Revving up supply chain: The case of Honda

Summary:Honda's process for allocating cars to its dealers was so complex that no single person understood all of it. That all changed when the auto giant enlisted the help of e-business consultancy, Syncata.

As employees and partners were persuaded to shift to MOVE, every change in technology created a business problem.

For instance, employees in charge of the mainframe had to agree to relinquish control over their data, and dealers had to learn how to analyze customer-demand data.

Syncata and Honda handled those challenges with tight management. MOVE was rolled out in six-month phases by teams of no more than 10 Syncata consultants who met two or three clearly defined goals.

As the demands on MOVE's software grew, Syncata was forced to seek help. At first, Syncata collected data on customer demand from dealers and optimized it according to a few basic characteristics—trim, color, transmission. Then it asked MOVE to calculate how Honda could most efficiently make cars to meet that demand. And then it factored in all 600 Honda and Acura models. Nath hired Patrick Jaillet, chair of the Management Science and Information Systems Department in the University of Texas at Austin's business school, to develop robust algorithms to handle the problems.

Sell Like Dell Currently, two Honda em ployees oversee and enhance the software for MOVE, whose latest phase was completed last October. Honda declines to divulge exactly where MOVE will go from here, although Bonawitz says he is working on the next two iterations. Honda's lead time on orders has dropped to 30 days at some plants, and the company says it has cut both factory and dealer inventories by 50 percent and meets 95 percent of dealers' requests for cars.

One plan is to incorporate e-commerce into MOVE and allow customers to order and track vehicles. Both Syncata and Honda say there are plenty of interesting problems left for MOVE to solve. Along with the rest of the auto industry, Honda aspires to sell cars the way Michael Dell sells computers, by building them when they're ordered. But as MOVE director Jim Foley notes, "A lot of changes have to take place. It's easier to store motherboards."

Nath, meanwhile, is glad Syncata stuck with brick-and-mortar customers like Honda and avoided the dot-coms, an option the company debated and rejected in late 1999. Syncata guarantees its engagements 100 percent, and Nath says it was impossible to do that for customers whose business plans changed daily.

Topics: Tech Industry

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