A

PROJECT REPORT
ON
SUPPLY CHAIN MANAGEMENT
IN CONTEXT WITH CHAUHAN AUTOMOBILES
DURG (C.G)
Submitted in the partial fulfillment for the award of degree
OF
BACHELOR OF BUSSINESS ADMINISTRATION
Of
Pt.Ravishankar Shukla University, Raipur (C.G)
Session 2009-2010
Submitted by
GUIDED BY
ABHISHEK KUMAR
MR.SANDEEPJASHWANT BBA 6
TH
SEM
HOD (MANAGEMENT)
DEPARTMENT OF MANAGEMENT
SHRI SHANKARACHARYA MAHAVIDYALAYA
SECTOR-6 BHILAI (C.G)
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Declaration
I ABHISHEK KUMAR student of sixth semester
at shri shankaracharya mahavidyalaya
hereby declare that this research report under
the titleSUPPLY CHAIN MANAGEMENT is
the record of my original work under the
guidance of Mr. Sandeep Jashwant (H.O.D )
B.B.A . This report has never been submitted
anywhere for award of any degree or diploma.
Place: ABHISHEK
KUMAR
BBA 6
TH
SEM
Date:

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Certificate
This is to certify that ABHISHEK KUMAR a
student of B.B.A sixth semester of our
institute under my guidance and
supervision she had carried out the
research project under title
SUPPLY CHAIN MANAGEMENT
This research report is the original
one.
Project guide
PRINCIPAL (H.O.D management)
Place:
Date :
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Acknowledgement
Perhaps the most awaited moment of any
endeavor in its successful competition of their
project report cases study having worked on
her project for the whole academic session. I
would like to express my sincere gratitude to
all those who made it possible.
Firstly I am heartily thankful to my guide Mr.
Sandeep Jashwant (H.O.D) of the B.B.A
department under whose able guidance. I had
the privilege to work and who guided at every
stage.
I take this opportunity to express my
sincere gratitude to our principle for being
guide of philosopher throughout B.B.A
program.
I shall be failing in my duty if I dont express
my deep sense of gratitude to all my friends
and the relatives who have share their
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valuable time and helped me directly or
indirectly in the preparation of my project .
At the end last but not the least, I would like
to thanks the other staff and non staff member
of this college.

SHRITEE DUTTA
BBA 6
TH
SEM

Preface
The topic chosen by me for my project is SUPPLY CHAIN
MANAGEMET
In reference to CHAUHAN hero Honda automobiles the two
wheeler especially in the stylish motorcycle. At present hero
Honda is market leader in the Indian market.
Today there are various companies coming in India and
these certainly will exist a cutthroat competition in these
field. I have chosen a hero Honda as a topic essence of my
project. Today two wheeler consumer due to new
manufacturing entrant has started getting a wide choice
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while buying one these gave to considered the facility
provided by the two wheeler the price mileage ,
maintenance and service etc. while buying a two wheeler .
A normal customer is quite puzzled and faces for an uneven
some time huge problems in deciding which vehicle to buy. I
realized the problem and decide to take these up as the
challenge and provide answer to as the requirement of the
Hero Honda.

Chapter (1) Introduction Chapter
(2) Company profile
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Introduction
History
Two wheeler in India
Company profile
Our brand
Product profile

Chapter (3) Supply chain
Chapter (4) Factor influencing
Channel
strategies
Distribution channel
Market consideration
Multiple channel
Product consideration
Traditional cannel
Chapter (5) Factor considered in supply
management
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Chapter (6) Operational research &supply chain Chapter (7)
Driving to new destination
Vendors management
Operation
Distribution network
working with supply chain
Rural network
the green supply chain
Chapter-8 Supplier relationship management Chapter-9
Different range of product
Processing order manually Chapter-10
Bibliography
Automating supplier transaction
End to end process integration
Improved collaboration analytics
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Index
Serial
no:
Chapter: Page
no:
1)
2)
3)
4)
5)
6)
7)
8)
INTRODUCTION
PROFILE
SUPPLY CHAIN
FACTOR INFLUENCING CHANNEL
STRATEGY
FACTOR CONSIDERED IN
SUPPLYMANAGEMENT
OPERATIONAL RESEARCH &SUPPLY
CHAIN
DRIVING TO NEW DESTINATION
10-16
17-22
23-28
29-31
32-38
39-48
49-57
58-65
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9)
10)
10)
SUPPLIER RELATIONSHIP
MANAGEMENT
DIFFERENT RANGE OF PRODUCT
SOME INTERESTING FACTS
BIBLIOGRAPHY
66
67
68
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Chapter - 1



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Introduction
Satisfaction is the persons feeling of pleasure (or)
disappointment resulting from comparing a product perceived
performance (outcome) in relation to his/her expectation. If
the performance falls short of expectation the customer is
dissatisfied. If the performance matches the expectation
customer is satisfied, if the performance exceeds the
expectation the customer is highly satisfied (or) delighted.
Many companies are aiming for high satisfaction because
they are much ready to switch.
Buyers expectation formed on the basis of past buying
experience, friend and the associate advice and the
marketers and the competitors information and promises. If
marketers raise expectations two high, the buyer is likely to be
disappointed. Even if the company sets expectation should
match the performances.
A customer is the most important person even in any
company
A customer never depend on company, but the
company depends on him.
A customer is the person who brings company his
Wants.
A customer is not a interruption of marketers Work he is
the purpose of it.
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Two wheelers in
India
In 60s decade several vehicles were running in the Indian
roads those are the sun beams, AIS, BBA and Royal Enfield.
From these motor cycles only the Royal Enfield has existence
in the motorcycle market.
After 60s decade some other motorcycles and scooter had
been launched in Indian two wheeler market those are the
Rajdoots, Java, Vespa and Lamrata .
Indian witrossed the first spate of modernization in two
wheeler industry in 1978-79 during that period Piaggio
sauntered the Indian market in a joint venture with the Lohia
machines and our major Japanese motor cycle manufacture
set up joint venture companies to produce 50cc two wheeler
for the first time.

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Objectives of the
study
} To know the customers expectations
Towards Hero Honda.
} To find out the customer opinion regarding
Various aspect of the bike.
} To give the appropriate suggestion to the
company regarding he performances.

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Our brand
Our brand identity:
Our brand is the visual expression of the ought and the
action it conveys to everyone our intention two
constantly inspire the confidence.
Our customers are the primary audience for our brand.
Indeed, our brand identity is shaped as much by their
belief in hero Honda as the as it its our brand.
We can do this by the living on the brand essence and
by continuously seeking to enhance our customer
experience.
In doing so, we ensure a special pace for our self in the
heart and in the mind of the customer.
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Our brand essence
Our brand essence is thje soul of our brand
Our brand essence encapsulates or mission at
Herohonda
It is the singular representation of our terms of
endearment with our customers.
It provies the basis on which we grow profitability in
the market.
Our brand essence is excitement
Hero Honda strives to inspire the confidence through
te excitement engineering.
Blending together youthfull creativity and competitive
technology to exceed the spoken and the implict
expectations of our customers.
By challenging the given . by exploring the unknown
and thereby stretching ourself towards tomorrow,
today.
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Learning
Learning is how we insure our proactively
It is the values that embraces knowledges as the plat
form for the building well informed.
Innovation
It is how we can create the future
It is that which provokes us to reach beyond the
obvious in pursuit of that which exceeds the ordinary.
Speed
It is how we convey clear convection.
It is the value that keeps us sharply responsive,
mirroring our commitment towards our goal and
process.

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Chapter -2


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history
India has the largest number of two wheeler in the world with41.6
million vehicles. India has a mix of 30 percent automobile and 70 %
two wheeler in the country. India was the second largest two wheeler
manufacture in the world starring in 1950s with the British
automobiles product of India (API) that manufactured the scooter.
API manufacture the lamberts but, another company Bajaj
automobiles LTD. Surpassed API and remaining through the turn of
the century from its association with piaggio of Italy (Manufacturer of
Vespa) the license raj that exist between the 1940s to 1980s in India ,
did not allow the foreign companies to enter the market and import
were tightly controlled .these regulatory maze , before the economic
liberalization , made the business easier for local player to have a
seller market . Customer in India was forced to wait 2 years to buy a
scooter from Bajaj. The CEO of Bajaj commented that he did not
make a marketing department, only in dispatch department. By the
year 1990, Bajaj has a waiting list that has twenty six times of annual
output for scooter.
The motorcycle segment has the same long wait time with three
manufacture; Royal Enfield, ideal Jawa and Escorts. Royal Enfield
made a 350cc bullet wit the only four stroke engine at that time and
took the higher end of the higher end of the market but , there was
little competition for there costumer . Ideal Jawa and escorts took the
middle and lower end of the market respectively.


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In the mid-1980s the Indian government regulation changed and
permitted companies to enter the Indian through minority joint
venture. The two wheeler market with for indo Japanese joint
venture: Hero Honda TVS S Suzuki, Bajaj Kawasaki and kinetic
Honda. The entry of these foreign companies changed the Indian
market dynamics from the supply side to demand side with a large
selection of two wheelers on Indian market customer started gain
over the product they bought and raise the higher customer
expectation.
Hero entered the joint venture for technical and financial
participation with one of the largest automotive makers.

Honda motors company limited of Japan, in 1984 for the
manufacturing of 100cc motor cycles in India.
Group companies Hero corporate service limited Hero
mind mine munlal
In 1984-1985 HHML came in existence by collaboration of hero
motor limited and Japans Company Honda motors limited for the first
100cc with four stroke motorcycle is made by Hero Honda motor
limited in India.

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Company
profile
Hero is the brand name used by the Munjal brother in the year 1956
with the flag ship company hero cycles .the two wheeler
manufacturing business of bicycle component had originally started in
the 1940s and turned in the world largest bicycle manufacture today.
The Munjal run their own steel make free wheel and other critical
bicycle component and and have diversified in to different like
product design. the Hero group philosophy is;
To provide excellent transportation to the common man at
easily available and affordable and to provide the total
satisfaction in all its sphere of activity
The hero group has a passion for setting the higher standard and
engineering satisfaction is the prime motivation way of life and work
culture of the group .In year 1984 Mr. Brijmohan lal munjal , the chair
man and managing director of hero Honda motors , headed an
alliance between the Munjal family and Hero Honda company LTD
HHM mission statement is :
We, at hero Honda , are continuously striving for synergy
between technology , system and human resources to provide
product and services that meet the quality price and aspirations
of the customer.

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Product profile
Price list
Model PRICE RTO INS TOTAL
CD-Dawn
33250 1805 853 35908
CD-DLX(MAC)
36420 1932 900 39252
PLEASURE
37600 1979 914 40493
SPL.NXG
40100 2029 950 43079
SPL.PLUS
41635 2140 972 44737
PASION PLUS
44550 2257 1012 47819
SUP.SPL.(RING)
46290 2327 1037 49654
SUP.SPL(MAC)
44900 2399 1109 48408
GLR.(MAC/SELF)
47880 2390 1059 51329
GLR.(DISK/SELF
48820 2428 1072 52380
CBZ.EXE (SELF/DISK) 59670 2862 1225 63757
HUNK
59390 2851 1221 63462
KARIZMA ZMR
94640 4261 1782 10068
3
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Colors in Vehicle
O GLAMOUR
Candy Blazing Red, Cloud Silver Metallic, Tornado Metallic
Grey, Impulse Orange Metallic, Excellent Blue Metallic.
O CD DELUXE
Candy Blazing Red, Cloud Silver, Candy Tahitian Blue,
Amaranth Maroon, Cool Mint Grey.
O SPLEDOUR
Black Candy Red, Blaze , Boon Silver, Metallic, Sierra Metallic,
Granti Blue Metallic.
O PLEASURE
Orange,Candy Blazing Red, Grey Silver, Tahitian Blue Metallic.
O CD DAWN
Black, Maroon, Red
O CD 100SS
Candy Ruby Red Black , Amazing Blue Metallic,Green Metallic.
O PASSION PLUS
Moon Yellow, Cloud Silver , Amaranth Maroon, Tahitian Blue,
Candy Blazing Red, Black With Purple Strips.
O KARIZMA
Green, Sky Blue Black Metallic, Yellow Shade.
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Chapter -3

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Supply Chain
} Selling direct with an outbound sales force via
Mail order: internet .TV home shopping
and telephone.
} Distributor (also called whole seller),
Who sell to retailer.
} Agent who typically sells direct
on behalf of producer.
} Retailer (also called dealer or reseller),
who sell to end customer.

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Distribution channel
Direct selling (company own
stores, own sales force, television
information, mail order, internet, and
telephone).


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Multiple types of channels






Multiple channel of Distribution
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For many product &services their manufacturer or provider uses
multiple channel of distribution, a personnel computer , for examples
might be bought directly from the manufacturer , either over the
telephone ,direct mail ,or the internet or through several kind of
retailers , including independent computer stores .In addition ,large
and small business may make their product through others outlet .
Channel structure ranges from two to five levels .The simplest is the
two level structure in which goods and the services move directly
from the manufacture or provider to the consumer. In three level
channels structure retailers serves as an intermediaries between
producer and consumer. A four level is added when manufacturer sell
to wholesaler rather than retailers. In four level structure, retailers
order goods from wholesaler rather than manufacturer.
Finally, a manufacturer agent can serve as an intermediary between
the manufacturer and its wholesalers creating a five level channel
structure consisting of manufacturer and its whole seller, retailer, and
consumer levels a five level channel structure, and jobber service
smaller retailers not covered by the large wholesalers in the industry.
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Company traditional distribution
channel
The dealers keep in contact with the manufacturer or the head office
or the regional office. As the order fax reaches the manufacturer, as
in Delhi it takes only one-night time of transit from the manufacturer
to the dealer.
The dealers in far off places like in Assam, South India and others, it
takes a maximum of 7 days to reach the placed order due to the
transit. Basically, the delay of delivery of the order is basically due to
the transit time. The transit time in near places is not more than one
night.
The manufacturer's have their own transportation facilities. The
manufacturers have trucks which can load 18-25 units of bikes at a
time, individually. When the units are dispatched from the factory, or
manufacturing it, it is in its standard form and accessories like seat
cover, handle cover, back-looking glass and others are not part of the
standard unit of the two wheeler of Hero Honda.
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Factor influencing marketing
channel strategies
Market consideration: - another important factor influences the
choice of distribution channel in the nature of the target market.
If the market for the product is meant for industrial use the channel of
distribution will not need any middle men because they buy the
product in large quantity.
If the number of the prospective customer is small or the market for
the product is geographically located in limited area , direct selling is
more suitable.
If the customer place order for the product in big lots, direct selling is
preferred. But if the product is sold in small quantity middlemen are
used to distribute such product.
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Product consideration:-
The type and the a nature of the product s manufactured is one
of the important element in choosing the distribution channel
Product of low unit value and of common use is generally sold
through middle men. Whereas expensive consumer goods and
industrial product are sold directly from himself.
Perishable product: product subjected to frequent changes in fashion
or styles as well as heavy and bulky product flow relatively shorter
routes are generally distributed directly to minimize costs.
Industrial product requiring demonstration, installation and after sale
service are often sold directly to consumer.
An entrepreneur producing a wide range of product may find it
economical to step his own retail outlet and sell directly to the
consumer
On the other hand firms, producing a narrow range of product may
their product distribute through wholesaler and retailers.
A new product needs greater promotional efforts in the initial stages
and hence few middle men may be required.

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Factor considered in supply
Management
Planning for new motorcycles
Acquire month wise brand wise, motorcycle sales data for the
past year from the local RTO.
On the basis of prospective base, identify hot , warm cause.
Prepare a forecast, brand wise, color wise.
Tie up with banks in command area of ARDs/SSPs for
availability of finance.
Planning for local promotion
Decide on budget.
Create a mix of activity.
Acquire the reach of each event: compare effectiveness of each
media vehicle (radio/newspaper/interests).
Make a check list of all items involved.
Assign responsibility.
Estimate cost of each element.
Identify the location, decide the periodicity.
Send an indent well in advance to RTO/HO for making
collaterals.
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Planning for new dealership appointment:-
Explore your territory
Look out for unrepresented potential, where demand exist or
area where have seen a surge of demand.
Scout out for financially sound parties with good business
acumen and with a central location.
Short list from among those who meet the eligibility criteria.
Spare the business preposition
Share the terms and the condition of becoming an ARD.
Planning for increasing under warranty turnout :-
Obtain database of customer residing in ARD/SSP territory
from mother dealership.
Plan for increasing awareness of new facilities in all populated
motorcycle pocket.
Plan for improving workmen ship and efficiency in service.
Plan for increasing passport.
Planning for increasing post warranty turnout:-
Prepare a list of consumer who insurance is about to expire and
prepare a action plan for their insurance renewal.
Make a provision for conducting free checkups camp,
demonstration of hero Honda genuine parts.
Plan for minimum number of calls to e made by (CRES) as
timely reminds to those customer whose insurance is about to
expire.

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RENEWAL OF INSURANCE:-
Plan for minimum number of calls to e made by (CRES) as
timely reminds to those customer whose insurance is about to
expire.
Plan for deputing manpower to the field to reach out the
customer whose about to expire.
PLANNING FOR INVENTORY:-
Observe sales pattern of the spare parts both workshop
consumption and of the counter sale.
On the basis combined with anticipated growth, identity
requirement of specific items and their quantities.
Plan to stock critical spares.
Plan to dispose dead stock.
Plan for methodology and periodicity of physical verification of
stock.
PLANNING FOR RESOURCE AND INFRACTURE:-
Identify resource/infrastructure requirement for ARD.
Estimate of each type of resources.
Shortlist equipment/ manpower/acquisition of land /up keep of
promises.
Prepare training center and calendar for providing the product
update periodically.

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PLAN FOR GATHERING MARKET
INTELLEGENCE:-
Identify element of marketing intelligence.
(Competitors sale, competitors standing, market price, potential
market).
Decide on the source of information.
(R.T.O transporters GRS published data)
Decide the periodicity of obtaining information.
(Weekly/ monthly/quarterly/annually)
IMPLEMENTING TRANING
ADULT LEARNING PRINCIPLES:-
Focus on real life and work place issue.
Greater focus on the why of the situation
Encourage trainees to share ideas and views
Listen to respect participant
Ideas phased learning is major effective.
Build on prior knowledge and facts.
Use aid for long term memory retention.
Visual aids
Visualization
Reviews
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Physical action
- ARD means authorized representatives of dealer.
- It determines exactly where you are in your progress
toward your business development goals.

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OPERATIONS, REACH & SUPPLY CHAIN
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Price is what you pay. Value is what you get
Manufacturing Hero Honda commissioned its third, plant at Haridwar
during the year, with an initial installed capacity of 500,000 units. With
this new capacity expansion, HHML now has an overall annual
capacity of 4.5 million two wheelers. With this, the Company has
become a global-scale manufacturer. The Haridwar complex is the
largest of the three Hero Honda plants, spanning about 275 acres.
The plant has lean manufacturing and practices that ensure
efficiency. It is connected with vendors through conveyors so that the
material can avoid multiple handling and is delivered on time. The
Haridwar plant is one of the greenest automobile plants in the
country.
Effluents are minimized, and there is zero discharge on liquid
effluents. All waste is treated and consumed within the factory. The
plant has 70 per cent of its area as green open spaces, and
approximately 45,000 square meters of the plant roof area is being
converted into a green roof.
Vendor management is critical to Hero Honda, as nearly 73 per cent
of the production is currently made up of material cost. During the
year, the company managed an average cost reduction of
Rs. 343 per vehicle despite volatility in metal price .
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Vendors management
Vendor management is critical to Hero Honda, as nearly 73 per cent
of the production is currently made up of material cost. During the
year, the company managed an average cost reduction of Rs. 343
per vehicle despite volatility in metal prices. A national network of 256
vendors - including 36 ancillaries - forms the backbone of its plant
operations.
To improve plant efficiencies and inventory turns, Hero Honda has
extended "Just in Time (JIT) beyond the shop floor. Vendors are also
making critical investments in quality and capacity in collaboration
with the Company. For example, the online vendor connectivity
program has made rapid progress. Three years ago, the Company
had only 46 vendors connected online to the company's factories. By
the end of 2009-10, it is estimated that 72 per cent of the vendors
and their supplies would be connected online.
Around 100 ancillaries will be setting up their manufacturing base in
Haridwar over the next two years to ensure a fully integrated supply
chain. To begin with, 40 ancillaries will set up their facility in the
Industrial Parks that are being specially developed for Hero Honda
ancillaries.
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During 2009-10, Hero Honda plans to work with vendors to develop
new vendor production facilities. 3PL service providers have also
been identified for the Haridwar plant a first for any two-wheeler
company as part of an ongoing exercise aimed at quality control,
members of senior management visited vendor premises for top
quality audits. This has resulted in the reduction of rejection parts per
million (PPM) by 20 per cent. During the year, the company launched
a collaborative cost improvement program with vendors. In this
program the processes and methods are continuously toned so that
the material cost can be managed better. Hero Honda is also
evaluating horizontal deployment of third party logistic services
providers (3PL) to manage costs along the supply chain better. In
2009-10, the Company plans to further study and tactfully optimize its
supply chain. As part of this plan, raw materials will be optimized so
that the best possible cost advantages accrue, to the company.

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Distribution Network
The company has a conscious strategy of penetrating new markets
and unrepresented territories through its distribution network which is
made up of dealers, authorized representatives, stockiest and SSPs.
In March 2001, the company had 826 such customers points in India.
By March 2009, this number went up to over 3500. On an all India
basis, 50 dealers, 150 SSPs, 267 dealers representatives and 45 city
work agents were added. All the four marketing zones of the
Company showed a uniform increase in new customers points during
the year in review.

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Rural Network
During the year, Hero Hondas ambitious rural connect
program
Har Gaon, Har Aangan

Also got underway. A total of 18,000 villages were covered
out of the targeted 23360 villages with a population of 5,000
people. In all, more than 100,000 opinion leaders in these
villages were approached. The rural initiative was carried out
by 500 specially trained rural sales executives at the
dealership level.


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The company has made significant progress in its rural marketing
initiative called Har Gaon, Har Aangan. This national level program
has made strides into thousands of Indian villages with a population
of 5,000 and above. In all, more than 125,000 opinion leaders in
these villages were met by specially trained 523 rural sales
executives.
The program itself has added sales of 25,000 vehicles from these
villages in just one year. The program focuses on many activities to
align with the objectives that go beyond commercial transactions, in
order to build enduring relationship with the customers in these
villages.
The program generally covers sales promotions, loan and exchange
offers, free service and check up camps, along with host value adds
like consultation for obtaining driving license, safe riding educational
programs and other services like health check up and awareness
camps. These services are offered free of charges in the interest of
society at large.
Under the HGHA program the company makes all the efforts to be a
part of the villages by conducting such programs either directly or by
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partnering or sponsoring the events organized by the local
administration on regular basis.
The company believes that the rural mobility is a major contributor to
GDP growth in an agrarian economy like ours. 'Sikhao Baliye' is
company's unique initiative in the rural market that aims at driving the
mobility of rural women.
The program aims at promoting company's light and zippy gearless
scooter Pleasure by creating awareness amongst its TG which
primarily are all rural men, particularly opinion leaders and those who
wish to impart riding training to their wives, daughters, daughter-in-
laws, sisters etc., and prospects in general.
The program covered 40 villages, 266 female riders received basic
riding training, and 35 of them could ride the scooter immediately
after the training.

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Page | 49


Page | 50

DRIVING TO NEW DESTINATIONS,
STRENGTHENING PROCESSES
ALONG THE WAY
Operations
Hero Honda has two key priorities: first, to expand and grow
aggressively, and second, to develop capabilities and innovate
constantly. Keeping these priorities in mind, Hero Honda undertook
the following activities during the year:
Commissioning of a new plant at Haridwar: The commissioning of this
third plant gives Hero Honda a total installed capacity of 4.2 million
two wheelers. A capacity of this magnitude has enabled Hero Honda
to Retain its position as the world's largest two-wheeler manufacturer
for eight successive years.
The full commissioning of the Haridwar plant allowed the company to
plan its production better. Depending on volumes, production was
rationalized across the three plants. This reduced changeover time
helped the company increase its overall efficiency level. In turn, this
helped Hero Honda bring down overall manufacturing cost per
vehicle during the year.
New Models: During the year, seven new models were introduced
across segments. Out of these four models were launched in the
space of a month. The variability of the product mix could have posed
a challenge; but, flexible systems at the three plants allowed
production to proceed smoothly.
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Distribution Network: The company has a conscious strategy of
penetrating new markets and unrepresented territories through its
distribution network of dealers, authorized representatives, stockiest
and SSPs. In March 2008, the company had 826 such sales and
service points in India. By March 2009, this number had grown to
more than 3500. All the four marketing zones of the company
demonstrated a uniform increase in new dealerships and SSPs
during the year in review.
Rural network: During the year, Hero Honda's ambitious rural connect
programHar Gaon, Har Aangan gained critical mass. Currently,
every non-metro dealership has a dedicated Rural Sales Executive
who travels to villages, meets people and drives the initiative on a
sustainable basis across the country. At the moment, there is a
network of more than 500 rural sales executives working on the rural
verticalwhich works on the hub and spoke model.
There is a plan to substantially boost this number in the coming
years. Typically, the rural executives fan out and visit villages with a
population of more than 5000 people. Apart from meeting opinion
leaders, the executives are also tasked with organizing Loan Melas in
partnership with Gramin Banks, License Camps and Riding Schools.
The idea is not just to increase awareness about the two wheeler
industry but also to increase buy-in for Hero Honda products.

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AN INDUSTRY THAT IS RIDING AHEAD
Page | 53

Working with Supply chain
Hero Honda continues to build and maintain
sustainable relationships with its supply chain
particularly in relation to long-term strategic
direction of the business. Vendor management
is critical to Hero Honda, as nearly 73 per cent
of the production is currently made up of
material cost. A national network of 256
vendors - including 36 ancillaries - forms the
backbone of its plant operations.
Softening metal prices, particularly of aluminum
& nickel in second half of the year, combined
with better sales realization worked together to
bring down the share of material costs
considerably.
Raw material costs as a proportion of total
costs scaled down from 72.5 per cent to 69.5
per cent. Simultaneously, a more streamlined
sourcing policy also helped in lowering costs.
During the year, the inbound logistic system at
the Haridwar plant was revamped; Hero Honda
switched from the individual logistic model to a
specialized third party logistic service provider
for all Haridwar-based suppliers. This switch
helped the company reduce logistics cost and
improve the operational efficiency of the value
chain. During the year, the company also paid
considerable attention to developing a multi-
modal transport system, in order to derive cost
economies.
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Also at the Haridwar plant, Hero Honda switched from individual
purchase of basic materials by supply chain partners to consolidated
settlements by the company itself. The resulting economies of scale
have resulted in greater leverage with suppliers and have helped
bring down material costs. The online vendor connectivity program
has made rapid progress. Three years ago, the company had only 46
vendors connected online to the company's factories. By the end of
2009-10, it is estimated 72 per cent of the vendors and their supplies
were connected online.
During the year, Hero Honda also worked with vendors to develop
and produce alloy wheels within Haridwar. This considerably reduced
dependence on costly imports.

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The Green Supply Chain
Hero Honda believes the process of sustainable development is
incomplete without involving the company's supply chain. With this in
mind, the company has put together a Green Vendor Development
Program for the front end and a Green Dealer Development
Program for the back end of the supply chain.
In each of these programs, the partners' are expected to manage
their environment involving material resources, industrial wastes,
energy resource, pollution and other effluents based on a number of
pre-determined parameters.
Hero Honda plans to support all its partners in the Green Supply
Chain venture by developing required competencies, sharing
knowledge, and by providing technical support. 31 vendors enrolled
under this program in 06/2009underwent requisite training and were
certified as green vendors during 06/2009. A fresh lot of 40 vendors
were inducted during the year for the program.
Contents of green supply chain
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Information Systems
A number of key technology initiatives were either initiated or
completed in 2009-10. The application infrastructure of the
organization was extended to support business processes at the new
production facility at Haridwar. This is expected to be operational in
2010-11..
During the year, the organizations entire network was revamped and
redundancies were built to support business users. The IT team also
deployed applications for sending real time business alerts related to
production, sales, service notifications automatically from the system
using SMS technology.
This helped business users immensely. This real time system was
also used by business partners to manage their dispatches and
outstanding. To improve productivity, a number of applications with
work flow capabilities were developed or enhanced. Also during the
year, the entire information security policies of the organization were
revamped in order to mitigate risks.
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A new eco-friendly state-of-the-art data centre was set up and Hero
Honda migrated to a new technology architecture that included blade
servers and virtualization. This would help consolidate servers and
storage as well as reduce complexity.
To help Hero Honda prepare for the future, two major strategic
initiatives are being planned for 2009-10.. The first is Product
Lifecycle Management software. This will help the company in
managing the increase of complexity of a diverse product portfolio
and help reduce cost and time for developing new models.
The new software is also expected to improve and scale up design-
level collaboration with vendors on an on-line basis. The software is
also expected to reduce warranty costs. The second initiative
comprised of rolling out Dealer Management System software across
the front end of the supply chain. This will help Hero Honda connect
with its entire dealer network. Once the project is complete it is
expected to improve customer service and supply chain performance
extensively.
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HERO HONDA MOTORS LTD.
Worlds Largest Two-Wheeler Manufacturer Uses
My SAP Supplier Relationship Management to
Streamline Supply Chain Processes
For New Delhibased Hero Honda, success has brought significant
rewards and some daunting challenges. The company, established
in 1985 as a joint venture between Hero Group of India and Honda of
Japan, holds a 50% market share in India and has grown to become
the worlds largest two-wheeler manufacturer. In the last six years
Hero Hondas sales volume grew by 400%, and this year the
company expects to manufacture and sell more than 3 million
motorcycles.
But growth has brought unique challenges, too. Hero Honda now
supplies motorcycles through more than 500 dealers and 700 service
points, institutions, and overseas customers. In addition, the
company calls on more than 240 suppliers for its parts and
subassemblies. The challenge for Hero Honda: cut time and waste
out of its supply chain and add more flexibility in meeting the fast-
changing dynamics of the modern market in India.
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Processing Orders Manually
We have a large supply chain, says S.R. Balasubramanian, vice
president of information systems at Hero Honda. And we need
accuracy and speed in the deliveries of raw material and components
that we get. Balasubramanian continues, Our suppliers are given a
plan for the month but changes are often necessitated by market
conditions like changes in the mix of models and colors. And
theres also increase or decrease in demand.
We want the ability to respond to these changes by aligning the
production plan, supply schedule of components, and other resources
to handle this efficiently.
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We had no visibility of materials in transit and a lot of time was
wasted on follow-ups. We also had to deal with incorrect deliveries
from vendors when they sent us either less or more than the
scheduled quantity. For example, we might have ordered 100 units
but the supplier delivered 110, says Balasubramanian.
This kind of error would slow down the receiving station while our
people would seek approval for receiving the extra quantity. Also,
mismatches like this meant that we either carried more inventory than
we needed or caused production holdups if the quantity supplied was
less than ordered, he adds.

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Automating Supplier Transactions
Hero Honda began a pilot test, bringing in my SAP Supplier
Relationship Management (my SAP SRM) as well as my SAP
Customer Relationship Management (my SAP CRM),
Both solutions in the SAP Business Suite family of business
solutions.
For the rollout of its supplier portal, Hero Honda chose its top125
suppliers together, they account for 95% of the companys supplies.
Most of these suppliers now perform their transactions with Hero
Honda through the Web-based self-service portal, in real time.
Suppliers can now see the status of their orders, shipments, and
invoices, and they can see new delivery schedules as soon as theyre
processed by the Hero Honda production plan. They can also use the
portal to make confirmations along the way for example, to confirm
that they can handle a certain variation and to confirm that theyll
meet the delivery schedule.
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End-to-End Process Integration
Hero Honda also implemented a customer portal, as a feature of my
SAP CRM. With the two portals now in place, Balasubramanian says
the company benefits from end-to-end process integration. Our
dealers place their orders once a month, he says. Typically, a
dealer might order several hundred motorcycles, as well as spare
parts.
So every Friday we get our orders in, we consolidate them on
Saturday, and on Monday morning our suppliers are all receiving our
delivery schedules, directly from our production planning system.
Because the ordering process is now fully automated, Hero Honda
saves approximately three days over the time it used to take to
complete this process. That translates into an inventory savings of
about 10%, which in turn translates into a substantial cost savings.
. . . we can get the change in on
Friday
and be pretty sure that the entire
Page | 64
shipment will go out, as
scheduled, the
following week.
S.R. Balasubramanian, Vice President,
Information Systems,Hero Honda
The automation also increases Hero Hondas own ability to be
responsive to its dealers. Even though dealers normally place their
orders on a monthly basis, there are many times when they want to
revise an order thats already in process.
They might do this to account for a sudden change in customer
demand for instance, their customers might start asking for a new
color or a different model. For these revisions, we can get the
change in on Friday and be pretty sure that the entire shipment will
go out, as scheduled, the following week, says Balasubramanian.
Our customers appreciate this kind of responsiveness and its just
what they, and we, need in order to continue to take advantage of
this fast growing market.

Improved Collaboration, Analytics
As valuable as Hero Hondas supply chain automation is, in many
ways the new system represents only the tip of a much larger
iceberg. We have just upgraded to a later version of my SAP SRM
and this will usher in added functionality, says Balasubramanian.
Well be able to do more strategic sourcing by evaluating our
suppliers and forming strategic partnerships, he says. Well also
implement self-service procurement for indirect materials. And well
extend the supplier portal by implementing a vendor-managed
inventory function, as well as improved analytics through the data
warehousing capabilities of SAP Business Intelligence.
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Hero Honda expects steady growth in motorcycle
demand in the future, as well as a steady increase in
the complexities of manufacturing the two-wheelers
The motorcycle market in India continues to be strong, says
Balasubramaniam. For one thing, many people who used to ride
scooters now prefer motorcycles. For another, were fortunate
that the economy is strong and financing is readily available.
Balasubramanian points out that the spectrum of motorcycle models
and colors is also growing. His company averages about three new
models each year and, with the current selection of models and
colors, Hero Honda is responsible for producing about 150 variations
of motorcycle not including accessories. But now were well
equipped to handle our growing market and product mix, he says.

Page | 66
. . . now were well equipped to handle our
growing market and product mix . . . [W]ere more
responsive than ever before to our dealers and
other customers.
(S.R. Balasubramanian, Vice President, Information
Systems, Hero Honda)

Different range of product
Page | 67



Karizma Hunk Hero
Honda CBZ

Glamour Glamour Hero Honda
shine

Page | 68
Some interesting facts
Over 20 million Hero Honda two wheelers tread Indian roads
today. These are almost as many as the number of people in
Finland, Ireland and Sweden put together!.
Hero Honda has consistently grown at double digits since
inception; and today, every second motorcycle sold in the
country is a Hero Honda. Every 30 seconds, someone in India
buys Hero Honda's top -selling motorcycle Splendor.
Hero Honda bikes currently roll out from its three globally
benchmarked manufacturing facilities. Two of these are based
at Dharuhera and Gurgaon in Haryana and the third state of the
art manufacturing facility was inaugurated at Haridwar,
Uttrakhand in April this year.
These plants together are capable of churning out 3.9 million
bikes per year.
Hero Honda is worlds third largest two wheeler maker.
Today Hero Honda has an assembly line of nine different
models of motorcycles available. It holds the record for most
popular bike in the world by sales for Its Splendor model.

Page | 69

Bibliography
NEWS AND VIEWS FROM MARKETING
DIVISION OF HERO HONDA.
AME BUSINESS MAGAZINE.
AUTO MAGAZINE.
BUSINESS INDIA
FINANCIAL EXPRESS
BUSINESS LINE
OVER DRIVE MAGAZINE.
WWW. INDIAINFOLINE.COM
WWW. HEROHONDA.COM
WWW.ECONOMICTIMES.COM
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