Honda Atlas Cars Pakistan

Limited (HACPL)
1. Introduction
• Honda Atlas Cars Pakistan Limited (HACPL) is a joint venture between
Honda Motor Company Limited Japan, and the Atlas Group of
Companies, Pakistan.
• The company was incorporated on November 04, 1992 and joint venture
agreement was signed on August 05, 1993.
• The first car (Honda Civic) rolled off the assembly line on May 26, 1994.
• The company is listed in Karachi, Lahore, and Islamabad Stock
Exchanges.
• March 2022 – HACPL Celebrates 500,000-unit production milestone.

2
Overview

3 Report on HACPL 2023

Dealership Network
• On July 14, 1994, car bookings started at six dealerships in Karachi,
Lahore, and Islamabad.
• Since then, the dealerships network has expanded and now the company
has thirty-seven 3S (Sales, Service and Spare Parts),
• Twenty 2S (Service and Spare Parts), &
• Five 1S (Spare Parts) authorized dealerships network in all major cities of
Pakistan.
• All dealerships are constructed in accordance with the standards defined
by Honda World over.

4
Organizational
Structure
Board of Directors (Chairman): Mr.
Aamir H. Shirazi

5 Report on HACPL 2023

Input-Output Process

6 Report on HACPL 2023

Plant Location
Multan Road, Manga Mandi,
Lahore.

1. Manufacturing 1
2. Finished Cars
3
3. Test Drive

7 Report on HACPL 2023

Production &
Sales
• The decline in production and sales of
Honda Atlas Cars is a result of a
disrupted supply chain, which affects the
manufacturing process, coupled with
economic factors such as currency
depreciation and increased costs, which
impact consumer purchasing power and
demand.

8 Report on HACPL 2023

2. Process Management & Design
Production Department:

The production department has several sections

such as:
• Vendor Section
• Engine Assembly
• Welding
• Paint
• Assembly Final
• Maintenance Section
• Vehicle quality control.

9 Report on HACPL 2023

Process Management & Design

Machinery Parts

A brief list of machinery used in HACPL is given • Various parts of the engine
below: • Brakes
• Seats
• Boilers • Lights
• Compressors • Cooling System
• Water treatment plant • Tyres
• Ovens (for backing the body of cars) • Rims
• Spot welding guns. • Fuel tank
• Two-post lifts
• G-SWAT/ B-S / S Side Slip / Shower testers

10 Report on HACPL 2023

Production Process
1. Welding: The production procedure starts with welding. The basic frame is
manufactured and transferred to the painting section.
2. Painting: The process starts with wiping, cleaning, and degreasing of frame
which is followed by Phosphating and ED coating. Now the frame is backed
in special ovens. After backing, the following coats are applied: 1. Base coat
2. Final coat 3. Clearcoat (for shining)
3. Assembly: Here ornamental parts such as lights are fixed followed by heavy
parts like engines, tyres seats, windshields, etc.
4. Inspection: This includes visual checks for defects, proper alignment, and
paint quality, as well as careful inspections of mechanical and electrical
systems, fluid levels, tire conditions, and alignment.
A road test is typically conducted to evaluate overall performance. Finally, a
"shower test" is applied to find leakages if any.
A pre-delivery inspection (PDI) is made and a sticker is attached. Now, the car is
ready for shipment.

11 Report on HACPL 2023

 3. Management of Technology
• Honda Pakistan introduces four new models of Honda Civic and Honda City each within 15 years, surpassing other car
manufacturers in the country, showcasing commitment to innovation and a diverse range of options for customers.
• The 3rd Generation Honda City, launched on January 31, 2009, brought advanced features such as a V-tech Engine, Anti-
Lock Braking System (ABS), and Euro-4 emission systems to the Pakistani market.
• The latest Honda City incorporates advanced technology for improved fuel efficiency and safety, reflecting the company's
investment in local development to meet global quality standards despite the resulting increase in car costs.
• Honda in Pakistan is distinguished for offering environmentally-friendly cars meeting Euro IV standards, setting them apart
from other manufacturers in the country.
• Honda increases the warranty on the new Honda City to 70,000 kilometers or 3 years from the date of purchase, aiming to
boost customer trust and satisfaction.
• By prioritizing technological advancements, Honda stays up with the evolving automotive industry, consistently introducing
state-of-the-art features and advancements through continuous research and development, ensuring their cars remain at the
forefront of automotive technology.

12 Report on HACPL 2023

 Research & Development (R&D)
• Conducts market research in Pakistan to understand consumer needs, preferences, and trends.
• Specializes in customizing and localizing vehicles based on market analysis, ensuring high performance and
affordability for Pakistani customers.
• Collaborates with designers and engineers to enhance vehicle design, aerodynamics, and efficiency for the local
market.
• Ensures thorough testing and validation to meet the highest quality standards before market launch.
• Focuses on environmental sustainability by developing hybrid and electric powertrains to reduce emissions and
improve fuel efficiency.

13 Report on HACPL 2023

 Technology as Competitive Advantage
• Utilizes advanced technology for faster, efficient production, reducing costs and maintaining competitiveness.
• Incorporates cutting-edge tech like advanced safety systems, smart connectivity, and hybrid/electric options for
a competitive edge.
• Invests in R&D to stay technologically ahead, continuously improving products for a competitive edge.
• Leverages technology for online purchases, efficient after-sales services, and advanced infotainment systems,
enhancing overall customer experience.
• Uses technology for eco-friendly vehicles and energy-efficient processes, aligning with global sustainability
goals for a competitive advantage.

14 Report on HACPL 2023

 CAM/CAD, MIS, & FMS
1. CAD (Computer-Aided Design) and CAM (Computer-Aided Manufacturing):
• Uses CAD for digital vehicle modeling, facilitating easy modifications and sharing among engineers.
• Uses CAM systems to control machines for cutting, milling, and drilling during manufacturing, speeding up design,
minimizing errors, and improving vehicle production.

2. MIS (Management Information System):

• HACPL uses an integrated MIS to enhance operational efficiency and decision-making.
• Collects, stores, and analyzes data related to production, inventory, and supply chain management.

3. FMS (Flexible Manufacturing Systems):

• Introduces FMS to enhance production capabilities through automation, robots, and computer-controlled machines.
• Creates flexible manufacturing cells or lines that can be easily adapted to produce different vehicle models or meet
changing market demands.
• Enables quick production of various vehicles, reduces setup times, and lowers overall production costs.

15 Report on HACPL 2023

 4. Workforce Management
• Actively manages and organizes employees for enhanced productivity and efficiency.
• The comprehensive Work Force Management (WFM) approach includes workforce planning, recruitment, employee
development, performance evaluation, and employee engagement.
• Ensures a skilled, motivated, and goal-aligned workforce at Honda Atlas Pakistan.
• Leads to improved productivity, customer satisfaction, and overall company success.
• Essential for meeting production targets and delivering high-quality vehicles at a company like Honda Atlas.
• Uses Oracle software for HR activities, including tracking absenteeism, recording employee shifts and overtime, and
managing payroll.
• Streamlines HR processes to maintain accurate and efficient records of employee activities and payroll management.

16 Report on HACPL 2023

 Workforce Management
How HACPL manages its workforce in different scenarios:

High Demand:
• Implements overtime and increased shifts.
• Hires temporary workers on short-term contracts.

Low Demand:
• Enforces reduced working shifts or hours.
• Offers voluntary time off or unpaid leave.
• Invests in employee training and skill enhancement.

Plant Shutdown:
• Temporary layoffs.
• Invest in retraining programs for employees.
• Provides support and communication during shutdown periods.

17 Report on HACPL 2023

 Training & Development & TQM
• Prioritizes employee growth through diverse training programs.
• Offers technical training in manufacturing, quality control, and safety, alongside non-technical skills development.
• Encourages participation in workshops, seminars, and conferences for industry updates.
• Focuses on enhancing communication, teamwork, problem-solving, and leadership skills.
• Aims to boost employee performance, contribute to company success, and facilitate career advancement within Honda
Atlas Pakistan.

TQM:
• New employees undergo training in quality control at Honda Atlas Cars.
• Training includes instruction on the application of the 7 Total Quality Management (TQM) tools.
• This ensures a standardized approach to quality assurance across the workforce.

18 Report on HACPL 2023

 Tools of TQM

1. Check Sheets
2. Scatter Diagrams
3. Cause & Effect Diagrams
4. Pareto Charts
5. Flowcharts
6. Histograms
7. Control Charts

19 Report on HACPL 2023

5. Capacity Planning

• Capacity planning at Honda Atlas Pakistan involves determining optimal

production capacity to meet customer demand.
• The current challenge is underutilization of the plant, with a production
capacity of 50,000 units/year (2-shift basis).
• Presently, Honda Atlas is producing only around 26,000 cars per year,
indicating a gap between actual and potential production capacity.

20
 Reasons Behind the Underutilization
of Plant
• Economic conditions in Pakistan, impacting consumer spending and reducing car demand, contribute to plant
underutilization.
• Interconnectedness with the cotton industry, including issues with the cotton crop, affects fabric components used in
automotive interiors, impacting production.
• Higher prices of Honda cars relative to competitors or market expectations may lead to lower consumer demand.
• Potential reduction in car purchases by large companies, especially for commercial purposes, negatively affects overall
demand for vehicles.
• Competition with Toyota poses challenges for Honda Atlas Pakistan in gaining market share and maintaining high
production levels.

21 Report on HACPL 2023

 Some Key Factors to Overcome
Underutilization
• Long-term capacity planning: Evaluate market demand, product lifecycles, and business strategies for future
production capacity management.
• Forecasting demand: Analyze market trends, historical data, and customer demand patterns for accurate predictions and
capacity adjustments.
• Production scheduling: Create efficient schedules based on demand forecasts, optimizing resource usage and
considering production lead times and cycles.
• Capacity utilization analysis: Regularly monitor and identify bottlenecks or inefficiencies to enhance overall
production capacity effectively.
• Flexibility planning: Incorporate idle capacity and flexible manufacturing technologies to adapt to unforeseen changes
in demand or market conditions.
• Supply chain coordination: Plan capacity in coordination with suppliers to ensure a continuous flow of materials,
avoiding delays in the production process.
• Efficient resource allocation: Implement strategies to minimize costs and optimize resource utilization for meeting
customer demand while maintaining efficiency.

22 Report on HACPL 2023

 Facility Location and Layout Planning
Factors contributing to the chosen location near Manga Mandi include proximity to the target market, a favorable labor
climate in Lahore, and the availability of infrastructure.
• Honda's strategic advantage lies in having 14 dealers within a 400 km radius, giving access to their target market of
business executives, politicians, and landlords.
• Lahore's large number of industrial units and technical training institutions ensure a steady supply of skilled labor for
Honda Atlas Cars.
• The present location was chosen for its becoming industrial zone status, with reliable electricity and telephone facilities
influencing Honda's decision.

Negative Aspect:
• Approximately 60% of Honda's car parts are imported, resulting in higher transportation costs.
• Honda Atlas Cars addresses transportation cost issues by sourcing materials directly, implementing cost reduction
strategies, and charging customers ex-factory rates, requiring them to bear transportation and insurance costs.

23 Report on HACPL 2023

 6. Supply Chain Management

Honda's Supply Chain Management endeavors focus

on enhancing supply chain efficiency and bringing
products closer to customers. This strategy aims to
create value for customers by enabling them to
purchase high-quality goods and services at reduced
costs, facilitated by the company's streamlined supply
chain structure, resulting in cost savings.

24 Report on HACPL 2023

 Vendor Procurement

Steps in Procurement:
• Forecasted Production
• Bill Of Material (B.O.M.)
• Review Order Specification
• Price Negotiation
• Evaluation Based On Cost Comparison
• Purchase Order Generation
• Delivery Against Delivery Challan
• Invoice
• Payment
• Good Receipt Note

25 Report on HACPL 2023

 OSP
Outsource Processing (OSP):
This section deals with the imported material which is imported from the commercial department as per the production
plan. The material is categorized into different classes:
1. Raw Material
2. PPS (Press Part Store)
3. CKD (CKD Kits)
After bringing in the material it is outsourced to different selected vendors for manufacturing. Once the vendor gets
material for manufacturing, the HACPL physical counts and audits the material two times i.e.; half-yearly and annual audit

Vendor Billing:
Sorting Bills Alphabetically
Matching Bills with Goods Receipt (GR)
Confirmation and Computer System SAP Entry
Forwarding to Accounts Section

26 Report on HACPL 2023

 Production Planning
• Annual Production: 50,000 units
• Pull System and Daily Production Based on Customer Demand

27 Report on HACPL 2023

 Master Production Schedule (MPS)
• Monthly Schedule Considering Demand Forecast, Inventory, and Backlog
• Day-wise (2-shift) Model & Color-wise Breakups

28 Report on HACPL 2023

 Material Management
• Short-range Decisions: Supplies, Inventories, Production Level, Staffing, Schedules, and Distribution
• Purchasing: Import from Honda Motor Co., Japan (CKD Form) and Local Vendors

29 Report on HACPL 2023

 Inventory Management

Types of Inventory:
• Raw Material, Imported, Vendor Parts, Machine
Spares, Consumables

Importance of Inventory Management:

• Knowing Inventory Levels
• Minimizing Inventory with Demand Forecasting
• Managing Interplant Transportation Costs
• Daily Activity Report and SAP Reports for
Monitoring

30 Report on HACPL 2023

7. Manufacturing
Techniques

• Just-in-Time
• Kaizen
• Kanban
• 5S
• Quality Control

31
 Just-in-Time
• HACPL is focused on JIT
• Focus on timely delivery of processes and supplies.
• Adherence to timelines from order receipt to payment collection, emphasizing waste reduction and lean manufacturing
principles.
• Utilization of Kanban to align production with demand.

Advantages of JIT System:

• Cost and time-saving benefits.
• Limited stock aligned with customer demand, reducing waste.
• Quick adaptation to changes in customer demand or styles due to the small production amount.

Drawbacks of Just-in-Time:
• Increased vulnerability to supply chain disruptions during economic downturns or unexpected events, potentially leading
to plant shutdowns.
• Minimal inventory leaves little room for error, leading to potential stockouts and lost sales during supply chain
disruptions or sudden demand increases.

32 Report on HACPL 2023

 Kaizen

Kaizen Implementation at HACPL:

• Uses of Kaizen tools such as cross-functional teams, suggestion boxes, and Gemba walks for identifying and
implementing improvements.
• HACPL applied Kaizen to optimize assembly line layout, resulting in a 15% reduction in production time and the
implementation of error-proofing techniques, leading to a 10% decrease in defects.

Kaizen Benefits:
• Promotion of innovation, problem-solving, and employee engagement.
• Enhancement of productivity, quality, and cost savings through continuous improvement methodologies.

33 Report on HACPL 2023

 Kanban

Kanban Usage at HACPL:

• Visual tracking of inventory levels and production order initiation for components through Kanban boards and cards.
• Ensures a smooth production flow, eliminating stockouts and overproduction, while lowering inventory holding costs and
minimizing waste.

Benefits of Kanban:
• Facilitates just-in-time delivery, aligning production with customer demand.
• Further reduces lead times through the integration of Kanban systems with suppliers, enhancing overall efficiency in the
supply chain.

34 Report on HACPL 2023

 5S

Implementation of 5S at HACPL:
• Active integration of 5S principles (Sort, Straighten, Shine, Standardize, and Sustain) across all work areas.
• Use of tools such as color coding, labels, and designated storage areas for easy identification and retrieval of materials
and equipment.

Benefits of 5S Implementation:
• Promotion of a tidy, orderly, and productive work environment.
• Lowering search times, reducing mistakes, and enhancing workplace safety, ultimately leading to increased productivity.

35 Report on HACPL 2023

 Quality Control

• High importance placed on quality control, with highly qualified personnel dedicated to this aspect.
• Rigorous inspection of purchased materials upon arrival, with any deficiencies reported and addressed according to
contractual terms.
• Low likelihood of deficiencies due to a stringent purchasing policy and a non-compromising stance on quality.
• Thorough testing of finished products before delivery to customers to ensure adherence to quality standards.
• Continuous engagement of quality control/quality assurance personnel in improving overall quality to meet individual
customer requirements and market standards.

36 Report on HACPL 2023

Thank you