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HondaSupplyTeam

How to Become a Supplier


Introduction
From its earliest days, Honda Motor Company has maintained a specific company principle:
Maintaining 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 !n its efforts to meet the changing needs of an evolving world
community, Honda needs the support of dedicated suppliers with similar goals and demanding standards
This web page will introduce you to the Honda purchasing philosophy applied by its worldwide operations as well as the
importance of the relationships between Honda and our valued suppliers
About Honda
Honda Motor Co "td was established in #$%& as a motorcycle manufacturer in Hamamatsu, 'apan From this beginning,
Honda has grown to become the world(s largest motorcycle producer, a title it has maintained continually since #$)%
Honda first entered the automobile mar*et in #$)+ and currently has become one of the world(s leading manufacturers
Honda also produces a variety of power products, including such items as lawn mowers, tillers, outboard motors and
generators
These three product groups , automobiles, motorcycles, and power products , remain the pillars of Honda(s business
structure today
Globalization
Honda is unique in its approach to worldwide production and also in its company structure
-ne feature of this unique approach is an attitude of globali.ation From the first words of the company principle, there is
an emphasis on an international viewpoint
-nly ten years after the creation of the company, the first overseas subsidiary , /merican Honda Motor Co, !nc , was
established Three years later, the first overseas production began in 0elgium with the manufacturing of mopeds for the
1uropean mar*et This global reach has grown to include more than )2 plants in +% countries 3as of -ctober, 455#6
7ith its attention focused on the world mar*et, Honda has followed a philosophy of producing in the mar*ets where there
is a demand for our products Honda endeavors to immerse itself into the local environment in an effort to become part of
the community and culture This includes the use of all local resources, including labor
7ith this attitude comes increasingly self,sustaining local production facilities worldwide This concept has been
fundamental to overseas production and will continue in Honda(s ever developing worldwide networ*
Purchasing Policy
0ecause of the established international nature of the purchasing function, Honda is committed to maintain free trade,
treating all suppliers equally regardless of si.e, location, or national origin
From this international environment, Honda has developed and maintains a basic purchasing policy that can be described
using the following principle:
Honda will buy from the most competitive suppliers in order to fulfill customer satisfaction
Customer 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 7e e8pect each supplier to develop the same commitment and dedication to customer
satisfaction as we have To accomplish customer satisfaction, what Honda requires of suppliers is competitiveness in what
we call 9C::M
1 !uality
9uality is the most important factor in ensuring customer satisfaction 7e believe quality must be built into the product
during the production process 9uality cannot be assured in the final inspection process !t is the responsibility of each
supplier and each individual wor*er to ensure quality / commitment by the supplier at every level from the top
management to the individual wor*er is essential to continually improve quality
" Cost
Competition in the parts supply industry has become very strong in recent years Honda is determined to provide products
at competitive prices and value for the money Suppliers are e8pected to achieve target cost through their ideas,
technologies, improved productivity, plus ;oint efforts with Honda in <1=</ 3<alue 1ngineering=<alue /nalysis6 activities
7e require suppliers( continuous efforts to reduce cost year by year
# $eli%ery
Honda employs the ;ust,in,time production system
!n order to respond quic*ly to our customer(s needs, it is becoming more and more critical to produce products with the
shortest possible lead,time
Suppliers are e8pected to have a reliable and fle8ible production system, which can respond in a relatively short leadtime,
and can be synchroni.ed with our assembly lines
Suppliers will also benefit from ;ust,in,time production system
'ust,in,time production reduces inventories, eliminates waste, and also improves production efficiency
/dopting ;ust,in,time lean production will raise supplier(s competitiveness in cost and quality
& $e%elopment
!n responding to ever,changing customer demands, and to provide high quality yet cost competitive products, Honda relies
heavily on established suppliers as a source for development and improvement of technology
!n the course of development, emphasis will be put on uniqueness 7e believe uniqueness in design or specification is a
part of competitiveness !t is this uniqueness that ma*es up the identify of our products
Suppliers are e8pected to have ability to reali.e such demand of uniqueness through their technology and *now,how in
development in a timely manner with high cost performance
' (anagement
!t is important for a supplier(s management team to be strongly customer,oriented and to provide effective leadership for
the entire company that e8pects to fulfill 9C::
Such management effort promotes mutual trust between the supplier and Honda
International Purchasing )peration
To facilitate ease in purchasing on a global basis, Honda has created a unique international organi.ation
This organi.ation consists of establishing local purchasing offices in locations which meet the requirements of local
manufacturing 1ach office is staffed with trained purchasing professionals who have the authority and responsibility for
purchasing their own parts and materials
/t the bottom of this web page is a list of Honda(s ma;or international purchasing offices Suppliers are encouraged to
contact these offices where close relationships can be developed, resulting in improved communication and
understanding
/s local purchasing operations continue to develop, local research and development offices are established
Purchasing Process
There are several steps that must be ta*en when initiating a relationship with Honda Following these steps can ma*e the
purchasing process smoother for everyone
1 Initial Contact
!nitial contact in the purchasing process may ta*e place in two ways First, according to an established purchasing
schedule, Honda may contact suppliers in various areas to e8plore the potential of purchase
The second way is direct contact by a supplier to Honda >lease see the appropriate contact listing at the bottom of the
page
!f there is an initial interest in the product, a meeting will be arranged between the supplier and a Honda purchasing
representative This initial meeting will be arranged between the supplier and a Honda purchasing representative This
initial meeting is of crucial importance to the future relationship This meeting should include a written overview of the
supplier(s operations 3present products and customers, etc6 and e8perience as a parts manufacturer The sample parts
and visual aids such as videos or slides can be helpful / confidentiality agreement will be signed by both parties before
the initial meeting
" Preparation In%estigation of Honda Parts *Homewor+,
/lthough it is of general interest to *now what parts you presently manufacture, Honda is much more interested in
*nowing,
e8actly what parts you would propose to supply to Honda
what tentative price you will as* for that part
/lso, Honda wants to *now,
to what e8tent you have studied Honda parts before ma*ing the presentation
/ thorough investigation of the part to be supplied should result in *nowledge about si.e, weight and how the parts affect
surrounding or attached parts 7ith this study and effort, beneficial discussions will transpire
The parts that we are most inclined to purchase first will be those parts that have world class competitiveness The study
of the part at this point does not require a detailed review of specifications for the part ?our own engineers can loo* at the
part or parts and ma*e their own assessment ?our initial efforts in this regard will be the most effective way to begin a
business relationship
/lso important to us is information of suppliers( development leadtime to help us quic*ly understand a part of the suppliers(
development capability
# !uotations
/fter evaluating the presentation and based on the tentative target price information, Honda may issue a drawing and the
accompanying specifications for the part and request a more specific quotation This quotation should include first and
foremost the quote as per the agreed specification !t may also contain the supplier(s own design quote and possible
adaptations of their own design to Honda(s specifications :ifferences in these quotes should be clearly defined
& Initial Plant -isit
!f the initial quote is found to be competitive Honda will arrange a visit to the company and its operations This initial plant
visit will be made by a combination of purchasing, quality control, and @A: personnel The purpose of the visit is not only
to inspect manufacturing processes and quality assurance activities, but also to determine management policies and
philosophies and general conditions
' Prototype $e%elopment
Following a favorable visit to the supplier, Honda will as* the company to provide prototype sample parts /long with the
samples, we will as* the supplier to provide its own testing and evaluation of the samples The resulting data, samples,
plus an outline of the production capabilities and schedules, should also be submitted
The lead time for this development wor* will probably be shorter than what many suppliers are accustomed to or e8pect
This is because of Honda(s policy of very rapid model changes and accelerated development schedules in response to
mar*et changes Several sample parts should be prepared This will shorten the response time if modifications of the part
are required / quic* response to such requests is very important 0oth parties will need to cooperate and communicate
. /esting and 0%aluation
Honda will require e8tensive testing of parts @esults will combine the suppliers( own test data with that of Honda @A:
divisions Honda(s local capacity for testing and evaluation is developing quic*ly in con;unction with manufacturing
capacity The testing process will include many discussions between our technical staff and the supplier(s technical staff
1 (ass Production !uotation
!f the results of evaluations and testing are positive, we will move to mass production price negotiations >ricing is a very
critical item and is discussed continuously from the initial meeting /t Honda it is required for suppliers to provide a detailed
brea*down of the price This brea*down will include raw materials, labor, tooling, required pac*aging, and delivery
e8penses, administrative e8penses, and other e8penses
7e find the brea*down of costs is helpful in suggesting ways that suppliers can see* to improve and thereby reduce costs
2 Preparation for (ass Production
Honda will issue tooling orders after the successful completion of final prototype evaluations
3 /rial 4un
To confirm that the part will continue to meet requirements in volume production, the supplier carries out trial runs under
mass production conditions
15 !A-
-nce trial runs are successfully done and mass production schedules are determined, there will be a 9/< 39uality
/ssurance <isit6 for an overall evaluation of the process
11 Agreement
BCeneral /greement for >urchase of >artsB and BCeneral /greement for 9uality /ssuranceB and any other applicable
agreements will be mutually signed
1" Purchase )rder
/fter all the necessary procedures are completed, orders are placed and mass production can begin
Supplier Participation in $e%elopment
$esign6In
/s Honda is heavily dependent on the outsourcing of parts, design,in activities are crucial to successful development and
production
:esign,in is a process in which engineers from suppliers wor* together with our engineers in the early stage of the vehicle
development, in order to better utili.e the suppliers( e8pertise which will help us to develop the best design in the shortest
timeframe
!n prototype development, suppliers are e8pected to follow the development cycle, identified below, until a mutual
agreement between both parties is reached on the best design -f course the time requirement of each development
event must be strictly met
Thus we can identify any potential problems and ta*e necessary countermeasures long before reaching the production
stage
To participate in the :esign,in program, both of the following conditions must be met
1 Parts
/n e8ample of parts that we consider suitable for this program is a part in which the suppliers( technology=*now,how can
best be utili.ed in the earliest stages of development
" Suppliers
Suppliers we choose to wor* together with in this program are those evaluated and selected in the light of the criteria of
competitiveness, B9C::MB described above
G70S/ 08GI8004S
:esign,in suppliers developing parts which have a high inter,relationship in fit or function with other parts may be as*ed to
participate as a guest engineer Suppliers( engineers actually wor* at Honda @A: facilities hand,in,hand with Honda
engineers from the very early stage of development The Cuest 1ngineer program helps Honda(s local procurement efforts
and spurs the development of new technologies by both suppliers and Honda
09port in a :orldwide 8etwor+
Honda always see*s competitive parts not only from domestic suppliers but also from overseas Therefore, parts being
used in one area of production with strong competitiveness can be good candidates for use in other manufacturing
locations
For suppliers who want to e8port, we would encourage that the first step be to become a supplier of Honda locally through
direct contact with our local purchasing office The supplier should be most competitive at that location, since it is free to
e8port or long distance transportation e8penses This approach will bring the supplier the best results
!n determining the cost competitiveness of parts for e8port to any of Honda(s operations worldwide, the price must be
assessed on the landed cost basis "anded cost includes the cost to manufacture the parts plus your sales and
administrative costs, plus freight costs, overseas pac*aging costs, overseas freight costs and duties, if applicable, and any
related e8penses /ll of the above costs are considered landed costs
-bviously, bul*y parts may have a cost disadvantage when you consider ocean or air freight transportation costs 7e
e8pect suppliers wishing to e8port their products to consider all these costs in determining their price quotation
!n e8porting to overseas locations, cost is inevitably accompanied by currency e8change :rastic changes in the currency
balance may create opportunities for suppliers in some countries to become very competitive in the e8port of their
products 7hile this is a distinct advantage, it must be stressed that companies should not rely only on e8change rates as
a means of becoming competitive
Conclusion
/s the relationships between Honda and its suppliers continue, there will be many opportunities for growth and e8pansion
within the Honda networ*
Through Honda(s commitment to purchase when we manufacture and sell our products, many suppliers who demonstrate
world competitiveness may be e8tended the option to e8port their parts to Honda operations worldwide
7e encourage suppliers who understand the Honda 7ay and who are willing to improve their competitiveness to contact
one of Honda(s purchasing offices and to ta*e the first step toward a partnership with Honda
Potential Supplier Contacts at Honda
"isted below are contacts and addresses for the following:
Automobile & Raw Materials:
Daren Miller
Honda of /merica Mfg, !nc
Eorth /merica >urchasing
4#55#,/ State @oute F+$
@aymond, -H %+5)F
$+F,)%%,5%22 e8t )2&+%
Power Sports:
1dwin Small
Honda of South Carolina Mfg, !nc
>urchasing
####Honda 7ay
Timmonsville, SC 4$#)#,$%4#
&%+,+%),&#+2
1dwinGSmallHhschondacom
MRO (Maintenance, Repair and Operations):
Send your company information to email address:
hammropurchasingwebsiteHhamhondacom
Pac+aging and /ransportation Items;
Mindi Mun.
!nternational >arts Supply
42555 Honda >ar*way
Marysville, -H %+5%5
$+F,)%4,2555 e8t )4&++
International /rade and C6/PA/ Contact;
>aula 1lliott
Trade Compliance :epartment
4%555 Honda >ar*way
Marysville, -H %+5%5
$+F,)%%,FF%#>aula 1lliott
paulaGelliottHhnahondacom

Procurement $i%ersity
Procurement_Diversity@hna.honda.com
Honda North America, Inc.
Procurement Diversity ana!er
"#$$#%A State &oute '()
&aymond, *H +($,'