To continue with this week’s theme of decisive supplier management, Supply Chain Matters must also comment on Honda’s decision to no longer source air bag inflators from troubled Japan based supplier Takata Corp. after a U.S. regulator accused the supplier of misleading regulators and withholding information that eventually led to one of the largest product recalls in U.S. history.
The move comes after continuous multi-year product recall actions involving this supplier’s inflators which have on occasion, demonstrated the tendency to suddenly inflate under certain high humidity conditions and spread shrapnel on drivers or passengers. Even more concerning are actions and fines from U.S. safety regulators ordering the supplier to stop using an aluminum nitrate propellant in the Takata designed airbag inflators.
Takata had been a long-standing supplier for Honda, its largest customer and investing stockholder. This vote of no-confidence sends a significant signal in the notions of Japanese supplier management practices where automotive OEM’s constantly collaborate with suppliers on all forms of product design or supply challenges. According to reports, Honda reviewed millions of pages of this supplier’s internal documents and actually alerted U.S. regulators to evidence suggesting “misrepresented and manipulated test data for certain air bag inflators.”
Honda indicated in a statement: “Honda expects its suppliers to act with integrity at all times and we are deeply troubled by this apparent behavior by one of our suppliers.”
Regulators have now assigned an independent monitor to audit the supplier’s safety practices for the next five years and to stop the use of a certain form of ammonium nitrate air bag inflator by the end of 2018. At the end of last year,
Meanwhile, automotive service parts focused supply chains remain stressed by multiple air bag inflator recall campaigns, in some cases calling for multiple re-installations of a similar repair component. As noted in our previous commentaries related to the air-bag inflators, five auto manufacturers, BMW, Fiat Chrysler, Ford Motor, Honda and Mazda Motor account for 18 million of the since recalled inflators.
Honda itself incurred a $70 million fine from regulators for reporting lapses that included Takata air bag inflators. Our readers might wonder why the OEM did not sever its relationship with its air bag inflator at that time. Japanese corporate culture resists admission of a flawed or troubled supplier relationship and in the midst of a product recall crisis of such a magnitude, Honda probably needed to insure adequate supply of inflators to meet both product recall as well as new production needs.