42889599 Supply Chain Management System of Honda Motors

Logistics and Supply Chain Managem ent Assignme nt SCM System of Honda Motors P.M.Somanna .M.Soman na - 09109

Supply Chain Management System of Honda Motors  he study of Honda!s SCM system is of its operations in the "S. Along #ith  oyota$ Honda ha%e one of the strongest SCMs in the automoti%e industry and this strong tradition arises from the fact that they &elong to the 'apanese sta&le of (uality de%elopment and (uality processes. Honda!s )perational practices sho# a great e*ample of the inno%ations the  'apanese automo&ile manufacturers perform and some of their operational strategies are as follo#s+ • • •

• • •

Careful site selection of their "S manufacturing plants ,reeneld Manufacturing Plants n- depth supplier relationship #hich is close and interacti%e$ similar to a partnership Autonomic organi/ational structure  'apaneseorth American manager mi* e# entrants focus on more esta&lished products and processes

Honda Purchasing Process and Dierentiators Honda uses their economies of scale &y #or2ing #ith their parts suppliers to order ra# materials in large (uantities and therefore integrate their suppliers into the entire purchase process in the follo#ing #ays+ • • •

Suppliers are in%ol%ed #ith de%elopment and design of ne# products 3elationships #ith suppliers is much li2e a partnership 4or the success of the functioning of the unit it re(uires an in-depth supplier selection process

Some of the structural characteristics of the Honda supply chain are also 2no#n as e*ecutional dri%ers that reduce operating costs and increase producti%ity. 5conomies of scale are achie%ed as all purchasing is done &y Honda  rading America Corporation and the technology used are multipurpose machinery #hich further reduce the associated manufacturing costs translating into lo#er costs of production. 6ith regard to capacity utili/ation also Honda operates facilities in e%ery ma7or mar2et they enter and therefore cut out pro&lems of outsourcing and dependence on e*ternal mar2ets to dri%e local ones.

Example of Honda Supply Chain

Market Characteristics  ad%ancements in the mar2et ha%e &een pioneered &y the 'apanese car manufacturers especially Honda #ith technologies such as the 8rd#a%e distri&ution soft#are &y linco Systems #hich assures parts (uality$ controls a%aila&ility$ guarantees deli%ery and pro%ides consistent materials pricing 5*ternal factors such as increasing oil prices also e:ect transportation costs for all mar2ets

Competitive Characteristics Strategic and operational %aria&les must &e factored into the design of a company!s glo&al %alue chain #hich can &e co%ered in the follo#ing+ • • •

;emand chain ;$ design$ engineering$ de%elopment$ and launch=

Supply Chain Characteristics  he 2ey element for Honda is the ?o# of information #ith their suppliers #hich is co%ered in the follo#ing 1@ steps+

nitial contact$ preparationin%estigation of Honda parts$ (uotations$ initial plant %isit$ prototype de%elopment$ testing and e%aluation$ mass production (uotation$ preparation for mass production$ trial run$ uality Assurance Bisit$ agreement and purchase order.

Company Specic Characteristics Strategic sourcing in%ol%es ma*imi/ing the %alue added through Honda!s e*ternal suppliers and they al#ays #ill choose the highest supplier in o%erall ser%ice
!C!D!D!M at Honda At Honda customer satisfaction is top priority and this is accomplished through supplier!s competiti%eness in (uality$ cost$ deli%ery$ de%elopment$ and management <.C.;.;.M.=  his principle is #hat dri%es Honda!s entire manufacturing and nal deli%ery process.

"ngredient uality

Elements Most important factor in nal perception and sale of product Must #e #uilt into production process

Cost

Suppliers are given target costs Cost reductions through o$n ideas% technology% improved productivity% along $ith &oint eorts $ith Honda in value engineering% and value

Delivery

analysis Suppliers must use &ust'in' time production system

Development

(ni)ueness in design and specications Helps create identity for Honda

Management

Positive attitude and encourage ne$ ideas Measured #y !C!D!D *rade cards for suppliers to gain feed#ack into the process

+o$ "ndia is a part of Honda,s *lo#al Supply Chain Honda Motors has a plant in 3a7asthan #hich is an e*port &ase for certain 2ey engine components$ and not a manufacturing hu& li2e some other auto-ma2ers such as Hyundai$ Su/u2i and 3enault already ha%e. he company has similar &ases in other AS5A countries. Honda Siel Cars ndia