1. How does Mr. Honda’s history with suppliers relate to Honda’s current supply management strategy?
The current supply chain management strategy reflects Honda’s long-term goal of manufacturing products where they are sold, and its determination of buying parts where it manufactures vehicles.
A. Increased local content is due largely to purchases Honda makes from many of the other 3 Japanese automobile firms that were established during the late 80’s.
B. Focusing on 4 regional markets has allowed Honda to develop strong sales, research and development, and manufacturing operations in each region to ensure that the product mix in each region is appropriate to the needs of the ...view middle of the document...
3. How does purchasing rank in the corporate structure at Honda?
The Purchasing at Honda has the option of adding a second source of supply and ultimately for disqualifying suppliers from additional business with Honda.
4. How is Honda organized globally? How does this help/hinder the purchasing function at Honda?
Honda concentrated on establishing and then expanding its assembly operations, while carefully probing the capabilities of domestic suppliers. Honda has established new auto manufacturing facilities in Mexico and increased exports to Central and South America. The centerpiece of these efforts is a program called Best Process.
When Renault came to benchmark Honda, the differences were stark. Renault had more than thirty preferred suppliers with guaranteed contracts. A preferred supplier, by definition, has no competition and has guaranteed ongoing contracts with Renault. Honda's purchasing function is important because it serves a strategic role. Honda discourages adding special unique features because they tend to increase the cost per unit. Honda believes that the interface between research and development and purchasing is now deemed critical to the supply chain management process. Clearly, switching costs go up with these types of supplier relationships, and there is a risk involved.
5. What are the key elements of Honda’s supplier evaluation policy? How does it differ from others (e.g. the Big Three)?
How Honda sees their supplier:
* Responsiveness & involvement of suppliers at early stage of product development
* Supplier evaluation by Honda R&D
* Recognize supplier’s existing customers – product supplied
* Technology development for 2 years
* Honda must visit the supplier – 3Gen
* Efficient in R&D
* Equally competitive at any global location
* Equally proficient in cost & quality at all the plants
* Maintaining relationship with suppliers
How other companies see their suppliers:
* Partnerships to control whole supply chain
* Evaluate whether they must continue to assemble products themselves or whether they can outsource production entirely
* Slashed the number of suppliers they did business with, awarded only to the survivors a long term contract.
* Encouraged top-tier vendors to manage the lower tiers.
* Go for the immediate benefits of low wage costs outweighed the long-term benefits of investing in relationships.
* The development of Internet-based technologies allowed companies to get suppliers to compete on cost more efficiently, eventually causing suppliers to brutally compete in cost.
6. What is Honda’s policy on new product development and supplier involvement? How does it differ from other automotive companies?
Pacific Automotive Cooperative (PAC) in 1986, the Japanese and American governments initiated its Market Oriented Strategies agreement (MOSS). The new policy required companies to report all of...