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.