Revving up supply chain: The case of Honda

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.

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In 1996, with help from e-business consultancy Syncata, Honda took a much bigger step and launched MOVE (market-oriented vehicle environment).

Over 10 years, Syncata had done more than 75 phases of various projects for Honda, and as a result of its track record had no competition for MOVE. Founded as NetBase Computing in 1990, Syncata specializes in supply-chain management, customer-relationship management, and other aspects of digital strategy for companies with revenue of $500 million and up. Syncata's vertical-market expertise includes automotive, financial services, high-tech manufacturing and insurance.

MOVE automated Honda's supply chain by having everyone involved communicate across Honda's dealer network. It also reversed Honda's supply chain—dealers, based on information from their customers, could advise Honda on what cars to produce by electronically modifying production orders for Honda's plants. MOVE has consumed three and a half years so far, and it's not done yet.

Deal 'Em Logging on to Honda's extranet, dealers work with their district managers to specify their ideal mix of cars based on parameters such as color and trim. Every month, they have two and a half days to negotiate those orders directly with Honda's national planning group. Meanwhile, the planning group is negotiating with Honda's plants—painting requirements, for example, are different for plants in Japan than they are in the United States. The planning group confirms the orders, and MOVE software calculates the best way to allocate them among Honda's plants and to transport cars to dealers.

Reverse Process Syncata CEO Ujj Nath says MOVE was its most challenging Honda project because MOVE required Honda to function backward from the way the company originally worked.

"[The supply chain] is a very challenging model to transform because it promotes very inconsistent behavior," he says. "Most people don't figure out until they're deep into the model that they have a hot [seller]. So if everybody sells 100 black V6 Honda Accords, they ask for 400 and then 800, hoping to get 200. The factory's job is very difficult, and it's hard to predict demand."

MOVE introduced major changes at Honda, and the project required close collaboration between Syncata and Honda at every step. Syncata laid the foundation by building software bridges to the data in Honda's mainframes—an accomplishment at a time when distributing mainframe data to Unix systems was not considered routine. The companies upgraded the PCs and laptops at Honda's field offices and trained employees to use the MOVE software with a Windows-like GUI, which incorporates information on parts shortages and production constraints.

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Topic: Tech Industry

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