Atlas Honda Limited is a joint venture between Atlas Group and Honda Motor Company that manufactures motorcycles in Pakistan. It has over 160 vendors and produces 750,000 motorcycles annually for domestic and export markets. The procurement process at Atlas Honda involves forecasting demand, determining raw material needs, issuing purchase orders, inspecting incoming materials for quality, and evaluating vendor performance. The goal is to efficiently source high quality components and materials at competitive costs to meet production targets.

2. Mudassir Iqbal
Procurement
Process Of
Atlas Honda Limited

3. What is Procurement ?
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.

4. Procurement Process
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

5. 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

6. Company Introduction
Manufacturing Plants
 Karachi
 Sheikhupura
Annual Production Capacity
 750,000
Export Countries
 Bangladesh
 Afghanistan

7. 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.

8. Procurement Process
 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

9. Procurement Process
 Pro forma Invoice Called
 Purchase Order Placed
Purchase Order Placed On Quota Based
 Establish Letter Of Credit
 Revivals & Recovery Of Original documents
Bill Of Lading
Invoice
Letter of Credit
 Clearing agent

10. Procurement Process
 Delivery & Possession of Materials
 Check Quality Inspection
 Payments to Vendors
Paid Two Half Payments(10 & 25) in One
Month

11. Procurement Process
Components Imported From
o Japan
o Taiwan

12. 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 PO to Vendor

13. Vendor Performance Evaluation
Vendor is evaluated according to
following factors:
Quality
Cost:
Delivery
Reliability

14. Cost Calculation Method
 Raw Material
 Labor
 FOH
 Profit margin
 Other Method
 Inflation rate
 Electricity charges
 New development of vendor
Jigs & Dais

15. 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)

16. Problems faced
Late delivery from supplier
Price negotiation issue
Quality issue
 (Receive poor Quality Material)

17. Key Performance Indicator (KPI)
Ensuring annual target
accomplishment
Overall cost reduction
Vendor consolidation
Vendor development / Up gradation

18. Sourcing Strategy
Multiple Sourcing
Ensure compliance of KPI

19. Future Plan
Reduce the complexity of supply
chain
Resourcing price & quality
Localization
B2B integration with suppliers
/partners

20. Conclusion
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.