Post on 08-Jul-2015
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