May 22, 2009. Shanghai campus -- The VDA QMC (Quality Management Centre of German Automobile Industry Association), collaborated with CEIBS today to host the “Kaufteilleiterkreis” (Purchasing Leader Circle) Meeting on campus. Purchasing and quality leaders from renowned German automotive manufacturing companies and senior consultants, as well as professors and researchers from CEIBS, were among the 21 participants who attended.
After a campus tour and a briefing about CEIBS, the conference got underway with the presentation of the results from the latest research “Supplier Integration Excellence”. The presenter was Dr. Martin Lockstroem, CEIBS Research Associate and Director of the BMW-SMI Centre for Supply Chain Management. The study investigated the following aspects of the Chinese automotive industry: current state of supplier integration; key challenges to supplier integration; key collaborative supplier capabilities and key enablers and disablers of supplier integration. The research findings show that integration of domestic suppliers in joint production planning and product development is currently taking place at a relatively low extent in China. In addition to inadequate process management capabilities, a shortage of R&D and product development capabilities contribute to the current situation. Furthermore, the findings suggest that a change of quality mindset, organizational set-up and processes among suppliers are prerequisites to develop necessary capabilities for a long-term success in the automotive industry.
In response to participants’ suggestion that it would be interesting to see this topic from the Chinese suppliers’ perspective, Dr. Lockstroem explained that such follow-up investigations were already underway and data from seven interviews with the suppliers had already been collected as a first step.
CEIBS Professor of Operations Management Tom Callarman then introduced the International Car Distribution Program (ICDP) to the audience. ICDP researches and provides strategic advice, specializing in the automotive sector. The program was founded in 1994 in Europe, and has teams operating in France, Germany, Italy, Spain, the UK, and Australia. In addition, ICDP collaborates with the Centre for Automotive Research in the USA. With a mission to investigate ways for participants in vehicle distribution to achieve systematic improvements in value delivered to customers in China, the ICDP has set up research plans to investigate China’s automobile distribution landscape, enhance dealer groups and carry out various automobile industry surveys.
CEIBS Professor of Business Marketing Waldemar Pfoertsch then gave a presentation on Marketing in the Chinese Automotive Industry: How Consolidation Will Shape the Future. Statistics shows that in 2009, China has become the largest automotive market in the world. The current trend is that Chinese automotive brands are preparing to enter the foreign market. The consolidation of the industry is pushed by government authorities; however, the integration of Chinese automotive companies will take some time. There is a long way to go for Chinese companies to enhance their branding, marketing and distribution capabilities in the global market. The study also suggests that within a matter of years, the Chinese automotive companies will become the real global suppliers and manufacturers and thus real threats to foreign companies.
During the presentation, Prof. Pfoertsch indicated, “China will become the biggest electric car market in the world. Firstly, you have BYD as the largest battery manufacturer in the world. Secondly, you don’t need a range of 300 km in China, compared to Europe where you need it.” Mr. Magirius, President of GKN China Holding also commented that, “The Chinese recognized that they will be behind the competition for the conventional combustion engine, but regarding the e-car, they have a real chance.”
Followed the discussion, Mr. Clemens Saur, Director APAC of Kugler Maag Cie, presented the case study titled “Industry Standards -- A common language for managing Quality?” A reliable rating helps buyers and consumers judge risk, proves market transparency and increases industry performance through competition for good ratings. The Chinese Government studies the introduction of ISO/IEC 15504 for System and Software development, as a likely alternative to CMMI. And this move apparently brings benefits to the German automotive industry and helps German companies better indentify local suppliers with global potential.
Mr. Saur suggested that “Many attempts have been made to introduce binding quality certifications processes and standards. But after all, very often quality certificates are useless and only a sheet of paper. It is indispensable for automotive companies to be actively involved in the certification process, if you want to achieve binding quality standards.”
The meeting wrapped up with the words of Mr. Helmut Stein, General Manager of the VDA-QMC China. He commented that the studies presented at the conference touched on the most important areas of the automotive industry. “Supplier integration is a hot topic but the integration costs money. It is important to closely watch the development of the Chinese brands and it is of equal importance to watch the change of government policy on the industry.” He proposed the standardization of transport boxes (KLT); the build-up of laboratory facilities in China to shorten the feedback loops for approving modified products and to reduce money and time for sample testing.
After three hours of intense discussions, the event came to a close with members of the audience voicing their satisfaction of the broad range of interesting topics covered.
