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SU MMIT
2014
Honda's Journey to Establish a
Procurement Business Partner
"The Joy of Buying":
Honda North AmericaMathew Daniel, Industrial Equipment Indirect Group Lead
Bill Harris, Unit Manager North American Indirect Procurement
GEPChetan Rangaswamy, Vice President, Consulting
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2014
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“Joy of Buying”Honda’s Journey to Establish a Procurement Business Partner
Introduction to Speakers
Photo
Mathew Daniel is currently serving as the CAPEX Category
Manager for Honda North America. He began his career at Honda
over 20 years ago starting out on the production floor and has since
served in a varied of roles within the company's Indirect
Procurement organization, including business planning, inventory
management and procurement.
Mathew Daniel
Category Manager, CAPEX,
Honda North America
Chetan is responsible for leading key strategic accounts for GEP. He
has managed multiple, large scale supply chain engagements for many
private sector clients and brings in more than 15 years of consulting and
industry experience. He has spent most of his consulting career
delivering cost-reducing transformation projects in retail, manufacturing
and automotive industries. He has extensive experience in helping
clients with working capital and cost-driven improvements.
Chetan Rangaswamy
Vice President, Consulting,
GEP
Objectives of the BPP Session
Questions we will answer
• What has been Honda’s recent journey in its pursuit to become a world class indirect procurement organization?
• How does Honda define at Business Process Partner relationship?
• Why did Honda drive towards a Business Process Partner relationship?
• How is Honda and GEP working together to co-create Honda’s future of indirect procurement?
Helping our clients with Procurement challenges is what gets us excited. GEP PEOPLE are
distinguished by their drive to do better, go further and achieve more for clients.
Who We Are – GEP Overview
A global leader in procurement services and technology (Gartner, Everest, HfS, Ardent, Hackett, Spend Matters)
More than 15 years of experience in delivering sourcing & procurement services
Managing more than $50 billion in spend annually
Processing over 6 million transactions every year
End-to-end eProcurement technology – flexible, targeted, unified, complete
Innovative, PaaS-based source-to-pay platform – purpose built for mobile, touch, cloud
Large repository best practice workflows, tools and templates
More than 150 Fortune 500 & Global 2000 Customers
Delivery centers in Europe, North America & Asia, supporting multiple languages
ISO 9001:2008; SSAE 16, SOC 2 certified
Who We Are – Honda Overview
• Honda is the 2nd largest automaker in Japan and the 8th largest in the world
• Honda Motor Company was founded in 1949
• American Honda Motor opened in Los Angeles, California on June
11th,1959 with $250,000 in capital investment & 3 employees
• The Honda Prelude, which started production in 1978, was the worlds first
4 wheel drive vehicle
• Honda began motorcycle production in Marysville, Ohio on September
10th, 1979
• The first Honda automobile rolled out of the new Marysville Auto Plant on
November 1st, 1982 … the first Japanese car produced in America
• Honda has sold more motorcycles than any other company since 1959
• Honda produces 14 million internal combustible engines … PER YEAR,
by far the most of any manufacturer in the world
•Today, Honda employs over 25,000 people in the United States, Canada &
Mexico, is the 12th largest employer in the state of Ohio and has invested over
$300B across its North America since 1979
• Honda North America is now a NET exporter of its products
American Honda Motor Co., Inc. (1959)Sales & DistributionTorrance, California; Duluth, GeorgiaHonda Trading America Corporation (1972)Torrance, California; Marysville, Ohio; Lincoln, Alabama & Timmonsville, S.C.Honda of America Mfg., Inc. (1979)Automobile, Engine Production and Parts ExportingMarysville, Anna & East Liberty, OhioHonda R&D Americas, Inc. (1984)California, Ohio, North Carolina, FloridaHonda Transmission Mfg., Inc. (1997)Automatic Transmissions, 4-Wheel Drive SystemsRussells Point, OhioHonda Engineering North America, Inc. (1988)Ohio, Ontario, Alabama, IndianaHonda of South Carolina Mfg., Inc. (1998)ATV and Engine ProductionTimmonsville, South CarolinaHonda Power Equipment Mfg., Inc. (1984)Power Equipment and Engine ProductionSwepsonville, North CarolinaHonda Canada, Inc. (1969)Sales & DistributionScarborough, OntarioHonda of Canada Mfg. (1986)Automobile, SUV and Engine ProductionAlliston, OntarioHonda de Mexico, S.A. de C.V. (1985)Automobile, Motorcycle & Parts ProductionEl Salto, Estado de Jalisco, MexicoHonda Manufacturing of Alabama, LLC (2001)Minivan, SUV, Truck, Automobile and Engine Production; Lincoln, AlabamaHonda Precision Parts of Georgia, LLC (2006)Automatic Transmissions for Honda Manufacturing of Alabama, LLCTallapoosa, GeorgiaHonda Aero, Inc. (2004)Parts Procurement and Production Preparationsfor Aviation Engine BusinessReston, VirginiaGE Honda Aero Engines LLC (2004) Manufacture and Sales of Compact Turbo-fan EnginesCincinnati, OhioHonda Aircraft Company, Inc. (2006)Development, Sales Promotion and Productionof the HondaJetGreensboro, North CarolinaHonda Manufacturing of Indiana, LLC (2008)Automobile ProductionGreensburg, Indiana
Production (parts included)
Research and Development
Sales & Distribution
Regional Headquarters
Jet Business
North American Locations
Motorcycles
Honda is a Global Mobility Company!
U3-X Personal Mobility Device
HondaJet
Walking Assist Device
Recreational/ Utility Vehicles
Lawnmowers
UNI-CUB Personal Mobility Device
Automobiles
Our Founder – Mr. Soichiro Honda
• Born in 1906 near Mount Fuji in Japan
• Spent his early childhood helping his father with his bicycle repair shop
• At 15 years old and without any education, he left home for Tokyo in pursuit
of work, serving as an automotive mechanic for six years
• In 1937, Mr. Honda founded the Tokai Seiki Co. to produce piston rings for
… Toyota!
• After his two Tokai plants were destroyed during WWII (one by a US bomber
and one by an earthquake), his salvageable assets were sold to … yes,
Toyota … for ¥450,000
• With that money, he founded the ‘Honda Technical Research Institute’, which
was a failure and liquidated after a few years for $5,000 USD
• Close to bankruptcy and recognizing he lacked critical business acumen, he
partnered with Takeo Fujisawa and started the Honda Motor Co., Ltd. in
1948
Hondamentalism … Embrace Failure
https://www.youtube.com/watch?v=yn9Ayif3Qpc
Honda Philosophy - The Three Joys
• Buying - Achieved through
providing products and
services that exceed the needs
& expectations of each
customer
• Selling – Occurs through the
development of relationships
with a customer based on
mutual trust
• Creating - When Honda
associates & suppliers involved
in the design, development,
engineering & manufacturing of
our products recognize a sense
of joy in our customers &
dealers
“These three kinds of joys embody our company philosophy. All my energy is devoted to
realizing these joys. I count on all of you to remain true to these values every day in your work,
without ever compromising them.” - Soichiro Honda
“We knew were we wanted to be, just did not know how to get there”
Honda’s Journey to a World Class Indirect
Procurement Department
Honda announces SAP ERP
implementation globally
10 Groups of North
American Indirect
Procurement Leaders
NA Procurement
subcommittee starts
benchmarking other
companies
15-member team to evaluate
Procurement BPOs
After a 12-
month search,
shortlists a
single BPO
provider
Honda Senior Leadership
rejects the BPO
Honda decides it needs
a BPP, not a BPO
1
2
3
4
5
6
7
“We knew were we wanted to be, just did not know how to get there”
Honda’s Journey to a World Class Indirect
Procurement Department
Awareness
within Honda
that it lacks
Category
Management
capabilities
Readiness to
enhance Category
Management
capabilities
Operational
Procurement vs
Category
Management
Maturity
Discovered a wide
range of Procurement
Services available
with suppliers
Reviewed
Capabilities of
8 Suppliers
GEP demonstrates significant
ROI on BPO, NA Procurement
wants to retain “Joy of Buying”
NA Procurement
leadership backs a
new concept to retain
the “Joy of Buying”
Honda and GEP
partnered to build a
world-class indirect
procurement
organization
Mar
2012
Oct
2012
Jan 2013
RFP
issued
Feb 2013
Aug
2013
Oct
2013
Dec
2013 to
Mar
2014
Aug
2012
Apr
2014
Selecting the “Right” Partner
During the 18-month solicitation process, Honda searched for a partner
that had the following characteristics:
• Broad range of services, including advisory, outsourcing and
technology
• Strong capabilities in:
• Advisory to assist with organizational design and process re-
engineering, etc.
• Market Intelligence that was tailored to specific business
challenges vs. generic reports
• Procurement Technology that could bridge its existing
challenges and future gaps
• Flexibility to evolve offerings while customizing them throughout
the relationship
• Partner that could scale up quickly, globally
Guiding Principles: 3 Joys
Goal: Deliver the highest quality and value to
its customers
People: Most important asset
Flexibility: Nimble to customer needs
Environmental: “Blue Skies for our Children”
‘During our search for a BPO provider, we solicited a firm that offered the entire gamut of what we
needed, plus one that matched Honda’s culture
Guiding Principle: Beautiful Company
Goal: Delight customers by delivering highest possible
savings & quality services
People: Creative and passionate
Flexibility: Services & processes tailored to clients’ needs
Socially: Conscious, beautiful company
Our shared cultures
Looking Beyond the “Checklist”
What is a BPP
Common goals
“mutual success”
Culturally similar
“fits like a glove”
Together all the way
“co-create the future”
Trusted partner
“conducive work environment”
Fun to work
“enjoy the journey”
2
3
5
6
41
Self-governed model
“value focus”
Key Takeaway
• Embrace failure….learn the lesson and do it better
• Maintain the Companies DNA
• Look for complimentary partnership
DE
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ER FALL
SU MMIT
2014
Session #16
"The Joy of Buying": Honda's Journey to Establish a
Procurement Business Partner
Speakers:
Honda North
America
Mathew Daniel [email protected]
BillHarris [email protected]
GEP Chetan Rangaswamy [email protected]
