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Our Fundamental Approach to Suppliers |
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| Growth through long-term relationships |
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A single Honda automobile is made of 20,000 to 30,000 parts. Manufacturing our automobiles and other products depends on close cooperation with our business partners who supply the necessary parts and materials. As our manufacturing base has expanded globally, the trust-based relationships we have established with thousands of suppliers around the world have become crucial to maintaining stable production and fulfilling our commitment to the continuing enhancement of quality andadvanced product functionality.
Recognizing the importance of our relationship with our suppliers, Honda is building long-term relationships and growing hand-in-hand with our business partners. |
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| Building trust on the basis of three purchasing principles |
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| Seeking to foster the trust of our business partners worldwide, we take care to respect all prevailing laws and regulations, maintain fairness in our relationships, set equitable conditions and use appropriate practices, always respecting the independence of our suppliers and treating them as equals in accordance with our three purchasing principles. |
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| Evaluating and selecting suppliers fairly |
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In striving for growth through long-term relationships, Honda’s purchasing division takes care to provide equal opportunity to any supplier who seeks to do business with us. We choose suppliers via fair processes while respecting their independence and treating them as equals.
When purchasing parts and materials, we select a business partner by impartially comparing and evaluating various candidates based on technological strength, product quality, timeliness of delivery, cost, financial state, regulatory compliance, environmental record, handling of confi dential information and other factors. Contracts with suppliers are based on requirements of compliance with prevailing laws and regulations. |
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| Rules and guidelines for fair procurement |
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To ensure fairness in our transactions with suppliers, our Conduct Guidelines explicitly prohibit associates from inappropriately exercising their position or authority to exact or provide improper benefits in their relations with our business partners.
The Honda Purchasing Division provides orientation sessions for all newly hired associates to ensure compliance with antitrust laws, Japan’s revised Act Against Delay in Payment of Subcontract Proceeds to Subcontractors Law and other laws. Periodically, and whenever this or other relevant laws are amended, the Purchasing Division arranges orientation sessions to ensure that associates are fully aware of our legal obligations. In June 2006 sessions were held to explain prohibitions on insider trading. |
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| Making purchasing policy transparent |
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| Awards ceremony at suppliers’ banquet |
As part of our effort to ensure transparency in purchasing, we hold annual meetings with our suppliers to optimize procurement QCD (quality, cost and delivery). At a March 2007 meeting in Japan attended by some 270 firms, Honda and its suppliers reaffirmed policies aimed at strengthening our production capacity through the reinforcement of local manufacturing and procurement and through rapid international communications. This was done to help maintain stable product quality and supply in all motorcycle, automobile and power product operations. Holding purchasing policy conferences in various countries, we’re making every effort to clearly communicate how our policies and strategies are to be applied everywhere we do business.
We also hold New Year’s awards ceremonies and celebrations with suppliers who have made particularly signifi cant contributions to QCD in their area. In FY2007, 50 firms received awards in Japan. |
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Cooperative Ventures with Suppliers |
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| Enhancing quality in partnership with our suppliers |
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Faced with increasingly diverse customer needs and rising expectations of product quality, Honda depends on its strong partnerships with suppliers to deliver products with superior QCD. To ensure that high product quality is maintained, Honda’s R&D and purchasing experts must work closely with our suppliers right from the initial stages of product development, exchanging opinions and information to enhance safety, functionality, environmental performance and other factors. For example, representatives from the purchasing department visit suppliers’ factories and inspect production processes to ensure that our need for a stable supply of high quality products at a reasonable cost is fully satisfied.
Honda will continue to work closely with its suppliers to further enhance QCD and provide our customers with a level of satisfaction that exceeds their expectations. |
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| Promoting environmentally responsible procurement |
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Seeking to take an environmentally responsible approach to procurement of parts and materials, Honda established Green Purchasing Guidelines in December 2001. By sharing information on parameters and targets with our suppliers, we’re collectively improving our environmental performance.
We have nearly achieved our objective of eliminating the use of lead, mercury, hexavalent chromium and cadmium.heavy metals viewed as substances of concern.in our automobile, motorcycle and power product manufacturing.
Using Honda’s Life Cycle Assessment (LCA) system*, we are working with our suppliers to assess the environmental impact of each stage of the manufacturing process, and to reduce CO2 emissions and landfill waste.
To promote the establishment of environmental management systems, we are supporting our suppliers’ efforts to acquire ISO 14001 environmental management certification. We’re pleased to say that 98% of our suppliers in Japan.a total of 403 firms. have been certified as of March 2007.
We also hold Green Conferences to share information on better environmental management and help reduce the impact of our activities on the environment. |
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Honda’s LCA system is used to quantitatively assess the environmental impact associated with its business operations, including motorcycle, automobile and power product manufacturing, from production through disposal. |
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