Honda Manufacturing Alabama HMA and BridgeWater Interiors BWI

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Honda Manufacturing Alabama (HMA) and BridgeWater
Interiors (BWI) Study Trip Debrief
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Scope of Presentation

• Overview of Hondas Supply Chain Management
• Companies Information in Brief
• Supplier Management
• Inventory Management
• Manufacturing Processes
• Discussion
• Conclusion

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Overview of Hondas Supply Chain
Customer (King)
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Overview of Hondas Supply Chain
Customer (King)
Distributor/ Dealer
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Hondas Footprint on the United States

• Started U.S. operations in 1959 and opened their
  first U.S. plant in 1979.
• Directly employs more than 26,000 Americans
• Produces automobiles, motorcycles, personal
  watercraft, marine engines and power equipment
• Achieved record sales of 1.3 million automobiles
  in 2003 and purchased 12 billion in parts and
  materials from suppliers in 33 states
• Honda's capital investment in the U.S. is more
  than 7 billion and employs more than 26,000
  associates

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Locations of US Facilities
Location of Hondas Facilities
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Supplier States
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Supplier States
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Overview of HMA
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Overview of HMA Lincoln, Alabama

• First vehicle rolled out on Dec 4, 2001
• Plant Size of 3.1 million (approx. 16 Wal-mart
  Super centers. Line length of 1.5 miles
• Workforce of about 4,600 running on one shift
  (6.30am to 3pm)
• Capital Investment of gt US1.2 billion
• Manufactures 2 models Odyssey and Pilot.
  Capacity of 300,000 vehicles and V6 engines
• Operations Stamping, welding, painting,
  plastic injection molding, casting, machining,
  sub-assembly and assembly, testing, quality
  assurance

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Honda Seat Supplier - BWI Oxford, Alabama
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Overview of BWI Oxford City, Alabama

• A Johnson Controls Joint Venture - Officially
  launched Jan 21, 2004
• Workforce of 160, running one shift per day
  (6.30am to 3pm)
• Manufactures seat asemblies for Honda Pilot
• 5 types (Driver, Front passenger, 40, 60 and
  3rd row rear seats)
• Production Capacity 500 seats per day
• Throughput 180 to 250 sets/day
• Solely assembly, no manufacture of parts

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Supplier Management

• Outsourcing Strategy
• Strong element of trust and a long-term
  partnership approach used in end-to-end supply
  chain
• Non-core products and activities outsourced
  for both companies
• Honda retains key capabilities in manufacturing,
  in particular Engine production
• Seats Honda retains ownership on specially
  retrofitted trucks, but management delegated to
  BWI. This shows the kind of importance they place
  over this asset.
• BWI assembles components and parts (altogether
  56 part numbers)

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Supplier Management

• Control And Influence
• Honda holds a remarkable influence over
  suppliers
• 23 out of 35 Southern suppliers are in AL, many
  of whom had relocated just to provide close
  customer support to Honda
• Constitutes about 300 million in investment and
  approximately 4,000 workers
• Demands lead times in hours, and suppliers
  strive to fulfill that! Shipping schedule
  controlled by Honda.
• Tight downstream vendor controls - Suppliers
  suppliers have to get approval from Honda prior
  to engagement
• Performance matrix in play that weights supplier
  performance

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Supplier Management

• Production and Order Planning
• Data on demand variation and daily demands
  transmitted through e-portal
• Orders forecast provided by American Honda Motor
  Co. 6 months in advance, with weekly updates.
• Forecasts do not change very much
• Enables steady demand planning by all upstream
  suppliers, although forecasts can change with a
  days notice
• Orders are kept small, and in lot sizes of 30
  vehicles worth each time
• Extremely complex schedule to manage 400 inbound
  truck shipments per day (approx 1 shipment every
  1.3 minutes!)

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Inventory
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Inventory (Parts)

• Honda
• 4hours
• (2hours on the floor, 2hours in the pipeline)
• gt85 of parts obtained from North America
• Suppliers deliver 1.7million parts/day
• BWI
• 72 Inventory turns per year
• 2.9days worth of on-hand inventory
• For foam, it is about 2.5hours.

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Inventory (Equipment)

• Gravity flow racks
• Pallet racks
• Forklifts
• Trolley

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Inventory (Equipment)

• Trailer loading machine
• Specialised pallets

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Inside the Trailer
Side View
Front View
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Trailer Loading Machine

• At the end of the assembly line, products are
  mounted on specialised pallets and lined up in
  the conveyor belt.

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Trailer Loading Machine

• Before loading seats on the trailer, the pallets
  in the trailer are unloaded.
• Mechanised rollers in the trailer will push out
  the pallets.

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Trailer Loading Machine

• The seats that were on the loading machine are
  sent into the trailer, pallet by pallet, level by
  level.

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Inventory (Finished Goods)

• Honda
• Cars are parked in a holding area before loading
  on rail cars and sent to a mixing centre.
  Inventory may sit for 1 day at the parking lot,
  depending on the schedule of the train.
• BWI
• Zero inventory. Seats are stored in trailers and
  shipped out almost immediately.

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Manufacturing
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Manufacturing
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Manufacturing

• Honda Odyssey and Pilot
• Mass Production
• Traditional push system based on forecast.
• Distributors do make orders in lots of 30 and
  receive the delivery about 2 months later.
  However, we do not categorise that as a pull
  because the distributors are making orders based
  on forecast, not actual demand.

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Manufacturing

• Honda Odyssey and Pilot
• Parts and Process Standardisation
• Many parts and processes for Odyssey and Pilot
  are common, but still produce in separate plants.

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Manufacturing

• Postponement
• Customisation of accessories are done by
  distributors.
• Honda still produce cars of different body frame
  colour and type of seat, before the end customer
  makes a purchase.

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Manufacturing
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Quality Checks

• At every stage of the assembly line.
• eg,
• torque of the screws
• Sensor to track the location of the screw driver
• ? defective seats are not passed downstream.
• Honda test drives every car.

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Discussion
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Discussion
The race for the King of the Hill.
versus
versus
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Discussion
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(No Transcript)
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Conclusion

• Compared the different approaches towards
  automotive manufacturing.
• PUSH manufacturing strategy can work in a modern
  environment.
• OUTSOURCING as a strategy to speed up
  manufacturing allow focus on core competencies.
• The importance of TRUST and COMMUNICATION in
  building a strong supply chain.

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The New Age Supply Chain Gurus.
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The end.
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Discussion 2
What are some of the critical success factors
for the automobile industry?

• Proximity to suppliers
• Strong reliable suppliers
• JIT Inventory
• Cost of manufacturing
• Production cycle time
• High Productivity
• Strong marketing ..

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Hondas Parts Centers
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Discussion
What is the full name of BMW?
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Hondas Footprint on Corporate America