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About Company:
The Atlas Honda Limited (AHL) is the joint venture of the Atlas Group and Honda Motors
Company, Japan. It was established in the year 1962. The company was created by the merger of
Panjdarya Limited and Atlas Autos Ltd. in 1988. Both these motorcycle manufacturing concerns
were established by the Atlas Group. In addition, a third concern, Atlas Epak Ltd. was taken over
by the Government of Bangladesh in 1971 after the fall of Dhaka. AHL manufactures and
markets Honda motorcycles in collaboration with Honda Motor Company. Honda motorcycles
are by far the largest selling motorcycles in the country with an unmatched reputation for high
quality, reliability and after-sales-service. The company does its business in four major products;
CD 70, CD 100, CG 125 and CG 125 Delux. It has two plants for its motor cycle products that
are situated at Karachi and Sheikhupura. The production rate of the Karachi Plant is 400 motor
cycles per day, whereas the production rate of the Sheikhupura Plant (SKP) is 1650+ motor
cycles per day. The products offered at the SKP are all the four categories while in the Karachi
Plant; only CD 70 is being produced.
Strategic Goals:
Customer Satisfaction.
Meet Quality standards.
Continuous induction of technologies.
What is Honda? Honda is an entity that realizes the dreams of individuals and spreads joy to people.
Honda’s philosophy, unique corporate culture, pursuit of challenges that fulfill
individuals’ dreams and variety of products and activities born of challenges will remain
the foundation of the Honda brand. We will continue building on our history of realizing
people’s dreams.
Honda’s Driving Force: The expectations and appreciation of people around the world for our dreams. People see
Honda as pursuing its dreams and always remaining a step ahead of the world. This
image and the people’s appreciation of our outlook will continue to be the driving force
of the Honda brand.
Honda’s Goal in Branding: To create a brand that is supported by people’s expectations and appreciation.
Global Brand Slogan: Everyone has a dream, some goal or activity that gives their life a deeper meaning and
sparks passion. When we pursue a dream, we feel empowered. This power, in turn,
connects us to others who share the same dream. It gives us the strength to overcome
great challenges and inspires us to spread the joy of our dreams to others. Ultimately, the
power born of a dream is a creative force, capable of producing revolutionary ideas.
Honda encourages all is associates to pursue their dreams. That is why we say we are a
company built on dreams. In the new century, the power of Honda’s dreams will continue
to lead new insights and technologies in automobiles, motorcycles, power products, parts
and other fields of mobility that are just beginning to be imagined. Dreams are the very
essence of Honda. The dreams of our associates, customers, and supporters make Honda
what it is today. Our highly original ideas and free thinking have surprised the world on
many occasions. Honda will continue to be Honda in the 21st century as long as we have
our dreams and original thinking. We will keep on dreaming and challenging ourselves to
realize our dreams.• What will we come up with next?• We will continue creating
exciting products and realizing people’s dreams and expectations. Our slogan For Honda
to remain Honda, and for everyone to realize their aspirations, we must believe in “The
Power of Dreams”.
ATLAS GROUP CAMPANIES YEAR ESTABLISHED In.
Shirazi Investments (Private) Ltd. 1962
Atlas Honda Ltd. 1963
Atlas Battery Ltd. 1966
Shirazi Trading (Private) Ltd. 1975
Atlas Insurance Ltd. 1980
Atlas Engineering Ltd. 1981
Honda Atlas Cars (Pakistan) Ltd. 1992
Honda Atlas Power Products (Private) Ltd. 1997
Atlas Asset Management Ltd. 2002
Shirazi Capital (Private) Ltd. 2005
Atlas Power Ltd. 2007
Atlas Worldwide General Trading LLC 2007
Atlas Venture 2008
Atlas Autos (Private) Ltd. 2011
Awards: SAFA Award Compliance with Corporate Governance and comprehensive disclosures in financial statements is one of the prime objective of Atlas Honda Limited. This effort was recognized internationally by professional body, South Asian Federation of Accountants (SAFA) and received the award for best presented accounts and corporate governance disclosures for its annual report 2008. ICAP / ICMAP Joint Committee Award The Company was once again encouraged by another prestigious national award upon receiving Best Corporate Report Award 2008 in Engineering Sector by Joint Committee of Institute of Chartered Accountants of Pakistan(ICAP) and Institute of Cost & Management Accountants of Pakistan (ICMAP). National CSR Award 2009 Corporate Social Responsibility (CSR) activities of Atlas Honda Limited got a boost from the recognition received through the 4th National CSR Award. This recognition will be an impetuous for the Company to further improve its effectiveness in this area.
HR Excellence Award 2009 The Company participated in the national level prestigious contest organized by the Employers‚’ Federation of Pakistan. The Company was adjudged to be second in the multinational companies sector. The recognition of high standards of performance by an independent national panel was indeed a source of great encouragement for the associates and an honor for the Company.
5S Dealers
5S Dealership
5S dealership reflects the AHL’s strong commitment towards facilitating its customers in the best
possible manner. 5S Dealership offers all the services within one-rood to act as a one stop
solution for multiple services of its customers. AHL pioneered the concept of 5S services and is
serving its customers through the biggest nationwide network of 5S dealership. All 5S services
are available at this type of dealership, including
Sales
Service
Spare parts
Second hand Exchange
Safety
Location: 5S dealership are located all-over Pakistan in the Urban, Sub-Urban areas & Major
towns where Honda Motorcycles are widely used.
SALES:
Cash sales
5S dealer has been authorized to make cash sales.
By dealing in favor of AHL
Short term- Short-term payment plan allows a 5S dealer to sell a Motorcycle by accepting an
advance payment and remaining in the installments of 1- 6 months duration.
Lease: 6 month to 2 years period
5S dealer can offer motorcycle on a lease basis for a time period ranging from 6 months to 2
years.
SECOND HAND EXCHANGE:
Second Hand Exchange represents the Second S of five facilities at 5S dealership. 5S dealer also
entertain the customers who want to avail the facility of Second Hand Exchange. 5S dealer
accompanies the customer to Second Hand Motorcycle buyer and helps the customer to get
maximum price for the motorcycle. Second Hand Motorcycles are sold away from the 5S
Showroom and the price in turn is adjusted in the price plan of New Motorcycle whichever is
feasible for the customer.
Spare Parts:
The third facility with 5S dealer is the availability of genuine Honda Spare Parts including
Oil,Battery& genuine spare parts for all the Models of Honda Motorcycles.
5S dealer ensures proper display of the spare parts as per AHL guidelines. 5S dealer sells
genuine Honda Spare Parts over the counter, from the workshop and in some special cases; he
can act as Honda distributor in identified areas.
Service:
Service• stands for the fourth facility S• as per 5S dealership concept. 5S dealer maintain an
efficient service infrastructure and system to cater the needs of Honda customers in his area. He
ensures that all pre-requisites for offering reliable Service to customers have been fulfilled.
Safety:
Safety• is the last service that comes under the banner of 5S services. AHL promotes a cause of
making motorcycles driving a safest experience by training everyone in the Atlas Honda world.
5S dealers have been directed to take all the safety measures as per the AHL safety policies.
5S Dealers communicate the Safety Tips to Customers
5S Dealers train customers to follow the guidelines for applying Brakes in safer way
5S Dealers emphasize upon Helmet Instructions
5S Dealers appoint a Safety Manager to practice all safety related trainings
Growth at a glance
» Condensed Balanced Sheet
» Condensed Profit & Loss A/C
» Profitability Ratios
» Return to Shareholders
» Dividend
» Asset Utilization
» Working Capital Cycle
» Liquidity / Leverage
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
- Inven
tory
holdi
ng
perio
d26
2831
4843
4854
5160
4038
4953
4949
- Trad
e
debto
rs
perio
d6
55
76
64
32
67
34
22
- Cred
itors
perio
d-50
-45-45
-64-57
-65-54
-55-49
-47-41
-36-43
-52-58
- Wor
king
capit
al
cycle
-18-12
-9-9
-8-11
4-1
-13-1
416
14-1
109
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
- Cur
rent
ratio
1.51.5
1.51.3
1.31.3
1.31.4
1.41.5
1.41.5
1.51.6
1.2
- Quic
k
ratio
0.90.9
0.90.6
0.80.7
0.60.8
0.61
0.90.7
0.70.9
- Lon
g
Term
debts
to
Equit
y0
00.2
0.10.2
0.37
0.60.5
0.30.1
0.10.1
0.30.2
0.3
- Tota
l
Liabil
ities
to Eq
uity
1.02
1.11.2
1.31.6
1.71.9
1.91.8
1.51.3
1.31.4
1.22.1
Liquid
ity /
Leve
rage
Following Chart May Help us in understanding the Organization through Proper channel
Atlas Honda Company Hierarchy
How Supply Chain works at ATLAS HONDA?
Atlas has commenced to develop local manufacturing capabilities to the highest, economically
feasible level. The company is producing 4 models of motorcycles at the same time. While a
major role in localization has been assigned to vendor industries, Atlas has the country’s one of
the largest in-house manufacturing capability at its Karachi and Sheikhupura (SKP) plants. Atlas
Honda business is a network of interconnected businesses involved in the ultimate condition of
product and service packages required by end customers. Atlas Honda supply chain spans all
movement and storage of raw materials, work-in-process inventory, and finished goods from
point of origin to point of consumption (supplier to consumer).
The whole idea behind Atlas Honda supply chain is that the more you make simpler and declare
what you do, how you do it, and with whom you do it, then the more you can view the
relationships between business partners with confidence and the a smaller amount the need for
distribution the risk. Atlas Honda knows what your customer and your customer’s customer is
going to want from you. It is also about knowing and not guessing, what your supplier and your
supplier’s supplier will do for you.
Figure 4: Hierarchy of Supply Chain Department
Functions of Supply Chain Management in Atlas Honda
1. Vendor procurement 2. Logistics 3. Local purchase
4. New sourcing 5. OSP 6. Billing
Figure 5: AHL Supply chain
VENDOR PRECUREMENT:
The Supply Chain Management at Atlas Honda is generally contains the following functions;
Vendor Procurement
Logistics (Inbounds/Internal/Outbound)
Local Purchase
New sourcing
Procurement ingredients Forecasted Production
Bill Of Material (B.O.M.)
Review order specification
Price Negotiation
Evaluation based On Cost Comparison
Vendor DCC
Dispatch Area
Skp line
Receiving area
RestrictedUnrestricted
ERROR FREE Quality Assurance
If rejected then it return to vendor
CKD StoreFrame Assy
Paint Shop
Engine Shop
Buffing Shop
All finished parts
Manufacture/assemble bikes
Quality Check
CKD feed the Khi line
Atlas Honda Supply Chain
Deliver
Finished part Finished part
SemAi-Finished Semi-Finished
Purchase Order Generation
Delivery Against Delivery Challan
Invoice
Payment
Good Receipt Note
Functions Responsible for all the relationship and dealing with different vendors.
Motivates vendors to produce excellent quality and train them to achieve the highest level
of quality.
Responsible for on time availability of the parts.
Responsible for vendor improvement program. Under this program, the department
representatives go to the vendors and train them for new methods to produce better
quality at reasonable price.
Hierarchy of Vendor Procurement
Vendor selection Criteria:
This is the vendor selection criteria, AHL believes on the QCDR when it comes to select any vendor.
AHL want quality oriented parts/material in the low cost. Delivery must be on time in all the difficulties.
Reliable implies that the vendor should financially sound to manufacture or to procure the goods for an
order. These difficulties are challenged by Vendor procurement.
Cost
Quality
Reliability
Delivery
How it works?
Once the vendor selected on the basis of QCDR then these process take into account for product
development and resourcing.
Process A: process A contains the Sample of the product, drawing of the product and CAD data
(computerized aided design). CAD data is the drawing softcopy of a car/bike’s part design which
usually provide to vendors for manufacture. AHL provide sample to vendors and hard copy of
the product’s drawing to facilitate vendors for manufacturing. AHL do not share CAD data with
the vendors.
Process B: a quotation is received from the vendors to construct the particular product. This
quotation contains the price of manufacturing the particular part on the basis of material, labor,
overheads, power consumption, depreciation cost, packing cost, transportation cost and profit
margin.
Process C: after obtaining the quotations from different vendors or single vendor, Price
committee is settling down. In which issues of price bargaining and price settlement is taking
into account in front of concerned persons and vendors.
Process D: once the price is settled down then Vendor submit a sample to AHL.
Process E: QA (Quality Assurance) verify and scrutinize the quality of the product with respect
to the different deviations.
Process F: if the quality assurance department verify the quality of the product then a vendor
submit a Pilot Lot which is from 100 and 500 parts.
Process G: If quality assurance verifies the pilot lot then it transfers to the procurement
department.
Outsource Processing (OSP):
This section deals with the import material which is imported from commercial department as
per production plan. There are approximately 145 parts which are imported from different
international sources and then it outsource to different 20 vendors to manufacture the required
part.
The imported material categorized into different classes
1. Raw Material
2. PPS ( Press Part Store)
3. CKD (CKD Kits)
Raw materials includes all pipes, sheets, stripes, aluminum etc which then transform into
a motor bike parts. There material outsourced to vendors for manufacturing motor bike’s
parts.
PPS (Press Part Store) are those parts which can be manufactured In-House.
CKD (CKD Kits) includes all finished and semi-finished parts like jumps, tires, rims etc.
•Sample & Drawing of PartProcess A
•QuotationProcess B
•Price Committee/bargaining and statementsProcess C
•Sample SubmissionProcess D
•Pilot lot (100 to 500 lot)Process E
•Quality Inspection (QA)Process F
•Provided to Supply chainProcess G
After bringing in the material next it is outsourced to different selected vendors for
manufacturing. Once the vendor got material for manufacturing then Atlas Honda physical count
and audits the material two times i.e.; half yearly and annual audit.
Vendor Billing:
The bills received from vendors are sorted alphabetically.
GR received from stores are also sorted
Then bills & GR are matched & after confirmation bills are fed in computer and system
SAP. Then these are forwarded to accounts section.
Inventory Management:
Inventory management at accompany can be very difficult where thousands of inventory in and
out on a daily basis. For this purpose file is maintained which enclosed the entire part data with
reference to part codes. Inventory in the form of:
Raw Material
Imported
Vendor Parts
Machine Spares
Consumables
The question is why we have to manage the inventory because to know that how much inventory
we have at the end of the day or at the beginning of the day to produce the goods and how much
we need more. Second reason is that to minimize the inventory as much as possible with the
help of demand forecasting. There are such parts that are being manufactured by Vendors in
Karachi and are sent to Sheikhupura for the final assembly and the same occurs for some
Sheikhupura Vendors. These parts have high interplant transportation costs. The Vendors should
be developed in their respective cities of Production. There are also some parts which have few
manufacturing processes in the Karachi plant and the rest of the processes on these parts have to
be done in Sheikhupura or may have to be assembled there.
A Daily activity report is managed on a daily basis by which we come to know the minimum and
maximum level of the stock.
For vendors parts SAP reports are generated to know the shortages and minimum/maximum
level of stock. ZMMDS report shows the daily receiving report on SAP against the P/O and also
highlights the shortages and scheduled quantity.
Finance:
Finance department is the backbone of any company and plays a vital role as a custodian of the
stake holders as well as share holders of both public and private companies. It’s safeguarded the
interest of stake holders and ensures the safe and healthy return on investment. Atlas Honda has
a well-established finance department. It is totally computerized .it has its own system which is
prepared by IT department. Finance department has further following sections.
General ledger
Costing
Taxation
Treasury
Payables
Payroll
Costing General Ledger Taxation
- Generate Part code
- Maintain inventory
- Maintain GR and RR
- Assign unit of
measurement
- Cost of local and imported
parts
- Cost of Karachi parts and
SKP parts
- Operating cost
- Operation cost
- Overheads
All the transactions are recorded in
general ledgers. General ledger for
each account is maintained
separately. There is a computerized
system, which then produce
different statements.
It deals with all tax and
Custom duty related
affairs.
- Service tax
- Sales tax
- Supplies tax
- Transportation
- Commission
- Rent
- Income tax
- Duties
Payables Payrolls Treasury
- This section deals with the
following activities.
- Vender payables
- Utility payables
- Insurance payables
- Tax payables
- Club payments
- Other payable
This section controls the salary
system of the organization.
- Tax deductions, absenteeism
deductions and all other
deductions
- Overtime payments
- Manage COD (chartered of
demand Agreement)
- Provident fund
- Petrol, newspaper, and
bonuses
- Management of
funds
- Allocations of
funds
- Payments of bills
- Risk evaluation
of currency rates
and interest rates
- Paying money ,
taxes
- -
Logistic:
Logistics department provides services and the management of the good between the point of
origin and the point of consumption. It is responsible to deliver the goods to the consumer on
time and safely. Logistics department plays multiple tasks in Atlas Honda like material
management, transportation, inventory handling and often packaging.
Logistics movement characterizes in four parts
By air (in case of emergency)
By containers
By truck
Small Mazda trucks
Containers Monitoring Sheet: Special symbols and code are used in logistics department to
understand the containers monitoring sheet such as:
D----Dispatch from Karachi
*----Available at Karachi plant
# ----Expected at Karachi
A ---- arrival at SKP
@ ---- under repair
~ ----- On the way towards Khi Plant
> ----- On the way towards SKP
There is a convoy of 11 containers that is possessed by the company and is devoted for the
interplant transfer and for the allocation principles. The interplant transfer usually takes 36 to 40
hrs for a trip. The parts in the critical zone may be transported by air. The parts may be shifted
directly to SKP or may be through Karachi plant if it is found that the container may be partially
vacant in the direct transfer of units to SKP.
Responsibilities
The major responsibilities of the logistics department are;
Manage dispatch and upload report in which engine and chassis number are saved
according to the dealer’s contract.
Manage barcode report and allocation report
Transportation rates are set
Coordinate with all the regions
Transportation of Raw Material from port.
Transportation of CKD from port
Transportation cost is analyzed
Atlas Honda
Services
Logistics Monitering and Controlling
BRIEF ANALYSES To understand the Supply chain of ATLAS HONDA, we need to draw the concept of how a
product is produced by the firm or what are the ways through which product suffers while being
made.
CEO of the firm decides the on following demands
Seasonal Demand
Cost push Demand
Cost pulls Demand
In Pakistan Production of Automobile is more elastic in Rural areas rather then Urban due
Rational Behavior of Consumer belonging to deferent Villages.
In season of rising in cotton, wheat, Rice and other crops i.e. Sugar cane rise in selling so as firm
has to increase the production. HONDA at its best can survive in all circumstances that might be
the plus point to be noted and not be easily ignored where as the in cities situation is deferent due
low enforcement problems people are scared of loosing their automobile i.e. Hence Other Small
Companies take its advantage.
By Production Atlas Honda Produce 4 main automobile as per Percentage Observed as;
Mechanism:
Working in condition where your are ultimately responsible if production chain stop due to any
reason. Dealing with vendors, supplying items what are required for making an automobile,
having relations in fact the mirror and the only to communicate with local and international
industry hence the work become more competitive.
48%
24%
18%
10%
Sales
Honda CD 70 Honda Pridor CD 100 Honda CG 125 Honda Deluxe
Costing and Supply chain
Things never going to be easy when there is talk about costing of an item and expenses of the firm
especially when you have massive impact in marketing and the huge amount is paid to the govt. in form
of Taxes and others expenses.
Basically firm contains following types of cost as
Supply Chain
Production Plan and Control
Local Parts
Imported Parts
Material Managment
Quality assurence
Production
Logistic
Dealer
Consumer
Cash
Retained Earning
Devidient and Bonuses
Variable cost
Fixed cost
To understand the phenomena of costing we keep some of most important following cost.
Material cost
Labor cost
Over Head
Transportation cost
Packaging cost
Dies/Mole/Tooling case
Rejection cost
Energy cost
To understand why it’s important in Supply chain or what really the role of costing in supply chain can be
shown as in following table ;
Other costs may be from admin/marketing/finance/profit.
Vendor itself costing up to 60% to 75% of Total cost then to find the profit is very difficult task.
Meanwhile reporting it in supply chain can be accordingly with following methods as;
Internal reporting
External reporting
Cost sturucture
Over heads
Labor
Material
Internal reporting refers to Top management; meanwhile external reporting contains the formulation of
report on the basis of particular style made by HONDA and for price negotiation with suppliers.
Making plans for future has got it worth and cost too. In other words some time your forecasting about
the
pro
duc
t
due
to
asy
mm
etri
c
info
rma
tion
or
wro
ng
esti
mat
ion, firm can bear the cost.
If HONDA’ Karachi Plans to make 10 Million Motor Bikes for year in KARACHI PLANT and they are aimed
to create demand but the actual demand is not meet, whether a shortage or the excess.
SupplyDemand
Blue rising line shows what actual demand is and the straight line colored as Brown shows the firm
target that’s not achieved yet. (From Karachi Plant)
Targeted units for sale – Actual unit for sales = Paining cost or forecasting cost.
However Vendors are grown up under the tyranny of HONDA, But if today they are grown next
Day they can be Monopolists too. Honda has a big role in meeting There Local Vendors to
Foreign vendors so that they could reduce there importing cost. This is time to make a plan How
to save Vendors Because Creating Venders is not much good for continuous Production.
Try to minimize the element of inefficiency that may have seen while moving and surveying
every morning in DCC then CKD, By Introducing the software other then SAP that only adjusts
the entries and reported to Vender Procurement section.
This is the Time to get the opportunity in terms of purchasing Raw Fields i.e. Oil and Gas Field
in other words Atlas should not only relaying the projects it’s is doing now i.e. ATLAS
ENGEENIEERING LTD, AGS and Others. As Now they are found in Pakistan especially in
province of Sindh most nearest place. In future that might be requirement of every Multi
corporation and who may not do that, wish that they could have purchased these fields.
Try to make better communication among Govt. and Make a Department of I.R International
Relations that may help in making Delegations at Domestic Level and Internationally too. Also
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
DELUX PRIDER CD 125 CD 70
the “Planning commission and Forecasting” so that Supply chain work become Minimize and
Efficient.