Supplier diversity key aspect of Honda's business strategy

Q: Mike, can you tell us a little about your background?

A: After growing up in Southeast Michigan and graduating from Bowling Green State University, I’ve spent my entire professional career in some form of purchasing and supply chain management at Honda. For the past 33 years, I’ve had many opportunities to experience different aspects of Honda at many different locations. I started as a New Model buyer of stamped and welded parts at our East Liberty Plant in Ohio. Then I was fortunate to be sent on an assignment to Honda Motor’s Suzuka Factory in Japan for 2.5 years.


When I returned from Japan, I moved between our Ohio auto plants supporting new model development with our suppliers. Then I relocated and worked in our Alabama Auto Plant, responsible for Purchasing New Model Development. That two-year assignment turned into eight years and provided me with the experience of developing and leading many aspects of purchasing and supply chain management. The growth and expansion in Alabama at this time, both for Honda and with our supplier network, was very exciting and challenging. It was excellent for learning about the purchasing processes.


After my time in Alabama, I returned to Ohio and led our Auto Procurement function, working with our eight commodity groups. In this role I had broad exposure to the link between our new model, quality, delivery, and development requirements and the impact they can have on a supplier’s cost structure.


In my current role as Business Unit Leader for regional Procurement, I oversee direct parts cost, sourcing, plus supplier commercial relationship management, new model development, mass production quality, production support at each of our facilities, mass production unit cost management, raw material sourcing, and supplier characteristics improvement.


 As you can imagine, based on my experience of moving around the company I’m an advocate for providing opportunities to others as a way to develop a diverse set of talents, experiences, and networks.


Q: How long have you been involved in supplier diversity as the head of procurement?

A: I was first exposed to and mentored in supplier diversity when I led indirect purchasing in Alabama starting in 2002. I quickly gained a new perspective and also had more involvement in sourcing opportunities than I had had in previous roles. Once I returned to Ohio and led direct parts procurement, I continued to participate in strategies that supported supplier diversity and have enjoyed being a part of the relationships we have built over the years with minority- and woman-owned businesses.


Q: Why is supplier diversity important to Honda?

A: Supplier diversity is a vital aspect to our inclusion and diversity efforts. By embracing supplier diversity, companies can increase their economic impact and contribute to the growth of underrepresented communities. We also recognize and appreciate that different perspectives generate new ideas and spark innovation. At Honda, we strive to be a company society wants to exist, so it’s important that we are reflective of society as a whole.

Q: What supplier diversity initiatives are most successful for Honda?

A: We engage in several approaches to increase our supplier diversity. For example, we attend many sponsored events each year, host our own match-making sessions, and encourage our largest suppliers to source diversely. We also continue to strengthen our relationships with diverse organizations such as National Minority Supplier Development Council, National Gay & Lesbian Chamber of Commerce and Women’s Business Enterprise National Council to increase efforts to onboard diverse suppliers. In the end, what I’ve found to be most successful is fostering the relationship with suppliers directly. We do this through working with them to support their continued development. By sharing best practices and holding each other accountable, we can all rise to the challenge.


Q: Do you have any examples of how a diverse supplier has grown with Honda?

A: Historically Honda has strived to develop relationships with suppliers and maintain them over time, closely managing growth and business expansion. For example, when we expand our model line-up, grow our volume, or build new plants, we typically give our existing partners the opportunity to expand and grow with us. One of our supplier partners that started with us in Ohio expanded operations in Alabama and then in Indiana. It wasn’t always smooth and easy, but we are partners and Honda sees a lot of value in mutual growth, so we worked together to find solutions. This supplier partner also grew from one product line to multiple products, bringing their skills and abilities to provide the quality, cost competitiveness and delivery that met and exceeded our expectations. In fact, they have been recognized with our excellence in quality and delivery awards several times over the years.


Q: What are some of the biggest challenges facing the continued growth of supplier diversity development?

A: One of our values at Honda is Challenging Spirit, meaning we like to view potential challenges as opportunities for growth. As changes in technology present new opportunities across industries, we all need to work together to make sure we’re filling the right spaces with the right people for the job. At Honda there is no lack of willingness to source diversely, so our team really runs forward with a lot of challenging spirit to find the right fit so everyone can be successful.


Q: What are a few of the best practices you would recommend to supplier diversity professionals?

A: • Establish a continuous improvement plan: As technology changes it’s essential to understand your current diverse suppliers’ capabilities, capacity, and succession plan.


• Establish a solid Tier II program: The direct side supplier development/selection process is long and cumbersome and highly competitive. It’s important to have a robust Tier II process that allows diverse suppliers an opportunity to work directly with our Tier I suppliers, who can then provide insight to Honda’s supply chain and delivery expectations.


It’s important to know what you’re looking for and what true opportunities exist so you’re not spending resources with no gain. Build your network internally and externally, so you can put your requirements out there and get lots of people working for and with you.


Q: Based on your experience in the supplier diversity arena, where do you see supplier diversity inclusion in supply chains of the future?

A: The vehicles of the future have a lot of the same parts in them that exist today, including fabricated parts like seats, tires, wheels, chassis, stampings, injection moldings, and more. While the styling and design will change year after year, many of those parts will continue to be used. This means many current opportunities will still exist in the future. Strategies around recyclability and reuse will also be critical as we look to remain sustainable. Building a sustainability mindset into your business will really give any diverse supplier business an edge in the coming decade.


Q: As a chief procurement officer what advice would you give to diverse suppliers wanting to do business with Honda and other major corporations?

 A: Know who your company is and what you can offer. Don’t say you’re willing to do anything for a customer. Be patient, but persistent. You should also work on developing an advocate inside the customer, someone who knows your company and is willing to go to bat for you. Networking is a skill that helps turn a foot in the door into a handshake. But you also need to know what your limits are and when to walk away. You know your business better than anyone, so you should feel empowered to know when to engage and when to try another door. 

To learn more about Honda's supplier diversity program, click here.

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Honda Mike Lipham Automotive Chief Procurement Officer Honda Development and Manufacturing of America

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