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HONDA DEALER MANAGEMENT SOLUTIONPROCESS REENGINEERING

INTRODUCTION

We are conducting this research to analyze the issues faced by Sablok Honda in Maharashtra, with the current dealer management solution.

Background

Honda is the worlds largest manufacturer of two Wheelers vehicles. in1999, The Wings, recognized world over as the symbol of Honda two wheelers , arrived in India as Honda Motorcycle and Scooter India Pvt. Ltd. (HMSI ), a100%subsidiary of Honda Motor Company Ltd., Japan . Since its establishment in1999at Manesar, 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 two wheelers sales and services

At Honda, reaching closer to the customers has always been their top priority and they have been relentlessly following their ambitious targets for expansion in line with their product portfolio expansion. Through diligent network expansion they wish to cover the vast Indian landscape and thus, deliver world class products and services. With 3170 dealers already in place across India, HMSI becomes the second largest two wheeler dealer network in the country. With the expansion of sales capacity, Honda continued its spree of spreading wings in India and reaching out to customers through expanded network in an aggressive manner.

Honda Motorcycle & Scooter India Pvt. Ltd. (HMSI) announced the opening of its 800th HEAD viz. Honda Exclusive Authorized Dealer with the inauguration of its new 4S (Sales/ Service/ Spares/ Safety) facility in the state of Karnataka.

In the end of FY 2013-14,HMSISales & Service network stood at over 2730 outlets (includes 768 Dealers, 1000 Branches/Sub dealers, 962 service set-ups) across India. In current FY2014-15, they are targeting to add a total of 1020 more outlets and provide service closer to customer, with a network of 3750 sales and service outlets.

The dealer outlets offer key customer needs ranging from product sales, product servicing, and Hondas genuine spares facility along with road safety promotion amongst other services.

Dealer Management Solution

The Dealer Management Solution (DMS) for the automotive industry is a comprehensive solution that simplifies day-to-day operations and increases performance efficiency. It is a centralized application that captures customer, vehicle and inventory information to facilitate better inventory management and provide visibility on dealer operations across geographies.

A central server is needed for DMS installation which stores all data, permitting multiple users to have the right of entry for as many as 50 or more client computers. Other DMS providers use an application service provider or centrally-hosted model.

Key functionalities of the solution include:Pre-salesVehicle SalesVehicle Parts and SparesVehicle ServiceCustomer Relationship ManagementBasic Financial AccountingWorkflow Automation and Alerts

Figure 1 HONDA DMS

Honda Dealer Management Solution System:

The Honda DMS system is preloaded with programs that help the dealers in their daily processes. The following are the main components of the Honda DMS system:

1. Purchase Management Purchase order or indent request Pre delivery inspection Transit damage report, Vehicle transfer to dealer

2. Sales Management Sales invoice with complete vehicle information Vehicle transfer to customer Handling of different payment mode of the customer RTO registration and sales certificate

3. Service Management Service reminder to customer JOB card Free service redemption Team incentives for employees based on service

4. Insurance renewal management Customer insurance history Reminder to customers for renewal

5. Account management

Detailed data of the entire customer related accounts

Problem Statement

In our project, we have tried to find ways to reduce the shortcomings of the current DMS and tune it according to the requirements of the dealers at the regional level. The main objective of the report is to reduce the time taken to service each vehicle, which thereby reduces costs. This helps enhance the productivity of the employees and employee retention.

Motivation

Our project is related to the business process reengineering (BPR) that focuses on reengineering the existing processes of the dealer management solution system at the HONDA service centre. The motivation for taking up this project was eliminate the shortcomings faced by the dealer at the regional level. Dealers faced several problems and hence were quite dissatisfied with the present system. HONDA was also unable to customize its software according to the requirements of its individual dealers. Hence, in our project, we have tried to comprehend the existing system and analyze the issues. Based on our analysis, we have provided recommendations for its improvement.

Coverage and Scope

The solution that the dealer desires from the system varies based on the specific requirements of the customers and the regional transport office. Hence, the changes that apply to one particular dealer cannot be applied to other dealers.The project covers the service aspect of the dealer management solution system. The other aspects such as sales, procurement and data management are not covered as it would increase the complexity of the project. The solution can also be applied to other processes with minor changes.

Limitations

We limited our project scope to the vehicles service management. We did not include the purchase management and Insurance Renewal Management business processes as the dealers were not able to provide us with the required information.

Under services management, there are three processes, namely free services, paid services and accidental services. We have limited the project to free and paid services alone, as accident services would increase the complexity of the project.

Assumptions

1. The current DMS system can be modified to incorporate this new system2. The customer service representative at the service station can be trained to use the modified IT system

METHODOLOGY

Objectives

Analyse the current DMS system and list out the issues faced by the dealers Provide a customized solution to mitigate the issues faced and reduce the overall costs

Research Methodology

The research methodology used by us is mainly qualitative in nature. We conducted telephonic interviews to gather data from the dealer. We also gathered information based on documents, videos and reports on the complete business process provided by Sablok Honda. The following data was obtained:

Documents detailing the process for sales and service Document stating the current problem faced by the company Videos showing the related forms and service cards used in the process Verbal information of the complete process

Based on the above information, reengineered the current business process to provide the dealer with a customised solution, mitigating the current issues faced by the dealer.

FINDINGS

AS-IS Process

In the AS-IS process, the service station representative is forced to work with the standardized DMS system provided to him. Hence, most of the tasks have to be done manually.

Figure 2 AS-IS Process

Initially, the customer checks the user manual provided to him and brings his vehicle for servicing, based on the dates mentioned

Figure 3 - Customer

The customer service representative at the service station inspects the vehicle. He then enters the details into the DMS system and informs the customer on the approximate delivery time and service charges (if it is a paid service). He then makes a servicing plan based on the details.

Figure 4 Customer Service Representative

Next, the vehile is servied by the servicing team at the station

Figure 5 Vehicle Servicing Team

Once the vehicle is serviced, the representative updates the inventory records based on the supplies consumed. He then manually calculates and prepares the bill, based on the value added tax (VAT) applicable for the spare parts used and supplies consumed. The customer is then informed about the service completion and he/she collects the vehicle after settling the bill.

Figure 6 VAT Calculation and Vehicle Delivery

Issues Faced

Lack of dealer level customization

Since the dealer is provided with a DMS standardized across the country, he/she is unable to customise it according to his/her requirements. It therefore reduces the efficiency of the system

Too many manual process

With there being a lack of an option to customise the system, the representative is forced to perform a lot of manual tasks, which otherwise could have been automated.

High turnaround time

The manual tasks only add to the overall time required to deliver the vehicle to the customer. Also, since the initial calculations are being done manually, the delivery time and costs would have a larger error component when compared to an automated process.

Increased costs

With the turnaround time being high, there is an increase in the labour hours required per vehicle, and this would increase the overall servicing cost.

RECOMMENDATIONS

TO-BE Process

In the TO-BE process, the DMS software provided is customized according to the needs to the service station representative. Hence a lot of the tasks, which were previously done manually, have now been automated.

Figure 7 TO-BE Process

The customer receives a SMS notification from the service centre, reminding him/her about the free/paid service due. The customer then brings the vehicle to the service centre.

Figure 8 - Customer

The customer service representative at the service station, as before, inspects the vehicle. He then enters the details into the DMS system and informs the customer on the approximate delivery time and service charges (if it is a paid service). This is generated by the system.

Figure 9 Customer Service Representative

Now, based on the details entered, the system generates a list of spare parts and supplies that would be used. It also generates a servicing plan based on the details entered. Once approved by the representative, the inventory system is auto updated and the vehicle is sent for servicing.

Figure 10 System Automated Processes

Once the servicing is completed, the status is updated in the DMS system. The system then calculates the VAT based on the different tax slabs and prepares an invoice. A notification is then sent to the customer to collect the vehicle.

Figure 11 Automated VAT calculation

The system then sends periodic reminders to the customer, asking him/her to bring the vehicle to the service station once the servicing is due.

Figure 12 Periodic Customer Review

Key Performance Indicators (KPIs)

1. Labour hours per vehicle serviced

Here, we can see that through the automation process, the customer service representative is required to spend lesser time with each service request. This thereby enhances his productivity.

Also, since the system generates a standardized servicing plan, the standard operating procedures are well defined and the vehicle servicing can be done faster by the servicing team.

2. Improved stock visibility and inventory management

Since we now have our DMS system integrated with the existing inventory management system, we are able to better manage our inventory and reduce the inventory holding costs. We do not hold excess supplies in our warehouse and place orders only when our inventory levels go below a certain point.

Also, since we now have the customer servicing schedule with us, we are better able to forecast demand and hence will be able to maintain our inventory levels accordingly.

3. Customer Retention

With a lower turnaround time and enhanced customer service, the number of repeat customers would increase as more people would choose to get their vehicle serviced through a Honda service center, than go to a local mechanic.

Beneficiaries:

After the changes that were made in the system, the clients shared information directly with each other. Due to the IT infrastructure (common software and standard Database) the following entities were benefitted:

Manufacturer:

Manufacturer was relieved from developing short term and customized requirement for each and every dealer. They could now focus on other important problems faced by the dealers.

Dealers:

Dealers could now work with less man power which helped in reducing the costs. The redundant job of cross checking multiple entries and the cumbersome process of calculating the taxes was no longer required. This will also help them to satisfy their customer by improving the turnaround time.

Clients:

The waiting time for the client reduce significantly. They also get reminder about the process completion, which help them to track their delivery.

CONCLUSION

The customized DMS system has been designed to mitigate the existing issues faced by the dealers at Sablok Honda in Maharashtra. It also brings in enhancements to the processes, leading to long term benefits. The DMS system can be customized through local IT outsourcing, which, according to the dealer, would cost around INR 25,000 to 30,000. This cost can be recovered by the dealer in the long run.

REFERENCES

The videos, documents and telephonic data from Sablok Honda. http://www.honda2wheelersindia.com/

http://yes.honda.co.in/honda-motorcycle-scooter.aspx

http://www.motoroids.com/news/honda-two-wheelers-india-celebrates-800th-dealer-network/