The Application of MIS at Honda

Introduction

Management Information system is a kind of system which helps in providing information to the organization so that they can run efficiently. MIS can be regarded as a subset of the whole internal control processes in an organization which consists of the documents, applications of people, technologies and processes that are used by management accountants which they use for solving business problems like pricing or costing the service or product (Bidgoli, 2010). Management Information System is different from the other kinds of information systems because they are applied in analyzing the operational activities of the organization. Rationally, MIS is used for referring the group of information management techniques applied together for the support of decision making process in a business which is Expert Systems, Executive Information Systems and Decision Support systems (Lucey, 2005).

Honda – A manufacturing organization

Honda is the world largest producer of the motorcycles and internal combustion engines that are measurable by volume mainly producing more than fourteen million internal combustion engines each year.

With the progress of Honda in the manufacturing sector, it has also generated astounding amount of data. Even though IT departments have an advantage over the improvement in the hardware components for storing large amount of data, but still the “fact gap” exists in the Honda to met the needs of useful data at aright time to make effective and efficient decisions.

For Honda, getting right kind of information is important in today’s environment which it was not required before, therefore reducing costs, enhanced productivity and maximization of profits.

Managers of Honda have to administer the intricacy of the supply chain, internal control and manufacturing as well as meeting the customer and distribution demands. In today’s business environment manufacturers are forced to make effective decisions on a regular basis with the limited information system. Honda has to face mounting globalization, increased competition than before and customers whose needs are reflected in their own facts and opportunities of a global market.

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Besides maintaining proficient business, Honda has grown its emphasis on the information technology. With the rising needs for partnership, connectivity and speed in the modern economy, Honda has started looking for ways to give authority to their employees so that they can work smartly to compete with their competitors in the current market scenario. Any business without the information technology is failed to deliver competitive edge and is just wasting the potential of their human resource. Honda observes this change and adopts useful hardware and software in their company.

MIS -information across various departments

With the advent of time, internet and the global economy has got so well with each other such that there is requirement of proactive plans to be implemented in the organization, thereby, constant connection of employees to the web and with each other.

Most of the IT departments are spending their time on budgeting personal computer equipments, but making choice for the Honda’s network hardware infrastructure seems to be a critical decision. When planning for the network infrastructure for Honda, it is vital to consider the issues like how employees will share access to the information, which of the data is important and how to maintain it, what is the actual demand; is it for wireless computers? And what are your plans for integrating peripherals. Honda’s hardware pattern is the basic element for driving employee’s connectivity and collaboration. (Bocji, 2005)

Performance and price are the key determinants which are there to dictate from where to begin the search. The present scenario for the hardware system consists of wide variety of providers or manufactures like Juniper, Foundry, Cisco and many more. The MIS systems from the top manufacturers are useful in providing implausible security and performance but it could be expensive for the company. Honda maintains the balance between the price and performance for smartening up their hardware equipments. Many companies are there who specialize in providing price efficient businesses through brand name network hardware equipment. For the purchase of new hardware equipment, Honda needs to look its eyes open for the alternatives that best suits to their company profile. Even, proper search should be made regarding potential services and additional support with the hardware equipments purchase. It should be certain that the hardware manufacturer should have a brand name while keeping in mind the organizations decisions and interests.

The tools of the management information system help the organization and its workforce in performing the jobs which are related to the processing of information. The collaboration of business systems and MIS is useful in decision making as it collates the production reports and business data.

Application of MIS in Honda

Helps in decision making

With the presence of computer everywhere, it is hard for any business to escape from the use of IT systems. Some of the fields or departments are there in HONDA where MIS is priceless.

While computers are not able to create strategies of their own but still they can help mangers of the organization in efficient decision making process and make them understand the usefulness of strategies. MIS is capable of converting data into useful information which can be employed in decision making. Even, MIS assists Honda in providing performance reports and financial statements which is functional for planning, supervising and implementation of plans.

MIS also aids Honda in collating valuable information and transform it into rational reports which otherwise be useless as it is impossible to manage volumes of data manually. With the help of these reports, Honda can recognize trends and patterns which would be impossible if all the work is done physically. MIS systems make use of the raw data to run replication and answer a variety of theoretical questions such as ‘what if’ concerning modification in strategies. For instance, MIS can tell Honda about the effect of alterations in price on the sales of their cars. Due to the Decision Support Systems, Honda can be enabled to make more of the informed decisions within the organizations which otherwise would be impossible without MIS.

Data collection

Even though MIS helps in collating numerable amounts of business information, but they are also useful for providing saving time benefit to the employees. In contrast with the past where files are to b handled manually, now MIS quickly examines the data after entering it into the computer through data processor. Thus, enhancing faster decision making in the organization which is reflect in the efficient working.

Information system

Everyday business require some or the other kind of information system in the organization. With the computerized system recording and business process management is vital to run the company at a profit as well as responding to the fluctuations in the market. Management information system, however, are perfect for gathering and reporting information related to the company’s business process. MIS enables Honda to review the data and make use of the information for achieving the company’s objectives. (Clarke, 2007)

Management methods

The information provided by the MIS help the managers to look at the areas or departments where there is need for the improvement (Pearlson, nd). What will be the techniques and approaches for correcting the business activities will lie on the part of mangers abilities and style of management that is practiced in the organization. By making use of de-centralized management approach, line mangers are able to make corrections quickly as it requires a great amount of autonomy in the management process. With the centralized management approach, the power and authority lies with the top management only so that they can take decisions (Stone, 2002).

Resource management

MIS system allows Honda to look at the utilization of resources and see if they are making use of the resources in a proper and efficient manner. Equipments, raw materials, assets, labor and some other are the examples of management resources that must be supervised and monitored regularly by the organization. With an inefficient use of resources company may be pulled back in the competitive environment and may loose competitive edge over the competitors. This also leads to the losses for the company by reducing profit margins and lessening sales.

Decision process

Many of the companies make use of some sort of decision processes when they gathered information from the MIS system. Every single unit of data is reviewed and is used to make decisions regarding operational activities, market trends, profit margins etc. the process of decision making consists of all the levels of management, tends to generate most well-informed decisions (Wright, 2009).

Communication

Appropriate communication allows managers to take decisions for the organizations based on the information provided by the MIS. Communication system permits top-level managers to discuss the data from the front-line managers and department level managers, thus, creating downward flow of the communication for making decisions. Upward flow of communication is also important for the decision making process which allows front-line managers to have an opportunity to discuss the information from MIS with the top level management. Open communication flow allows Honda to obtain input or information from all the levels of the management to make informed decisions obtained from the MIS system.

Environmental management

With the establishment of the business in the global environment, Honda is planning to introduce environmental management system for continually improving the practices to be done for the protection of environment. With the MIS system, Honda is getting proactive to acquire environmental management ISO 14001 certification for the production processes and other services. (Garson, 2003)

Kinds of MIS

Financial MIS – this MIS states the past and present records of the Honda and its activities. The financial MIS shows the profits and losses of Honda, its financial records to represent how well company is going, decisions regarding control of the cost and spending of funds.

Manufacturing MIS – this MIS monitors the flow of goods and services, raw materials and components of Honda. Raw goods which are processed on Honda get monitored by this manufacturing MIS. In this way, Honda with the aid of manufacturing MIS can reduce and control the cost of goods and services.

Marketing MIS – this MIS is created for handling all the aspects of marketing like prices, sales, advertisements, product innovations, future decision making etc. Marketing MIS aids decisions regarding product appearance of the Honda. It helps the company in enhancing customer contacts by preparing questionnaires for the feedback by customers about the services of Honda and tracks out the spending habits of the customer.

Human Resource MIS – HR MIS helps Honda in recruiting and selection of candidates. Human Resource views the requirements of the workers, hiring procedures, workforce rules, and training and performance assignments. The task for the Honda’s Human Resource MIS is to look at MIS also deals with the external and internal information or data. The information regarding the internal working of the Honda can be easily available from the company’s network, for e.g., sales for each car. The information of the external environment can be collated from:

MIS is however, different from information system and data processing system (Lauden, 2007). Operational information systems just read the collated data and perform the tasks like producing lists of stuff that are required for re-ordering. Data processing systems helps in recording daily transactions like sales of Honda cars in a particular month. Whereas MIS assist the managers in analysing and evaluating the data related to the sales to show the pattern and trends of diverse product lines, enabling them to make efficient decisions regarding the product and its promotion or whether the promotion should be discontinued. It even collects the external data:

Data on the population shifts – with the increase in age of the people, they are less likely to be interested in customizing cars.

Intelligence about competitor’s activities – this information can be gathered from the newspapers, articles or from market intelligence.

Government Legislation – if there is increase in minimum wages, then financial condition would change.

Economic and Social Factors – sales for the cars would fall in a particular area where the employer had closed its plant.

MIS even collates the data regarding formal and informal flow of the information

Formal Flow of information is the one in which a process is accepted, e.g. downloading the sales figures across the several branches. External information can be gathered through data collection agencies like Bradstreet and Dun which provides economic data for the commercial and academic organizations. Formal flows of information can also be collected from the people who are working on the similar document at different locations, by making use of company intranets and e-mails.

Informal flows of information are provided through reading newspapers or articles, chance meetings, or by watching news. The medical care and payroll of the employees.

Facilitation Decision Making at Three Tiers of Management

Management Information System even provides Honda the information on the regular basis. The term MIS implies three main functions Arrangement, Purpose and Order. The information system is useful for various purposes and at various levels. Its main uses are:

• It helps in strategic planning and its implementation.
• It lessens or reduces the service cycles
• Enhances the productivity of the employees resulting in efficient working
• Better understanding of consumer needs and demands
• Lessening the product development and marketing life cycles
• Smoothening the progress of Honda business and re-engineering process.

The use of MIS can be applied across the administration for

• Carrying the procedures of policy making
• Carrying the research and development
• Recognizing the kinds of risk and ways for managing it
• Meeting the necessary legislative and regulatory requirements
• Assessing performance, achievements and quality
• Enabling the efficient and effective use of resources
• Supporting reliable and quick decision making
• Providing facts for business transactions

The process of decision making is fundamental at various levels in Honda. These are made within the Honda at Strategic, Programs, Operational and Activity level. MIS at Different Levels of Management in Honda:

Senior Management – it directs the senior management for planning strategic business plan, provides information for the positioning of the Honda business, implementing policies and plans, analysis of competitors and evaluation of performance of the employees and the external factors which have an influence over the direction of strategic plans.

Middle level of Management – at the middle level, MIS assists managers in performing operational and organizational functions by providing:

• Assessment of resource usage
• Data for operational planning
• Data for delivery procedures
• Information for synchronization of work units
• Ways for controlling budget and problem solving

It also allows middle level management for program administration by

• Providing data for implementing procedures
• Managing resource usage
• Scheduling of project and plans
• Providing information for administrating programs
• Line Management – it allows line managers to manage activities of Honda by providing
• Information for problem solving
• Data for making consistent decision making
• And information for routine service delivery

MIS plays an important role for providing information to the mangers to perform the above functions so as they can make informed decisions (Oz, 2009). The main purpose of the Management Information System is the transformation of data from external and internal sources into useful and valuable information which can be used for making effective decisions.

A manger can take two kinds of decision which can be either structured or unstructured structured decisions are repetitive decisions and are taken routinely regarding the replacement of a supplier or stock. Whereas unstructured decisions need proper insight into the problem, knowledge and evaluation for carrying the business processes.

Mangers have to go through different stages while considering the related decisions

Identify the problem – the MIS provides information regarding the performance of the departments and where the actual problem is arising

Mull over the solution – proper use of spreadsheet to know the issue like “what if Scenario”

The solution so chosen is based on the information provided by the MIS and manger’s experience.

The solution is then implemented and reviewed. At this level, MIS again provides the data according to which solution can be evaluated.

MIS – An Efficient Mean to Manage Business Process

Business process management can be termed or defined as the series of activities that are implemented in business organizations ranging from planning, leading, organizing, monitoring and controlling (Jeston, 2008).

The five major functions of managers of Honda are:

1. Planning – the directive functions for the company like where it is going to operate, diversifying etc

2. Organising – it deals with the organising of the resources like space, people, services and equipment.

3. Coordinating – it requires the coordination of the activities of different departments of Honda

4. Decision Making – what decisions should be taken for the growth of Honda, its products and services, employees and its IT department

5. Controlling – supervising and monitoring the activities of various departments of Honda

As a leading company in this global environment, Honda has to face several challenges for managing thousands of its existing parts and at the same time qualifying, sourcing and approving new products. With the increase in competitive pressure, Honda has chosen management information system for managing their business process in association with qualifying and sourcing new raw materials so as to meet the critical requirements for scheduling (Magal, 2009).

Problems

• New parts are being sourced constantly causing duplication in the organization.
• Existing parts are required to be updated with the altering specification.
• For the substitute parts, time consuming search has to be done

Solution

With the employment of management information system, the duplication of parts is easily recognized, thus reducing surplus inventories or stocks.

With the automation of vendors and raw materials and parts, the business process of Honda has shown efficiency

Search is now become simpler as qualified vendors are supplying parts

Benefits

It provides vision to the managers to see backlogs and buyer workloads

Now time required for sourcing the parts have been reduced due to MIS

The suppliers and vendors are continually managed while assuring accuracy and reduction in cost at the same time.

The schedules for the new products are met on time and is exceeded by reshuffling the business process 

 With the enhancement of Business processes in Honda, there is need for more efficient production processes. With the improved and better information and data on the business processes, there is a closer approach to enhance the supply chain management which includes all the processes ranging from the sourcing of the raw materials to the production and allocation of the finished products. As a result of the improvement in management of supply chain, Honda is able to response efficiently to the changes in the market. With the efficient implementation of MIS, Honda is able to react rapidly to the external environment as well as MIS enable the organisation to render better and efficient service and products to be able to move ahead of their competitors and enjoying larger share of the market.

While MIS is extremely helpful to generate data analysis and statistical reports, it is also useful for creating Management by Objectives tool. MBO is an administrative procedure through which managers and their subordinates and co-workers concur on the sequences of objectives to be achieved within a set time frame for the employees. Objectives are set with the SMART approach, that is, the goals should be specific, measurable, agreed, realistic and time-specific.

The main purpose of SMART objectives is to give basic indicators through which an organization can judge or evaluate the performance of their employees. To make MBO a success, it is necessary to track the progress rate consistently. For this purpose, MIS system is best to make use of. As all the SMART objectives are measurable as mentioned in its name, the progress can be tracked with the help of management reports which are to be analyzed by the policy makers.

Conclusions

Every organization consists of one or more than one core competency, that is, to have a competitive edge over their competitors. With the application of proficient management information system, Honda has better chances to be ahead of their competitors. MIS provides necessary tools to Honda to better understand the enterprise and the external environment or the market.

Management information system is an approach set out of internal control that helps Honda management in operating business day after day. It is just not a tool used for collating the information but allows the managers of Honda in the process of decision making that are used by the management.

With the employment of MIS in the organization, Honda has found many benefits of it in the system. MIS assist Honda in describing its objectives and its resources. It even permits the managers of Honda for creating reports about the activities of the company regarding products and services, business partners, people, employees and inventories. It helps in keeping the resources of Honda in an organized manner. MIS track the records of resources and maintain the in an organized way.

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