1. Living Lean The Honda Way
Six Sigma Supply
Living Lean
The Honda Way
©2014 Supply Chain Advisors

2. ©2014 Supply Chain Advisors
Introduction
Participant Experience ? Lean (Process Improvement) Tools Customer Focus Six-sigma Quality Goals Lowest Total Cost Speed (Value Added Vs Total) Objectives
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3. From a customer perspective, OTD value added time is maybe 12 days
Average process time vs. value added time in calendar days for a typical auto OEM
Value Added Time
Sales Order Bank
24 Days
Non-Value Added Time
1 Day
Mfg. Order Bank
26 Days
1 Day
Non-Value Added Time
52 Days
Total OTD Time
Production
2 Days
2 Days
Delivery
12 Days
7 Days
64 Days
Source – Honda of America

4. HAM (Honda America Mfg.) Perspective
1982 – 1st Accord produced in Marysville, Ohio 1992 – 3rd largest auto maker in US 2012 – 600 Suppliers in N. America $34 Billion to 155 Ohio Suppliers 1/3 of total N America budget
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5. ©2014 Supply Chain Advisors
HAM is a Hallmark
Six Sigma Supply Chain Mutual Commitment – Trust Gain-Sharing – Legislative Impact ½ of Cost & Quality from Suppliers Proven Success - $ 1 Billion United Technologies Impression
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6. Supplier Economic Impact
Source – Honda of America

7. Helping Suppliers Succeed
Source – Honda of America

8. HAM Execution Joint Process, Quality, Cost Improvement
AP – Actual Process, Actual Part, Actual Person, Actual Place Target Cost – Achieve or Justify Joint Process Optimization – Tire/Wheel Six sigma Quality – Door painting Remove Non Value Added
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9. Supplier Quality Performance Management
Measurement
Reporting System
Ranking
Supplier Improvement
Honda Trouble Report ( HTR ) System
All manufacturing part problems generate Index through a Honda Trouble Report
Quality Management System Procedure (S-0801)
Supplier ranking
By Commodity
Index / $ Purchased
Warranty
Utilization of the Supplier Ranking in the QCD Supplier Selection process
Top Management (Supplier & Honda) Quality Business Plan Joint Reviews
Extended on-site Support
Quality Improvement Department
Focus Team to review and assure problem have proper corrective
Parts Quality Department
PPM Index
Index
Product Impact
Assigned Value based on the potential impact to the product
Nuisance
Value determined by the hours spent for containment
Source – Honda of America

10. Source – Honda of America
HAM Supplier Performance
Source – Honda of America

11. Source – Honda of America
Usage of a Cost Model
6.3142
6.6378
0.166
Mat’l Cost
Wt X $/kg X Yield
Process Cost
Cycle time X Standard Rate
Component Parts
Cost of Purchased Comps
Tooling
Invest/Production Qty
SG & A: Mark Up
For Sales, Admin, Profit
0.1428
0.3235
95.1%
Quotation
0.113
Comparison for:
- Model Accuracy
- Quote Competitiveness
Cost
Model
Source – Honda of America

12. Source – Honda of America
Summary – Cost Management
Commit adequate resources
Synchronized effort from all areas
(Purchasing, Design, Manufacturing, Supplier)
Top Management Support
Develop accurate and detailed part costs
Create and utilize detail Cost Models.
Ongoing Monitoring System (Part Detail and Unit Summary)
Reduce Underlying Costs, Not just prices
Source – Honda of America

13. Summary for Follow-up JOINT PROCESS Focus FACT (Data)-BASED Analysis
EXPECT RESULTS – HELP TO ACHIEVE
JOINT PROCESS Focus
FACT (Data)-BASED Analysis
ANALYZE  Improve  Verify  Automate
MEASURE – Before & After
SHARE Rewards
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14. ©2014 Supply Chain Advisors
Thank You for your time and your interest. Benefit comes from your application. Thank you Meri, Jane and Karl for inviting me.
©2014 Supply Chain Advisors