Supply Chain Performance Report

Supply Chain Performance Report

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Units index of packaging materials used in the assembly of vehicles and equipment at our plants around the world (compared with year 2000)

Basic Approach

Strengthening Supply Chain Sustainability

In order to provide customers with a timely, stable supply of better products and services, it is necessary to put significant effort into developing and optimizing supply chains with suppliers around the world while also taking into account environmental and human rights issues.

Companies within the automobile industry, which is a broad-based industry supported by many suppliers, must pursue the reduction of not only their own environmental impacts but also those of suppliers throughout their entire supply chain.

In addition, as awareness of compliance and human rights issues grows worldwide, companies are being asked to verify working conditions and legal compliance not only for themselves but also for their suppliers, as well as to make efforts to take corrective action if required.

From FY2018, Honda is taking part in CDP’s supply chain program (an international initiative by institutional investors requesting companies for disclosure of information on climate change policies) and requesting disclosure of risks and opportunities related to Greenhouse Gas (GHG) emissions and the environment from suppliers in addition to information on matters relating to Honda’s operational domains.

In this way, through the Company’s efforts to actively promote sustainable initiatives at its development and manufacturing facilities in cooperation with all its suppliers around the world, Honda is seeking to be “a company that society wants to exist,” that is liked by and has strong roots in local communities, and to realize a supply chain where Honda can co-exist with and provide mutual benefit for the Company and local communities.

Honda is striving to strengthen supply chain sustainability mainly in the areas of purchasing and logistics.

Overview of supply chain

Overview of supply chain

Basic Approach to Logistics

Management of Logistics from ESG Perspective

At Honda, many parts that are used in its products are sourced from suppliers and transported to its plants. Then, they are incorporated into the Company’s products, and the completed models are sent directly from the plants to dealers. In addition to this, parts are also transported between plants, and parts for services and repairs are sent to dealers. As such, due to the extremely large volume of transportation that takes place throughout the manufacturing process at Honda, increasing efficiency, reducing environmental burden, compliance and risk management in logistics are becoming critical issues. Honda transcends conventional divisional and regional boundaries to ensure the integrated control of logistics and is conducting management from anenvironmental, social and governance (ESG) perspective.

Overview of Honda logistics

Overview of Honda logistics

Global Management of Logistics

Integrated Management Framework Transcending Divisions and Regions

Honda newly established a department in April 2016 to advance ESG management in logistics on a global scale. This body has teamed up with logistics-related divisions and the six regional headquarters worldwide to formulate policies and develop strategies for combating the various logistics-related challenges and pending problems so they can be managed in an integrated fashion, including environmental response for CO2 reduction, management of transportation companies, response to laws and regulations, insurance policy and risk management.

Logistics global management framework

Logistics global management framework

Logistics Initiatives

Integrated Management of Legal Information Concerning Logistics

In order to supply products and parts across countries and regions, it is necessary to identify and analyze a variety of factors that include differing transport infrastructure, laws and risk of natural disasters. Laws and regulations, in particular, have the potential to significantly impact safety and speed in transportation. Honda has created a function for the integrated management of international treaties and legal information concerning logistics operations in order to consistently secure precise information and enable efficient, accurate and early global response, thus ensuring swift compliance with laws and regulations.

In response to the strengthening and increasing complexity of laws and regulations, Honda reinforced its global six-region compliance foundation in FY2017 and made preparations for transport regulations in line with the introduction of new technologies such as electrified technology in FY2018.

Honda will continue deepening relations with each region and working to ensure legal compliance.

Integrated management framework for legal information

Integrated management framework for legal information

Reducing CO2 Emissions

Identifying Global CO2 Emissions

Honda is working to improve transportation efficiency in the shipping of vehicles and equipment, parts shipped between plants, parts for services and repairs, and parts collected from suppliers. In addition to this, in FY2017 the Company commenced management of CO2 emissions in the transportation of automobile production parts, which make up the majority of international marine transport.

Honda continues striving to grasp CO2 emissions for all products around the world by steadily expanding the scope to other product domains since FY2018.

Expanding Modal Shifts

Honda will make efforts toward expanding its modal shift that involves switching means of transportation from trucks to ship and rail transportation, with a focus mainly on transportation to distant regions.

In Vietnam, the distance between Honda’s production facility on the outskirts of Hanoi in the north and the major market of Ho Chi Minh City in the south is over 1,700km. For this reason, Honda is replacing conventional trucks with ship and rail transport for longdistance shipments between north and south.

As a result, we will achieve reductions in CO2 of 27% with rail transport and 65% with ship transport compared with conventional truck transport.

In addition, Honda is working to increase efficiency in each transport mode and in rail transport is introducing freight cars specially designed for shipping automobiles with high load efficiency.

Transport mode in Vietnam

Transport mode in Vietnam

Expansion of rail and ship transport in Vietnam

Expansion of rail and ship transport in Vietnam

Rail transport in Vietnam

Rail transport in Vietnam

Upper left:     Special freight cars for transporting automobiles

Upper right:   Bright car carrier

Lower:           Up to eight vehicles can be loaded onto each railcar.

Achieved CO2 Reduction by Increasing the Ratio of Longer Carriers

In India, Honda achieved around a 6,226t reduction in CO2 emissions for the year by improving transport efficiency of completed vehicles from its factory to dealers.

Honda India has implemented this initiative in collaboration with logistics service providers and dealers in which longer carriers transport two or more dealers’ clubbed orders on the same route, if one dealer order is less than six cars. Previously Honda India has used small carriers with four car capacity for small quantity dealer orders.

A small truck with capacity of four vehicles

Carriers

A longer truck with capacity for six vehicles

Loading the vehicles

Loading the vehicles

Conceptual diagram of delivery

Conceptual diagram of delivery

Reducing Waste from Packaging Materials

Updating of Packaging Specifications

Like CO2 emissions reduction, reducing waste from packaging materials is another environmental challenge in the logistics area. Honda is working to reduce waste from packaging materials by simplifying packaging, rethinking the materials used and changing specifications. For example, disposable transport packaging that uses cardboard boxes and steel cases is being switched over to reusable plastic containers to eliminate the use of steel cases. These initiatives began with products bound for Europe and are expanding to those bound for North America.

Index of packaging materials for knock-down parts*

Index of packaging materials for knock-down parts*

* Parts to be used in the assembly of completed vehicles or equipment at our plants around the world

Image of updating of packaging specifications

Image of updating of packaging specifications