Group members

Aftab Baig 58407

Muhammad Ahsan 58193

• Introduction of Automobile industry

• Know about the Purchasing policy of the automobile

industry

• Compare the purchasing policy with current learning of the

class

• Missing points in purchasing policy of the Automobile

industry
An industry that produces automobiles and other gasoline
powered vehicles, such as buses, trucks, and motorcycles.

 Pak Suzuki Motor  Sind Engineering Ltd.

 Cars, Trucks , Bikes and
Company Ltd. Pick-ups.
 Sigma Motors (Pvt) Ltd.
 Indus Motor Company  L.C.Vs

Ltd.  Hinopak Motors Ltd.

 Honda Atlas Cars Ltd.
 Millat Tractors Ltd.
 Farm Tractors.
 Dewan Automotive
Engineering Ltd.
 Cars and Pick-Ups
 DYL Motorcycles Ltd.
 Trucks and Buses.
 Ghandhara Nissan Ltd.
 Trucks, Buses and Cars.
 Master Motor Corporation Ltd.
 Trucks , Buses and Pick-
ups.
 Pakistan Cycle Industrial
Cooperative Society Ltd.
 PLUM Qingqi Motors Ltd.
• The 1st in Pakistan

• Pioneer in Pakistan Automobile Industry

• Largest Dealership Network

• Highest Market Share

• Has Become a Household name

 Automobile Heavy Bikes
• WAGONR
• SWIFT
• HAYABUSA
• CULTUS • INTRUDER
• MEHRAN
• INAZUMA
• APV
• JIMNY • INAZUMA AEGIS
• BOLAN • BANDIT
• CARGO VAN
• PICKUP RAVI Outboard Motors (Marine)
Motor Cycle • 2-STROKE
• GS
• GD • 4-STROKE
• SPRINTER ECO
• They have centralized system of purchasing, But they
have petty cash amount for least cost items and urgent
requirement.
• They Import items from selected vendors .
• They gave the space to their vendor for easy to complete
the task and improve JIT and work with least inventory .
a. Determination of
Request/Indent
• Email
• Verbal
• Against to Sale Order
• Purchased Requisition
• Approved Quotation
b. Stock Source
• Either available in stock or buy
from the local market.
• Quotation Call
• Price List
c. Vendor Selection
• Preference Route
• Previous Record
• Location base vendor
• Technical and commercial base
• Delivery Time
• *If new vendor, then enlistment/
Registration is required.
d. Order Processing
• After the approval of
Requested departmental
& divisional head, P.O
Singed by designated
authority(s).
e. Good Received
• Delivery Challan
• GRIN stock against local
P.O f. Invoice Verification
• Quotation , P.O, DC and
Invoice
g. Payment Process
• Within 30 days
• Identify Need
• Select Specific Product
• Appoint Purchase Team
• Specify Technical Specifications
• Budget for Purchase
• Research Potential Suppliers
• Solicit Bids
• Award Contract
1. IPP (imports part purchasing)
• Deals in Procurement of Components (CKD, KD, Spares), CNG
Cylinders, Raw Materials (Steel Sheet, Plastic Resins, CED Paint),
PMEs and their Spares from foreign sources
2. LPP (local parts purchasing)
• Deals in Procurement of locally developed Components from local
Vendors
3. GP (general purchasing)
• Deals in Procurement of Plant Consumables (Paint, Industrial
Gases, Lubricants, etc.), PMEs and their
• Spares, Administrative Procurement (Computers, Mobile Phone,
Stationery, etc.) from local suppliers
Selection of supplier is based on following criteria (before
selection visit to the premises of supplier by GP Officials is
mandatory):
(a) Preference route for selection of supplier:
1. Direct Manufacturer,
2. Manufacturer’s authorized agent/ distributor.
3. General Order Supplier, if required, for verification of direct
manufacturer and authorized agent / distributors’ proposal,
GP section also gets quotations from general order
supplier(s). If their proposal is competitive, GP section may
select that supplier, with the approval of end-user.
(b) Performance route for selection of supplier:
• 1. Have Conformance to quality standards and
specifications.
• 2. Completive Prices
• 3. Conformance to the delivery schedules.
• Pak Suzuki has played an motivation role in the engineering sector
by promoting and encouraging the downstream vendor industries in
the private sector ("Downstream" refers to movement in the
direction of the customer).
• Currently there are about 143 local vendors for difference parts
whereas there are more than 10 foreign suppliers for some major
components.
Sourcing raw material
• Pak Suzuki are sourcing raw material from different countries like,
Japan, Korea , Thailand but most of the components are sourced
from Japan SMC i.e. Suzuki motor company.
• Furthermore Pak Suzuki importing components from SMC Japan
as CKD that means (completely knock down) i.e. fully
disassembled form. There are three department they involving for
procuring components from vendor that are as follows.
• The following set of criteria is essential for deciding on choice
of vendors:
• i) Price
• ii) Quality of goods/services. Such a justification must be
verifiable.
• iii) Availability of goods/services within the required
delivery time.
• iv) After sale services, including availability of
parts/supplies.
• v) Bidder’s previous records of performance and service.
• vi) Ability of bidder to render satisfactory service in this
instance.
• vii) Financial stability of the vendor.
• viii) Availability of bidder’s representatives to call upon and
consult with
• ix) Payment terms
• x) Warranty offered.
• xi) Ability to provide samples
Traditionally Suzuki motors are keeping inventory as in
case problems arise i.e. of stock out. They are also working
on Just in Time approach (JIT).
1. JIT objective: To eliminate inventory
2. JIT requires:
• a. Small lot sizes
• b. Slow setup time
• c. Containers for fixed numbers of parts
3. JIT inventory: Minimum inventory to keep system
running, Lower inventory reduces waste and reducing
inventory reveals problems so they can be solved.
• We also suggested the JIT for the Inventory, so there are
no any conflict between our suggested inventory and Pak
Suzuki inventory .
• Local parts purchasing department (LPP):
LPP sent delivery order to vendors monthly basis (firm
orders), delivery order contains order quantity, delivery
dates, packing size, minimum lot size, and starting date
Ordering process through ERP in PSMCL: LPP issue
delivery order and part tags to vender, delivery order shows
all details and part tags to vender through e-mail and
vender is liable to paste part tags and delivery instruction
letter along with supplier in order to generate GRINS
(goods receivable inspection notes)
DI’s (delivery instructions) and part tags explore all the
relevant information about location and quantity.
• Departmental head of production control prepares
YEARLY ACITVITY PLAN in consultation with all the
sectional heads of the department and takes approval
from divisional head.
• In the yearly plan, the basic activities of production
control are described. Additional assignments from
management, other than the basic jobs stated in the
yearly plan, are performed as when required.
 Suggested Policy
• Purchasing Power Parity
• Lobby system
• Alternative Vendor Pool
• Market intelligent
• CFT Team
• De-centralized purchasing
system
Actual Policy
• No using PPP for
imported items
• They don’t have lobby
system with govt officials
• Develop vendor Society
• Purchasing Power Parity
They must follow the purchasing power parity for the IPP
(import part procurement) and also start developing the local
vendors so in future they would be able to make those parts to
attain less cost and reduce lead time.
• Lobby system
They should make lobbying with policy maker, they can easily
have information regarding upcoming policies and regulations.
• Alternative Vendor’s Pool
(Some times company face shortage of supply due to non-
availability of materials. so they can easily brake the monopoly
the suppliers with new hiring of vendors).
 Market Intelligence
Pak Suzuki not having the Market Intelligence department
which provides the information about the market changes,
competitors activities and Government policies which also
effect the entire planning of the organization.
 CFT TEAM
In Pak Suzuki there are no CFT team for purchasing or
other sales decisions. They must establish the CFT team in
the company.
 De-centralized Purchasing System
They must do the De-centralized system of the purchasing
for least cost requirement and for the normal office
supplies.
• Develop Vendors Society
(In the consideration of the law and order situation
especially in Karachi Pak Suzuki is also emphasizing to
develop a vendor’s society for the purpose they are lending
land to their vendors (importantly critical parts’ vendors).
Pak Suzuki offer land on the basis of lease).
Yearly planning of the required items from different vendors
Purchasing Process on ERP system
22