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    Supply Chain Management System of Honda Motors

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    Somanna Muthanna
    Honda has one of the strongest supply chain management systems in the automotive industry. It carefully selects site locations for US manufacturing plants and has close, partnership-like relationships with suppliers. Honda involves suppliers in product development and design. It achieves economies of scale by ordering raw materials in bulk and integrating suppliers into the entire purchasing process. Now, Honda's plant in India exports key engine components to other Asian markets from its sourcing base, demonstrating how Honda has integrated international markets into its efficient supply chain system.

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    Supply Chain Management System of Honda Motors

    Uploaded by

    Somanna Muthanna
    4K views5 pages
    Honda has one of the strongest supply chain management systems in the automotive industry. It carefully selects site locations for US manufacturing plants and has close, partnership-like relationships with suppliers. Honda involves suppliers in product development and design. It achieves economies of scale by ordering raw materials in bulk and integrating suppliers into the entire purchasing process. Now, Honda's plant in India exports key engine components to other Asian markets from its sourcing base, demonstrating how Honda has integrated international markets into its efficient supply chain system.

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    Honda has one of the strongest supply chain management systems in the automotive industry. It carefully selects site locations for US manufacturing plants and has close, partnership-like relationships with suppliers. Honda involves suppliers in product development and design. It achieves economies of scale by ordering raw materials in bulk and integrating suppliers into the entire purchasing process. Now, Honda's plant in India exports key engine components to other Asian markets from its sourcing base, demonstrating how Honda has integrated international markets into its efficient supply chain system.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    4K views5 pages

    Supply Chain Management System of Honda Motors

    Uploaded by

    Somanna Muthanna
    Honda has one of the strongest supply chain management systems in the automotive industry. It carefully selects site locations for US manufacturing plants and has close, partnership-like relationships with suppliers. Honda involves suppliers in product development and design. It achieves economies of scale by ordering raw materials in bulk and integrating suppliers into the entire purchasing process. Now, Honda's plant in India exports key engine components to other Asian markets from its sourcing base, demonstrating how Honda has integrated international markets into its efficient supply chain system.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 5
    At a glance
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    Honda has a robust supply chain management system that integrates international markets to reduce costs and increase efficiency. They also focus on quality development and processes.

    Honda carefully selects sites for US plants and builds new greenfield manufacturing plants. They also use a mix of Japanese and North American managers and focus new products on more established processes.

    Suppliers are involved in developing and designing new products. Honda treats suppliers like partners and has an in-depth supplier selection process.

    Logistics

    and Supply
    Chain
    Managemen
    t
    Assignment
    SCM System of Honda
    Motors

    P.M.Somanna - 09109
    Supply Chain Management System of Honda Motors

    The study of Honda’s SCM system is of its operations in the US. Along with Toyota, Honda have one
    of the strongest SCMs in the automotive industry and this strong tradition arises from the fact that
    they belong to the Japanese stable of quality development and quality processes.

    Honda’s Operational practices show a great example of the innovations the Japanese automobile
    manufacturers perform and some of their operational strategies are as follows:

     Careful site selection of their US manufacturing plants


     Greenfield Manufacturing Plants
     In- depth supplier relationship which is close and interactive, similar to a partnership
     Autonomic organizational structure
     Japanese/North American manager mix
     New entrants focus on more established products and processes

    Honda Purchasing Process and Differentiators

    Honda uses their economies of scale by working with their parts suppliers to order raw materials in
    large quantities and therefore integrate their suppliers into the entire purchase process in the
    following ways:

     Suppliers are involved with development and design of new products


     Relationships with suppliers is much like a partnership
     For the success of the functioning of the unit it requires an in-depth supplier selection
    process

    Some of the structural characteristics of the Honda supply chain are also known as executional
    drivers that reduce operating costs and increase productivity. Economies of scale are achieved as all
    purchasing is done by Honda Trading America Corporation and the technology used are
    multipurpose machinery which further reduce the associated manufacturing costs translating into
    lower costs of production. With regard to capacity utilization also Honda operates facilities in every
    major market they enter and therefore cut out problems of outsourcing and dependence on
    external markets to drive local ones.
    Example of Honda Supply Chain

    Market Characteristics

    IT advancements in the market have been pioneered by the Japanese car manufacturers
    especially Honda with technologies such as the 3rdwave distribution software by Blinco Systems
    which assures parts quality, controls availability, guarantees delivery and provides consistent
    materials pricing

    External factors such as increasing oil prices also effect transportation costs for all markets

    Competitive Characteristics

    Strategic and operational variables must be factored into the design of a company’s global value
    chain which can be covered in the following:

     Demand chain (marketing, sales, service)


     Supply chain (sourcing, manufacturing, logistics)
     Product development (R&D, design, engineering, development, and launch)

    Supply Chain Characteristics

    The key element for Honda is the flow of information with their suppliers which is covered in the
    following 12 steps:

    Initial contact, preparation/investigation of Honda parts, quotations, initial plant visit, prototype
    development, testing and evaluation, mass production quotation, preparation for mass production,
    trial run, Quality Assurance Visit, agreement and purchase order.
    Company Specific Characteristics

    Strategic sourcing involves maximizing the value added through Honda’s external suppliers and they
    always will choose the highest supplier in overall service (not just lowest price)

    Honda also practices Target pricing wherein they prepare a price table for parts and if the price
    cannot be met, Honda will work with suppliers to get costs down.

    Q.C.D.D.M at Honda

    At Honda customer satisfaction is top priority and this is accomplished through supplier’s
    competitiveness in quality, cost, delivery, development, and management (Q.C.D.D.M.)

    This principle is what drives Honda’s entire manufacturing and final delivery process.

    Ingredient Elements
    Quality  Most important factor in final
    perception and sale of product
     Must be built into production process

    Cost  Suppliers are given target costs


     Cost reductions through own ideas,
    technology, improved productivity,
    along with joint efforts with Honda in
    value engineering, and value analysis
    Delivery  Suppliers must use just-in-time
    production system

    Development  Uniqueness in design and specifications


     Helps create identity for Honda

    Management  Positive attitude and encourage new


    ideas
     Measured by Q.C.D.D
     Grade cards for suppliers to gain
    feedback into the process
    Now India is a part of Honda’s Global Supply Chain

    Honda Motors' has a plant in Rajasthan which is an export base for certain key engine components,
    and not a manufacturing hub like some other auto-makers such as Hyundai, Suzuki and Renault
    already have. The company has similar bases in other ASEAN countries.

    Honda Siel Cars India (HSCI), a subsidiary company of Honda Motor Corporation (HMC), Japan, is the
    sourcing base for critical engine components to other Asian markets. HMC is the second most profit-
    making car company in the world, behind Toyota.

    With the global markets plagued by currency fluctuations importing components isn’t a feasible
    option. So, it is only natural for international auto makers to set up their own production facilities in
    the country and also tie up with local vendors for component.

    Thus we see how Honda’s robust supply chain management system has managed to integrate
    international markets to add to its overall efficiency and reduce costs on the whole.

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