Li Xinqiang： Integrating Global Resources to Cultivate Local Parts Enterprises

　　After three years in Chengdu and two years in Wuhan, the sixth Global Automobile Forum 2015 will be held in Chongqing Yuelai International Conference Center on June 9-10. With the theme of "Great Change: Restructuring the Industrial System", more than 800 Chinese and foreign professionals gathered to discuss the future changes of the automobile industry structure. The following is a speech by Li Xinqiang, Assistant to the President of Changan Automobile and Minister of Purchasing.

　　Li Xinqiang: Good host, good morning everyone! I am honored to be invited by the organizing Committee to discuss with you how to build a cooperative relationship between automobile and parts enterprises. Changan Automobile was founded in 1862, with a history of 153 years, but we have only entered the automobile industry for 30 years. At present, Changan Automobile has established R&D centers in Italy, India, the United States and Yokohama, Japan, and has more than 6,000 R&D teams around the world. At the same time, we have established joint ventures with Ford and Mazda, and have 12 production bases and 32 automobile plants around the world, and established strategic cooperative relations with world-class parts enterprises. In 2014, Changan Automobile sold 2.54 million vehicles, including 1.38 million vehicles sold by China brand.From January to May this year, 1.25 million vehicles were sold, of which 730,000 were sold by China brand.The sales of China brand of Changan Automobile ranked first in China and 14th in the world for 8 consecutive years. It can be said that Changan Automobile is not only a long-standing enterprise, but also a young enterprise. It not only adheres to the road of independent research and development, but also constantly integrates excellent global resources. It not only cultivates local parts enterprises, but also hopes to carry out in-depth cooperation with multinational parts suppliers.

　　In China, there are vehicles from Europe, America, Japan and South Korea, as well as state-owned enterprises and private enterprises. Parts enterprises also have suppliers’ management from different countries and different properties, capital cooperation based on equity, long-term strategic cooperation and some ways of full market competition. For a long time, it has been centered on the automobile factory, and has not paid attention to the voices and demands of suppliers. With the slowdown of market growth and the intensification of competition, the contradiction between suppliers and automakers has gradually intensified. Suppliers complain about low prices, frequent design changes and inaccurate plans, while automobile companies also accuse poor quality and slow response. These problems are not only found in China brands, but also in joint venture brands. The reason, I think, is that automobile enterprises still stay in the single imperative management of suppliers, lacking sufficient communication, understanding and trust with suppliers, which will inevitably reduce the synergy efficiency of supply chain and weaken the competitive advantage of products. We should change from supplier management to supplier relationship management. From single command management to double collaborative relationship. First of all, we must make clear the goal of two-way management.

　　Changan Automobile’s vision is to build a world-class automobile brand. Therefore, we should take the establishment of an internationally competitive supply system as our ultimate goal. Create an efficient China brand supply chain. The core is to cultivate a batch of supply systems that are not only excellent in ability, but also capable of serving our institute. The key is to build a two-way collaborative and sustainable system. The function of procurement has been changed. Chang ‘an headquarters is responsible for purchasing strategy and planning, while molecular companies are responsible for purchasing vehicles, transportation and implementation, and a special supplier relationship management department has been set up at the headquarters. Unified management of supplier performance evaluation relationship improvement, strategic cooperation and capability improvement. Then, the procurement process is reformed, so that suppliers can be integrated into R&D, procurement, production, sales and other links, so that suppliers are not only participants, but also co-makers of rules. Not only implementation, but also suggestions for the development of vehicle enterprises, and truly achieve win-win development.

　　It is necessary to change the management of suppliers from one-way to two-item. Changan Automobile has carried out a lot of experiments and innovations in this process. In terms of quality, in order to improve the product quality of China brand, we have formulated and published the strategy of Changan Automobile Parts, and constructed the first supplier quality ability certification standard of China brand. At the same time, we have set up SP teams in various projects of Changan Automobile to cooperate with suppliers to improve quality and improve cooperation. And work with suppliers to develop the quality standards and technology of each component. In terms of cost, the management mode of purchasing cost has been changed, from purchasing price management to whole life cycle management of parts, and accurate cost analysis of parts has been established. Guide suppliers to control the cost in all stages from design, development to mass production, and at the same time, build the first supplier cost management diagnosis of China brand to optimize the cost together with suppliers. In terms of sales, according to the logistics properties of parts, we plan in advance the suppliers that each production base will enter the industrial park and build nearby. The release mechanism of product planning and production planning has been established to guide suppliers to build property rights in advance. At the same time, efforts should be made to improve the accuracy of production planning and minimize the impact on suppliers’ production and delivery. In addition, a supplier relationship model is constructed to evaluate the cooperative relationship in a two-way way. The purpose of monitoring suppliers’ performance is to develop suppliers’ risks and guide suppliers to improve and upgrade. If the supplier is rated as high risk, it will be stopped.On the other hand, suppliers are regularly invited to evaluate automobile enterprises, mainly through high-level seminars and questionnaires. The purpose is to force the management of automobile enterprises. It is necessary to improve a management level of informatization, which must be supported by the level of informatization.

　　In 2011, Changan Automobile cooperated with Oracle Bone Inscriptions Company to realize an online management of the whole process of supplier access, selection and elimination. It not only improves the efficiency of supplier management, but also makes the procurement process more open and transparent. Implement a two-way management system of supplier relationship to support the rapid development of enterprises in many aspects. First, the ability of suppliers has been rapidly improved, from meeting the needs of our maintenance cars and economical cars to meeting the development of middle and high-class cars, supporting Changan Automobile to go out of Chongqing and lay out the strategy of the whole country. Second, the quality of our spare parts has increased at an average annual rate of 50%, which has greatly improved the quality of the whole vehicle. At present, the quality level of some models has reached or even surpassed that of the same class of cars.

　　Third, while ensuring the product quality, we should strictly control the continuous optimization of material cost and give full play to the leverage of purchasing, so that the profitability of China brand has been significantly improved. Since 2012, the supplier’s satisfaction with Changan Automobile has increased by 20% for three consecutive years, which has laid a solid foundation for the long-term development of China brand. With the arrival of big data, new energy and mobile internet, the individual needs of customers and the upgrading of products have brought more challenges to supply management. Customer-oriented, greatly improving the response speed and customer experience will be the next goal of supply chain management. Continuously improving the cooperative relationship with suppliers and forming a virtuous circle will surely make China brand cars become world-class at an early date. Welcome friends to know about Chang ‘an, enter Chang ‘an, and go hand in hand with Chang ‘an for win-win development. Thank you for your trip to Chang ‘an.