SUPPLY CHAIN MANAGEMENTINHINOPAK MOTORS LIMITED.

Sir. SOHAIL MAJEED IQRA UNIVERSITY

Presented by:SHEEMA RAZA 2936ADIL AZIZ 2938KHAWAR ATEEQ 2934SANA MUSHTAQUE

SCM MissionTo 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

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

Revenue growthBetter assets utilizationCost reduction

SUPPLY CHAIN IN

HINOPAK MOTORS LIMITED

I N D

I A

C H I N A

IRAN

KARACHI

Lahore

Quetta

Sadiqabad

FaisalabadMultan

IslamabadPeshawar

NWFP

Punjab

Sindh

Balochistan

Province

Federal Capital

Provincial Capital

Hino Head Office

Hino Area / Rep. Offices

A F G H

A N I S

T A N

Head Office, Karachi - PakistanARIBIAN SEA

Assembly Operations Plant

Area47,000m2

Employees454 Nos.

Body Operations Plant

Area24,000m2

Employees905 Nos.

Established in 1986 Share Holding Hino & TTC = 89% & Public = 11% Head Office in Karachi City

Introduction of Hinopak Motors

FG1J (4x2)

FL1J (6x2)

FM1J (6x4)

SG1J (4x2)

FM2P (6X4)

GT1J (6x4)

500 SERIES

DUTRO (4x2)

JR. DUTRO (4x2)

HIGH POWERDUTRO (4x2)

IMV FRAME

300 SERIES BUS SERIES

AK1JR

AK1JR-CNG

AK1JM

RK1J

FB2W

AK1JR-LH

DUTRO-LH

PRODUCT RANGEAssembly Operation Plant (AOP)

PRODUCT RANGEBody Operation Plant (BOP)

Truc

k &

Spe

cial

ized

Bod

ies

Bus

Bodi

es Urban Bus Urban Bus Splendor Bus CNG Bus Rapid liner Senator Road liner

AchievementsISO 9001 Certification

Hinopak is the only automotive company in Pakistan and the first Hino affiliate worldwide to receive the ISO 9001 certificate. This certificate has been given to Hinopak for implementing and maintaining a company-wide quality.

ISO 14001 CertificationBeing a responsible corporate citizen striving for the improvement in our environment, both within and outside the company , Hinopak Motors Limited has voluntarily ISO 14001 Certification. ISO 14001 pertains to monitoring and managing the effect, which any business has on the environment.

OHSAS 18001:2007 CertificationHinopak has successfully achieved accreditation to safety management system OHSAS 18001:2007.OHSAS 18001 is a Health and Safety Management System, developed to assist in the reduction and prevention of accidents and accident related loss of lives, equipment and time.

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

5000

3000

10000 1,518 1,883

2,341 2,286 2,614

3,593 4,1123,017

876895

HINOPAK Sales Achievement (Last 10 Years)

59%

41%

Hinopak, Current Market Shares

Hino Others (Nissan, Master, Issuzu, Faw, Dong feng etc.)

World Recession

77.47%

12.09%

8.80%0.04%

1.60% 0.00%

Hinopak Mkt. Share in Bus Business

HINOISUZUNISSANMASTERDONG FENGVOLVO

45.42%

22.21%

23.11%

8.86%0.40%

0.00%

Hinopak Mkt. Share in Truck Business

HINOISUZUNISSANMASTERDONG FENGVOLVO

Organizational Chart

Supply Chain Structure in HINOPAK

Final product

manufacturing

Supplier

ProcurementInventory

management

Customers

PROCUREMENT&

INVENTORY MANAGEMENT

Order Flow Process ( Customer to HPML)

Customers

(Direct/Indirect)

Assembly/

Manufacturing

Procurement

Vendors/Supplier

s

60% Local &

40% Import

Material ManagementInventory ControlBill of MaterialOrdering SchedulingStock Checking & Control

ERP System Implementation

Classification of Inventory CKD PartsThese 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 intervalsVendorized / local partsThese 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.

Part CategoriesCKD PARTS Venderized PARTS

Engine Disk wheelAxle assembly Brake drums

Chassis Leaf springsCap Batteries

Pareto Principle is used as a Powerful Tool for Keeping with the lowest cost of stock. The Manager MOD Frequently and Closely Control 20% of the Inventory Offer that makes 80% of total Inventory Value. 1700 items are available in different CBOM , 200 Kanban items.

Pareto Principle for Inventory Control

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 inventory.Kanban is maintaining minimum inventory on the floor.

Kanban

Import Procurements ProcessForecast

Procurement B.O.M

Price Negotiation

Performa Invoice (FOB /

C&F)

P.O placed L .C

Revival & Recovery of original

documents i- BL ii- Invoice iii- L.C

Clearance through Agent

or direct

Delivery and Possession of

Material

Good Receiving

Note

Local Procurements

Mktg. ForecastSupply Chain deptt. & PPC

MPS Generation

Oracle generate Purchase generate

P.O received by Vendor

Vendor Supplies Part

to HPMLReceiving Cell Oracle Entry

MOD Verifies the quantity

fwd to QCInspection

GRN generated

transfer to stock

feeding on line as per MPS

thru MIR

on completion of job, job

closed

Invoice generated to

mktg.

MRN generated Finance (-tax &

payment to vendor)

OK

NOT OK

Global Procurements

MRP PLANNING

Example of ERP System

WAREHOUSE MANAGEMENT

Warehouse ManagementStores:

Stores Department at Hinopak performs following functions.Manages the receiving, stacking & Issuance of parts & materials to the shops.Ensures the provision & dispatches of required parts to the shop floors, spares parts division & vendors.Handles the rejections & damages from all shops

Division of Stores:Stores department at Hinopak has been divided into a number of small stores according to the type of material being stored and function/services provided by the store.

The division is shown as follows:

STORES DEPARTMENT

CKD Stores RM Stores Consuma

ble StoresWiring

Harness Store

Stationery Stores

MANUFACTURING

Master Production Scheduling (MPS)•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 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)

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

Muda (waste)

Practice to Improve / Process Efficiency

To avoid 3Ms

SEITON (Organizing)

Place things in such a way that they can be easily reached whenever they are

needed.

SEISO(Shine)

Keep things clean and polished; no trash or dirt in the workplace

SEIKETSU(Standardization)

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.

SERI (Sort)

Remove what is not needed and keep what is needed

5S Activity

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. It pushes 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.

VENDOR MANAGEMENT

VendorRegistration Form

VendorEvaluationForm (Initial)

There are three types of Sourcing Sole

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

MultipleQualityCostsPrice

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

Sourcing

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

SUPPORT 8 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 SUPPORT 8 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:RATING FACTO POINTS

EXCELLENT 9

VERY GOOD 8

GOOD 7

AVERAGE 6

Quality Performance Scorecard for vendors (monthly basis)

S# 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

Periodic Appraisal of Vendors SCORE CARD

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

CriteriaOn time deliveryProduct technologyLead timePurchasing and material supportProcess controlProcess technologyQMS Certification

Future recommendations

JUST IN TIME. Lean Purchasing Practices – small frequent deliveries, pulled to the line.Reduced Inventory Carrying Cost.Previously [6 + 6] Line Feeding …. Change to [1 + 1] Line Feeding.Direct Feeding From Vendor To Line.Reliability of Parts Good Quality Increase.Function of QC Change from In-coming Inspection To Vendor Development.Have a Second Source of Supply: Especially for critical parts, use two sources of supply

THANK YOUFOR YOUR KIND ATTENTION