The Flow Of Goods And Services From Initial Raw Material

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The flow of goods and services from initial raw material to consumers as finished goods and the reverse flow of the used or damaged goods combines multiple organization which have to function efficiently. Even though the functioning of an individual enterprise of the supply chain is for individual management but the entire supply chain have to be effectively managed. This is achieved through the help of Information technology. The IT support system provides with supply chain managers with relevant information at the right time. Depending on the time frame of the activities and the frequency at which they occur, i.e. strategic, tactical and operational levels of supply chain management. All these levels have different
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Computerized shipping with tracking, electronic invoicing, are many small competencies of the modern supply chain management. These are designed to provide maximum customer satisfaction. Here we look at how Honda successfully implemented technology in its supply chain. Also presented is the success and failure of Information Technology in Honda.

Honda - Supply Chain Management

The Honda Automobiles maintains a purchasing policy with its suppliers known as Purchasing Sales Agreement (PSA). It is a simple and basic generally 8 page document that broadly covers terms such as price, warranty and delivery. Direct as well as indirect suppliers have to sign the document for supplying raw materials to Honda. Along with PSA, Tooling Agreement is also signed with suppliers. Honda first selects Top Tier Suppliers, which are of high reliance, for the core supplies. Honda then selects second tier suppliers, whose supplies are managed by top tier suppliers for quality and delivery. Honda selections of suppliers form a hierarchy and reaches to fourth and fifth tier suppliers. Honda believes in long term relationship with its suppliers and that is why it constantly reviews the services and products. Along with different tiers suppliers, tertiary suppliers go through formal meetings, which generally have an agenda of reducing cost from 2-3%. The relationship between
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