China's auto market is becoming more competitive, forcing manufacturers to look closer at their entire supply chain to cut costs and drive efficiency. One obvious area where companies such as Beijing Benz Daimler Chrysler (BBDC) are working to optimise themselves is in their supplier management.
BBDC is a relatively recent joint auto venture that built a new manufacturing facility in Beijing in early 2007 for the E-Class Mercedes and Chrysler 300C.
Knowing the import- ance of communication with their suppliers, BBDC implemented a web-based EDI (electronic data interchange) system that is user friendly for all levels of BBDC suppliers. This system earned See- burger the 2007 China Supply Chain Council, CHaINA Summit award for Best IT Supply Chain Solution for China.
According to James Hatcher, general manager of Seeburger Asia Pacific, the implementation "gives BBDC a way to optimise their supply chain while giving them a competitive advantage''. Hatcher has worked in Asia for 24 years in Taiwan, Hong Kong and Singapore in various supply chain capacities.
BBDC went live in January 2007 with their complete JIT/JIS (just in time/just in sequence) solution that also integrated their 3PL for full visibility. The project is a good example of some of the innovative changes that have begun to take place in China's automotive manufacturing industry.
Over 150 suppliers are using the system daily giving BBDC a competitive advantage in the domestic automotive market. Their market leading solution has now forced most other OEMs (original equipment manufacturers) to re-evaluate their SCM (supply chain management) solutions.
"One of the big challenges with China's supply chain is the fact that the OEMs would typically have an ERP (enterprise resource planning) system and they are interested to do EDI or B2B (business-to-business) type com-munications, but many tier one suppliers, while they might have ERP, can't necessarily do system-to-system communication," said Hatcher, explaining the rationale behind the web EDI system.
"Part of what we architected for suppliers who could do traditional EDI messaging is a comprehensive web EDI portal which provides a user interface, so that while they don't have an IT system, they have the ability to do JIT and JIS. They can do a lot of processes such as forecasts and printing bar-coded shipping documents and labels directly from the EDI portal."
This means you have a fully integrated solution for any level supplier," explained Hatcher. "For BBDC, there is no data entry required; they can just scan the bar-code, leaving little room for error."
According to ChunMei Han, the system administrator at BBDC who helped implement the system, "The benefit for BBDC of the web-EDI system is that we can send out the PO (purchase order) and our material schedule automatically through the system, which allows us to save time and also gives the vendor more opportunity to supply the material in time."
By many accounts, China's automotive market is becoming more competitive as both foreign and local players develop more offerings and fight to win over the great mass of Chinese consumers who look to owning a car as a key step in their move into the middle class. Lower car prices are putting pressure on parts suppliers to bring costs down, and automakers need to sell more cars to maintain their profitability. This is where the supply chain comes under the magnifying glass.
Just-in-time and just-in-sequence are key differentiators in a competitive market. "The biggest challenge for China automotive manufacturers is demand and inventory," said Hatcher. "Because demand is growing in irregular spurts it's constantly a challenge to juggle how much inventory to keep versus having lead time from suppliers. When you implement this type of comprehensive supply chain solution you can more quickly share demand from your customers down to your supply base, improving inventory management and shortening lead times. If you can deliver faster, you sell more."
The web EDI system also helps BBDC to optimise their production line so they can produce more than one car on the same production line - from 2008, they will produce the Mercedes C-Class - and receive parts directly to the production line through the JIS information. This allows BBDC to bypass delivery of the parts to a warehouse.
Sophisticated supplier management such as BBDC and Seeburger's implementation are still a rarity across China's supply chain, but are a sign of things to come, not just in the automotive sector. Chinese suppliers, hungry to do business with manufacturers, will strive to meet high standards, while manufacturers, striving to stay lean, will continue to push for transparency.
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