Supply Chain Management System

2

Iqra UniversityIqra UniversityGulshan CampusGulshan Campus

Submitted to Mr. Sohail Majeed

Prepared bySHEEMA RAZA 2936

ADIL AZIZ 2938

KHAWAR ATIQ 2934

SANA MUSHTAQ

FOREWORD The findings essentially highlight all management functions being practiced at Hinopak with some recommendations in the end, as desired by you. Moreover, this report also reflects the impact of the crude industry of the commercial vehicles on the management decisions of Hinopak. The basis of this report has been company promotional material, company website and necessary inputs from few existing managers.

We are grateful to you (course facilitators Mr. Sohail Majeed) for providing us insightful guidelines and essential concepts regarding major features of management that really worked like a catalyst to materialize this report. We may not also forget the courtesy, knowledge, guidance and great piece of co-operation from management of Hinopak Motors Ltd. We are also much obliged to Mr. Salman Abdul Wahab – Manager PMD & Import, Mr. Khanzada Sehban, D.G.M MOD, for being so instrumental in their value added guidance, whenever needed, while shaping up this report.

Dear Sir, the report is strictly confidential and most of it should not be copied or reproduced without prior permission of Hinopak Motor Company Limited.

We hope that the report prepared is up to your expectations and look forward to the same kind of support and valued guidance from you in future.

Sincerely,

Sheema Raza

Adil Aziz

Khawar Atiq

Sana Mushtaq

3

4

This

report

is

dedicated

to

Dear

Sense Sohail San!

COMPANY CORE VALUES & ACHIEVEMENTS 10

MISSION STATEMENT 10

VISIONS STATEMENT 10

EXPORT MARKET 10

PAKISTAN 10

BUSES BUSINESS 11

TRUCKS 11

SPECIAL VEHICLES 12 ISO Certification 12

9001 12

14001 12

EURO EMISSION STANDARD 12

Material Handling 18

Inventory Control 18

Bill of Material 18

Ordering (Local Parts) 18

Scheduling (Customize KANBAN & NON-KANBAN Items) 18

Stock Control 18 Material Requirement Planning & JIT 19

Average inventory consumption 20

Net family demand plan at Hinopak 20

Classification of inventory 20

Scheduling (Customize KANBAN & NON-KANBAN Items) 20

1. MUDA WASTE 25

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2. MURA UNEVENNESS / WAVINESS 25

3. MURI OVERBURDEN / IMPOSSIBILITY 25

1. After sales service 35

2. Warranty claim 35

3. Spare parts 35

4. Change of lubricants. 35The method of implementation: 35

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EXECUTIVE SUMMARY

Hinopak Motor Limited has been a market leader since 20 years. In 2007, with the market share of 56% it became the most sought vehicle company in the country. Hinopak's Market share stands at 76% in busses, 65% in heavy trucks and 49% in light duty truck, which clearly shows that it out beats all other companies in the country. Backed by Hino's expertise Hinopak has achieved standard of quality and excellence that rival the best in the region. With over 39,000 vehicles on road, Hinopak has gained 65% market share making it the largest manufacturer in medium and heavy-duty truck and bus industry in Pakistan.The gross profit increased to Rs. 1,388 million from last year's Rs. 835 million. The distribution and administrative expenses increased to Rs. 409 million from Rs. 308 million. The net increase in cash and cash equivalent was Rs. 300 million. The year thus closed with a positive cash balance of Rs.156 million. The selling prices of vehicles are rising and "Deletion" because of falling value of the rupee against dollar and yen.Total Customer Satisfaction, is a set vision for the company. Total Quality Management or TQM is a philosophy of management driven by continual improvement and responding to customer needs and expectations. Hinopak by utilizing its MIS system controls and keeps track of raw materials inventory, work – in – process inventory and finished goods inventory. Just in time (JIT) approach is preferred to eliminate all sources of waste, including any activities that do not add value by focusing on having the right part at the right place at exactly the right time. Hinopak is the only automotive company in Pakistan and the first Hino affiliate worldwide to receive the ISO 9001 certificate.Hinopak is Pakistan’s first automobile company to export its buses to Middleast and African countries. The company is in the process of negotiation with Hino Japan that Hinopak will be made the center of all Hino export to Algeria, U.A.E. and other African countries by 2010.In order to keep the checks and balances, to avoid errors and to detect frauds, the company has an internal auditor, whose responsibility is to make sure that the controls are implemented at all levels and there is proper segregation of duties and no teeming or lading takes place.Although Hino Pak is meeting the production targets, lack of support from the government is creating problems in the efficiency of the company Hinopak backed by Hino Japan has designed a CNG bus suited the operating conditions in Pakistan. But lack of support from government makes it difficult to practice. Even though Hinopak Motors Ltd. is a well-managed organization there is still some span for improvement. The company will have to make its decision making and managerial practices more clear and transparent. A trace of double standards during hiring, promotion and foreign trainings ought to be faded out to truly motivate the employees and retain the potential employees of the company. Moreover, structure of the company is to be lined up in such a way that the work channel and communication channel should not affect the pace of the work.

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COMPANY HISTORY

Hino Motors Japan and Toyota Tsusho Corporation in collaboration with Al-Futtaim Group of UAE and PACO Pakistan formed Hinopak Motors Limited in 1986.

In 1998, Hino Motors Ltd., and Toyota Tsusho Corporation obtained majority shareholding in the company after disinvestments by the other two founding sponsors. This decision to invest in Hinopak at a time when the country's economy was passing through a depression and the sale of commercial vehicles was at an all time low reflects the confidence our Principals have in our company and their commitment to the Pakistani market. Hinopak is the trusted market leader with over 65% share in the Pakistani Truck and Bus industry. Hinopak a vital contributor in saving of foreign exchange is also providing jobs and plays a pivotal role for the development of the local industry through its progressive manufacturing.

By continuing to move forward and staying alert to the ever-changing market & social needs, Hinopak will continue to be a successful and respected corporate citizen of Pakistan, reflecting their commitment and belief in the Hinopak corporate philosophy to "contribute to the development of a more prosperous and comfortable society by providing the world with a new set of values".

Hinopak Motors Limited assembles, manufactures and markets world renowned Hino diesel trucks and buses in Pakistan. The Company has held the top position in the domestic market for medium and heavy-duty vehicles for 17 consecutive years and is highly acclaimed for quality and technological excellence.

Backed by Hino's expertise Hinopak has achieved standard of quality and excellence that rival the best in the region. With over 39,000 vehicles on road, Hinopak has gained 65% market share making it the largest manufacturer in medium and heavy-duty truck and bus industry in Pakistan.

Hinopak's product range has been designed and built in Hino's traditions of automotive excellence to be the leader in its category and the main emphasis has been given to passengers' safety & comfort.

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HPML MARKET SHARES

56%44%

HPML Market Shares in 2007

HPMLOTHERS

47%53%

HPML Market Shares in 2006

HPMLOTHERS

HPML SHARE HOLDING

13%

11%

76%

HPML SHARE HOLDING

TTCOTHERSHINO

MARKET SHARE IN DIFFERENT CATAGORIES

45.42%

22.21%

23.11%

8.86%0.40%

0.00%

Hinopak Mkt. Share in Truck Business

HINOISUZUNISSANMASTERDONG FENGVOLVO

77.47%

12.09%

8.80%0.04%

1.60%0.00%

Hinopak Mkt. Share in Bus Business

HINOISUZUNISSANMASTERDONG FENGVOLVO

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COMPANY CORE VALUES & ACHIEVEMENTS

MISSION STATEMENT

"The mission of Hinopak Motors Limited is to provide the society with safe, economical, comfortable and environment friendly means of transportation by

manufacturing and supplying commercial vehicles and services".

VISIONS STATEMENT “Total Customer Satisfaction, a set vision for the company. In pursuit new concepts have

been introduced such as a mobile workshops, 3S/2S”

EXPORT MARKET

Hinopak is proud to be Pakistan’s first automobile company to export buses. After successfully establishing itself as the market leader at home, Hinopak proceeded to explore its product potential for the export market. This quest met with initial success when it made its first historic sale well over a decade ago, in 1990 Hinopak exported its first bulk order of buses to U.A.E. Follow up orders were soon placed, ensuring the satisfaction of customers at home and abroad. This entry into the export market was an important milestone for Hinopak and lead Pakistan into an exciting new era for the automotive industry, fulfilling Hinopak’s commitment towards the economic growth of Pakistan

BUSES BUSINESS

The largest Manufacturer of Buses in Pakistan, Hinopak is fully-equipped to design and manufacture a wide range of Bus Chassis and all types of Bus Bodies. Hinopak’s Bus Line Up includes the Road liner Supreme Luxury Bus for long journeys, Citiliner Intercity Buses, Citiliner Urban Buses and the luxury Senator Coach and Rapid liner Deluxe Coaches. Hinopak delivers only the safest most reliable products and remains the Pioneer in supplying the largest number of Urban Buses those are successfully facilitating the commuters of Punjab and Sindh.The new Bus line up is built upon reliable AK1J and RK1J (Rear engine bus) Series that offer straight and kick up frame options for intercity and intra-city usage. Both newly introduced series can be suitable for a wide variety of bus bodies. The kick up frame for inter-city

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Bus

Bodi

esUrban Bus Urban Bus Splendor Bus CNG Bus Rapid linerSenator Road liner

operation offers more space for storage and luggage while the larger door s and low boarding height of the straight frame allow passengers greater comfort and convenience.

TRUCKS

The New Hino 500 Series is a dynamic combination of power, economy, style and safety. Vast improvements in engine technologies have allowed us to create Engines with more horse power while offering lower fuel consumption. These dynamic new vehicles featuring revolutionary technologies such as multi valves engine, new air intake system, turbocharger with intercooler, overhead cams, heavy duty clutch, synchronized transmission and power steering promise to change the face of transportation with new standards in comfort, luxury, safety and especially economy. Hinopak’s latest product range has been especially developed and designed keeping in mind the rugged terrain and varying climates in order to meet the requirements of the diverse Pakistani automobile market. The robust FG1J 4x2 truck with a JO8C engine has a gross vehicle weight of 18 tons and suitable for all types of cargo and transportation needs.The FL1J 6x2 Truck has a gross vehicle weight of 27.5 tons and is equipped with a JO8C Engine which allows a greater fuel economy with more loading capacity. The new product line also introduces the dynamic FM1J 6x4 Truck with a gross vehicle weight of 28 tons and boasts a JO8C engine with turbo intercooler. This Truck is suitable for all types of transportation needs specifically for the hilly areas and dump trucks. The powerful SG1J is 4x2 Prime Mover with a gross combination weight of 35 tons, also equipped with a JO8C turbo intercooler engine it is the ideal choice for heavy loads.

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SPECIAL VEHICLES Our versatile range of special purpose vehicles play an important role in meeting the transportation needs of our customers. These vehicles are engaged in prompt and safe hauling of a variety of supplies like food, equipment and machinery, virtually from any location to any destination. Hinopak has been able to successfully develop and market various buses and super structures satisfying the needs of different customers.

ISO Certification 9001

Hinopak is the only automotive company in Pakistan and the first Hino affiliate worldwide to receive the ISO 9001 certificate. Quality Management To the uninitiated, ISO 9001 certification may be considered a vital marketing tool exclusively for promoting exports. In fact, the ISO 9001 requirement is as valid for the domestic customer as it is for the overseas clientele.

14001Hinopak Motors Limited has voluntarily ISO 14001 Certification. ISO 14001 pertains to monitoring and managing the effect, which any business has on the environment.

EURO EMISSION STANDARD

Environment is major area of concern today the world over. The problem has attracted attention in Hino too. Hino as responsible corporate citizen is using the power of superior Japanese technology in step with the expansion of exhaust emission regulation. Hino, to achieve its target to reduce pollution has preceded low emission standard engines which are called EURO engines. As a leading manufacturer of diesel vehicles, Hino has taken diverse measures to preserve the global environment in not only its products but also its corporate activities in general while contributing to the development of people’s lives and society as a whole

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Supplier’s communication Customer Support, service

Customer Relationship Management (CRM)Supplier Relationship Management (SRM)

HINOPAK’S SUPPLY CHAIN STRATEGY

SUPPLIER RELATIONSHIP MANAGEMENT

Hinopak has alternative suppliers for different parts and the company has mutual understanding among the suppliers. The organization informs its’ suppliers well before time when to manufacture the parts according to their production plan so this makes it easier for the suppliers to generate their capacity and manufacture their parts.

CUSTOMER RELATIONSHIP MANAGEMENT

Hinopak has a good communication channel with its customers and provides them with extra sales services which are also known as value added services. Some of their value added services include:

After sales service Sales service up till 100000 KMsSCM MISSION

To create a seamless end-to-end Supply Chain from suppliers to customers, which provides excellent Customer Service at optimal overall cost through:

Efficient Business Partners relationship Flexible manufacturing Reliable distribution Reduction in cost base

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Efficient supply chain management must result in tangible business improvements. It is characterized by a sharp focus on;

Revenue growth Better assets utilization Cost reduction

ORDER FLOW PROCESS ( CUSTOMER TO HPML)

GLOBAL PROCUREMENT

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Custormers

(Direct/Indiire

ct)

Procurement

Vendors/

Suppliers

60% Local &

40% Import

Part Assembling

Assembly/

Manufacturin

g

IMPORT PROCUREMENTS PROCESS

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Forecast Procurement

B.O.M

Price Negogiation

Performa Ivocie (FOB / C&F)

P.O placed

L .C

Revival & Recovery of original documetns i- BL ii- Invoice iii- L.C

Clearance through Agent or direct

Delivery and Possession of Material

Good Recieving Note

JAPANN

Hinopak

PAKISTANPORT QASIM

SINGAPORE

JAPAN – SINGAPORE – PAKISTAN = 20 DAYS

THAILAND SINGAPORE

PAKISTANPORT QASIM

Hinopak

THAILAND – SINGAPORE – PAKISTAN = 16 DAYS

JAKARTA

PAKISTANPORT QASIM

Hinopak

SINGAPORE

JAKARTA – SINGAPORE – PAKISTAN = 16 DAYS

SEA SHIPMENT ROUTE ( FOR C K D ITEMS)

16

MRN generated Finance (-tax & payment to vendor)

OK

NOT OK

LOCAL PROCUREMENTS

17

Mktg. Forecast

Production Planning &

Control/Supply Chain

deptt.

MPS Generation

Purchase order

geneartionOracle genrate P.O to

Vendor

Vendor Suppplies

Part to HPML

Recieving Cell

Oracle Entry

MOD Verfies the

qauntity

IR fwd to QC Inspection

GRN generated

transfer to stock

feeding on line as per MPS thru

MIRon completion of job, job

closed

Invoice generated to mktg.

ERP SYSTEM IMPLEMENTATION

Material Handling Inventory Control Bill of Material Ordering (Local Parts) Scheduling (Customize KANBAN & NON-KANBAN Items) Stock Control

Example of ERP - ERP MODULE

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Material Requirement Planning & JIT Through ERP & MRP system Hinopak‘s supply chain department and material operation department is performing entire planning

DEMAND MANAGEMENT

Demand management includes product forecasting & control, customer order entry, component forecasting.

INVENTORY MANAGEMENT

Inventory management include business forecasting, inventory status (end item), and MPS, Bill of material, Inventory status, & MRP.

CAPACITY MANAGEMENT

Capacity management includes resource planning, capacity planning, capacity requirement planning.

QUALITY MANAGEMENT

Quality management includes total productive maintenance & total production control. In the first phase the product forecasting is done when we are actually calculating the demand, thus keeping the business forecasting in view of the inventory management, we analyze the resource planning related to the capacity planning.In the other phase the customer order are generated and the customer order entry is done. As the customer order is received the inventory status is checked in the inventory management. Based on the inventory levels, stocks and the production requirement of the company as well as the orders received, a master production schedule is generated. Integrating, the master production schedule and other levels of inventories with the capacity planning of the facility.In the third phase the component forecasting is done on the basis of customer orders and the forecasted demand of the company. Checking the inventory status the replenishment time and cost thus generating the material requirement planning with the help of the bill of material as well as the master production schedule. The bill of material provides with the exact amount of quantity of each part required in the product, the master production schedule provides the actual production schedule of the products to made and the capacity requirement planning helps in the planning of the capacity for the fulfillment of the production schedule.The material requirement planning and the capacity requirement planning are integrated, performing the shop scheduling thus calculating the capacity control using group technology as well as the Kanban system.

JIT IMPLEMENTATION

JIT production will be successfully carried out by the performing action of the total productive maintenance and the total production control. Thus, the company will be able to provide a better JIT distribution of the truck to the ARMY, INSTITUTES and the The JIT activities will help Hinopak in the purchase order scheduling as well as the vendor capacity control. In short, the company will be reducing the total time to manufacture the

19

CKD Parts

trucks and buses. I.e. the total time from the procurement of raw material to the distribution of the final product would be decreased to a great extent.

BENEFITS OF JIT1. Decrease Q.A cost2. Waste elimination3. Decrease sampling cost4. Increase supplier relations5. Creates vendors management systems.6. Decreases the ordering and holding costs.

INVENTORY MANAGEMENT & CONTROL Average inventory consumptionNet family demand plan at HinopakClassification of inventory

CKD Parts Vendorized / local parts

Scheduling (Customize KANBAN & NON-KANBAN Items)

AVERAGE INVENTORY CONSUMPTION Net family demand plan generates plan for the required product, and no of parts needed and raw material needed to manufacture a particular product. As there are different variety of raw materials and parts required for a product to be manufactured so net family demand plan summarizes how many parts are needed or required for the manufacturing of a particular product.

CLASSIFICATION OF INVENTORY

Inventory is further classified into different categories, the two basic categories of inventories are:

CKD Parts Vendorized / local parts

CKD PARTS:These are high value, low volume parts these parts are outsourced mainly from Japan.CKD parts come on weekly bases and are issued CKD store. The rolling of these high value parts takes place on regular intervals. Special wood packaging standards are deployed for these parts.

VENDERIZED PARTS:

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Tyres (Vendorized parts)

These parts are purchased form specific vendors which are not international but local vendors, all types of parts under the category of Venderized/local parts, like High value, low volume, low value, high volume. These parts o monthly bases according to the production plan which is generated once the Master Supply plan has been created.

Part CategoriesCKD PARTS Venderized PARTS

Engine Disk wheelAxle assembly Brake drums

Chassis Leaf springsCap Batteries

KANBAN The concept is that a supplier should only deliver components to the production line as and when they are needed. Kanban limits the amount of inventory in the process by acting as an authorization to produce more inventories. Kanban is maintaining minimum inventory on the floor.

PARETO PRINCIPLE USING FOR INVENTORY CONTROL The Manager MOD Frequently and Closely Control 20% of the Inventory Offer that makes 80% of total Inventory Value. Pareto Principle is used as a Powerful Tool for Keeping with the lowest cost of stock. There are about 1700 local items from which 200 items are 80% of the cost.

NON-KANBAN ITEMS Scheduling of non-Kanban items are based on CKD. As the arrival time of CKD is ~ 3 months, so we are maintaining inventory of non-Kanban items within 40 days from suppliers.

CRITICAL INVENTORY ANALYSIS CARDThis card is displayed on daily bases in the AOP store; the basic purpose is to bring awareness among the employees working in the AOP store for the inventory which will be used for the manufacturing of a particular model for the current month. This card also categorizes the inventory which can be arranged accordingly so that it is available in the store prior to production. The basic objective is to set up corrective and preventive action plans for the critical items needed for the production.

BILL OF MATERIAL & QUANTITY MODEL – CLASSIFICATION Analysis of raw material for the model FGIJK model has been carried out during the project, the data was taken from the Venderized parts store. The raw material which are used for

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the current model are Venderized parts means that there are some specific vendors who supply the parts to Hinopak. According to the demand created by the marketing department i.e. how many vehicles to supply to the customers then according to the production plan is prepared which subsequently generates MRP for the required car. In order to categorize the materials, Bill of QUANTITY & BILL of MATERIAL is a terminology use to describe the following methodology.There are also some CKD parts, which come on weekly bases, these are expensive parts and are outsourced mainly from JAPAN & TAIWAN.

Bill of material:The exact quantity of parts required in manufacturing the entire product.

Shops & Stages:There are different shops and a different stage which shows us how many different items are used according to the different shops and stages which are laid down in the assembly line of Hinopak.

Conclusion:The above bill of material is for a specific product which is manufactured at Hinopak, the bill of material has been analyses separately for shops and stages. The reason for doing this is to analyze further how many shops and stages are there in the assembly line of Hinopak. Also to specify that how many parts are needed to manufacture the product in the assembly line.

MASTER PRODUCTION SCHEDULING (MPS)The objectives of this module are to help Hinopak Motors they anticipate shortage before its accrue, (current stock, purchase order, manufacturing order & sales order) these activities

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creates a projection of your stock levels anywhere from a week to several years in advance through this you can easily highlights your shortages.MPS You can easily see what exactly the shortage will appear if we execute the specific production plan.

ASSEMBLY OPERATION PLANT ( FLOW DIAGRAM)

23

BODY OPERATION PLANT ( FLOW DIAGRAM)

PRACTICE TO IMPROVE / PROCESS EFFICIENCY

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TO AVOID 3MS

1. Muda Waste2. Mura Unevenness / Waviness3. Muri Overburden / Impossibility

KAIZEN

The Japanese term for Continuous Improvement is kaizen and is the process of making incremental improvements, no matter how small, and achieving the lean goal of eliminating all waste that adds cost without adding to value. Kaizen teaches individuals skills for working effectively in small groups, solving problems, documenting and improving processes, collecting and analyzing data, and self-managing within a peer group. It pushes the decision making (or proposal making) down to the workers and requires open discussion and a group consensus before implementing any decisions. Kaizen is a total philosophy that strives for perfection and sustains Toyota Production System (TPS) on a daily basis.

5S ACTIVITIES

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Waste of material, time, energy, resources, equipments and potential etc.

Muda (waste)

"Implementation of 5S Activities to acquire a Neat & Clean environment which gives Higher Productivity, Fewer Defects, and a safer execution"

Seiri (Clearing up)Remove what is not needed and keep what is needed.Seiton (Organizing)Place things in such a way that they can be easily reached whenever they are needed. Seiso (Cleaning)Keep things clean and polished; no trash or dirt in the workplace.Seiketsu (Standardizing)Maintain cleanliness after cleaning – perpetual cleaning.Shitsuke (Self-discipline).Commitment, a typical teaching and attitude towards any undertaking to inspire pride and adherence to standards established for the four components.

VENDOR MANAGEMENT

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5 S activities

SEITON (Straighten)

SEISO(Shine)

SEIKETSU(Standardizati

on)

SHITSUKE (Sustain)

SERI (Sort)

The pie chart on the right shows the total number of vendors which, local and international vendors. The total number of international vendors is 10, and local vendors are 110 and around 80 for the backup plan.

VENDOR EVALUATION FORM (INITIAL)

VENDOR REGISTRATION FORM

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28

QUALITY PERFORMANCE SCORECARD FOR VENDORS

QUALITY PERFORMANCE Yusuf industries

Hataf Engg

Tariaj Industries

Allied Engg

TransmissionEngg

LINE RETURN 8 7 7 8 7PPM DEDUCTION 9 9 8 7 8

CERTIFIED YIELD MULTIPLIER 9 9 7 7 8PENALTY:FIELD ISSUES

STOP SHIPMENTLINE PURGE

9 8 7 7 8

SUB TOTAL 9 8 7 7 8PROCESSS CONTROL 9 8 7 7 8

PROCESS TECHNOLOGY 8 9 7 7 8SUSTAINING TECHNICAL

SUPPORT8 7 7 7 7

ON TIME DELIVERY 7 7 7 7 7PRODUCT TECHNOLOGY 8 7 7 8 8

LEAD TIME 7 8 7 8 9PURCHASING AND

MATERIAL SUPPORT8 8 7 8 9

PERFORMANCE MATRIX TOTAL

7 8 7 8 7

PRICE INDEX =TARGET PRICE /ACTUAL PRICE

8 7 8 8 8

SCORE=PERFORMANCE MATRIX*PRICE INDEX

8 8 9 8 9

TOTAL COST OF SUPPLY =((100-SCORE/100)/1

8 8 8 7 8

POINTS RANKING:The above points are given on the bases of evaluation done on the performance factors. Following are the range which shows the highest points and lowest points.

RATING FACTOR

POINTS

EXCELLENT 9VERY GOOD 8

GOOD 7AVERAGE 6

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SUPPLIER RELATIONSHIP MANAGEMENT Industries spend around 60% of their capital on inventory on the basis of Mass Production to get maximum return on investment. Its’ imperative that suppliers must be developed and provide raw materials according to the requirements and specifications of the respective industry.

SUPPLIER RELATION

In the modern era of industrialization, the concept of relation with suppliers has changed they say “Treat Suppliers as Partners”. Industry has to build a trust free environment with their suppliers and it relates methodology and applications of CRM (Customer Relationship Management). I f the company is deciding to change the production plan, its their duty to inform their respective supplier about the demand of the respective raw material and that is only possible when there is an effective applications of Customer Relationship Management. It enables the supplier to provide material at lower cost on long term bases.

SOURCING

There are three types of Sourcing 1. Sole 2. Multiple3. Single SourcingSOLE

Implies when the company is bound to purchase material from one supplier. Following factors are related to sole sourcing.

Technical specificationsRaw material locationOnly single organization is producing that particular material.

MULTIPLE Sourcing implies when the industry selects more than one supplier i.e. two or more than two suppliers. But choosing of the suppliers depends on the following factors:

1. Quality 2. Costs3. PriceSINGLE

Sourcing is based on the joined consensus of opinion of the organization. This results in long term contracts among the suppliers with a guaranteed volume.

SUPPLIER SELECTION

Selection of supplier is a critical activity to be deployed by the Materials Management. It is based on the following principles:

PRINCIPLES OF SUPPLIER SELECTION

The supplier must understand and appreciates the management philosophy of the organization.

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The supplier must have effective production facility and must be flexible with the future technological advancements.

The supplier must be able to provide raw material according the requirements of the company.

The supplier must meet specifications of the respective purchaser. The supplier must have enough capacity, when the demand goes up by the purchaser he

must be able to provide according their demand. Supplier must try to deliver raw on time to the purchaser. Supplier must be IOS 9000/QS 9000 certified. Supplier must have electronic track record of customer complaints and specifications.

SUPPLIER CERTIFICATION

There should be a mutual agreement between the supplier and the purchaser on specifications that are required to manufacture the product.

The supplier should not have product related lot rejection for more than one year. The supplier shall have no product related lot rejection for a significant period of time,

i.e. three months or number of lots. The supplier shall have no negative non-product related incidents for a stated period

around six months or a number of lots. The supplier should have documented system of quality ISO 9000. The supplier shall have successfully passed an onsite system evaluation. Evaluation can

be conducted by a third party. The supplier must conduct inspection and tests. Laboratory tests must be used for batch

process.SUPPLIER APPRAISAL/SCORE CARD

Supplier appraisal should be conducted on monthly bases; this evaluates the supplier and creates a clear picture of the respective supplier standing: Following are the factors on which score card must be based:

On time deliveryProduct technologyLead timePurchasing and material supportProcess controlProcess technologyQMS Certifications

PERIODIC APPRAISAL OF VENDORS

31

Dis

trib

ution

Res

ourc

e Pl

anni

ng

Institutional Business

Dealers

SCORE CARDS# Vendor Name AREA FORMAT TOTAL NO Feb-10

1 A & A Metal Industries

QUALITY QRR (Q) 10 10

QRR (S) 10 10

QPR 10 10

PIR 10 10

SUPPLY V-BEH 30 30

PRICE PCR 30 30

TOTAL 100 100

GRADE A+

2 A & Z Company QUALITY QRR (Q) 10 10

QRR (S) 10 10

QPR 10 6

PIR 10 10

SUPPLY V-BEH 30 24

PRICE PCR 30 30

TOTAL 100 90

GRADE A

DISTRIBUTION RESOURCE PLANNING

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GRADING CRITERIA A+ = 95 % and above A = 85 % ~ 94 % B = 75 % ~ 84 % C = 65 % ~ 74 %

BENEFITS & LIMITATION OF DRP MARKETING BENEFITS

1. Improved service levels that increase on time deliveries and decrease customer complaints.

2. Improved and more effective promotional and new product introduction plans3. Improved ability to anticipate shortages so that marketing efforts are not expended

on products with low stocks4. Improved inventory coordination with other functions in the enterprise.5. Enhanced ability to offer customers a coordinated inventory management service.LOGISTICS BENEFITS

1. Reduced distribution center freight cost resulting from coordinated shipment2. Reduced inventory levels, since DRP can accurately determine what products are

needed & when.3. Reduced warehouse space requirement because of inventory reductions4. Improved inventory visibility and coordination between logistics and manufacturing.5. Better budgeting since DRP can simulate inventory and transportation requirements.INSTITUTIONAL BUSINESS

1. Pak Air force2. Pak Navy3. Pak Army4. Colleges5. Universities

WALK IN CUSTOMERS

Coca cola, Pepsi, policeWALK IN CUSTOMERS INCLUDE

Multiple institutionsDEALERS

Different transport service providers

DISTRIBUTION NETWORK MODEL

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CUSTOMERSINSTITUTIONS, WALK IN, DEALERS

LahoreIslamabadKarachiMultan

PeshawarD.I.KhanMultanQuetta

AREA OFFICES

SALES DEALER

SERVICE DEALER

LahoreMultanQuettaKarachi

SargodhaSadiqabadSukkur Hyderabad

WAREHOUSE HINOPAK

WIRE HARNESS STORECKD STORE STATIONARY STORE

VENDOURISED PARTS STORE

RAW MATERIAL

CUSTOMERS

When demand arises from the customers (walk in, institutions and dealers), raw material is arranged accordingly for the particular product. There are different stores which are located in the factory office, raw material such as CKD parts, Wire harness and stationary is arranged accordingly.

AREA OFFICE

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Different area offices are located in cities like Lahore, Islamabad, Karachi and Multan, the main purpose is to provide parts and take customers feedbacks who buy the product of Hinopak.

AREA REPRESENTATIVE

Area representatives are offices which are set up by Hinopak in order to represent the area offices of different cities, so that complains, warranties and customer support can be provided to the end consumer of the product.

SALES DEALER

The objective of Sales dealer is to sales the product of Hinopak, demand is generated by the customer or they directly contact the sales dealer who deal in the products of Hinopak. The customer who wants to buy the product can directly contact the sales dealer who are there in different countries so f Pakistan.

SERVICE DEALER

They provide all the value added services which include:1. After sales service2. Warranty claim3. Spare parts4. Change of lubricants.

The method of implementation:To implement the automatic reorder system, the company needs to enhance the oracle support, building a system in which the inventory levels should be defined of each item setting a safety stock level also. So by using the automatic reorder system, the company will be saving a lot of finances which were getting wasted in the ordering as well as the non availability of items.Therefore, whenever the inventory level of any item will reach the reorder point the automatic reorder system will generate the order for that item and will place the order to the registered supplier of the company for that particular product. The supplier will see that order from its own interface, as he will be having the access to the company’s system from his own login ID. Thus the whole process of the reordering will be automated and the company will be saving a lot of cost which was previously getting wasted in this process.

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Bibliography:The reference for this project is taken from the following books.

1. Essentials of supply chain management by Michael Hugos.2. Supply chain management by SUNIL CHOPRA, PETER MEINDL, and D.V KARLA3. Process management by JOEL D. WISNER & LINDA L. STANLEY.4. Total quality management by BESTERFIELD.5. Operations management by CHASE, JACOBS, AQUILANO.6. Materials management handbook.7. www.hinopak.com 8. www.hino.com 9. Hinopak QMS manual

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