Entering its 25th year making cars in North America, Honda Motor Co. Ltd. is asking more of its suppliers.
Beyond quality, delivery, price and even value-added engineering and products, the automaker expects to see a united corporate culture that extends even to the shop floor.
``Today, our associates still support suppliers, but now they're looking at company characteristics in addition to production characteristics, assessing weaknesses that might be reflected in a supplier's performance,'' said Larry Jutte, senior vice president of Honda of America Manufacturing and general manager of parts and procurement. He spoke at the auto industry's Management Briefing Seminars, held Aug. 2-6 in Traverse City.
Honda has its own corporate culture, one that has helped it succeed, Jutte said. Its consistent message and long-term outlook have helped it and fellow Japanese carmaker Toyota Motor Corp. build reputations as preferred customers for auto suppliers.
``Look, if you are going to have a relationship with someone, then you must understand the values that guide their business,'' Jutte said.
And to learn about those values, Honda asks its executives to actually visit suppliers and production facilities.
``Through two-way communication, you really learn from the people on the floor, the people in manufacturing, in the plants,'' he said. ``You talk to them about what they're doing, how they're doing and what they're learning. Usually, they're frank and honest with you. They have nothing to hide. Then I can go back into a meeting with the management team and have a discussion about what I've learned.''
He added: ``It's not that I don't trust [management], but it's important to have an open and frank discussion with everybody. You can build close relationships that way.''
Even with the added demands, suppliers continue to have high regard for Honda and Toyota.
Rankings in consulting group Planning Perspectives Inc.'s annual survey of suppliers showed Toyota and Honda far outrank their North American carmaking counterparts in suppliers' eyes. The study gave Toyota a total rating of 399 on a 500-point index for its ability to work with its suppliers, with Honda following close behind at 384.
DaimlerChrysler AG's Chrysler unit came in at 183, Ford Motor Co. at 160 and General Motors Corp. at 144.
While Toyota has improved its status by 27.1 percent since 2002, and Honda by 29.3 percent, Ford dropped 4.2 percent and GM 10.6 percent.
Those are important numbers and trends that suppliers remember when it comes time to decide which automakers will be approached first with new technology, said John Henke, president of Birmingham, Mich.-based Planning Perspectives.
Suppliers increasingly are shifting their capital expenditures, research and development dollars, service and support to companies like Honda and Toyota. The survey, with responses from 223 suppliers, showed that companies simply believe the Japanese automakers are more trustworthy, with Honda rated at 3.62 on a 4-point scale ranking trust, and Toyota at 3.83. GM hit 2.07 and Ford rated a 2.13.
The importance of strong supplier relationships extends beyond the automakers. Paul Radkoski, vice president of North American materials management at Visteon Corp., once was told his company had to pay a premium price for a part because the firm, a spinoff from Ford, had a reputation of being a drain on Tier 2 suppliers' engineers and support staff.
``We aren't going to be able to do a lot of business with a supply base that doesn't want to go forward with us,'' Radkoski said.
Both Radkoski and David Nelson, vice president of global supply management for Troy, Mich.-based supplier Delphi Corp. - itself spun off from GM in the 1990s - are former Honda purchasing executives attempting to implement the carmaker's concepts at North American companies.
``Nobody needs to be sold on the concept of a collaborative approach, but at Delphi, we have had to go to the roots to change a system that had been focused on costs,'' Nelson said. ``We want to get lean, not mean.''