Minority Business News

 

ISSUE 2005

May 15 - June 15 2005

 

Cover Story:

Honda North America, Diversity drives the corporate philosophy
By Meta J. Mereday and Peter Fretty 

While diversity may be the current rallying cry in corporate America, it is not a new concept to Honda.  Diversity has always been a part of the Honda’s framework since its founder instilled the principle of “Respect for the Individual” as part of the corporate philosophy from the beginning. The three components of this principle — trust, initiative and equality — provides the clear connection between Honda’s value system and its diversity initiatives.

“We, at Honda, understood early that an appreciation of the similarities and understanding the differences of people leads to overall success,” said Paula Carter, Honda North America’s Procurement Diversity Manager. “The importance of diversity is centered on communication internally and externally and partnering with our suppliers in all areas of their business. Supplier diversity is key to insuring that our company is participating in the economic development of everyone. Our success is fostered in recruiting and developing a diverse supplier base.”

Program Development

It is a well-known fact within Honda that “successful organizations are those that understand the competitive advantage of effectively managing diversity.”  With a corporate philosophy and internal value system that firmly embraces diversity and inclusion, Honda developed external partnerships that would bring them closer to diverse businesses to expand their program and to generate that competitive advantage.  This comprehensive format is the framework for Honda’s Supplier Diversity Initiative.

“We are actively involved with efforts to not only attract and retain diverse suppliers, but to also to help them develop their products and services for use at all of our facilities,” Carter said.

Carter, who started at Honda North America in 1992, was instrumental in the bringing the program to the forefront with an in-depth program assessment in 1999.

“We reviewed all aspects of the program beginning with the question ‘what is our mission?’ Once we identified our mission and our goals, we structured a comprehensive list of key areas to address including certification requirements, diverse supplier categories, contracting and subcontracting guidelines,” Carter added. “With these categories and others, we researched programs from firms both automotive and non-automotive to get a variety of viewpoints, strategies and ideas. For us it was essential to have a program that enhanced our existing philosophy built on respect, initiative and trust.”

A major area that received attention included collaborations with outside organizations that could assist Paula and the Honda team to drive their supplier diversity initiative. She participates on many panels and conducts presentations to showcase Honda’s approach to diversity.

“We already had a significant relationship with NMSDC as a national corporate member and valued the information and supplier connections we have gained from that affiliation,” said Carter, who chairs the South Central Ohio Minority Business Council, an affiliate of the NMSDC.  “We also have alliances with local organizations that represent various ethnic and social concerns. One aspect of our assessment included identifying who exactly comprises a diverse supplier because part of our benchmarking process includes making sure that all groups who have something to bring to the table are invited and prepared.”

When Honda started its benchmarking process, it incorporated the immediate industry standard as the guideline.

“This gave us a starting point and with information regarding reporting practices from a myriad of companies and industries, we had an idea of what to look for in the process and how we could incorporate the Honda way.”

Also, Honda’s management began an extensive review process that included the relationships with OEMs and MRO suppliers as well.

“We wanted to have a clearer picture regarding the diverse breakdown of these vital business units to determine, among other things, which were MBEs and WBEs and their level of business.”

This process has become an extension of Honda’s ongoing audit process to maintain current information on supplier ownership, certifications, ethnicity, and company size among other aspects – all of which led to the establishment of our own internal auditing system. This provides the foundation for Paula and the Honda buyers to have current data on the diverse suppliers within their operation and the ability to determine their viability for upcoming  contracting opportunities.

Partnership Approaches

“When we bring a company on board, we want to have a long-term relationship with that company and the time and effort that it takes to integrate them into our systems proves to be worthwhile on both sides,” Carter said. “The Honda way reflects a true partnership whereby we learn from and teach each other. This emphasizes respect on both sides and the awareness that the information from all parties is valued.”

Honda is not simply looking for diverse suppliers – instead it is looking for business partners from diverse orientations who can mesh with its internal nature of operations.

“When we recruit suppliers we look not only at their current capabilities, capacity and financials, but we look at their development process, growth information and their diverse workforce. We have to trust that as we are emphasizing diversity, our suppliers are as well.  We want to make sure that their model is in sync with ours to build a lasting partnership.”

Honda provides training and support to its suppliers to build on the partnering process and to help suppliers to make the right fit within the company’s multifaceted operation. Carter said that leads to success for all parties involved.

The Honda way also embraces those suppliers who may need additional resources in order to benefit from the alliances. Sometimes this is in the form of advice and in some cases, it involves more in depth interaction. 

“In any partnering relationship, there must be consensus from both parties for it to work. Both parties must come to the table with a unified format that only improves on their individual operations and provide an even better product or service for us.  By working with both companies to bring them to that understanding, we can build the consensus and strengthen the partnership. In this era of “bundling” packages, Honda continues to look for specific opportunities within the organization to benefit diverse suppliers.

Honda continues to work on areas to build on it supplier diversity initiatives and to instill the important core corporate values of respect, trust and initiative in the procurement process.

“We realize that we may not be able to include every supplier into our procurement process, but we intend to maximize their opportunity for economic development throughout the company, and we constantly communicate that message.” Carter said. “We want to recognize the ones who are able to be first-tier suppliers as well as those that have the potential to be second-tier suppliers, and we are in the process of meeting with our tier-one suppliers to discuss ways they can help with our initiative. Our suppliers know that they are part of a team.”

Supplier Successes

EGI, a minority supplier based in Dayton, Ohio, is a prime example of a MBE that has achieved success as a result of its relationship with Honda. EGI first provided Honda with body side moldings, weather stripping and other rubber products in 1987, as part of a joint venture that Honda helped to engineer. At the same time, EGI acquired an injection molding facility in Daytona Beach, Florida which expanded the product capabilities it could provide.

Because of EGI’s joint venture and acquisition,  which was motivated and supported in large part by Honda, EGI was able to grow and this lead to the opening of its Marion Industries facility, which produces front and rear end suspensions for Honda Operations in both Anna and Marysville, Ohio. The opportunity was generated largely through Honda’s desire to outsource and working with EGI to prepare the company to handle the work. EGI had no experience or expertise in producing suspension components, however this did not deter Honda from moving forward with the endeavor, thus they spent a year working along Honda employees in the Anna facility learning how to produce these components.

“It was like overnight when it was time to move the equipment and open our facility, we did not have any major problems,” Ernie Green, EGI’s CEO said. “Honda played a major role in our success because they worked with us and allowed us to learn ‘on the job’ with their key personnel.”

Green said he believes that a large part of Honda’s success is caused by its openness to ideas and outreach to others, and he stresses that that industries can learn from Honda because of its continuous desire to improve themselves and others.

“The way that Honda conducts its business and trains its associates could definitely serve as a model for any company,” said Green. “As a result of our business relationship with Honda, we have implemented many practices into our business and all of our customers benefit as a result.”

Another Honda partnering success is JBE, based in Hartsville, S.C. Founder and CEO Jerry Ellison said he believes doing business with Honda is truly like  having a partnership with the firm.

“Once you start doing business with Honda, you realize how much of a partnership focus they have,” he said. “We work together learning from each other. They sincerely appreciate what we bring to the table and what we have to say, and we have grown extensively and gained so much return from the relationship.”

As JBE has continued to supply an array of components for Honda’s Jet Ski and ATV divisions, Honda’s focus on quality has been unwavering, explained Ellison.

“Although Honda does not require its suppliers in the ATV business to be ISO certified, we got certified anyway, and they took notice of the initiative,” he said. “One of the things that other suppliers can learn is that if you concentrate on quality, that the other components will fall in line. In the long-run quality is cheaper because you are doing things right the first time, and this does not cause end user problems. You are taking care of your business partner and your customers.”

Ellison stressed that Honda really is a class act. “If you are lucky enough to be a supplier to Honda you have a heads up to supplying to any other automotive company,” he said.

Honda North America has infused its corporate philosophy of respect, trust and initiative into its procurement process, and it is an impressive model that effectively drives a successful diversity program.

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