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Hooray for Honda

by James P. Womack
February 11, 2014

Hooray for Honda

by James P. Womack
February 11, 2014 | Comments (6)

Honda (the car company) reported something very interesting in January about its imports and exports to and from North America. But to put this news in perspective it helps to have a bit of background. So here goes:

We in the lean movement talk an awful lot about Toyota. But Honda has always been my favorite company in the lean universe. They were enormously helpful to me and the MIT research team when we were writing The Machine That Changed the World, and they were the first to apply lean logic in creating a global production and engineering system.

Beginning in 1979 with the motorcycle plant in Marysville, Ohio, Honda started to move production closer to its global customers. The next step was the auto assembly plant Honda opened nearby in 1982. The development of design and engineering centers in the US was well underway by the end of the 1980s. (In each case Honda was several years ahead of Toyota and removed any excuse Toyota might have had for staying at home.)

While writing Machine in the late 1980s, I made a number of visits to Marysville to talk with Shoichiro Irimajari, then head of Honda in North America. During one visit, Iri grabbed his doodle pad and markers and suggested we sit on the floor in the middle of the big, open office for all the managers. He wanted to diagram his concept of a regionalized world where major companies in automotive and many other industries would locate both production and product development within each region of the world: North America, Latin America, Europe, South Asia, East Asia, and, eventually, Africa. These activities would be sized in proportion to company sales in each region.

In this vision, companies would design and make their high-volume products for each region entirely within the region and would cross-trade niche products between regions to capture scale economies. Trade between regions would be modest in volume, roughly balanced, and currency neutral. In this way the companies would come to resemble what Iri called “post-nationals”, enterprises that were truly citizens of every region of the world, with many centers of excellence and only a tiny headquarters. (His most striking idea was that there would be no correlation between the nationality of a firm’s senior managers and its country of origin. That will take a while.)

I still have Iri’s drawing and it became the basis for the MIT team’s vision of the global lean enterprise, as published on page 211 of Machine. Thank you Iri!

Iri’s vision was grand and he didn’t stay with Honda to see it through. (He left abruptly during a power struggle over the CEO job in the 1990s.) But Honda has continued along this path. Last month, as noted above, the company reported some interesting news: in 2013 exports from its American production plants to the rest of the world exceeded imports from Japan. And by next year, when Honda’s new Mexican plant comes on stream, the flow of cars from Japan to the US (and to Canada and Mexico as well) will fall much further.

This development is good lean logic: Move production as close to customers as possible to minimize lead times and inventories. And move design close to production to maximize information flow while minimizing response time. But logic often lives a lonely life when no company has the courage (and in Honda’s case the political and economic need as well) to be the first mover.

So… hooray for Honda. Two things the company has never lacked are courage and foresight. We all benefit from their example.

The views expressed in this post do not necessarily represent the views or policies of The Lean Enterprise Institute.
Keywords:  global
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6 Comments | Post a Comment
Daniel Jones February 11, 2014
2 People AGREE with this comment
If I remember Iri also suggested putting global HQ in a jumbo which could visit each region in turn! Classic Iri but tremendously insightful.

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Tushar Pawar February 11, 2014
Moving certain related aspects of the business close to the customers makes sense but not all. An organization's ability to derive true value depends largely on how well it can identify avenues of value addition making efficient utilization of resources that are location independent.Agreed you need to have a global physical presence to develop a global perspective but it does not mean moving all aspects of business close to the customers. 

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Adam Ward February 13, 2014
2 People AGREE with this comment
Jim, thanks for the props to Honda. As a former Honda design engineer that spent 12 years at the Raymond, OH R&D center, I have often felt slighted since my transition into the Lean Consulting world. As a member of the original Honda Element team we were so proud of beating Toyota to market and their Scion xB, beaming as we released it to the public in spring of 2002 at the New York Auto Show. Now applying these design principles to the transform the healthcare world, I often find myself using Honda, not Toyota, as an example for innovation, value and long-term thinking with their position as a "mobility company." Too bad they're so secretive, otherwise the world could have a great benefit from them. Fortunately for me, I lived it. Thanks Honda!!

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Darin Wolding February 15, 2014
It is gratifying to see Honda receive praise for pioneering lean principles. I spent nearly 20 years with Honda at the Marysville Auto Plant....during which I never stopped learning. Though I've moved on to pursue other opportunities, I continue to draw on the education I received from Honda and have often felt the lean community has overlooked Honda. So much of Honda's strength lies in the broad application of fundamental problem-solving principles and a truly lean culture. Inside Honda, you won't hear terms like kaizen, kanban, and heijunka. I often joke that we didn't have Kaizen events....we just had meetings. The lean philosophies are so deeply ingrained within the culture, there is no need for labels. It is just how things are done. Simplicity and consistency. Hooray for Honda!

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Ernesto Aguilar February 20, 2014
1 Person AGREES with this comment
Jim,  your comments are very appropriate to understanding deep as the most innovative in the automotive industry under the concept of lean manufacturing and based on the philosophy of its founders Honda and Fujishawa: Courage and foresigh.
Hooray for Honda


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Justin Ippolito September 17, 2014
1 Person AGREES with this comment
Has anyone here read "Driving Honda: Inside the World's Most Innovative Car Company" by Jeffrey Rothfeder? I feel it is a must read for all Honda fans. It is great that Honda is finally being recognized. As a shareholder in the company I could not be more proud of what Honda has achieved and will achieve going forward. You can even now take to the skies in a HondaJet!

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