Best supply chain must be systematic, complete, and timely

• Source: Gasgoo.com
• [09:10 September 07 2009]
• Comments

An exclusive interview with Gordon Xie, Senior Manager of Management and Consulting,Deloitte

Gasgoo.com: Mr., can you express your opinions on problems existing in the supply chain of China's domestic auto industry?

Gordon. Xie: The development trend of China's auto industry has been in what we call the third phase of the Warring States period, from the Happy Valley enclosure to fight for share, and then to cost-competitive. The leading domestic manufacturers have begun to realize that the evolution of the industry trends, but gap between foreign advanced enterprises still exists in operation. I will talk about this issue from the following three aspects, systematicness, completeness, and timeliness.

The first aspect is the systematicness. We should systematically think about the optimization of the entire supply chain. According to the SOP of international supply chain management theory, the overall optimization should be from selling to operation and to procurement. Market forecast is needed. The following aspects are the indicators for forecast: different regions of China, GDP indicator, per capita consumption indicator, local availability of maintaining the volume of vehicles, consumer preferences, the market share of local competitors, sales over the past few years.

The sales forecast contributes a lot to the optimization of the entire supply chain. Or else there will be the Bullwhip Effect, with failed labor rate and on-time delivery. The production plan will be determined by sale forecast; of course proper safety stock is needed since too many stocks have the risk of being excess. Suppliers should be carefully chosen for an NPI project. Apart from considering the quality, buying price, logistics cost of the material, you should also refer to factory location and consumer location. This is so called systematicness.

The second aspect is completeness. There are many functions in supply chain management. If this function is not properly arranged, there will be overlapping or duplication. For example, there are too many people taking part in a program, while no people in another program. Only by perfect cooperation of all the functions could completeness and optimization take effect in the supply chain management. You must learn from others who do well in completeness, and then make some improvements and localization.

The last one is timeliness. Timeliness is determined by transportation methods, region, and so on. Good communication on statistics between suppliers, buyers and dealers contributes a lot to timeliness. In statistics communications, the computer can do what the human being cannot do. Deloitte provides our customers with IT services in helping PO management, invoice management, and sales forecast. The sales forecast is more flexible than before, as it is determined by the consumers and market. But IT service will make it easier, so investment in the IT service will pay back. A purchaser cares a lot about on-time delivery, quality and cost. On-time delivery will be fail if the profit is less than the business between your supplier and another customer. Timeliness will be realized on the premise of win-win solution in business.

In all, a systematic strategy, improvement of the completeness of operation, and timeliness achieved by the help of IT service are needed in China's supply chain management.