Honda Trading America Corporation (HTA)

Capitalizing on Opportunities

Jointly-owned by Honda Trading Corporation and American Honda Motor Co., Inc. (AHM), HTA is a full-service, international import/export organization. From logistics and regulatory requirements, to marketing and finance, HTA provides the management that capitalizes on opportunities in an international trade and global sourcing environment.

HTA is responsible for consolidating the purchasing requirements for Honda of America Manufacturing, Inc. (HAM), its tier-one parts suppliers and processors. HTA is the major supplier of steel, aluminum, plastic raw materials and automotive parts to HAM. In its role as a front-line sourcing facility, HTA must balance its supply positions with the manufacturing, assembly and processing requirements of its partners.

HTA sources competitively priced, high quality raw materials and parts, manages long production and replenishment lead times, and supplies its domestic and international customers in a "just-in-time" environment. In concert with AHM, HTA has the additional responsibility of supplying Honda's global assembly and manufacturing facilities with automotive parts and supplies. As part of its responsibilities, HTA must coordinate the processing of global sales orders from AHM with the physical shipments from HAM.

In 1993, HTA recognized that to support its growth opportunities and meet its strategic objective to become a complete global supply chain organization, it had to gain better control and access to its information and become more effective in its business operations. To achieve its objectives, HTA required an enterprise-wide, state of the art, global sourcing, execution and distribution information solution. The solution had to support all its current business activities and provide it with flexibility to meet unforeseen future demands while meeting its aggressive corporate growth objectives.

The Search

HTA's enterprise solution had to:

• match HTA purchases and inventory to the production requirements of HAM's processing partners and tier-one suppliers;
• fully support export, import processes, documentation and compliance;
• support time-sensitive accounting and financial reporting in a multi-currency environment; and
• be completely integrated to provide accurate data to users and decision-makers in a real-time environment.

In 1993, after an in-depth search, HTA decided to partner with Blinco Systems Inc. (BSI), a developer of enterprise global sourcing/distribution software, and chose BSI's 3rdwave Enterprise Suite Solution. BSI demonstrated significant expertise in international supply chain and logistics solutions. It exhibited quick and comprehensive understanding of HTA's current requirements and future vision. BSI was viewed as a partner that would provide practical and workable solutions to meet HTA's demanding and varied business process needs.

Collaborating for Results

From the initial meeting with BSI and review of 3rdwave Enterprise, HTA believed that BSI's software model was adaptable to the rigors of their environment. For the implementation to be successful, HTA had to have 3rdwave support its steel procurement and inventory management group; its Metals, Plastics and Recycling group; its import and export departments, and provide complete cost control throughout the system.

3rdwave provided solutions for each of HTA department's idiosyncratic business processes while maintaining multi-department and multi-site (six locations; nin subsidiaries) and overall corporate accounting integrity.

The Challenges

3rdwave's fully-integrated core solution provided a comprehensive foundation that could be customized to meet HTA's specific needs. The core solution of Purchase Order Management, Traffic Control, Inventory Management, Sales Order Processing and Accounting touched on the main HTA business processes, and provided gateways for HTA to automate communications with its suppliers, customers and other corporate systems.

HTA's most pressing issue, management of the entire steel and aluminum supply chain, was initially beyond 3rdwave's standard application capabilities. HTA buys a wide range of steel and aluminum products from approved mills in the United States and delivers them to HAM or its approved suppliers for further processing. For coils delivered to its approved processors, HTA maintains title over the inventory.

The following events were crucial for HTA's steel and aluminum supply chain program to be a success:

• Inventory had to be completely visible throughout the system. Steel or aluminum is received directly at HAM, or as many as five different processing centers, for slitting, cutting, or stamping and furtherance on to 30-40 sub-assemblers.
• Operating in a tight, usually 10 minute JIT delivery environment, HTA must be assured that inventory is always available to meet demand throughout the supply chain while maintaining minimal floor inventory.
• Steel and aluminum had to be tracked and costed through slitting, cutting and stamping at the processors. Waste from slitting and cutting at the processors had to be visible.
• The system had to provide comprehensive transformation audit trails with a history of the converted product back to the parent item and mill.
• In order to efficiently control finished costs through the entire transformation process, tracking the costs related to the waste and recycling the scrap had to be managed within the software.
• Maintaining integrity of inventory cost at the SKU-level as the raw material moved through its various transformations was a critical factor.
• With regard to its export needs, HTA needed a system that allowed it to upload and track multi-line orders, validate the information, and prepare all export documentation.
• Operating in a global trading environment, HTA required a system that supported multi-language and multi-currency accounting processes.
• A final key element was that the solution had to have a solid fully-integrated accounting system. The proper solution would provide HTA with the ability to balance its accounts quickly so that accurate accounting information could be passed to other enterprise wide systems at its business partners.

Collaborating for Results

Collaborating with BSI's development team, HTA has achieved all of the primary objectives of the initial project with the 3rdwave applications.

Today, HTA closely matches its supply and demand requirements. With 3rdwave providing complete inventory status throughout its global supply pipeline, HTA immediately determines availability of inventory to meet demand. Working closely with its processors, HTA gathers demand data within 3rdwave, analyzes it, and drives its purchase orders to the Mills insuring that the right product is produced and delivered according to actual demand needs. EDI ASNs (856) from its suppliers streamlines HTA's receiving processes, virtually insuring the accuracy of inventory throughout the supply pipeline. If delivered to a processor for further processing, 3rdwave monitors the inventory derived from the parent, its waste and its cost. Providing visibility into the status of inventory through the transformation process, 3rdwave insures that delivery to HAM and its tier-one suppliers are met according to its tight JIT programs.

With 3rdwave's integrated purchase order management, sales order management, documentation, traffic and accounting modules, HTA has full visibility into the status of its domestic, export and import orders.

For its export business, HTA has increased the accuracy and dramatically streamline the time required in documentation preparation. It is not uncommon for HTA to process a +1000 line-item export order. A process that took days to complete is now accomplished in several minutes and will take only a few hours to print.

With 3rdwave, HTA generates the Pro-froma Invoice, Commercial Invoice, Packing Lists/Manifests, SEDs, and Bills of Lading in multiple languages, if required.

HTA has realized its accounting and finance department objectives with 3rdwave. Maintaining accounts in the currency of the transaction and being able to mediate exchange rates against the U.S. dollar provides HTA with accurate and up-to-the minute account statuses. 3rdwave also provides complete exchange rate profit and loss analysis.

With the complete cost integration within 3rdwave, HTA balances inventory costs with the G/L and analyze any variances quickly. HTA is able to accurately close its books within 48 hours of period end and provide head office and management with timely accounting month and year-end reporting.

3rdwave provides HTA with access to accurate information in real-time thereby supporting the functional needs of operators and the strategic requirements of management.

3rdwave insures that accounts are in balance throughout the system with complete audit trails thereby insuring that information reported across the system has total full integrity.

HTA and 3rdwave: Partnering into the Future

Finally, HTA and BSI have developed a true partnership in its ongoing information technology needs and infrastructure. Working closely with HTA, BSI provides valuable and critical insight into how HTA's IT requirements can be turned into practical solutions and positively and profitably impact HTA's business processes. Working collaboratively with BSI to use 3rdwave as not only an effective operating but also a strategic tool, HTA continues to adapt 3rdwave to meet its expansion plans, changing environment and the diverse needs of its customers, suppliers and business partners.

Greg Norval of HTA, who has been responsible for the 3rdwave project from its inception in 1993, says, "BSI is an integral member of our information systems team. They provide much more than just software to HTA. BSI assists us in affecting change and improvements in our business processes. The senior management and programming staff have all quickly come to understand our business and have been able to apply that understanding into effective 3rdwave solutions. 3rdwave has grown with HTA, and together we look forward to meeting HTA's future growth and business challenges with continued success.