Mudassir Iqbal

Procurement

Process OfAtlas Honda Limited

Procurement is the acquisition of goods,

services or works from an outside external

source. It is favorable that the goods,

services or works are appropriate and that

they are procured at the best possible cost

to meet the needs of the purchaser in

terms of quality and quantity, time, and

location.

What is Procurement ?

Procurement life cycle in modern

businesses usually consists of Six steps:

o Identification of need

o Supplier Identification

o Supplier Communication

o Negotiation

o Supplier Liaison

o Logistics Management

Procurement Process

Company Introduction

Atlas Honda Limited (AHL) is a joint venture between the Atlas Group and Honda Motor Co. Ltd., Japan.

At present, more then 160 vendors are working with the company

On top end in two wheeler industry.

Manufacture 5Models

CD-70

CD- Dream

Pridor

CG -125

Deluxe

Company Introduction

Manufacturing Plants

Karachi

Sheikhupura

Annual Production Capacity

750,000

Export Countries

Bangladesh

Afghanistan

Procurement Process

The procurement process of Atlas Honda

Ltd. involve:

Forecasting:

Demand drive from market

03 yearly,

Quarterly,

Monthly

Demand drive according to model and

color.

Production & Planning (P&P) department

receives requirement from Forecasting

department.

P&P department then run MRP to find out

the total quantity of raw materials.

BOM: System define Bill Of Material

Procurement Process

Procurement Process

Pro forma Invoice Called

Purchase Order PlacedPurchase Order Placed On Quota Based

Establish Letter Of Credit

Revivals & Recovery Of Original documents

Bill Of Lading

Invoice

Letter of Credit

Clearing agent

Procurement Process

Delivery & Possession of Materials

Check Quality Inspection

Payments to Vendors

Paid Two Half Payments(10 & 25) in One

Month

Procurement Process

Components Imported From

o Japan

o Taiwan

Selection of Vendors

Selection of existing Vendors for new parts

Give Parts to Vendors for Development

Receive develop parts from supplier

Check Quality inspection

Visit & inspection Vendor plant

Checking Vendor Capability

Price Negotiation

If Select Give P\O to Vendor

Vendor Performance Evaluation

Vendor is evaluated according to

following factors:

Quality

Cost:

Delivery

Reliability

Cost Calculation Method

Raw Material

Labor

FOH

Profit margin

Other Method

Inflation rate

Electricity charges

New development of vendor

Jigs & Dais

Recent Initiatives

Reduce vendor energy consumption

VIP (Vendor improvement Program)

One – two months project

2-3 person

Help to improve Quality

Better Production Planning

Resolve Supply Chain Issues

Technical Help

Other (Requirement)

Problems faced

Late delivery from supplier

Price negotiation issue

Quality issue

(Receive poor Quality Material)

Key Performance Indicator (KPI)

Ensuring annual target

accomplishment

Overall cost reduction

Vendor consolidation

Vendor development / Up gradation

Sourcing Strategy

Multiple Sourcing

Ensure compliance of KPI

Future Plan

Reduce the complexity of supply

chain

Resourcing price & quality

Localization

B2B integration with suppliers

/partners

Procurement Process of Atlas Honda Ltd

is well organized. All the requirement of

Production department fulfilled in time

because they forecast procurement

plan for upcoming 3 months. The reason

behind for forecasting for the next quarter is to avoid the shortfalls.

Conclusion