SUPPLY CHAIN

SUZUKI MOTORS

Distribution:

Distribution networks are complex systems that involve multiple parties, that actively help in
moving the product through its point of origin to the final consumer, such as manufacturers,
wholesalers, retailers, and logistics providers. To optimize a distribution network, it is
important to consider factors such as the location of production facilities, the proximity of
distribution centers to customers, transportation modes and routes, inventory management,
and information technology systems.

Distribution channel of Suzuki:

The distribution process of Pak Suzuki Motors involves a number of steps, including
production, warehousing, transportation, and sales. The company produces its vehicles at its
manufacturing facility in Karachi, Pakistan, and stores them in warehouses until they are
ready to be distributed to dealerships and sales outlets.

The distribution channel of Pak Suzuki Motors includes authorized dealerships, sales outlets,
service centers, and spare parts outlets. The company's authorized dealerships and sales
outlets are responsible for the sales and distribution of Suzuki vehicles in Pakistan, while the
service centers provide after-sales services to customers, and the spare parts outlets offer
genuine Suzuki spare parts for the company's vehicles.

The distribution channel of Pak Suzuki Motors is organized into four regions: North, Central,
South, and Baluchistan. Each region has a regional office that oversees the sales and
distribution activities in that area.

USUAL DELIVERY TIME 3-4 MONTHS

The company's authorized dealerships and sales outlets are spread across various cities and
towns in Pakistan, including Karachi, Lahore, Islamabad, Rawalpindi, Peshawar, Faisalabad,
Multan, and many others. Pak Suzuki Motors' service centers and spare parts outlets are also
located in different parts of the country to provide after-sales services and genuine spare parts
to customers.

Pak Suzuki has the largest Dealers network offering 3S (Sales, Service and Spare Parts)
facilities in Pakistan. The company currently has 77 dealerships spread across 27 cities. The
company enjoys a dominant position in small & medium size cars and light commercial
vehicles market in Pakistan. Pak Suzuki was able to hold and maintain around 50% market
share in Cars and Light Commercial Vehicles segment.
In addition to dealerships and sales outlets, Pak Suzuki Motors also has a network of 48
authorized service centers across Pakistan. These service centers offer after-sales services to
customers, including maintenance, repairs, and warranty claims.

Pak Suzuki Motors also has a network of over 3,000 spare parts outlets across Pakistan.
These outlets provide genuine Suzuki spare parts to customers and ensure the availability of
spare parts for Suzuki vehicles in the market.

The distribution channel of Pak Suzuki Motors involves a direct distribution approach, where
the company supplies its vehicles directly to its authorized dealerships and sales outlets. The
dealerships and sales outlets then sell the vehicles to end customers, who may also purchase
after-sales services and spare parts from the company's service centers and spare parts outlets.
Suzuki Pakistan uses a combination of road, rail, and sea transportation to move parts and
vehicles from production facilities to distribution centers and dealerships. Road transportation
is commonly used for final distribution of vehicles to dealerships. This is because road
transportation offers flexibility and is able to reach locations that may not be accessible by
other modes of transportation.

How to optimize the distribution channel?

- One approach is to use data analytics and optimization algorithms to determine the
most efficient routes for delivering vehicles to dealerships. This involves analyzing
factors such as traffic patterns, road conditions, and delivery schedules to minimize
travel times and reduce transportation costs.

- Secondly, improve the tracking and monitoring systems used in the distribution
network. By using real-time tracking systems, companies can better manage inventory
levels, reduce waste, and improve delivery times. This involves implementing systems
that allow for seamless communication between different parties in the distribution
network, such as manufacturers, logistics providers, and dealerships.

- Finally, companies can consider alternative transportation modes and

infrastructure, such as intermodal transportation, to reduce transportation costs and
improve delivery times. Intermodal transportation involves using multiple modes of
transportation, such as road, rail, and sea, to move products from production facilities to
dealerships.
Risks Associated with Distribution:
1. Goods-in-transit Accidents: During transportation of Suzuki vehicles, accidents can
occur due to a variety of reasons such as poor road conditions, inclement weather,
driver error, or mechanical failure. For instance, in 2019, there were over 450,000
road accidents in Pakistan resulting in more than 7,000 fatalities and over 40,000
injuries, according to the National Highways & Motorway Police. Such accidents can
cause significant financial losses to Suzuki Pak Motors by damaging their vehicles,
causing delays in deliveries, and impacting customer satisfaction. Moreover, the
company may need to incur additional costs to repair or replace the damaged vehicles.
Mitigate:1. Comprehensive insurance coverage for goods-in-transit
2. Advanced tracking and monitoring systems: to track their goods, drivers
behavior and patterns etc

2. Accidents Involving Fleet and Delivery Vehicles: Suzuki Pak Motors may face risks
associated with accidents involving their own fleet and delivery vehicles. For
example, a delivery vehicle involved in an accident could damage the vehicles being
transported, causing delays in deliveries, and negatively impacting customer
satisfaction. In addition, accidents involving the company's fleet and delivery vehicles
could result in property damage, injury, or death to drivers or passengers, and
potential legal liabilities for the company. To mitigate this risk, Suzuki Pak Motors
can implement regular vehicle maintenance, conduct driver training programs, and
invest in advanced safety features such as collision avoidance systems.
Mitigate: Regular maintenance of vehicles and Driver training programs

3. Internal Theft: Internal theft is a common risk faced by companies in the automotive
industry, including Suzuki Pak Motors. The company may face theft of vehicles,
spare parts, or other valuable items, either by employees or external parties such as
logistics providers or dealerships. For example, in 2019, the Lahore police arrested
three people involved in stealing cars from a Suzuki car showroom. Internal theft can
cause significant financial losses to the company, negatively impact their reputation,
and lead to legal action. To mitigate this risk, Suzuki Pak Motors can implement strict
security measures such as surveillance cameras, background checks for employees
and logistics providers, and implement inventory management systems to track the
movement of goods within their distribution network.
Mitigate: Strict security measures, Inventory management systems (Tracking
movement of goods within the distribution system)

4. Counterfeit Products: The distribution process may expose Pak Suzuki Motors to
the risk of counterfeit products, including fake spare parts and accessories.
Counterfeit products can damage the company's reputation, lead to customer
dissatisfaction, and cause potential legal liabilities.
Mitigate: Raise awareness about the dangers of counterfeit products and educate
customers about how to identify genuine products.
Procurement:
Procurement involves every activity involved in obtaining the goods and services a company
needs to support its daily operations, including sourcing, negotiating terms, purchasing items,
receiving, and inspecting goods as necessary and keeping records of all the steps in the
process.

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 are
involving for procuring components from vendor that are as follows.
 IPP
 LPP
 GP

- IPP (imports part purchasing)

Deals in Procurement of Components (CKD, KD, Spares), CNG Cylinders, Raw
Materials (Steel Sheet, Plastic Resins, CED Paint), Plant Maintenance essentials and their
Spares from foreign sources.

Objective of IPP department

To ensure continuous supply of all the imported inputs to the end user to keep running
the production without any interruption, which ensures that:

The right materials are available at the right place, at the right time, at the right
quantity and quality, and at the competitive cost.

Mode of Payment: Payment by IPP department is done by:

 Letter of Credit
 DP contract - payment against receipt of document
 T/T remittance

Mode of Shipment:
 By sea and By air

Port of Discharge:
 Port Qasim (99%)
 Karachi Port

Major shipping Lines:
 Maersk Line
 NYK

Clearing and Forwarding agent:

 Express services and A.Shakoor brothers

Inland Transporter:
 Al hammas freight Liner
Insurance company:
 EFU general Insurance

- LPP (local parts purchasing)

Deals in Procurement of locally developed Components from local Vendors
Objective of LPP department

1. Arranging components from vendors at competitive prices, in right quantity and at

right time
2. Order local components at competitive prices & look out for all possible ways to
reduce cost of vendorized parts

- GP (general purchasing)
Deals in Procurement of:
o Plant Consumables (Paint, Industrial Gases, Lubricants, etc Administrative
o Procurement (Computers, Mobile Phone, Stationery, etc.) from local suppliers

Functions of GP:
1. Planning
2. Ordering
3. Follow Up
4. Price Negotiation
5. Market Sourcing

The procurement process is a critical part of the overall supply chain in the automobile
industry, as it involves acquiring the raw materials and components needed to manufacture
vehicles. For Suzuki Pak Motors in Pakistan, the procurement process involves sourcing parts
and materials from local and international suppliers.

One of the key challenges faced by the procurement team at Suzuki Pak Motors is managing
the frequent changes in market demand. This requires a high level of flexibility and agility in
the procurement process, as the team must be able to quickly adjust their purchasing
strategies to meet changing demand patterns. For example, if there is a sudden increase in
demand for a particular model, the procurement team must be able to secure the necessary
parts and materials to meet that demand.

To manage the procurement process effectively, Suzuki Pak Motors uses a variety of tools
and techniques, including demand forecasting, supplier performance management, and
contract management. For example, the company uses advanced analytics to forecast demand
for its vehicles and parts, allowing them to anticipate changes in market demand and adjust
their procurement strategies accordingly.

In addition, Suzuki Pak Motors works closely with its suppliers to ensure that they meet the
company's quality and delivery standards. This includes regular performance reviews and
audits, as well as ongoing collaboration and communication to ensure that suppliers are
meeting their contractual obligations.
To incorporate market trends and customer preferences, due to unexpected changes, into their
demand plan, Suzuki Pak Motors utilizes a combination of market research and dealer
feedback. They conduct regular market research to understand changing consumer
preferences and trends in the automotive industry. This includes analyzing data on consumer
demographics, lifestyle preferences, and purchasing behaviors. They also take into account
market trends such as the growing demand for electric and hybrid vehicles.

Suzuki Pak Motors also receives regular feedback from their network of dealerships across
the country. These dealerships are in direct contact with customers and can provide valuable
insights into changing market demands and preferences. For example, there was a shift in
consumer preferences towards smaller, fuel-efficient cars due to rising fuel prices and
economic uncertainties in Pakistan. Suzuki Pak Motors received feedback from its network of
dealerships reporting an increase in demand for their compact car, the Suzuki Alto.

In response, Suzuki Pak Motors adjusted its demand plan by increasing production of the
Suzuki Alto to meet the growing demand in the market. Additionally, Suzuki Pak Motors
launched an upgraded version of the Alto, equipped with advanced safety features, to further
appeal to safety-conscious customers. These changes in the demand plan and product offering
allowed Suzuki Pak Motors to maintain its market position as the most selling automobile
brand in Pakistan, with the Suzuki Alto becoming the best-selling car in the country.