Some Tier 1s Make It Modular

As soon as Nissan Motor Co. Ltd. announced that it would build a new plant in Canton, MS, for production of four new vehicles, certain buzz words rapidly attached themselves to the project: modularity; sequential delivery.

When it comes to manufacturing the next-generation Quest, a fullsize pickup and two fullsize SUVs, the onus is being placed squarely upon suppliers. Nissan is so confident in its success that it already is expanding capacity before construction is complete. Nissan will shift 150,000 units of Altima production to the new facility, freeing up room at its Smyrna, TN, plant for possible additional vehicles.

Some vehicles, Nissan says, will sport as many as five modules — assembled completely by onsite suppliers before making their way to the assembly line. Parts will arrive at the line in sequence and synchronous to production from suppliers located on or in proximity to Nissan's property.

Nissan, it seems, is one step ahead of its global counterparts in achieving the next level of manufacturing efficiency through its supply chain.

Not so fast, says Honda of America Mfg. Inc., which began building the Odyssey minivan at a new plant in Lincoln, AL, late last year.

With the shift in production — which was needed to make room for the new Pilot SUV at Honda's Alliston, Ont., plant — Honda's buzzwords echoed previous manufacturing philosophies: flexibility and balance.

The importance of maintaining flexibility is the reason why Honda has not encouraged its suppliers to set up shop closer to its plant in Alabama, a state that quickly is becoming the nerve center of modern automotive manufacturing, says Larry Jutte, senior vice president, powertrain, parts and procurement, at HMA.

“With some components, a synchronous manufacturing system clearly gives the company an advantage,” Jutte tells Ward's, noting that minimizing inventory and logistics are strong arguments for the trend. “But if it's without flexibility, it may not be a long-term advantage.”

Only one of Honda's Odyssey suppliers is shared with another southern transplant. Tire and Wheel Assembly Inc. does tire and wheel mounting for both Honda as well as the Mercedes-Benz plant in Vance, AL.

Due to its location, T and WA is one of the few to have signed onto a synchronous delivery system, shipping tires and wheels in synch with Honda's assembly line. It's also one of just 13 Honda suppliers currently making parts in Alabama.

Jutte says the local suppliers were chosen based on strategic value. They tend to make the larger and harder-to-ship parts, such as stampings and bulky molded plastic pieces.

“Right now we have no plans to add or ask any suppliers to move to that region,” Jutte says. “Obviously, if a supplier chooses to do that on their own and has consensus with us to do so, those things are ongoing in business, but we're not recommending at this point.”

The bulk of the supply base is stretched across North America. Some are central to all Honda facilities — Alliston, Lincoln and its large manufacturing complex in East Liberty and Marysville, OH.

Flexibility is critical because some units of the Odyssey still are being produced at the Alliston plant. There also are a number of shared parts between the Odyssey and Pilot and Acura MDX SUV, built alongside the new Honda version in Canada.

The auto maker's goal is to keep production levels of the three vehicles fluid enough to mirror demand, meaning that suppliers must be flexible as well.

Nissan, on the other hand, is more equipped to embrace the new manufacturing concepts of synchronous delivery and modularity because its vehicles are new, will be built only at one location and are not likely to share parts with other U.S.-built Nissan products.

Maintaining flexibility is just one issue pressuring the supply chain, as production capacities often are stretched to accommodate the growing output of the North American transplants. In addition to the new Honda and Nissan plants, Toyota Motor Mfg. North America Inc. is putting the finishing touches on a new line at its Princeton, IN, plant to accommodate the Sienna minivan, which moves from the Georgetown, KY, plant. The Solara is shifted to Georgetown from Cambridge, Ont., Canada, in order to make room for the Lexus RX 300 — production of which begins in September 2003.

Jutte says, however, that Honda suppliers are having no trouble keeping pace with the auto maker's growth. “I'm proud to say supplier performance (at the launch of the Odyssey) was almost flawless,” he says.

The next test for Honda suppliers probably will come sooner rather than later, as the auto maker examines increasing production at its new Alabama facility. “What the future holds depends on the demand on our products,” Jutte says. “We're always challenging to push more out of our facilities.”

For complete transcripts of the purchasing interviews, see www.wardsauto.com