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Copy of Honda Customer Analysis

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Melissa Hanson

on 30 November 2011

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Transcript of Copy of Honda Customer Analysis

Questions? Thank You! Suppliers

Supply Chain Labor Honda’s Sourcing Philosophy Respect for the Individual:
Initiative: To freely explore ideas, unrestricted by convention, to take actions based in self-reliance and to take responsibility for the results
Equality: To acknowledge and respect both our individual differences and common humanity
Trust: To confide in each other at all times, to compensate for each other’s lack and to achieve our goals by acting on good faith
Three Joys: Joy of Buying, Joy of Selling, Joy of Creating
Purchasing Mission Quality Parts
On Time
Right Quantity
Globally Competitive Price

Relationship with Suppliers Open Door Policy
Fair and clear business relationship
Mutual trust

Honda Trading Established in 1972 as a subsidiary of Honda Motor Co, Ltd.
“Manufacturers Trading Company” focused on QCD (Quality, Cost and Delivery)
Initial investment: 5 million yen
Current Capital: 1,600 million yen
Sales (as of March 2011)

Consolidated Accounts: 693,800 million yen
Unconsolidated Accounts: 306,100 million yen

Honda Trading Three Operating Divisions:
Raw Materials Operations: Light Metals Division, Steel Division, Plastics & Resin Division, Automobile Recycling Division
Parts and Equipment Operations: Part Division and Equipment Division
Productions and Logistics Management Operations

Four Regions: Asia, China, Americas, and Europe Honda's Labor Force Global scale
Primarily non-union or company union
Highly customer-centric
Well-aligned with Honda corporate goals

What Does This Mean for Honda? Lower health care costs
Lower wage expense
Low risk of strike
Better production efficiencies
Individualized accountability

The Company "Union" “Honda and the Honda Motor Workers' Union have enjoyed cordial, mutually supportive relations, engaging regularly in frank exchanges on key issues such as employment security, working conditions, occupational safety and health, and production and sales activities at group negotiations, labor-management committee meetings, and other venues. Both the company and union respect differences in each other's perspective and approach and strive to maintain a strong labor-management relationship in an effort to achieve sustained company growth and improved working conditions through mutual trust.” Source: http://world.honda.com/community/report/doc/2006-report-49.pdf Honda Motor Worker's Union Company “guided” (Run)
Corporate arm of philanthropy
Pseudo-workers’ rights/capitalist leaning
Primarily designed to maintain cost controls
Illegal in the United States (NLRA 1935)
40,000+ members globally
60 years old
Avoiding U.S. Unions Higher cash wages
Fewer traditional fringe benefits
Fewer layoffs
Relocating to “right-to-work states,” such as Alabama Worldwide Workforce 179,060 associates globally
Distributed throughout manufacturing facilities
Primarily located in: United States - non-union
China - Public Union (Provincial Union Federation, ACFTU)
Japan Source: Tilly and Kennedy, 2010. Major Production Facilities United States* China* Japan Turkey Indonesia Thailand New Zealand* United Kingdom Canada Pakistan Mexico India Primary Issue for
Honda's Labor Force ORGANIZATION! Are Labor Elections a Road
to Freedom in China? Honda strike in 2010 marks a major turning point Younger workers unsatisfied with wages, conditions
Less likely to bear conditions than older, agricultural generation
Employers actively violating LCL
Government unions allowing violations (Pro Business)
“Toothless” government union
Workers desire democratically elected union representation
Possible “move” toward collective bargaining other “rights”
Mexican Workers Seek Independent Union Workers seek an independent, non-company/protection union
Unhappy with “Ghost Union” provided by company
Honda raised wages to discourage organizing at Jalisco plant
Fired union organizers
Being characterized as an anti-union transnational corporation
Accused of denying rights to workers
Honda currently pays $15.60/day in Mexico
But in the United States... Extra shifts for non-productive activity after tsunami
“They are being so generous it’s unreal” (Randy Jackson, Honda employee in Ohio)
“Top 10” Ohio employer
Using “down-time” to “strengthen the team”
Reportedly are reluctant to consider layoffs, “deeply ingrained in how Honda does business”
Multiple failed UAW organizing attempts in Alabama

Dealers Dealers & Suppliers Plants/Major Facilities, Suppliers, Dealers Honda Supply Chain Effective Supply Chain Management Adaptability: ability to adjust supply chain designs to meet structural shifts in markets and modify supply network to current and developing strategies, products, and technologies
Continually monitor global economic environment to spot new supply bases and markets
Use intermediaries to develop fresh suppliers and logistic infrastructure
Create flexible product designs
Utilize product and technology lifecycle management strategies Effective Supply Chain Management Alignment: ability to create incentives to enhanced performance
Exchange appropriate information and knowledge freely with vendors and customers
Clearly establish roles, task, and responsibilities
Equitably share risks, costs and gains of improvement initiatives Effective Supply Chain Management Agility: ability to respond to short-term changes in demand or supply quickly and handle external disruptions smoothly
Effective communication
Collaborative relationships
Postponement design structure
Inventory buffers of inexpensive but key components
Dependable logistics systems
Current contingency plans and crisis management procedures
Understand How Your Suppliers Work Learn about supplier’s business
Visit supplier’s facilities
Respect suppliers’ capabilities
Commit to co-prosperity Turn Supplier Rivalry into Opportunity Source each component from two or three vendors
Create compatible production philosophies and systems
Set up joint ventures with existing suppliers to knowledge and maintain control Supervise Your Suppliers Send monthly reports cards to core suppliers
Provide immediate and constant feedback
Get senior managers involved in solving problems
Develop Suppliers’ Technical Capabilities Build suppliers’ problem-solving skills
Develop a common lexicon
Hone core suppliers’ innovation capabilities

Share Information Intensively
But Selectively Set specific times, places, and agendas for meetings
Use rigid formats for sharing information
Insist on accurate data collection
Share information in a structured fashion
Conduct Joint Improvement Activities Exchange best practices with suppliers
Initiate kaizen projects at suppliers’ facilities
Set up supplier study groups Global Network of Over 1000 Suppliers 400 Tier One suppliers in Japan
More than 600 suppliers in North America, including 500 in the U. S.
Provide over 80% of components
Honda manufactures most engines, transmissions, and bulky parts in-house Four Global Models Primarily Use Global Suppliers

Civic Accord

CR-V Fit Region-Specific Models Use More Local Suppliers

Odyssey City Group Suppliers = "Affiliated" Companies Honda holds more than 20% of equity OR
Honda purchases more than 70% of company's total production OR
Honda relies on company for more than 70% of its supply of a particular system or component Who Are Honda's Suppliers? Core Japanese Suppliers Follow Honda Production TS Tech has operations in ten countries including US plants in Ohio, Indiana and Alabama.
Keihin has 16 plants outside Japan including four in the US
Stanley Electric two US lighting plants
Over 40 suppliers expected to enter Mexican market when Mazda and Honda open plants in 2013 and 2014.
Four Global Models Primarily Use Global Suppliers North American models: 81% local
United Kingdom models: less than 65% local
Brazilian models: 60% local
Turkish models: less than 40% local

North American models: 81% local
Indian models: less than 35% local

North American models: about 80% local
United Kingdom models: less than 65% local

Brazilian models: 60% local North American models are about 80% local content New Indian model; about 80% local content



Fit Suppliers Awarded Exclusive Contracts for Models Honda uses multiple suppliers for each type of component, but each supplier provides all components for a particular model
Mitsubishi provides navigation for Civic and Accord; Pioneer for Japanese Odyssey; and Alpine for Legend
Stanley Electric supplies almost all headlights except for passengers vans, which come from Koito Industries
Honda's US Suppliers TS Tech Co., Ltd. (seats and headrests)
Denso Corp. (heaters and air-conditioners)
Nippon Seiki Co., Ltd. (instrument clusters)
Nihon Plast Co., Ltd. (trim and airbags) Keihin Corp. (fuel injection systems and electronics)
Showa Corp. (steering systems and shock absorbers)
Sumitomo Wiring Systems, Ltd. (wire harnesses)
Bando Chemical Industries Ltd. (transmission belts)
NOK Corp. (oil seals)
Nichirin Co., Ltd. (hoses) Stanley Electric Co., Ltd. (lighting)
Mitsuba Corp. (front and rear wipers and power window motors) Nissin Kogyo Co., Ltd. (braking systems)
Musashi Seimitsu Co., Ltd (gears and camshafts)
FCC Co., Ltd. (clutches)
F-Tech Inc. (chassis and suspension parts)
In 2010, Honda purchased $15.7 billion in parts and materials U.S. suppliers, up 24% from 2009
19,000 companies supply maintenance, repair and operational services to Honda's U.S. operations.
Ridgeline, Pilot, MDX and North American Odyssey developed by Honda North America using primarily North American suppliers
How to Be a Honda Supplier: QCDDM (and E) "Maintaining a global viewpoint, we are dedicated to supplying products of the highest quality yet at a reasonable price for worldwide customer satisfaction."
Honda requires supplier competitiveness in the following areas:
Quality - most important factor
Cost - achieve targets; reduce costs every year
Delivery - reliable, just-in-time production system
Development - unique improvements to technology
Management - effective, customer-oriented leaders
Environment - must meet environmental purchasing guidelines Initial Contact
Preparation Investigation of Honda Parts
Initial Plant Visit
Prototype Development
Testing and Evaluation
Preparation for Mass Production
Trial Run
Quality Assurance Visit
Purchase Order 12-Step Purchasing Program Arceri, K. (2011, October 18). GEDA program aims to recruit Honda suppliers. Retrieved from: http://www.bizjournals.com/triad/news/2011/10/18/geda-launch-supplier-recruitment.html

Automotive News. (2011, August 29). Mexico braces for influx of Japanese suppliers. Retrieved from http://www.mexicotradeandinvestment.com/pdf/31-08-11/Mexico%20braces%20for%20influx%20of%20Japanese%20suppliers.pdf.

Brown, B., Lawson, B., Shah, D., Smeak, J., & Taylor, C. (n.d.). The Automotive Industry Supply Chain Management for Honda and Foreign Automakers [PowerPoint slides]. Retrieved from The Ohio State University web site: http://www.google.com/url?q=http://fisher.osu.edu/~knemeyer_4/The%2520Automotive%2520Industry%2520 Presentation.ppt&sa=U&ei=aWPWTve-LOHo0QG7pbDhAQ&ved=0CAQQFjAA&client=internal-uds-cse&usg=AFQjCNFOf-t5Ovrw2RUnKpwoOP-rtt2FqQ

Ferdows, K., Lewis, M.A., & Machuca, A.D. (2004, November). Rapid-fire fulfillment. In Harvard Business Review, HBR spotlight: The 21st century supply chain collection (pp. 30-36). Retrieved from http://www.stevens.edu/provost/fileadmin/publications/pdf/Case-Study-1.pdf

Honda Recognizes Top Suppliers in North America (2011, June 22). Retrieved from http://www.hondanews.com/channels/corporate-north-american-operations/releases/honda-recognizes-top-suppliers-in-north-america

Honda Rolls Out Global Supply Chain Guidelines (2011, January 19). Retrieved from http://www.environmentalleader.com/2011/01/19/honda-rolls-out-global-supply-chain-guidelines/

How to Become a Supplier (n.d.). Retrieved November 30, 2011, from http://www.hondasupplyteam.com/j_pstat/html/honda_howto_supplier.htm#SupplierParticipationin Development

Lambert, D.M. & Knemeyer, A.M. (2004, December). We’re in this together. In Harvard Business Review, HBR spotlight: The 21st century supply chain collection (pp. 47-55). Retrieved from http://www.stevens.edu/provost/fileadmin/publications/pdf/Case-Study-1.pdf

Lee, H.L. (2004, October). The triple-a supply chain. In Harvard Business Review, HBR spotlight: The 21st century supply chain collection (pp. 2-12). Retrieved from http://www.stevens.edu/provost/fileadmin/publications/pdf/Case-Study-1.pdf

Liker, J.K., & Choi, T.Y. (2004, December). Building deep supplier relationships. In Harvard Business Review, HBR spotlight: The 21st century supply chain collection (pp. 37-46). Retrieved from http://www.stevens.edu/provost/fileadmin/publications/pdf/Case-Study-1.pdf

Lin, C., Hsieh, K, Roan, J. & Kao, C. (2011). The application of structural holes theory to supply chain network information flow analysis. Information Technology Journal, 10(1), 146-151. Retrieved from Science Alert.

Lin, L.; Iwatani, T. (2010, June 15). Honda Workers Suspend Strike as Union Negotiates Wage Increase by June 18. Retrieved from http://www.bloomberg.com/news/2010-06-14/honda-workers-in-china-end-strike-for-three-days-as-union-negotiates-wages.html

Lin, L. Wong, S. (2010, July 1). Honda Workers Bypass ‘Toothless’ China Unions, Fueling Strikes. Retrieved from http://www.chinalaborwatch.org/news/new-233.html.

Mabrey, G. (2007, September 25). Honda supply chain innovation [PowerPoint slides]. Retrieved from http://www.indianalogistics.com/summit/2007/ppt/gmabrey.pdf

Narayanan, V.G., & Raman, A. (2004, November). Aligning incentives in supply chains. In Harvard Business Review, HBR spotlight: The 21st century supply chain collection (pp. 21-29). Retrieved from http://www.stevens.edu/provost/fileadmin/publications/pdf/Case-Study-1.pdf

Piscopo, V. 2011, May/June. UAW supports organizing efforts at Honda in Mexico. Retrieved from http://www.uaw.org/story/uaw-supports-organizing-efforts-honda-mexico.

Slone, R.E. (2004, October). Leading a supply chain turnaround. In Harvard Business Review, HBR spotlight: The 21st century supply chain collection (pp. 13-20). Retrieved from http://www.stevens.edu/provost/fileadmin/publications/pdf/Case-Study-1.pdf

SupplierBusiness (2009). Honda Purchasing Strategy & Relationship with Suppliers. Retrieved from http://www.supplierbusiness.com/uploadedpdfs/Honda_sample.pdf.

Tilly, C.; Kennedy, M. (2010, September/October). On STRIKE in China. Dollars & Sense, 290, 19-23. Retrieved from Business Source Premier.

Update # 14: Earthquake Impact on Honda Operations (2011, May 2). Retrieved from http://world.honda.com/investors/pdf/2011/Update_Earthquake_Impact_on_Honda_ Operations_20110502.pdf

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