HONDA CORPORATION
A. WORKING CAPITAL
MANAGEMENT OF THE
INDUSTRY
1. INVENTORY MANAGEMENT
 USE OF RFID(RADIO
FREQUENCY
IDENTIFICATION)
- A Honda plant
Greensburg, IN is employing
RFID to locate vehicles and
track their progress through
its assembly plant. Vehicles
within the plant are outfitted
with the technology, as is the
gate, enabling easy
immediate location.
- Honda's use of RFID
technology is a case study in
how real-time tracking
information can help increase
efficiency in operations and
inventory management,
beyond its use in retail and
warehousing.
 APEX (Allocation Preferencing
and Exchange) inventory system
- The system, “result of five
years of software coding and
deliberations among dealers,
the factory and Honda’s field
staff” will allow dealers to
change car specs before the
vehicles are built. Before
they cars into transit, dealers
can also exchange them with
other retailers.
 USE OF INVENTORY
CONTROL TECHNIQUE
- Using JIT in controlling the
inventory, company are able
to reduce the handling cost
which means when the raw
materials are needed for the
input at that time only the
inventory are brought down
on the job floor.
- when the output are finished
goods, it is produced then
using supply chain
management system
- Using supply chain
management system, the
company reduces the time of
in converting raw material into
finished goods and then
selling it to end customers.
2. CASH MANAGEMENT OF THE
INDUSTRY
 DEBTORS – DEALERS
- DEALERS MANAGEMENT
SYSTEM, it is an online
network system through
which the companies are
directly related to their
dealers all over the country
- DMS system also helps in
receiving the money from
debtors on time, as debtors
get aware when they have to
pay to the company and it
also helps in determining the
discounts availed in different
order of lots of goods.
 DECENTRALISED CASH
MANAGEMENT SYSTEM
- By this system many
companies have reduced
their cost of collection from
their debtors and even they
have increased the working
capital of the company.
 USE OF CREDIT DEFERRAL
POLICY AS FINANCING
ALTERNATIVE AND ALSO
BANK CREDIT
- discounting of bills
receivables, and obtaining
short term bank borrowings
 - Defers the payment to its
supplier for a longer period
and use that fund to finance
its current assets.
- Generally the payment
period for the creditor is
more than the collection
period from debtors and the
period for which cash and
bank balance is required.
- and use that fund to finance
B. WORKING CAPITAL STYLE
IN INDIA
1. INVENTORY
 CONSERVATIVE POLICY AND
AGGRESSIVE POLICY
- This ensures profitability but
at the same time when the
current assets are less
current liabilities may not
be met with this. Such style
is followed in industry like
automobile industry.
 OPTIMUM INVENTORY
- In India such policy is
achieved by the use of
inventory management
technique like Just in Time,
Supply Chain Management
etc. In India much stress is
given to convert the
inventory in the production.
2. CASH MANGEMENT
 SELF COLLECTION
POLICY/AGENCY OR
DEALERSHIP SYSTEM
- In India the policies
followed for debtors are
generally the self-collection
policy where the company
itself collects the amount
from its debtors.
 DISTRIBUTED CASH
MANAGEMENT SYSTEM
- where every branch has its
own cash accounts and they
manage these cash
accounts
 USE OF CREDIT DEFERRAL
POLICY AS FINANCING
ALTERNATIVE:
- discounting of bills
receivables, and obtaining
short term bank borrowings
- Defers the payment to its
supplier for a longer period
its current assets.
- Generally the payment
period for the creditor is
more than the collection
period from debtors and the
period for which cash and
bank balance is required.
SOURCES:
 https://www.supplychaindive.com/
news/RFID-Honda-production-
transparency-tools/444492/?
fbclid=IwAR221Am0ZFZCYRxyszA0r
Bag1JpZlLQ7HE2rxT_gqjj3CXkwa7Y
O1ChPlXU
 http://www.managementparadise.c
om/forums/financial-
management/68240-working-
capital-management-hero-
honda.html?
fbclid=IwAR221Am0ZFZCYRxyszA0r
Bag1JpZlLQ7HE2rxT_gqjj3CXkwa7Y
O1ChPlXU
 https://www.suretybonds.org/blog/
honda-launches-inventory-ordering-
system/