Executive report of key results of recent research on supplier development strategies and outcomes
Global Supplier Development – The PACK Teams
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- Navigate this page:
- Purchasing Liaisons
- Performance Capabilities – QCDD-M
- Moving Capacity Globally
- Transferring Technology Globally Between Suppliers
- Major Obstacles and Challenges in Developing a Globally Aligned Supply Base
- Honda’s Localization Strategy
- Actual Place, Actual Part, Actual Situation
- North America Production – Supply Base Growth
- 400 meter metaphor
Global Supplier Development – The PACK Teams Transfer of personnel also occurs in order to transfer supplier development practices. In one case, a senior manager from HAM went to work at HUM in order to transfer supplier development expertise to its UK location. This initiative has only just started. The supplier development concept at Honda is defined loosely from Japanese as “a sense of performance, which is used to help suppliers improve”. A major initiative involves using a technique known as PACK teams. These teams are composed of manufacturing experts who travel for extensive periods in teams, and who transfer Honda know-how throughout its supply base. These individuals are hand-picked from Honda Japan, and have temporary visas that allow them to travel for five months (maximum). The team works extensively during the prototype stage in order to ensure that the necessary quality systems are in place within the supply base. By definition, these individuals must interact with Honda’s local Supplier Development group, in order to find out which suppliers require immediate help. The PACK team is a major factor in ensuring that suppliers meet timing requirements in the new product development process, so that the supplier can easily slip into the mass production phase. The tam also transfers knowledge from Honda'’ Japanese supply base to suppliers in North America and worldwide. For the most part, this team has focused on transmission parts. In transfering their knowledge, they also transfer knowledge to the local supplier development group, who picks up the slack when the PACK team returns back to Japan. The mother company of the supplier is expected to transfer the technology provided by the PACK team for their similar products across other locations (accounting for local variation). This is part of their responsibility as a Honda supplier. In cases when the supplier is not global (e.g. BF or supplier “D”), they will send a guest engineer to Tokyo to work with Japanese designers at Honda R&D. An on-going problem that is encountered in this process is the poor transfer of technology across the same supplier (same problem noted with BMW). Purchasing Liaisons An important task in managing this process is the management of the relationship between the designer and the guest engineer. To achieve this, a Purchasing Liaison Associate is assigned to monitor the relationship over time. The purchasing liaison is a relatively new concept. Currently, it is used only by HAM (Mark Ehrlich is the liaison for HAM serving in Japan). Next year, HUM (UK) will also send a purchasing liaison. The primary task of the liaison is to ensure that the supplier is properly prepared to work with the design team at Honda R&D. For instance, they may inform the supplier “Don’t come here and make a presentation unless you reall understand and have addressed all of the following items: corrective action, FMEA’s, etc.” Although Honda’s R&D people are prepared to treat suppliers healthy, it is generally a good idea to ensure that the supplier has thought through all of the relevant issues, as well as what they want to achieve, prior to meeting with the designers. The liaison ensures that the supplier is ready to present to Honda, by ensuring that suppliers have done a careful self-analysis of their capabilities, and have a clear goal for their presentation. This dramatically increases the success rate of the supplier/designer interface. Performance Capabilities – QCDD-M Honda’s primary objectives are in Quality, Cost, Delivery, Development, and Management. The last of these is considered critically important – it refers to the management capabilities of the supplier, in terms of strategy, measurement, and planning. It is a “soft” objective, but is one of the most important. A big part of supplier development involves ensuring that the supplier can hit Honda’s QCDD-M targets. The PACK team helps to transfer technology worldwide before mass production. This enables longterm international global support. In December 1997, the PACK team consisted of 15 people who were on temporary assignment out of the Ohio plant for 5 months. Moving Capacity Globally To drive improvement, Honda may introduce new business to suppliers in order to improve them. For instance in Thailand, many of Honda’s competitors have actually reduced their production because of the financial problems being experienced by many suppliers. Honda views this current crisis as an opportunity to improve the supply base, and has just begun production of the CRV in Thailand. This makes the best of a poor opportunity: Thai suppliers get more business, and associated support. The timing for this move was excellent, as CRV production in Japan was at 100%. To improve performance in the supply base, Honda introduced this very popular product from Japan to Thailand in order to force suppliers to improve their capabilities in this region of the world. Transferring Technology Globally Between Suppliers There is very limited transfer of technology across suppliers (in contrast to the Toyota strategy). Part of this is because of Honda’s wish to introduce competition within the supply base as a motivation for improvement. There is also very limited technology transfer from Japanese to non-Japanese suppliers. In limited situations, some technology transfer occurs. For example in welding special materials (a zinc alloy), the volume in the UK was not high enough for a Japanese supplier to build their own supplying plant in the UK. Honda then requested the Japanese supplier to share limited technology transfer to a UK supplier. The UK supplier may receive assistance in developing the welding technology from the Japanese supplier, get the business from Honda, and then pay a royalty to the Japanese supplier. In another situation in the US, a major producer of casting products in Japan helped HAM to enter into an agreement and transfer production expertise to a US supplier. HAM coordinates the transfer. HAM thus developed a local source for the casting through a royalty arrangement with the Japanese supplier. The tooling die was built in Japan and shipped to the US supplier. Thus, HAM did not have to worry about the finish of the parts, since the die was sent directly to the US supplier. HAM thus benefits from shorter development and delivery times, quality, etc. The Japanese supplier that did the transfer may also benefit in other ways than the royalties, in terms of establishing a preferred relationship with Honda, which is important in gaining future business. In rare situations, tooling in Japan will be sold to a competing supplier. However, very limited help is provided in such cases. Major Obstacles and Challenges in Developing a Globally Aligned Supply Base One of the most critical challenges in deploying this strategy is getting suppliers to develop a global competence, (one that is aligned with Honda’s global perspective). This is not easy, as the following story illustrates. In the previous example of the global supplier (A), HAM has been unsuccessful in dealing with their contact at A2 . Although A1 (the mother company) has a very close relationship with Japanese buyers at Honda Motor Company, the people working in their A2 location may not understand A’s global strategy, and may not have a network in place to share production technology, design, expertise, etc. globally. As a result, the buyer working at HAM may not be happy with the results of this outcome, and may not wish to source from A2 , as they may also not fully understand the role of the A supplier in the Honda network. Major challenges exist in deploying this strategy:
To some extent, these challenges will evolve as Honda continues to expand. Honda started initially in motorcycle production, where it did and still does produce in almost every country in the world. As it expanded into automotive, it also began to expand sales country by country. Motorcycle production is not nearly as large or complicated an investment as automotive (and is large a “knockdown” type of operation.) However, many of the lessons learned in motorcycle production globally is being applied to Honda’s automotive production expansion worldwide. Moreover, they have been down this route before! Honda’s Localization Strategy The “soft” area of supplier development (ref: interview with Leon Nichols at HAM), was established as part of supplier development because of the timing and speed of the exodus of Japanese suppliers establishing transplants in the US. They simply needed help understanding local conditions! Honda has established a fixed process for localization:
In cases when recurring problems with the supplier occurs, it becomes difficult to consider them for future business unless the problems can be resolved. If the problems are of a basic nature, Honda may make less of a commitment (volume-wise). If the problems are of a fundamental nature that will not go away, (e.g. an inability to even listen to Honda’s proposals, and not even necessarily accept them), then Honda must consider whether they will be able to work with the supplier five years down the road. In such cases of a fundamental mismatch which cannot be resolved, Honda will drop the supplier, as this is a critical stumbling block. Actual Place, Actual Part, Actual Situation A strong focus at Honda is adjusting the relationship to accommodate the local situation. For example, Japanese and US buyer-supplier relationships are fundamentally different. How should Honda modify their relationships to accommodate local conditions. In another case in the UK, there was not enough volume for a Japanese supplier to enter the market, yet the UK suppliers employed a different engineering approach. In order to account for such different local situations, Honda has employed the “Gimba” or “3A” approach: Actual Place, Actual Part, Actual Situation. This means that the actual part produced by the actual person in the supplier’s location is “fit” onto the vehicle before being approved for production, to ensure that it meets Honda’s requirements. This may require repetitive changes to the part over time. North America Production – Supply Base Growth 
North American Production  
1 million new Civic models produced – larger % of U1 suppliers – overall mix of transplant/domestic balances out 
Japanese “transplant” suppliers established Some parts of car “off limits” for localization  
1982 1987 1991 1994 1997 (160Y/$) (102Y/$) (130Y/$) As shown in the above figure, increased local content of U1 (US, tier 1) suppliers was implemented. In the initial stages, Honda used primarily imported Japanese supplied parts for assembly in the US. No transmission or engine parts were done in North America at all. Over time, a number of Japanese transplant operations were developed. Since 1991, the number of domestic US suppliers has increased dramatically, to the point where the total number of truly “domestic” suppliers is about 50%. (The number of US suppliers, including transplants, is around 95%). The priority for sourcing all new parts is as follows:
2nd priority: Joint ventures with US suppliers 3rd priority: Knockdowns (produced in Japan in kits for assembly in the US) 4th priority: Japanese suppliers Although this progression may seem slow, in reality it is a major step in localization. Especially between 1987-1991, Japanese suppliers were screened using QCCD-M criteria and asked to establish facilities in the US. Between 1991 – 1997, US suppliers were selected using the same set of QCCD-M criteria as Japanese suppliers. This was a very difficult set of criteria for US suppliers to meet. For example, companies such as Bosch and Delco developed excellent prototypes which met the standard, but when volumes increased during the mass production stage, many defects occurred. As Honda’s volumes continued to increased, it continued to work with large U1 suppliers for all new business. Final Story A very humorous story emerged about Mr. Morita. At one point, a concurrent engineering project had a series of overlapping activities on a chart. As they were looking at the chart, he walked over with a pair of scissors, cut out the middle of the page, and put the two pieces up together. Essentially, he was saying they needed to reduce the time for the project in half! 400 meter metaphor Mr. Morita also discussed a metaphor that he frequently uses to emphasize the importance of continuous improvement. Every new product cycle is like a 110 meter hurdle race. The hurdles are the same for all of the racers, yet some are able to master them better than others. They include things such as quality problems, lack of trust, cycle time, FMEA’s, customer requirements, new technology, etc. The finish line represents the product release. In every race, there is always a winner! The winner ultimately captures market share, profits, satisfied customers, etc. Generally, the winner is the one who is able to leap (e.g. manage) all of the hurdles and run (e.g. deploy) the strategy quickest. However, once the race is over, the racers continue to jog around the track getting ready for the next 110 meter race, which represents another chance to win! Although you did not win this time around, by the time you go around the track again, next time you may be a contender! One way of positioning supplier development is to understand what are the “best practices” at each of the hurdles that can turn contenders into winners. As the race continues, priorities will shift according to the nature of the hurdle. Directory: scm scm -> The petition and case system scm -> Coastal zone region / estuaries and tidal flats index Map to Study Sites scm -> Section 1 south carolina's intriguing landscape (statewide overview) Index Map to Study Sites scm -> Section 5 coastal plain region / overview index Map to Study Sites scm -> Thirty-sixth regular session oea/Ser. P june 4 6, 2006 ag/doc. 4634/06 re scm -> Scm-061 -confCall6-Summary Source: 3gpp – 3gpp2 scm ahg co-Chair Date scm -> Description scm -> Title: Spatial Channel Model Text Description File: Source scm -> Junior Umpire of the Year – Marcus Kouri • Senior Umpire of the Year – Wendell Kehler scm -> Course Code Course Title Download 295.54 Kb. Share with your friends:
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