GROUP 8

 

HONDA

 

Supply Chain Managemen

 

 

 

Supply Chain Management Principles and practices at Honda

About Honda

Honda Motor Co. Ltd. was established in 1948 as a motorcycle manufacturer inHamamatsu, Japan. From this beginning, Honda has grown to become the world's largestmotorcycle producer, a title it has maintained continually since 1964.Honda first entered the automobile market in 1963 and currently has become one of the world'sleading manufacturers. Honda also produces a variety of power products, including such items aslawn mowers, tillers, outboard motors and generators.These three product groups - automobiles, motorcycles, and power products - remain the pillarsof Honda's business structure today.From its earliest days, Honda Motor Company has maintained a specific company principle:

³Maintaining a global viewpoint, we are dedicated to supplying products of the highest quality yet at a reasonable price for worldwide customer satisfaction.´

Honda is striving constantly for new and better technology. In its efforts to meet the changingneeds of an evolving world community, Honda needs the support of dedicated suppliers withsimilar goals and demanding standards.

 

 

P

urchasing

P

olicy

B

ecause of the established international nature of the purchasing function, Honda is committedto maintain free trade, treating all suppliers equally regardless of size, location, or nationalorigin.From this international environment, Honda has developed and maintains a basic purchasing policy that can be described using the following principle:

³Honda will buy from the most competitive suppliers in order to fulfill customer satisfaction.´

C

ustomer Satisfaction

This principle is based on the idea that Honda's suppliers are not simply selling their parts to us;they are selling their parts to our customers through us. Honda expects each supplier to developthe same commitment and dedication to customer satisfaction as they have. To accomplishcustomer satisfaction, what Honda requires of suppliers is competitiveness in what they callQ.C.D.D.M.

1. Quality

 Quality is the most important factor in ensuring customer satisfaction. Honda believes qualitymust be built into the product during the production process. Quality cannot be assured in thefinal inspection process. It is the responsibility of each supplier and each individual worker toensure quality. A commitment by the supplier at every level from the top management to theindividual worker is essential to continually improve quality.

2.

C

ost

 Competition in the parts supply industry has become very strong in recent years. Honda isdetermined to provide products at competitive prices and value for the money. Suppliers areexpected to achieve target cost through their ideas, technologies, improved productivity, plus joint efforts with Honda in VE/VA (Value Engineering/Value Analysis) activities. Hondarequires suppliers' continuous efforts to reduce cost year by year. Honda will give the suppliersannual pricing for their raw materials so that they can able to fix the cost of each parts whichgoes in to different model cars.

3. Delivery

 Honda employs the

 just-in-time

production system.In order to respond quickly to customer's needs, it is becoming more and more critical to produce products with the shortest possible lead-time.