NAME : AYMEN IMTIAZ

ROLL NO : 5313

DEPARTMENT : MANAGEMENT SCIENCES

SEMESTER : BBA(6th)

SUBJECT : MANAGEMENET INFORMATION

SYSTEM & E-COMMERCE

INSTRUCTOR : SIR SIBT-UL-HASSAN

ASSIGNMENT#1 : KIA MOTOR CASE STUDY

 ASSIGNMENT #1
INFORMATION SYSTEM HELPS KIA TO SOLVE ITS QUALITY PROBLEM
 INTRODUCTION:
Kia Motors has been one of the largest automobile manufacturers in South Korea., Kia
manufacturers vehicles under their own brand and is minority-owned by Hyundai.

Originally founded in 1944, Kia began as a manufacturer of steel tubes and bicycle parts. In
the early 1950s, Kia broadened its scope into manufacturing motorcycles and Honda-licensed
vehicles. In the 1960s and 70s, Kia transitioned into building Mazda trucks and cars. Starting
in 1981, Kia began building vehicles under their own name.

Kia Motors is based in Seoul, South Korea and distributes vehicles worldwide except in
Japan and North Korea. The company has developed a reputation for reliability, becoming
the first auto manufacturer to be ranked first by J.D. Power and Associates despite not
manufacturing luxury automobiles.

 KIA’S DEFECT PROBLEM AND GOVERNMENT’S NEW REQUIREMENT:

Korean car manufacturer Kia motors started selling in North American Market , promising
high quality vehicle at prices well below the competition. Until 2002Kia ranked at the bottom
of J.D. Power and Associates’ annual initial-quality survey of new vehicle owners . In 1997
when the average North American car had 1.1 defects per vehicle , Kia had 2.75. In 2002 Kia
had improved to 2.12 defects per vehicle, but the industry average was 1.33. it was affecting
its ability to sell cars, retain customers, keep operational cost down.
Like others manufacturers Kia also had to create a system by Dec 1 . 2003to report any
defects, accidents or injuries involving its vehicle to the U.S National Highway Traffic Safety
Administration(NHTSA).
 PROBLEM FACED BY KIA:
Kia had been using seven different systems to store different information like warranty
claims, parts sales, vehicle identification number number master storage files, vehicle
inventories, etc.
This fragmentation of the information in different system prevented KIA from getting
complete picture of defects, so because of no proper linkage amongst all the different systems
it was difficult for the management to analyze the real cause of the defect, and to take
necessary corrective actions.
o All this has several effects on Kia motors business these are:
 Higher operating costs
 Deference in sales
 Lower customer retention and higher churn
 Bad customer experience
 Decrease in profitability
 SOLUTION ; KIA’S NEW QUALITY CONTROL SYSTEM:
KIA created a software “engine” that examine six Kia systems for warranty claims, parts
sales, vehicle identification number Master storage file, and vehicle inventories and store the
essential information in a single common data repository .By tracking consumer complaints
received through phone , email, or postal mail KIA improves quality.
o KIA’S new quality control system enabled it to
 Centralization of data
 Pinpoint the sources of defects and determine what percentage of its vehicle is likely
to have problems
 Customer’s feedback and complaints became easily accessible
 Quick respond to the market (SHIFT IN DEMAND OF CONSUMERS)
 KIA’S CURRENT RANK AND DEFECTS PER VEHICLE:
Kia ranked number one in the industry  by J.D. Power in the 2020 U.S. Initial Quality Study
(IQS), with a reported 136 problems per 100 vehicles. And for the sixth consecutive year, Kia
is the number one mass-market automotive brand. “An exceptional run,” said Dave Sargent,
Vice President, Automotive Quality, J.D. Power.
Kia’s continued success in IQS was led by having two models – Forte and Soul – included
among the top 10 vehicles in the industry.

 Kia #1 mass-market brand for the sixth consecutive year

 More J.D. Power Awards for Initial Quality than any other brand, two years in a row

 The Forte, Sedona, Sorento and Soul each topped their respective segments

 NEW ARTICLE ON KIA’S USE OF INFORMATION SYSTEM:

A recent article shows that Hyundai and Kia Develop World's First ICT Connected Shift
System having following functions.
 Information and communication technology (ICT) automatically shifts to optimal gear
based on road and traffic conditions ahead
  Improves driving comfort and fuel efficiency by minimizing unnecessary shifts through
predictive gear-shifting control system
 Future developments to include consideration of driver’s preferences and traffic signal
status

ICT Connected Shift System uses intelligent software in the Transmission Control Unit
(TCU) that collects and interprets real-time input from underlying technologies, including 3D
navigation equipped with a precise map of the road as well as cameras and radar for smart
cruise control

 FACTORS CONTRIBUTED TO THE CHANGE OF RANKING:

One of the biggest factor is the shift from old separated information collecting system to new
tracking consumer complains system that enhance and improve the quality in Kia further
more one area where Kia have excelled is improving the infotainment systems in their newest
models. Issues with Bluetooth connectivity, navigation systems and other electronic features
have become the biggest complaint for new car buyers, but now the new cars are coming out
with fewer glitches.

 KIA’S WARRANTY PROGRAM:

KIA’S warranty provides coverage until either the yearly or total mileage figure is reached,
whichever comes first.

Kia Lucky Motors will  repair or replace any parts / assemble their vehicles that are found to
be attributable to manufacturer in material or workmanship under the stated provision of 
limited warranties under normal use and maintenance under the warranty period only.
(Warranty Period : 4 years / 100,000Km,which ever comes first)

The original battery is fully covered for the first 12 months from the Date of Delivery
regardless of mile

Maintenance and repairs on vehicle must be carried out in conformity with the prescription
laid down by Kia Motors Corporation (the Manufacturer) in Pakistan. Tires are warranted by
Tire Manufacturers. Refer to the tire Warranty pamphlets provided to you with your Kia
Vehicle.

 HOW DO THESE WARRANTIES AFFECT KIA ABILITY TO BE

PROFITABLE?

Despite improvement in sales, Korea’s two top automakers expect dent from massive quality
warranty costs in the third-quarter results due next week. The engine-related quality
assurance costs is now estimated 600 billion won ($506 million) for Hyundai and 300 billion
won for Kia, which will all be reflected as expenses for the July-September period, according
to industry sources . Kia also added 160 billion won as quality-related expenses for the third
quarter a year ago, leading to an operating profit of 117 billion won in that quarter. Kia’s Q3
operating profit this year is estimated to climb by 89 percent mainly due to the base effect

Due to these provisions, the EBIT of the two will be below 3.0 percent, lower than a
previously estimated 3.6 percent, but it will recover to nearly 4 percent next year, according
to international credit rating agency Fitch Ratings.

 CRM RESULTS IN REDUCE COST AND INCREASED SALES:

Customer Relationship Management (CRM) helps businesses reduce operating costs and
increase sales.. A CRM system allows you to keep all your records, customer information,
and communication digitally, reducing your overhead expenses to a large extent. A paperless
office can save you a lot of time, as well as money. You can utilize your time more prudently
in devising strategies to serve your customers better, and the money you save is your profit.

Also, storing information digitally improves your business processes; it quickens your
decision making abilities, and it helps you deliver better services to your customers. These
are all steps towards increasing your overall profit margins.

 It organizes, and prioritizes your work

 It reduces your production costs 
 Information sharing gets simplified, yet secure, across the board in your company 
 You can also reduce the cost of acquiring new customers 
 It reduces the travel expenses of your sales reps 
 It modernizes the sales process of your organization .

 IT’S ROLE IN CENTRALIZING DATA, INTERFACING WITH CUSTOMERS,

AND IMPROVING PRODUCTION PROCESSES.
The benefit of IT in data centralization ,is more flexible data management technology at
reasonable cost. It can help managers to use resources more effectively, align disparate parts of
the organization with companywide goals, and collect data for strategic and operating decisions.
It has created a whole new set of options for gathering, organizing, and using information
Moreover, information technology PCs, spreadsheets, telecommunications, and data base
management software has done more than just enhance existing processes. The broadened realm
of possibility has sparked some progressive companies to rethink their information needs and
wants. Companies have found ways to channel the power of information to the muscles of their
corporations. As a result, they have boosted their efficiency and overall competitive position.
Similarly manufacturers are using digital technologies to streamline complex processes to
increase productivity and profitability.

The benefits of adopting technology into manufacturing practices include:

 An improvement of the quality of product throughout all stages of the manufacturing

process, and not just the end product.
 An improvement to the efficiency of the plant in terms of increased productivity and
a reduction in material wastage.
 An improvement to the speed and value of communication between the production
and engineering teams, and the front-of-house sales teams.

DIGITAL TECHNOLOGY’S ROLE IN IMPROVED QUALITY AND LOWER RATE

OF DEFECTS LEADING TO CUSTOMER SATISFACTION AND REPEAT
BUSINESS.

Technology has been helping us solve problems where human power alone just isn’t
enough.  The implementation of management quality standards or lean practices, and other
methods that reduce waste and defects, have allowed companies to improve their
performance in terms of efficiency,
A Defects Listing Software is a powerful inspection and defects management tool for
projects. It functions as a warranty of quality for the whole project. Defects Listing Software
helps to boosts productivity during the construction and closeout of the project. The Defects
Listing Software has all the features for quick and efficient inspection and defects
management on site. The listing of defects is made directly on the digital drawings and there
is no need to carry paper-based drawings and checklists when inspection walkthrough is
carried out at site.
There are a few major areas in which technology now is able to provide key advantages to
businesses for customer loyalty by improving customer service:

 Websites. Providing areas on your website where customers can answer their own
questions or seek answers from others.
 E-mail. Using e-mail as a way to improve customer service and more quickly respond
to certain needs or help requests.
 Communications. Unifying communications so that you know that the customer who
left a voice mail also sent an e-mail with the same request a few days ago.
 Software. Better managing customer relationships with more sophisticated data-
gathering tools, such as customer relationship management software.