experience in the past to cope with the problems, culture ofthe Hinopak and their skills and understandings.At top level, it’s analytical, as they take their time carefully weighingalternatives and consider riskier options while at middle level it’s more ofbehavioral and directive while at lower level its purely directive. Page 18 of 39
  19. 19. ORGANOGRAM Chairman MD & CEO DMD Director Director Director Design & Sales & Finance 34 Material 82 83 146 Development Marketing & MIS Operations Assembly Product Personnel 311 61 27 Operations Support & Admin Plant Body Operations 801 Plant Total Strength of HPML 1559 Quality 14 AssuranceTYPES OF DEPARTMENTALIZATION• Production Department Organization has two main operation plants for vehicles manufacturing which are separately located. Divisions of plant are based on assembling and manufacturing.  Assembly Operation Plant Assembly operation plant is operation division for the Chassis assembling and sub-assemblies only.  Body Operation Plant Body operation plant is operation division for the manufacturing of bus, truck bodies’ and related parts which re required during assembly of chassis and its sub-assemblies.  Engineering & Development Page 19 of 39
  20. 20. Engineering and development department is separate division for introducing & developing the new model of vehicles with new technologies & facilities.• Quality Assurance DepartmentQuality Assurance Department is for assuring the all activities duringoperation and assemblies• Marketing DepartmentMarketing Department is the searching engine for the firm which put ordersform customers also is for the sales of product in market• Finance DepartmentFinance Department for accountability of overall performance ofproduction, as well as sales and profitability of the Organization• Material OperationsMaterial operation department is for providing all required material at timeof operation to the production department also complete monitoring andcontrolling of material management• Personnel & AdministrationPersonnel & Administration is for monitoring over all productivity of plantwith work man force and facilitate the manpowerVERTICAL CO-ORDINATION• Span of management• Decentralization• The Delegation Process  Preparing  Planning  Discussing  Appreciating• E-Managerial Business Communication Page 20 of 39
  21. 21. DEPARTMENTALIZING Page 21 of 39
  22. 22. ORGANIZATIONAL FUNCTION Page 22 of 39
  23. 23. FINANCIAL PROJECTIONSBUDGET PLANOPERATING RESULTSSALES REVENUEThe sales revenue in the year increased by 22% to Rs.7,827 million from Rs.6,392 million in 2006.Most of it, around 76%, came from the sale of chassis.GROSS PROFITThe gross profit increased to Rs. 1,388 million from last years Rs. 835 million.The increase in chassis gross profit is in line with the increase in sales volume.The steady value of the Japanese yen in the first three quarters of the yearhelped gross profit from bus and truck chassis to rise. Larger productionreduced the cost per unit and higher value-added specialized vehicles wereproduced than in any previous year.DISTRIBUTION ANDADMINISTRATIVE EXPENSESThe distribution and administrative expenses increased to Rs. 409 millionfrom Rs. 308 million due to: • Investments made in 3S dealership network • Publicity launched to promote new models • General inflation and normal increments in salaries and wages. Page 23 of 39
  24. 24. OTHER INCOME & EXPENSESIncome from short term investments decreased by Rs.16 million due to lowerliquidity. A net exchange loss of Rs. 31 million was recorded in fair valueadjustment on forward exchange contracts made to hedge the exchange risk.CAPITAL EXPENDITUREThe Company is continuously making investments to improve the capacity,technology and safety of its plants especially the Body Fabrication Plant. Theexpense incurred on this account during the year was Rs. 117 million.CASH FLOWThe cash income from the operating activities was Rs. 542 million of which Rs.117 million were invested in capital goods and Rs.130 million paid individend to shareholders. The net increase in cash and cash equivalent wasRs. 300 million. The year thus closed with a positive cash balance of Rs.156million.STATEMENT OF VALUE ADDITION Page 24 of 39
  25. 25. DISTRIBUTION OF VALUE ADDITIONSOME FINANCIAL HIGHLIGHTS Page 25 of 39
  26. 26. Page 26 of 39
  27. 27. Page 27 of 39
  28. 28. (Ref. Annexure-C, Capital Budget Expense of E&D Department 2008)(Ref. Annexure-D, Manufacturing Budget Expense of E&D Department 2008) Page 28 of 39
  29. 29. LEADING“ The process of using influence to motivate others towardsaccomplishment of goals. “MOTIVATIONThere are several factors for motivations of employees • Medical policy • Traveling policy • Retirement policy • Promotion policy • Safety & health policy • Employment welfare and benefit policy • To enhance or encourage highly effort performance • Performance appraisals • Trainings & developments (Employees , community, customers/vendors ) • Performance & Statutory Bonus/Cash awards • Special Salary adjustment • Late sitting allowance • Leaves encashment • Recreational activitiesCOMMUNICATIONCommunication is the process of sharing our ideas, thoughts, and feelingswith other people and having those ideas, thoughts and feelings understoodby the people we are talking with. Communication is a process, by whichinformation is exchanged between individuals through a common system ofsymbols, signs or data.Structure of the company is to be lined up in such a way that the workchannel and communication channel should not affect the pace of the work. Page 29 of 39
  30. 30. The key element is “understanding”. Hinopak is using chain of commandis from top to bottom.Methods used for communications • Electronic mail • Voice messaging • Faxing • Teleconference and video conference • Inter departmental memorandumMeeting • Before the meeting:  Plan the meeting: time, people, items to be discussed  Prepare materials. • During the meeting  Start on time.  Cover most important topic first.  Promote a professional atmosphere.  Collect idea of everyone.  Must have final decision.  End on time. Page 30 of 39
  31. 31. • After the meeting:  Distribute copies of minutes.  Follow up on decisions madeImportance of communication in organization • Everything a manager does involve communication. • The success of an organization is built upon effective communication.DISCIPLINEDiscipline, rules and regulations are most important for any organization.Hinopak is strictly following the discipline and for the awareness of this it isconducting trainings programs also. • High quality worker performance form is used to evaluate the worker performance which is based on plan verses actual. • Accountability on Rules & Regulations standards breaking • Workers behaviors are accountability at time of start their work with all safety measures and using all stuff throughout the day and kept at their defined places at the time of leaving their places with cleaning of machines. • Late arrival of workers as well as managerial staff.GROUP DYNAMICSGroups are more useful for organization as for good for people. It canimprove creativity, can make better decisions, can increase commitments toaction, can help control their members, and can help offset largeorganization size.Situations in which groups are superior to individuals • When there is no clear expert in a particular problem or task. • When problem solving can be handled by a division of labor and the sharing of information. • When creativity and innovation are needed. Page 31 of 39
  32. 32. Groups are performed better than individualsHinopak is comprises of some groups to get better performance, opinionfrom people (employees, vendors, and suppliers). There is some group areperforming for different causes which are; • CSR Committee • Task Committee • Health and Safety Committee • Day to Day Operation Committee Page 32 of 39
  33. 33. CONTROLLING“Process of monitoring and regulating the organizationalactivities” Determine Establish Measure Compare Standards areas to Standards Performance Performance Met or Control against Standards Exceed Standards not Met Take Corrective Recognize action as Performance Necessary Adjust Standards and Measures as NecessaryFEEDBACK MECHANISMBoth middle and top management agree upon innovative feedback,procedures and services provided to the customers. Different tests and Page 33 of 39
  34. 34. approaches are implemented in this regard like customer evaluation forms,customer feed back, marketing and promotional activities, periodic changingin products and product range to ensure best quality product is available inthe market.CONCURRENT SYSTEMHinopak controlling system is dominated by feedback controlling system.However one may find a touch of concurrent control system as well. Productsupport department collects the inputs of the customers’ complaints througha PIR (Product Improvement Request) and QPR (Quality Problem Request)system.(Ref. Annexure-E, QPR-Quality Problem Report)CONTROLMECHANISMWORK PLACE PRIVACY AND WORKPLACE VIOLENCETo avoid any negative activities through email system, MIS department keepstrack of the emails being sent across and websites being visited (especially onSaturdays). Few video cameras are also installed in some critical productionareas and security areas.TOTAL QUALITY MANAGEMENTTotal Quality Management or TQM is a philosophy of management driven bycontinual improvement and responding to customer needs and expectations.Through TQM, Hinopak is not only focused on the final product but alsoconcerned about how the company handles deliveries, how rapidly itresponds to complaints, how politely the phones are answered and the like.Hinopak utilizes statistical techniques to measure every critical variable in theorganization’s operations. These are compared against standards orbenchmarks to identify problems, trace them to their roots and eliminate theircauses. Statistical process control uses periodic random samples taken duringactual production to determine whether acceptable quality levels are beingmet or production should be stopped for remedial action.INVENTORY CONTROLHinopak by utilizing its MIS system controls and keeps track of raw materialsinventory, work – in – process inventory and finished goods inventory. Just in Page 34 of 39
  35. 35. time (JIT) approach is preferred to eliminate all sources of waste, includingany activities that do not add value by focusing on having the right part at theright place at exactly the right time.INTRODUCING ERPHinopak has recently practicing ERP on ORACLE. Oracle offers advancedanalytic capabilities for automotive providing business intelligence, decisionsupport, global compliance management and feedback from customers.ISO IMPLEMENTATIONHinopak is the only automotive company in Pakistan and the first Hinoaffiliate world wide to receive the ISO 9001 certificate. This certificate hasbeen given to Hinopak for implementing and maintaining a company widequality system in: • The Assembly and Progressive Manufacturing of Commercial Vehicles • Management • Project Engineering • Design • Development • Purchasing • Production • Marketing • Quality ManagementTo the uninitiated, ISO 9001 certification may be considered a vital marketingtool exclusively for promoting exports. In fact, the ISO 9001 requirement is asvalid for the domestic customer as it is for the overseas clientele. What isimportant for each customer is the assurance that the products and servicesbeing offered are in accordance with predetermined quality standardsINTERNAL AUDITINGIn order to ensure compliance with the company policies by all departments /staff, the company has a full-time internal auditor. The internal auditorresponsible for carrying out surprise and routine audits anywhere in the Page 35 of 39
  36. 36. company and inform top management about the state of policies &procedures compliance. The company has a very strict financial controllingsystem. Each department is answerable for its Profit/Loss account which iscompiled every quarter. Inter-departmental transactions are also Debited /Credited to ensure efficiency and accountability.Employees’ bonuses, incentives and perks are also hedged with Company’sperformance. This also ensures that all employees work towards Company’sprofitability with all sincerity. This also helps in maintaining Goal congruenceand avoiding dysfunctional behavioCONCLUSIONS & RECOMMENDATIONSAlthough Hino Pak is meeting the production targets, lack of support formthe government is creating problems in the efficiency of the company. HinoPak has already produced CNG busses, but government is still not willingto accept the idea.The government should aim to increase the local production, by making thelocal auto industry more competitive, creating capacity for local design andinnovation, domestic competition, human resource development and auto-cluster development. whereas the government is still focusing on importsfrom other neighboring countries.If existing automobile business are not adapted to the requirements of thefuture they would soon be history. If the future is inevitable it is imperative toprepare for it in time.Even though Hinopak Motors Ltd. is a well-managed organization there isstill some room for improvement. The company will have to make its decisionmaking and managerial practices more clear and transparent. A trace ofdouble standards during hiring, promotion and foreign trainings ought to befaded out to truly motivate the employees and retain the potential employeesof the company. Moreover, structure of the company is to be lined up in sucha way that the work channel and communication channel should not affectthe pace of the work. Page 36 of 39
  37. 37. GLOSSARYCKD Complete-Knock-Down, when vehicle parts (especially the parts of) chassis come in the separate pieces and assembled in the country where it is assembled to curtail the custom duty factor.CBU Complete Built-up Unit6x4 First digit shows the total no. of wheels directly attached to the axles of the vehicle and last letter shows the wheels that are directly driven by engine.PIR Product Improvement RequestQPR Quality Problem ReportE&D Engineering & Development Department.AOP Assembly operating plant, manufacturing plant where Chassis of the vehicles are assembled.BOP Body operating plant, manufacturing plant where body of the vehicles are fabricated.MIS Management Information SystemCBA Collective Bargaining AgentUTS Urban Transport Service3S Available Sales, Services, and Spare Parts facilities2S Available Services and Spare Parts facilities Page 37 of 39
  38. 38. OTHER REFERENCESREPORT • Hinopak Motors Limited for the year 2007 • Hinopak NewslineBOOKWEBSITES • http://www.hino.com • http://www.hinopak.com • http://www.pama.org.pk • http://www.hino-global.com • http://www.japanese-trucks.com Page 38 of 39
  39. 39. APPENDIXES • Annexure-A Corporate Objective 2008 • Annexure-B Planning/objectives of Production Division • Annexure-C Capital Budget Expense 2008 of Production Division • Annexure-D Manufacturing Budget Expense 2008 Production Department • Annexure-E QPR-Quality Problem Report Page 39 of 39

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