Auto parts industry procurement strategy and trends

1. Characteristics of auto parts industry

According to current media, research materials, and National Bureau of Statistics data, China’s rapid development of the automotive industry continues to grow at an annual growth rate of more than 20%. By 2010, the total vehicle sales volume may be able to The scale of 14 million vehicles. The entire market was very optimistic. Even with the overall economic adjustment in 2008, and even under the deceleration environment, the various economic forecast media still adopted relatively optimistic forecasts for the enthusiasm of the Chinese automobile consumer market.

However, the entire industry is still facing very big challenges, especially domestic auto manufacturers and auto parts manufacturers attached to their supply chains. One of the biggest challenges is the impact of a large economic environment, and familiarization can be listed: the rise in steel prices, artificial increase, continuous reduction in market prices, difficult development of foreign markets, foreign-funded enterprises in the high-end technology and high-end supply chain With oppression, the pressure for overall survival remains high. Countermeasures for domestic enterprises are basically focused on strengthening specialized production and design, striving to reduce costs, strengthening cooperation with the host plant, and so on.

Judging from the statistics of industry statistics from the National Bureau of Statistics, the auto parts industry can include:

The classification of product composition is even more varied. According to CCID Consulting's product classification in 2007, the scope is really extensive, but the research and analysis from the procurement model, including the improvement of the model, is based on the body, chassis, and engine electronics.

As an auto parts OEM upstream automotive industry, the industry has a large variety of products and thousands of products, but all of them are related to OEM vehicle production. Therefore, they have similarities in procurement patterns and methods, and have a mode Copy the properties of each other.

As an auto parts industry, or a supplier of an OEM factory, it can be divided into the first-level system integrators and the second- and third-tier accessory suppliers as well as the common parts. In the layout of the industry: According to the distribution of BOM pyramid structure of the vehicle; distribution of corporate customers: pre-market, aftermarket, and export markets of OEM OEM assembly plants.

The basic procurement features, with multiple levels of matching, have strong mutual influence and replication. Moreover, the selection of procurement model and procurement strategy has a strong hierarchy. Generally speaking, companies with high levels of industrial chain have a strong influence on the subordinate enterprises.

2. Purchasing characteristics and development of auto parts industry

The overall number of auto parts and components industry has grown at an annual rate of around 1,000. By 2008, it had more than 7,000 (National Bureau of Statistics data). In the development process, the characteristics of the procurement method used can be described in the following aspects: the procurement market, procurement organization, procurement methods, procurement channels, procurement settlement methods, supplier characteristics, and localization of purchased items. In a nutshell, the auto parts industry's attitude towards procurement is zero inventory, especially zero inventory on the accounts; supporting companies adopt a unified strategy to pressure upstream inventory and extend the settlement period.

When it comes to procurement development trends, we must mention the development trend of the auto parts industry. As the proportion of China's spare parts industry in the automotive industry, 35% to 36%, compared to the international level of 60% to 70% is still relatively low, the entire industry scale has very large room for expansion, and the scale of individual enterprises will also increase . Against such a backdrop, the prospects for procurement and development of China's auto parts industry are bright and difficult. Dreamwealth Content Management System

At present, there are still many problems in the auto parts industry: irrational procurement infrastructure and procurement, lack of constraints in the design process, lack of synergy between design, procurement, and manufacturing, and no win-win partnership with suppliers. Failure to integrate suppliers' resources early in product design. These have resulted in an increase in the total cost of the product, an increase in the time for mass production, an increase in the cycle of launching the market, an increase in stocks or out of stock and a lack of predictability in the supply chain.

Because based on lean thinking, through the entire automotive production and marketing supply chain, the purchasing status is basically exploring agile procurement and small-batch procurement model. The development pattern of the auto parts industry procurement model on purchasing patterns, procurement concerns, procurement talent demand, and procurement informatization is very clear, and in the short period of 10 years of rapid development, it has moved closer to the international level. It must be acknowledged that the development of procurement management is a microcosm of the development of the management level of the entire enterprise and the industry, as well as the overall development of the entire enterprise in design, production, sales, service, and logistics.

Purchasing model: The auto parts industry generally began to explore the supply model based on the VMI management model, to reduce its own inventory to a minimum, and to establish a stable, mutual trust and long-term supply with the supplier on the basis of the joint inventory management. Cargo mechanism. With the supply mechanism of VMI, third-party logistics is in the ascendant in the automotive field. From the perspective of the entire enterprise group or supply chain, the host company or parts and components group improves logistics efficiency, enhances timeliness of inventory and information sharing, and establishes a unified internal third-party logistics or warehouse. Point of shipment, guaranteeing beat production. The figure below shows that under the JIT delivery mechanism and VMI mechanism for procurement methods, the supplier needs to cooperate with the OEM product design, product planning, supply-basis data synchronization, logistics, and supplier evaluation. To improve and rectify, to ensure the realization of VMI procurement methods. Content from dedecms

In terms of procurement development trends, most companies currently use procurement cost as the focus of procurement management. How to select suppliers, purchase and ask for quotation, and control billing as a specific implementation process. The substantial increase in the cost of procurement of various production materials over the past two years has also greatly stimulated the auto industry's model of survival and has begun to replicate within the industry.

Purchasing concerns focus not only on internal procurement techniques, payment processes, procurement process control, and supply sources; the company's focus is on external optimization and internal personnel and process improvement.

External development trends:

From a single single cost savings, to a long-term and stable cost reduction strategy. China's auto parts and foreign-invested private enterprises account for 60% of the total income, and the domestic procurement market is their main source of supply. In the early years, a large number of suppliers competed in procurement and bidding procurement methods, and obtained procurement costs during the contract period. After the savings, due to changes in purchasing parties, new suppliers entered, and old suppliers withdrew, resulting in fluctuations in product specifications, delivery terms, and quality levels, bringing product costs and monitoring costs in the procurement process. The long-term and stable suppliers have greatly reduced negotiation costs and obstacles, and the product design, development, and production have become more involved. This is similar to Ford’s Q1 certification management supplier strategy. It has also been adopted in auto parts industry companies. . From the selection of multi-supplier quotas, to the earlier suppliers' participation in product design investment, according to the design investment to give suppliers a quota share; suppliers involved in many activities of manufacturers, they often know best about the company's strengths and weaknesses. On the other hand, suppliers themselves may also be industry leaders in certain aspects, and they are the best choice for manufacturers to conduct benchmarking. When suppliers participate in the management process of manufacturers, they can benefit manufacturers in improving quality, reducing costs, and improving management levels. Manufacturers and suppliers are highly integrated by jointly developing quality plans and defining cooperation goals. The transactional relationship shifts to supplier collaboration. This is a cross-industry business topic, basically needless to say, but in the auto parts industry, his coordination mechanism is transmitted in the entire automotive manufacturing supply chain. The scope of synergy is also the deepest and most lasting of all manufacturing industries. At present, domestic collaboration is still reflected in the synergies of transaction data, and in-depth collaboration such as production collaboration and design collaboration still requires further in-depth development and design. From international procurement to domestic localization; procurement of items that meet specifications, long-distance transportation through imports, and expensive import tariffs, a lot of competitiveness has been lost in cost competition. Although the current overall vehicle profit is still higher than that of foreign counterparts, the development of procurement sources that tend to be localized is not only a strong nurturing of local standby procurement sources, but also a circumvention scheme for international procurement risks. Content from dedecms

Internal development trends:

Reorganization of the procurement process: The procurement of supply rights, decentralization of suppliers, to provide suppliers with sufficient power to carry out the inventory level, replenishment frequency, inventory quality management. Through VMI this way, to promote the participation of suppliers, but also the relationship between themselves and the suppliers have explored each other, the psychological position of suspicion has become mutual trust and interaction. Improving the performance of procurement teams and cultivating talents for procurement. There is a general shortage of professional procurement managers in the country. Most of the auto parts industry purchasers transfer from other positions such as technology, quality, planning, etc., and because purchases are used as a cost for enterprises. Most of the institutions are not given special attention. However, with the actual reduction in the cost of procurement, the procurement manager of the domestic auto parts industry is also the first, and it can also be said that leading professional education has started to inject CPM certification. Improve supply chain procurement technology investment. Most of China's spare parts industry is still in the messy phase of supplier management information technology investment. EDI business access, supplier business synergy, and E-purchase solutions have not yet been fully applied to ERP by domestic parts and components companies. I heard that the sound of rain did not see the hands wet. OEMs mostly use software such as SAP, Oracle, and Infor that have vendor collaboration management, and require auto parts manufacturers to log onto the ERP system or download procurement transaction information on the portal for rapid purchase and delivery. With the continuous increase in the size of the domestic auto parts industry, electronic collaboration, network interconnection, electronic procurement of internal processes, online development of suppliers are also constantly applied. Such as Jiangling Engine, currently through the cooperation with UFIDA Software Co., Ltd., to achieve the supplier's planning, orders, inventory, ASN, quality and financial interconnection.

3, the conclusion

Today's auto parts industry's procurement has not been comparable to that of 10 years ago, whether it is the overall quality of the employed personnel or the procurement system. However, the challenge is even more: OEM manufacturers' year-to-year price reductions, suppliers' quality issues in low-cost regions, ever-increasing high-tech deployment requirements, and stronger foreign technology upgrade competition require procurement and supply management. More upstairs. It is purely from the optimization of the procurement process around the fulfillment of purchase orders to the selection of suppliers, suppliers, and suppliers, and strategic purchases with suppliers. However, no matter what kind of procurement, the development trend is to obtain a competitive advantage in procurement costs. Therefore, all purchases must be based on the correct needs of procurement, effective management of sales, budget; control of corporate materials, product specifications, generalization and reuse of the specifications of the items can bring about a huge reduction in procurement costs, the other is Effective sales and planning coordination. All of these are the real motives for continuous purchasing models, methods, and informatization applications to obtain procurement performance.

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