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Tran Phuc Huy - CO1-124 - POM - A2

Principle of Operations Management (Học viện Ngân hàng)

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1. Evaluation of approaches to continuous quality improvement

1.1. Lean manufacturing

 Definition

A lean manufacturing system minimizes waste, creates customer value, and

continuously improves processes. Using lean principles, techniques, and tools, a
manufacturing cycle can be made more efficient (Lynn, 2014)

 Technique

The Just-in-Time (JIT) method involves producing and delivering products just in
time to meet customer demand. Reducing inventory carrying costs, minimizing
overproduction waste, and improving overall efficiency are all facilitated by this process
(Antony, 2008).

Kaizen is an improvement philosophy and technique based on continuous

improvement. Processes, products, or services are continuously improved with small,
incremental changes. Ideas for improving the workplace are welcomed from all employees
(Antony, 2008).

The 5S methodology is a system that organizes and maintains workplace cleanliness

by sorting, setting in order, shining, standardizing, and maintaining. A visually organized
workspace will reduce waste and improve productivity by creating an efficient and efficient
work environment (Antony, 2008).

In a Value Stream Mapping, raw materials are represented along with the final
product delivery. In this way, non-value-added activities are identified and eliminated,
allowing the overall flow of value to the customer to be streamlined (Antony, 2008).

A Poka-Yoke system prevents errors or defects from occurring in a process or

system. As a result, defects in the final product are less likely to occur when mechanisms or
visual cues are used to make errors difficult or impossible (Antony, 2008).

 Elements

Customer-centricity: The customer is at the center of all processes and decisions

when you have a customer-centric approach. In order to improve customer satisfaction and

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loyalty, a customer-centric philosophy needs to understand and meet the needs of the
customer (Krajewski et al., 2018).

Internal customer-supplier relationships: The departments and individuals in an

organization serve as each other's customers. When colleagues and internal stakeholders'
needs are met, collaboration and efficiency can be enhanced (Krajewski et al., 2018).

Perfection is the goal: Continuous improvement and excellence are demonstrated by

pursuing perfection. Despite its high level of efficiency and quality, it recognizes there is
always room for improvement (Krajewski et al., 2018).

Synchronized flow: Optimizing the flow of processes and activities is the goal of
synchronized flow to minimize delays, bottlenecks, and disruptions. Often, lean
manufacturing principles are associated with an efficient workflow that aligns with customer
demand and reduces lead times (Krajewski et al., 2018).

Reduce variation: In order to achieve consistency and predictability, variation must

be reduced. It is important for organizations to minimize variability in order to improve
quality and customer satisfaction (Krajewski et al., 2018).

Include all people: An organization's improvement efforts should be shared with all
members. In order to foster a culture of collaboration, empowerment, and shared
responsibility, collaboration, empowerment, and shared responsibility are cultivated across all
levels of the organization (Krajewski et al., 2018).

Waste elimination: In order to eliminate waste, non-value-adding activities and

processes need to be identified and eliminated. By reducing activities that do not add value,
this principle minimizes waste in lean manufacturing (Krajewski et al., 2018).

 Pros and cons

For organizations looking to improve efficiency and quality, lean manufacturing

offers numerous advantages. Through waste reduction, excess inventory is minimized,
production costs are reduced, and overall resource utilization is improved. A culture of
innovation and problem-solving is fostered through a focus on continuous
improvement. When just-in-time production is implemented, lead times are reduced, and
customer demands can be met more quickly. Lean manufacturing also enhances the quality
of products, resulting in satisfied customers. In the dynamic business environment, the lean
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approach contributes to sustained competitiveness by promoting a streamlined, responsive,
and cost-effective production system.

There are several advantages to lean manufacturing, but it also has some
disadvantages. When employees are under increased pressure to meet tight deadlines, the
relentless pursuit of efficiency can lead to stress and burnout. Small businesses face
significant challenges when implementing lean practices due to the high upfront costs of
training and technology. Organizations are vulnerable to supply chain disruptions due to the
just-in-time nature of production. It is also possible that long-term strategic planning and
innovation may be compromised when the focus is on cost reduction. The right balance
between lean principles and contextual factors is crucial, as unintended consequences and
operational challenges can result from overemphasizing lean principles.

1.2. Total Quality Management (TQM)

 Definition

Total Quality Management (TQM) is the systematic and comprehensive approach to

product and service quality improvement in an organization (Barone, 2010). In order to
enhance quality and customer satisfaction, all employees in an organization must take part in
TQM (Barone, 2010).

 Technique

Plan-Do-Check-Act (PDCA) is a fundamental process for solving problems and

improving performance. In this process, a change is planned (Plan), implemented (Do), and
checked (Check), then acted upon to further refine the process (Act) (Slack, 2012).

Kaizen is a continuous process of improving processes, products, and

services. Continuous improvement is promoted among employees through Kaizen (Slack,
2012).

The 5 Whys is a simple yet powerful technique for root cause analysis. It involves
asking "why" repeatedly in order to uncover the underlying causes. When organizations
repeatedly ask "why," they can pinpoint the source of problems (Slack, 2012).

 Elements

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Meeting the needs and expectations of customers: Product, service, and process
alignment with customer expectations is at the heart of the principle. In order to increase
customer satisfaction and loyalty, you must understand what your customers need and deliver
on their expectations (Oakland, 2019).

Improvement covers all parts of the organization: In order to accomplish continuous

improvement, all aspects of an organization must be considered, including processes,
systems, and functions. A holistic approach to improvement should be applied to every
aspect of the organization (Oakland, 2019).

Improvement includes every person in the organization: An organization should

strive to improve collectively as part of this principle. It is the employee's responsibility to
contribute to ongoing improvement and be empowered and engaged (Oakland, 2019).

Including all costs of quality: According to this principle, all costs related to quality,
such as prevention, appraisal, internal failure, and external failure, should be considered. It is
imperative that organizations address quality-related expenditures comprehensively in order
to optimize them (Oakland, 2019).

Getting things “right first time”: Defects and errors should be prevented according to
this principle. Rather than detecting and correcting errors, it emphasizes prevention
(Oakland, 2019).

Developing the systems and procedures which support improvement: In order to

support continuous improvement, well-defined and effective systems and procedures must be
in place. An organization's operations are infused with continuous improvement through a
structured approach (Oakland, 2019).

 Pros and cons

In an organization committed to excellence, Total Quality Management (TQM) offers

a multitude of advantages. Ensure that product and service quality meets or exceeds customer
expectations with TQM. Continuous improvement processes in TQM foster a culture of
innovation and accountability among employees. As a result of rigorous quality training,
skills are improved across all levels of the workforce, increasing overall competence. TQM
uses systematic approaches such as Six Sigma and statistical process control to identify and
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mitigate defects, reducing waste and enhancing operations. It fosters customer loyalty,
increases competitiveness, and drives sustained business success by creating a quality-
oriented organizational culture.

Despite the benefits of Total Quality Management (TQM), it does not come without
its challenges. It can be challenging for employees used to traditional management
approaches to embrace TQM due to the cultural shift required. TQM training and education
programs can take a long time and cost a lot of money. Putting too much emphasis on quality
may result in slower decision-making processes, reducing agility. In order to achieve
organizational goals, it is crucial to strike a balance between quality and efficiency. In
addition, quantifying the return on investment of TQM initiatives can be challenging due to
the complexity of measuring success.

1.3. Six Sigma

 Definition

The Six Sigma methodology and tools are used to reduce defects and errors,
minimize variation, and increase quality and efficiency (Pankaj, 2017).

 Technique

Process mapping describes how a process flows and identifies areas that can be
improved by visually representing its steps and activities. It is helpful to document the
current state of operations using flowcharts and value stream maps (Tanner, 2018).

The statistical process control (SPC) method is an approach to monitoring and

controlling processes. In order to ensure that operations are within acceptable limits, control
charts, histograms, and other statistical tools are used (Tanner, 2018).

A root cause analysis identifies the underlying causes of problems or defects within a
process. In order to uncover the root causes of operational issues, techniques like Fishbone
diagrams (Ishikawa), 5 Whys, and Failure Mode and Effects Analysis (FMEA) are commonly
used (Tanner, 2018).

A Design of Experiment is a structured method for systematically varying multiple

factors simultaneously in order to identify what factors are most important. Operational

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excellence is achieved by optimizing processes and identifying the best combination of
variables during the Improve phase (Tanner, 2018).

Control charts play an important role in the Control phase of DMAIC. Data points
and their variability are graphically displayed to help monitor process stability over time. For
the Six Sigma project to succeed, control charts are vital for maintaining improvements and
maintaining control of the process (Tanner, 2018).

 Elements

Customer-driven objectives: Customer-driven objectives are those that are driven by

customer needs, expectations, and feedback. It is important for organizations to align their
objectives with the needs of their customers in order to enhance customer satisfaction
(Pyzdek, 2003).

Use of evidence: The use of evidence informs decisions and drives improvements
rather than relying solely on intuition or assumptions.Better outcomes are achieved when
decisions are based on evidence (Pyzdek, 2003).

Structured improvement cycle: It is called a structured improvement cycle when

improvements are organized and systematic. This can be accomplished through methods such
as Plan-Do-Check-Act (PDCA) or Define-Measure-Analyze-Improve-Control (DMAIC). In
order to identify issues, implement changes, and assess their impact, structured and
repeatable cycles need to be used (Pyzdek, 2003).

Process capability and control: It is important to ensure that a process meets

specifications when assessing its capability and controlling its limits. The ability to
understand the variation in processes and implement controls is essential to maintaining
predictability and stability (Pyzdek, 2003).

Process design: The process design process involves creating and optimizing
processes in order to achieve specific objectives. Workflows are mapped, identified, and
implemented in order to ensure effective, streamlined, and aligned processes (Pyzdek, 2003).

Structured training and organization of improvement: Personnel involved in

improvement efforts should receive structured training. Coordination and efficiency of
improvement activities are supported by organizational structure in addition to training
(Pyzdek, 2003).

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 Pros and cons

Its data-driven and systematic approach to operations management offers significant

advantages. Six Sigma emphasizes statistical methods and process improvement, reducing
variation and enhancing overall efficiency by identifying and eliminating defects. DMAIC is
a methodology for identifying, measuring, analyzing, improving, and controlling
problems. Products and services meet or exceed customer expectations, which leads to
increased customer satisfaction. Its focus on measurable results and performance metrics
makes Six Sigma an effective tool for optimizing processes, reducing costs, and ensuring
quality, allowing organizations to compete successfully.

In operations management, Six Sigma has some drawbacks as well as benefits. Due to
Six Sigma's rigorous data-driven nature, its implementation requires a significant amount of
training and expertise. If statistics are overemphasized, decision-making processes can
become slowed by analysis paralysis. Additionally, the rigid structure of DMAIC framework
might limit flexibility in dynamic environments due to its rigid structure. Successful Six
Sigma adoption can be hampered by cultural resistance to change, and an exclusive focus on
short-term metrics may overlook broader strategic goals. It is imperative to carefully consider
and customize Six Sigma in operations management to balance its benefits and challenges.

1.4. Business Process Re-engineering

 Definition

Business Process Re-engineering (BPR) is the radical redesign of business processes

to achieve dramatic improvements in critical aspects like quality, output, cost, service, and
speed (Lynn, 2020).

 Technique

Process Redesign: In BPR, existing processes are fundamentally rethought and

redesigned. For instance, non-value-added steps may be eliminated, workflows may be
simplified, and new technologies may be incorporated to accomplish substantial
improvements (Hammer et al., 1993).

Benchmarking: Organizations use benchmarking to compare their processes and

performance with the best practices in their industry or with their competitors. In order to

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achieve reengineering objectives, organizations must identify performance gaps (Hammer et
al., 1993).

Information Technology Integration: It is common for BPR to automate and

streamline processes using advanced information technologies. Increasing efficiency requires
integrating enterprise systems, automating workflows, and implementing software solutions
(Hammer et al., 1993).

Cross-functional Teams: Creating cross-functional teams is an important part of BPR

to promote collaboration and break down silos. It is these teams that bring together
individuals from different departments who are tasked with redesigning and implementing
improved processes collectively (Hammer et al., 1993).

Customer-Centric Focus: The goal of BPR is to understand and meet the needs of its
customers. Reengineered processes are aligned with customer expectations through
techniques such as customer journey mapping and feedback analysis (Hammer et al., 1993).

 Elements

End-to-end processes: As the name implies, end-to-end processes cover all stages and
functional areas from the point of initiation to the point of completion. There should be a
connection between every step in the process and the overall goal of the process. Through
end-to-end process management, bottlenecks and inefficiencies are reduced and business
operations are improved (Powell, 1995).

Radical/breakthrough improvement: An improvement that is radical or breakthrough

refers to a significant and transformative improvement to a process, product, or service. A
radical improvement involves substantial, innovative changes that can dramatically improve
performance, unlike incremental improvements, which are gradual and small-scale. This
approach aims to challenge existing paradigms in order to revolutionize how tasks or goals
are accomplished (Powell, 1995).

Process based analysis: By analyzing processes, organizations can gain a better

understanding of their activities. By analyzing the end-to-end flow of processes, this

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approach identifies opportunities rather than focusing on individual tasks or departments
(Powell, 1995).

 Pros and cons

By improving efficiency and effectiveness, Business Process Re-engineering (BPR)

offers distinct advantages in operations management. By optimizing workflows and
streamlining processes, organizations are able to streamline and redesign processes. The BPR
approach enhances service quality and customer satisfaction by fostering a customer-centric
approach. BPR facilitates innovation through cutting-edge technology and automation,
reducing cycle times and costs.Using this approach, organizations become more competitive
and adaptable, better able to adapt to changing markets.Throughout dynamic business
environments, BPR's focus on fundamental process redesign empowers organizations to
achieve significant breakthroughs.

Operational management presents challenges when it comes to Business Process

Reengineering (BPR). Employees who fear job insecurity and disruption may be resistant to
its radical restructuring. Dramatic changes may undermine morale and productivity if they
don't focus on the human side of the organization. There is a high risk of delays and cost
overruns when it comes to BPR projects because they require significant resources and take a
long time to complete. It is possible that frontline workers, who possess critical knowledge of
the process, will be left out of the top-down approach due to its top-down nature. The
implementation of BPR requires careful change management in order to address cultural
shifts, communication gaps, and make sure that the organization's long-term goals are
aligned.

1.5. Approach at Honda

Lean manufacturing has been embraced by Honda throughout its production processes
to maximize efficiency and minimize waste. Inventory management techniques such as Just-
in-Time (JIT) reduce excess inventory costs by ensuring parts arrive exactly when
needed. By visually signaling production needs, the Kanban system facilitates smooth
workflows between different stages of manufacturing. Honda also promotes continuous
improvement, one of the key principles of lean manufacturing, so that employees can identify
and eliminate inefficiencies. An example of this is the "Andon" system, which allows

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workers to stop production if a problem is identified, fostering a culture of immediate
problem resolution.

2. Preparation a continuous improvement plan based on operational activities

 Problem

In October of 2023, over 2,5 million Honda cars including Honda Acura, CR-V in
America are recalled due to the errors of fuel pump impeller (National Highway Traffic
Safety Administration, 2023). Therefore, the defect rate of fuel pump impeller in cars
manufacturing of Honda is at 16 PPM. The root cause is determined due to the steel impeller
which has moving difficulty to create thrust for fuel into the combustion chamber.

 Objective

In the end of 2024, the defect of fuel pump impeller will be 3 PPM and cut down on
manufacturing cost through adjust the processing stages.

 Approach

This plan will apply lean manufacturing approach for continuous quality
improvement by replace steel by plastic for pump impeller. .

 Timeline

This continuous quality improvement runs for 12 months, that is divided into 3 main
phases. During each phase, specific tasks will be mentioned and then addressed.

 Plan

PHASE 1: ASSESS, ANALYSIS AND PLANNING (3 MONTHS)

Week 1-4: Material analysis – Quality Assurance Team

Value stream mapping and process analysis: Identify the ideal plastic material for
each pump application, considering factors like flow efficiency, strength, wear resistance,
temperature tolerance, and compatibility with fluids.

Week 4-7: Define the root reason of the defect in pump impeller – Quality Assurance
Team

Fishbone diagram and 5 Whys: Use techniques like Fishbone diagram and 5 Whys
to engage cross-functional teams including mass production team and quality assurance team
for the identification of root cause. Analyze the current manufacturing process in factory and

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standard of production to determine that workers obey the standard or not. After ensuring the
compliance of worker in stages, define the bottlenecks of standard and find out that the cause
is in pump impellers.

Week 8-9: Set objectives and metrics – Board of director

Establish clear objectives for the reduction to 3 PPM in the defect rate of pump
impellers. Identify key metrics such as cost, performance and sustainability.

Week 10-12: Develop strategies to adapt the objectives – Quality Assurance Team

Kaizen: Develop strategies to address root causes based on the above analysis.
Implementing change from steel to plastic for pump impeller by taking advantage of lean
principles and just-in-time technique. Streamline the new standard after replacing steel
impeller by plastic impellers by applying the optimization of techniques in install pump
impellers step.

PHASE 2: PILOT AND ASSESSMENT (2 MONTHS)

Week 13-19: Pilot projects – Mass Production Team

Kaizen: Select 2-3 production lines representing diverse applications of steel

impellers installation step. Implement alternative materials namely plastic and processes in
pilot projects, closely monitoring results and gathering feedback from workers and engineers.

Week 20: Cost estimation and budgeting – Finance Team & Quality Assurance Team

Develop a detailed cost analysis of the transition, including potential savings from
changing from steel impeller to plastic impeller and training.

PHASE 3: IMPLEMENTATION AND EXPANSION (6 MONTHS)

Week 21-22: Phase-out roadmap – Mass Production Team & Quality Assurance Team

Poka-Yoke: Based on pilot results and stakeholder input, finalize a detailed roadmap
for the replacement of plastic impeller across all production lines. Set clear timelines and
milestones for each department and facility.

Week 23-40: Lean implementation and Process Optimization – Mass Production Team

Lean technique: Collaborate with production teams to ensure smooth integration of

plastic impeller manufacturing into existing processes.

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Week 41-42: Training and upskilling – Quality Assurance Team & Mass Production
Team

Train technicians and production line workers on new processes and equipment
required for using plastic materials. Foster a culture of continuous improvement and
innovation.

Week 43-44: Supply chain expansion – Procurement team

Secure consistent supply of high-quality plastic materials from qualified vendors.

Establish robust quality control measures throughout the supply chain.

PHASE 4: EVALUATION AND CONTINUOUS IMPROVEMENT (1 MONTH)

Week 45 – 46: Performance monitoring – Quality Assurement Team

Benchmark & Performance review: Track the long-term performance and

durability of plastic impellers in real-world applications such as feedbacks from dealers and
customers. Identify the cost of manufacturing plastic impeller compared to steel impeller.

Week 47: Sustainable initiatives – New Process Initative Team (NPI Team)

Explore additional opportunities to reduce the environmental impact of the production

process, such as exploring bio-based plastics or closed-loop recycling systems.

Week 48: Practice sharing and best practices – Innovative Team

Update the new standard of manufacturing and implement in the whole of Honda
factories over the world.

 Result

After deploying this 12-month project, the defect rate of pump impellers is at 5 PPM,
that does not meet the objective as set.

3. Critique a range of total quality management approaches and techniques within the
continuous improvement plan in order to achieve organizational objectives

The result of the plan at Honda that changes from steel pump impeller to plastic
impeller only reduce 5 PPM, while the objective is set with onl 3 PPM.

On the one hand, Honda's 12-month continuous quality improvement plan to replace
steel pump impellers with plastic ones showcases several positive aspects. The use of
material analysis and process mapping in the assessment phase demonstrates a meticulous
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approach to identifying the ideal plastic material for pump applications. The incorporation of
Fishbone diagram and 5 Whys to pinpoint the root cause of impeller defects engages cross-
functional teams, promoting collaboration. Clear objectives and metrics, including the
reduction to 3 PPM in defect rates, highlight a commitment to measurable improvement. The
implementation of Kaizen principles and Lean techniques in developing strategies and
streamlining standards shows an adept utilization of continuous improvement methodologies.
The pilot projects phase, featuring Kaizen and feedback mechanisms, ensures a careful
evaluation before full implementation. Furthermore, the incorporation of Poka-Yoke for the
phase-out roadmap and Lean techniques for process optimization reflects a thorough planning
process. Training initiatives, supply chain expansion, and sustainability considerations
demonstrate a holistic approach.

On the other hand, some potential risks also lack explicit focus on preventing defects
in the deploying time of this plan. In Phase 1, the assessment and analysis focus on material
analysis and root cause identification using Fishbone diagram and 5 Whys. However, the plan
could benefit from a more proactive approach to preventing defects at the source by
incorporating techniques like Failure Mode and Effects Analysis (FMEA) during the material
analysis stage. FMEA helps anticipate and mitigate potential failure modes, enhancing the
robustness of the chosen plastic materials. Additionally, in Phase 2, during the pilot projects,
integrating error-proofing techniques such as Poka-Yoke specifically aimed at preventing
defects could further strengthen the plan's defect prevention strategy. Emphasizing these
preventive measures ensures a more proactive and comprehensive quality improvement plan
throughout each phase of implementation.

4. Produce a continuous improvement plan, underpinned by theoretical concepts, that

justifies approaches and solutions, with reference to costs, benefits and sustainable
performance.
 Cost - effectiveness

To ensure cost-effective deployment of plastic impellers, Honda can synergistically

leverage Six Sigma's rigor and Lean's agility.

In phase 1, Six Sigma's DMAIC shines: Define: Use Fishbone diagrams and 5 Whys
to pinpoint the root cause of steel impeller defects, like uneven coating. Measure: Analyze
current costs and production practices to ensure worker compliance. Analyze: Map material
options considering cost, strength, and flow efficiency. Improve: Implement Kaizen to

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redesign the process for plastic impellers, optimizing installation steps for minimal waste and
cost reduction.

In the pilot phase, Lean's Kaizen takes center stage in pilot projects on diverse
production lines. Cost estimations using Six Sigma tools ensure informed budgetary decisions
for scaling up.

In phase 3, Poka-Yoke error-proofing from Six Sigma minimizes defects across

facilities. Lean supply chain optimization secures reliable plastic suppliers at competitive
rates.

Finally, Six Sigma's benchmarking helps track cost savings from reduced material
costs and process streamlining. Sustainable initiatives like exploring bio-plastics align with
Lean's waste reduction principles, further impacting overall production cost.

 Benefits and sustainable performance

To achieve sustainable pump impeller improvements, Honda should combine Six

Sigma's rigor with Lean's agility.

In the first phase, Six Sigma's DMAIC approach shines. Define: Use Fishbone
diagrams and 5 Whys to pinpoint the root cause of steel impeller defects, like uneven coating.
Measure: Analyze current production practices and quality standards to ensure worker
compliance. Analyze: Map ideal plastic materials considering strength, flow efficiency, and
sustainability. Improve: Implement Kaizen to adapt the process, replacing steel impellers
with plastic while optimizing installation steps.

The pilot phase leverages Lean's Kaizen in small-scale testing on diverse production
lines. Cost estimations using Six Sigma tools ensure informed budgeting. As Honda expands,
Lean's Poka-Yoke comes into play, preventing errors across facilities through standardized,
streamlined processes. Training empowers workers on new practices, while Lean supply
chain optimization secures reliable plastic suppliers.

Finally, Six Sigma's benchmarking helps track plastic impeller performance,

comparing costs and customer feedback. Sustainable initiatives, like exploring bio-plastics,
align with Lean's waste reduction principles. Best practice sharing across factories ensures
continuous improvement, solidifying Honda's position as a leader in sustainable, high-
performance manufacturing.

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This integration unlocks the power of both methodologies, driving sustainable
improvements by tackling root causes, streamlining processes, and embracing innovation, all
while keeping costs and environmental impact in check.

5. Discuss the role and importance of strategic risk analysis (SRA) for Honda

5.1. Definition of SRA

The strategic risk analysis (SRA) process involves identifying and managing risks
that impact the ability of a company to achieve significant objectives (Wire,
2022). Corporations can suffer from strategic risks if they fail to achieve their goals, which in
turn will hurt shareholder value and the organization's viability as a whole (Wire, 2022).

5.2. The role of SRA at Honda

In an automotive landscape characterized by rapid changes, Honda's Strategic Risk

Assessment (SRA) is pivotal.Informed decisions can be made by Honda by systematically
evaluating potential risks and uncertainties. By navigating market fluctuations, technological
advancements, and geopolitical shifts, SRA ensures Honda's sustainability around the
world. In order to improve resilience and competitiveness, SRA analyzes internal and
external factors comprehensively.Honda's strategic foresight enables it to allocate resources
efficiently, innovate responsibly, and deliver high-quality products under changing market
conditions.

5.3. The importance of SRA for Honda

 Cost

China's border closure in 2021 resulted in twice soaring steel prices, which threatened
to stall a new car model. For non-critical parts, SRAs assessed alternative materials, including
composite fibers (Honda, 2022). With the material swap and strategic sourcing from new
suppliers, Honda factories in Vietnam were able to shave 5 million off their production costs
(Nguyen, 2023).

The abrupt surge in gasoline prices in 2023 wreaked havoc on logistics costs due to
the expense of airfreight for an important engine component (Nguyen, 2023). Using their
inner logistics lions, the SRAs negotiated long-term contracts with seafaring partners and
explored alternative shipping routes. Consequently, transportation costs were cut by 20% and
stable supply was assured (FDI Invest, 2022).

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 Quality

Organizers need to reduce non-fixed costs in order to comply with Covid 19. In order
to reduce costs, product quality is an important factor. Transporting accessories safely is
essential to ensuring that they do not break or crush (Honda Global, 2021). As part of its
strategic risk analysis, Honda analyzed the risks associated with raw material imports in order
to improve the quality (Nguyen, 2021). In particular, Honda can prioritize implementing
preventive measures such as choosing a reliable shipping partner, selecting a high-quality
packaging material, and setting safety standards during transportation based on the severity
and likelihood of each risk. Honda can maintain continuity and quality of products from the
factory to the customer in this way, minimizing the risk of product breakage during
transportation (Cafef, 2023).

 Speed & flexibility

SRAs identified an increase in demand for electric vehicles with extended range by
monitoring customer consumption trends and analyzing customer reviews. As a result, Honda
electric cars will start mass production in Q1 2024 after they swiftly gathered this data and
presented it to product development teams (Nguyen, 2023).

In the wake of the covid epidemic of 2022, Honda can expect a doubled demand for
cars and motorcycles from its customers. Thus, Honda has been able to accomplish its goal
with the help of strategic risk analysis (Cafef, 2022). Specifically, Strategic Risk Analysis
assists Honda in analyzing and applying technology efficiently, optimizing production
processes, adjusting production schedules, and delivering quick customer service. As an
industry leader, Honda is able to handle uncertain situations with greater flexibility and speed
by integrating strategic risk analysis into its decision-making process (FDI Invest, 2023).

 Dependability

Prior to the launch of the Vision, Air blade, and other motorbike lines on the market,
Honda had a few faulty motorcycle lines. Prior to selling new products to customers, Honda
performs strategic risk analysis in order to detect and analyze potential defects (Motor
Federation, 2020) . By increasing customer dependability, Honda can improve its
reputation. By analyzing strategic risks, Honda can identify potential vulnerabilities and
risks. Among the factors assessed are factors like equipment reliability, workforce
availability, and supply chain dependencies (Honda, 2020). Risks identified are evaluated for
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their potential impact on production. Analyzing disruptions that might affect Honda's
consistent and reliable output includes assessing how likely and how severe they may be
(Nguyen, 2023).

6. Undertake an SRA for an organization using risk identification and mapping

Having a disruption in the supply chain could have serious repercussions for
Honda. There is a risk that Honda's supply chain will be disrupted, which means there is a
shortage of raw materials and components for its production. Consequently, Honda's
production process was disrupted. This has resulted in a severity level of 9 being assigned to
the risk of supply chain disruption. As soon as I encounter the Honda Current Process
Controls, I set the Current Process Controls and Detection levels to 3. A total of 81 RPN
points have been assigned to this risk of Supply chain disruption.The Supply Chain
Department should increase supplier diversity and monitor and analyze supply chain risks, as
my recommendation. A completion date of March 2024 has been set for the
project. Therefore, severity, occurrence, and impact are determined as a result of the action.
detection of risk are decreased. The RPN level decreased to 24 and no longer affected
Honda's production processes.

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There are serious consequences that can be incurred by Honda Motor Company if
terrorism occurs. Employees could be injured, their reputations damaged, and production
could be slowed if production facilities are used unauthorisedly. A severity level of 9 has
been assigned to production delays and reputation damage. Honda's Current Process Controls
are detected by setting the Occurrence level to 3 and the Detection level to 4. Thus, Supply
Chain Disruption carries the RPN 108. Security Department and Facilities Management
should implement perimeter security measures, access control measures, surveillance
measures, and employee training as a recommendation I've made. A completion date of
February 2024 is required for the project. By reducing the severity, occurrence, and detection
of risks, action outcomes are improved. Honda's production no longer suffered from the RPN
level, which dropped to 54.

This table assess about the risk of fire protection and prevention for Honda. Fires
could be caused and the production process disrupted by Honda's factory fire prevention
system. Due to the severity level of 9 assigned to fire prevention and fighting risks, we grade
them accordingly. In Honda's Current Process Control instances, I only set Detection level 3
and Current Process Control level 4. As a result, this risk Fire protection and prevention has
an RPN level of 108. Adding fire prevention measures to the factory and training employees
on fire safety is what I recommend for the department that needs equipment. A deadline of
February 2024 must be met for the completion of the project. The severity, occurrence, and
detection of risk-related actions are decreased as a result. The RPN level dropping to 42 did
not adversely affect Honda's production process.

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It is a potential hazard for employees to work with a broken main machine. Machine wear
and tear are caused by a lack of regular maintenance, resulting in production
stoppages. Thus, the main machine is broken, resulting in a serious level 9 risk rating. I only
use level 3 for Honda's Current Process Controls, and level 8 for the Detection. The RPN
level for this risk is 216. I would recommend strengthening monitoring systems in
maintenance and repair departments so they can detect early signs of wear and
malfunction. Additionally, departmental protocols for handling warning signals and
abnormal machine behavior can be improved. Consequently, risk-related action results such
as severity, occurrence, and detection are reduced. The RPN level dropping to 98 did not
negatively affect Honda's production process. The project must be completed by June 2024.

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Safety and health risks may be faced by a worker. This increases the possibility of
employees contracting illnesses. We graded the diseases and occupational health risks at a
severity level of 8 due to these factors. For Honda's Current Process Controls, I only set
Level 3 for Detection and Level 4 for Current Process Control. The RPN level of this risk is
96 as a result. In order to minimize waste and maximize resource utilization, the
environmental management and protection department should adopt a recycling and reusing
program, and employees should receive adequate training in risk management and safety in
order to reduce accidents and pollution risks. In order to accomplish these tasks, the
Environmental Management and Protection Team is responsible. A completion date of May
2024 is anticipated for the project. Due to this, risk-related actions such as severity,
occurrence, and detection are reduced. The RPN level coming down to 36 did not adversely
affect Honda's production process.

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7. Assess a range of contingency plans and strategies available to the organization as
it seeks to manage organizational and stakeholder risk

Nowadays, Honda created a plan to cope with 6 risks including terrorism, natural
disaster, diseases and worker health, main machinery failure, fire protection & prevention and
supply chain disruption. Therefore, this company also build more two contingency plans for
the whole of risk in automobile industry that are the mass working quit and mass power
outages.

The application of PDCA in building contingency plans is so essential. To assess the

effectiveness of each plan, Honda should implement the evaluation through 4 steps: plan,
dissemination, pilot and assessment.

Regarding the plan of supply chain disruption, Honda follow all 4 steps of PDCA. In
planning step, supply chain team make a plan with particular details. For the next step
“dissemination”, supply chain team organize meetings for employees to clearly understand
about the reasons of disruption and the addressing methods. In pilot stage, Honda set a
scenario that Cosmo abruptly stop supplying raw materials with a 3-day notice. In this case,
supply chain team is flexible in connecting with other suppliers in 5 days, mass production
team changes proper production route. The last stage is the assessment of managers in the
way how workers and staffs address problems.

For diseases and workers health, PDCA also is applied fully in this plan. HR team
and mass production team create a detailed plan and then train to the whole employees. The
pilot step is implemented in case of Covid-19 pandemic when HR team must adjust the
working schedule for workers for the guarantee of social distancing and production quantity.
Finally, director highly appreciate for the flexibility of all employees in dealing with
pandemic.

In case of natural disaster, the first 2 steps of PDCA are followed with planning and
training for employees as plan of pandemic case. However, in pilot step, HR team and GA
team cooperated together in some activities such as encouraging employees to use company
car and additional provide cars for employees. Normally, managers also appreciate the
departments in addressing particular cases.

Honda annually practices the activities of fire protection and prevention based on
PDCA method. Making plan is implemented by labor safety team and then this department
will train employees about knowledge and skills of fire protection and prevention. Honda also
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implement drills as reality and employees also have a chance to practice skills and
knowledges about fire prevention. Lastly, managers assess the whole contribution of teams in
this plan.

In terms of terrorism case, making plan and dissemination are deployed by labor
safety team with planning and organizing meeting for employees. However, in this plan,
Honda does not effectuate the pilot steps because the expense of realistic scene is extremely
high.

8. Critically evaluate the significance of strategic risk analysis for organizations

operating in the diverse and complex environment

Honda should build a plan for two cases including mass power outages and mass
working quit because these two plans are extremely crucial for the competitive advantages of
Honda in automobile industry. Moreover, adding the pilot stage for terrorism case is
essential.

 Recommendation for Honda in contingency plan of mass power outstages

Honda risks a domino effect of harm if no contingency plan is implemented for mass
power outages. Manufacturing and delivery stall due to a halt in production lines. The
reputation of a brand is eroded by delayed shipments. In the event of stock depletion, sales
are disrupted, which can result in revenue losses and shrinkage of market share. During a
time of uncertainty and production halts, employee morale plummets, negatively affecting
productivity. It is possible to lose significant amounts of money due to lost production,
wasted materials, and recovery efforts.

In the face of a potential blackout, Honda can weave a safety net of resilience through
a four-step contingency plan.

Step 1: Planning – Risk Management Team & Engineering Team

This blueprint anticipates diverse outage scenarios, prioritizes critical operations like
assembly and welding, and fortifies them with backup power like generators or even
microgrids. Flexible work arrangements and energy-efficient equipment dim the impact of
darkness.

Step 2: Dissemination – HR Team & Internal Communication Team

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This involves educating employees on their roles and responsibilities during power
outages, as well as ensuring that relevant stakeholders are aware of the contingency measures
in place.

Step 3: Pilot – Mass Production Team & Labor Safety Team

Simulated power outages will be implemented as a test for all employees.

Step 4: Assessment – Risk Management Team & Director

Risk Management Team make a report about the positive and negative things of this
plan. And this report is sent to director for general assessment of continuous improvement.

 Recommendation for Honda in contingency plan of mass working quit

Honda could suffer substantial damages if it fails to prepare for mass layoffs. It may
be difficult for an organization to manage downsizing challenges without a strategic plan,
leading to chaos in employee morale, workforce management, and overall
productivity. Honda may suffer prolonged uncertainty, legal complications, and reputational
damage without a well-thought-out contingency plan. As a result, the company runs the risk
of losing valuable talent and expertise that is critical to its success.

Developing a contingency plan for mass employee departures at Honda requires a

systematic approach involving key departments.

Step 1: Planning – Human Resource Team & Mass Production Team

The Human Resource Department and Mass Production Department map potential
quitting scenarios ranging from sector-specific resignations to mass walkouts. By analyzing
turnover data, identifying vulnerable departments, and developing targeted retention plans,
such as upskilling programs and flexible work arrangements, they improve employee
retention rates.

Step 2: Dissemination – HR Team, Internal Communication Team & Director

Open dialogues, clear communication channels, and proactive outreach to at-risk

employees ensure everyone understands the plan and their role in mitigating the impact of
resignations.

Step 3: Pilot – Mass Production Team & HR Team

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Pilot, executed by Operations and Training teams, tests the plan in high-risk
departments. Cross-training programs, temporary staffing solutions, and streamlined
workflows become the fuel for continued operations.

Step 4: Assessment – Risk Management Team & Director

Director and Risk Management Team assess the effectiveness of plan in limiting
working quit of workers and recruit & retain the talent, especially prevent the mass working
quit.

 Recommendation for Honda to add the pilot step in contingency plan of mass
working quit

Honda's production line is just an assembly of machines that can be affected by some
factors. This ecosystem is thrown into chaos by a failure to practice for terrorist
attacks. Employees are at risk and rescue efforts are hindered by untested evacuation
procedures. During a security breach and infrastructure damage, production grinds to a
halt. Delays in delivery undermine supplier relationships, and customer confidence plummets
amid safety concerns. It is likely that production will be crippled for months as legal
liabilities and the cost of repairing damage drain the bottom line. It is possible for Honda's
brand to be tarnished and its market share to be destroyed in a worst-case scenario following
a tragic loss of life and a tarnished reputation.

Therefore, Honda can safeguard its factories and manufacturing operations through a
four-step contingency plan, a shield against the storm of terrorist attacks. Three steps of
PDCA that Honda made including plan, dissemination and assessment, that do not need to be
adjusted. However, the additional build the pilot stage is essential. Step three is called as
Pilot, overseen by Mass Production Team and Security teams, puts the plan to the test with
realistic attack simulations. These live drills expose bottlenecks, validate response protocols,
and test communication pathways.

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