How Honda approaches resource trading
Honda has long been a leader in sustainability in the global automotive industry. The automaker introduced the CVCC engine in the early 1970s to cut smog-causing emissions, and produced the first battery-powered cars in the 1990s and hydrogen fuel cell electric vehicles in the early 2000s, both of which used innovative technologies to reduce or reduce emissions. Eliminate exhaust emissions from used vehicles.
But what about the environmental impact of products at the end of their useful life?
As part of its ambitious goal of achieving zero environmental impact of its products and operations by 2050, Honda seeks to recycle resources, work to recover products at the end of their life and recycle or reuse 100% of materials to create new products.
Creating a circular society supports the company’s goals of carbon neutrality, 100% clean energy, and 100% resource circulation.
Achieving resource circulation requires major innovations in the design of its products, restoring their lifespan, and in purchasing spare parts, goods and services to reduce their environmental impact.
Design for resource circulation
Product design is at the heart of Honda’s efforts to recycle resources.
Here, the company looks at sustainability holistically, selecting materials and creating design elements that prioritize longevity and recyclability. This is particularly important, as the initial design phase determines 80% of a product’s environmental impact.
“Honda’s commitment to sustainable materials is not just about using recycled plastics and other reusable materials; “It’s about rethinking the entire product life cycle,” says Matthew Daniel, Honda’s head of indirect purchasing. “By designing for disassembly and maintainability [ease of maintenance]We envision that everything we buy, from parts for our vehicles to forklifts used in our factories, will be reused or recycled, reducing our environmental footprint and generating new business value.
Maximize useful life
Honda is exploring the full scope of its corporate purchasing to increase the useful life of the goods it purchases while avoiding unnecessary purchases.
Daniel says the process starts with the simplest questions. “Do we even need to buy this commodity in the first place? And if we do, can we buy less of it? If not, can we buy it in a different, more sustainable formulation?” These three questions enable us to develop specifications that will help us achieve the rest of our strategy “This involves maximizing the useful life, and hopefully we can produce a second or third life before having to recover the raw materials.”
Honda has collaborated with GEP, a leading global provider of procurement and supply chain solutions, to implement and accelerate its sustainability goals. “Honda’s approach to sustainability focuses on integrating the right strategies into every aspect of the business, especially procurement and supply chain,” says Venjat Narayanasamy, vice president of consulting at GEP.
“Honda’s comprehensive vision for resource circularity – from design to end-of-life management – ensures that it not only achieves its environmental goals, but also sets new standards for the industry,” says Narayanasamy. “In addition, its focus on creating and purchasing durable, repairable products ensures that what it buys and produces will remain in service longer, reducing the need for new resources and reducing waste.”
By reducing the extraction of virgin resources, Honda helps preserve natural ecosystems and biodiversity. At the same time, reducing waste through circular practices helps mitigate pollution and greenhouse gas emissions.
Transfer purchases
Honda is focused on more than the sustainability of its direct materials. The company spends billions of dollars annually on indirect goods and services and is looking to trade resources in this area as well. Extending the life of purchased goods such as IT hardware, equipment and office furnishings can reduce overall capital expenditures.
However, purchasing sustainable goods may initially result in increased capital expenditures, so the success of these resource trading initiatives lies in finding solutions that increase sustainability and protect profitability.
“From an operational perspective, our goal is to preserve the indirect goods we purchase in service for as long as possible, at the highest possible value, and then recover them for reuse,” says Daniel.
Honda is taking steps to create a resource distribution center with three main functions.
The first is the control tower that will set policies, track effectiveness, and streamline the company’s activities.
The second is a physical process that focuses on dismantling end-of-life assets and recycling basic raw materials such as steel, aluminum and copper.
The third function, the Second Life Lab, will explore new ways to reuse used indirect goods. A notable example of this initiative is Honda’s current practice of converting old uniforms for factory workers into insulating materials for use in vehicle assembly.
“By integrating sustainability into every aspect of its operations, Honda is not only achieving its goals, but also setting a new standard for what is possible in sustainable practices,” says Narayanasamy.
A blueprint for a sustainable future
Honda’s journey towards circular resources is more than just a commitment to sustainability – it’s a bold step towards reshaping the future of the automotive industry.
Thanks to the expertise of partners like GEP, Honda has become a pioneer in setting new standards in sustainability.
It’s a clear message to the industry: embracing resource trading is a necessity to create meaningful change.
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