Honda Trading Asia Co. Ltd. is a subsidiary of Honda Trading Corporation and the trading firm of the Honda Group in Asia. The $16bn company is engaged in procuring parts, equipment, dies, molds and raw materials, including steel, aluminium, and resins. It provides logistics services such as customs clearance, just-in-time delivery operations, and warehousing. With its extensive supply chain and strategic operations, it plays a crucial role in supporting Honda's manufacturing and service centers, including its tier-1 and tier-2 suppliers. It operates across eight countries: Thailand, Malaysia, Vietnam, Indonesia, the Philippines, Taiwan, India, and Pakistan.
Success Story
Inventory Optimization, Demand and Supply Planning
Honda Trading Asia optimizes inventory and supply chain performance with Blue Yonder
The company
The business challenge
Honda Trading Asia Co., Ltd. faced supply chain disruptions that were intensified by the COVID-19 pandemic, leading to supply and demand fluctuations and escalating expediting costs for last-minute overseas express shipments. The company’s reliance on in-house spreadsheets, a legacy system for demand and supply calculations, resulted in data inaccuracies and inefficiencies, which, in turn, led to low on-hand inventory, severe stock shortages, and, on other occasions, wastage from excess inventory holdings.
The solution
Honda Trading Asia Co., Ltd. leverages Blue Yonder Inventory Optimization and Demand and Supply Planning solutions to improve forecasting accuracy and streamline its supply chain operations. This replaced manual, ad-hoc methods, allowing Honda Trading Asia to align its inventory strategy with market demand efficiently.
“Our mission was ultimately to enhance working capital. Honda Trading needed an integrated approach to better balance demand and supply, right-size inventory, and meet customer service requirements with improved fulfillment rates. To achieve this, we turned to Blue Yonder for data accuracy, supply chain visibility, and the ability to act swiftly and share information, as speed of decision-making is crucial in the automotive parts industry.”
–Somya Mayuraskoon, Director, Honda Trading Asia Co., Ltd.
Transforming supply chain dynamics with inventory solution
Honda Trading Asia began working with Blue Yonder in September 2020 after facing a major problem during Covid, when fluctuations in demand and supply threatened the stability of its procurement. This meant it needed to pay substantial sums to expedite cargoes.
The problem was made worse by employees’ love of spreadsheets, as they were seen as easy to use. This was error-prone and extremely time-consuming, especially when people were analyzing thousands of lines within their spreadsheets.
Project milestones
“Blue Yonder’s Professional Services started by providing us with training support on best practices in demand and supply planning and in inventory optimization. And then in more technical terms they assessed the system together with us, to see how we can practically start using the solution,” said Somya Mayuraskoon.
Honda Trading Asia is fully live in Thailand and is sharing best practices across its operations in Taiwan and Vietnam; the next stage will be its operations in the Philippines.
Blue Yonder’s inventory optimization solution was a pivotal element in Honda Trading Asia’s supply chain transformation. When combined with Blue Yonder’s demand and supply planning solution, it can accurately forecast demand and adjust inventory levels to optimize performance and respond to market fluctuations. This strategic shift not only minimizes supply chain risks but also significantly reduces expediting costs and improves overall service delivery.
Return on investment
Honda Trading Asia is experiencing notable improvements in operational efficiency and decision-making processes due to the automation of manual tasks and the unification of previously fragmented data sources. The company is focusing on cost management strategies that have reduced unnecessary expenditures through optimized inventory levels and have increased customer satisfaction as a direct result of its updated operations.
Not only has Honda Trading Asia redeployed 7 planning staff members into more value-adding roles, such as sales positions, but it has also seen a 15% reduction in total inventory. With less working capital being tied up, the automotive giant has eliminated its entire USD $30 million bank loan.
“In the past, we used to spend $1.5 million in expediting freight costs, and now, after the implementation of Blue Yonder, we have eliminated 98% of these unnecessary costs, which is a phenomenal achievement. Previously, when using spreadsheets and our legacy system, we would spend up to $ 1 million every year on what ended up being poorly planned, unusable, and therefore wasted inventory. Now we’ve reduced this wasted stock by 90 %,” said Somya Mayuraskoon.
Improvements in sustainability
The Blue Yonder solution has also helped Honda Trading Asia reduce its inland freight by 15%, resulting in a corresponding reduction in CO2 emissions from this greater efficiency.
True partnership
A key success factor of the successful implementation was the role of Blue Yonder partner Nexus, which provided strategic integration and rigorous data management services. Nexus actively addressed the business challenges Honda Trading Asia Co., Ltd. aimed to solve with Blue Yonder solutions and provided step-by-step guidance to achieve its goals.
Looking ahead
Blue Yonder has helped Honda Trading solve immediate challenges such as monitoring customer buying behavior, right-sizing inventory, and optimizing postponement and replenishment strategies in the supply chain. It has also positioned the company to achieve long-term operational excellence and played a critical role in Honda Trading Asia Co., Ltd.’s ongoing commitment to enhancing customer service across Thailand, Vietnam, Taiwan, and the Philippines.
“For sure, Blue Yonder has made our operations easier and simpler. In the future, we would like to implement Blue Yonder Network to achieve end-to-end visibility across our supply chain, particularly to help during geopolitical disruptions. So, with end-to-end visibility of the supply chain, we can make our decisions faster and better,” said Somya Mayuraskoon
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