There is often more going on below the visible surface of a supply chain. A transmission factory might be installed near an assembly line, but the casings may come from 1,000km away. Petrol engines might be produced at an integrated campus, but clean diesel or low-emission products may be centralised elsewhere, with sources going back to India and then Europe before reaching Latin America and back again.
Managing such complexity requires an organisation as nimble as the supply chains it is meant to oversee. Sudden changes in production must be applied just as quickly to logistics, whether by adjusting pick-up frequencies or allocating supply between factories; likewise, model changes may shift supply locations and routings. Even more must be considered for global parts, including repacking, container utilisation and buffer stock management.
For Honda, growth across North America has put more demand on logistics as well as the need for a 360-degree view of its operations. As its plants build multiple models per assembly line and co-produce others across locations, the network needs frequent adjustments to avoid over- or under-loading trucks, or piling inventory at one plant even as another runs out of material.
Honda’s plants used to run most of their logistics, though recently Honda North America logistics, based in Marysville, Ohio, has assumed more responsibility. This department, led by Dana McBrien, began with oversight of Ohio plants and today manages most routes to US plants and cross-border flows, and increasingly its international logistics (see our special reports here). This responsibility has extended to parts ordering for Japanese material and final delivery to North American plants from a new parts centre in Ohio. It’s an approach Honda may apply elsewhere, particularly as McBrien wants to engineer logistics closer to the speed of change.
As McBrien admits, however, centralisation isn’t always the answer. Even as the Volkswagen Group looks to change its centralised management for some functions, logistics may show a way forward in devolution. At Skoda, head of logistics Jiří Cee and his team control parts operations all the way to the line side, ensuring efficiency across packaging, picking and handling. Skoda otherwise works with the wider group for consolidation and purchasing, sharing best practice. Such an approach uses the strength in scale, while ensuring operations and IT work as well for those on the factory floor as they do for those at headquarters.