Guangxi Yuchai Machinery Group Co., Ltd.: Sharing the responsibility with partners for common development

Company profile
 
Headquartered in Yulin, Guangxi, Guangxi Yuchai Machinery Group Co., Ltd.(Yuchai) is a large-sized modern enterprise group integrating the engine industry chain with the petrochemical industry chain and conducting diversified industrial operation and have become a domestic leading industrial conglomerate through lean management and group operation. It has over 30 wholly-owned, holding and joint-stock subsidiaries, over 20,000 employees and total assets of 32.7 billion yuan.
 
As an internal combustion engine manufacturing base with the most complete spectrum of products in the country, a key mini excavator export base and an industrial base with an output value of 100 billion yuan in Guangxi. We have industrial operations in areas like Guangxi, Guangdong, Jiangsu, Anhui, Shandong, Hubei, Sichuan, Liaoning and Chongqing. In 2015, the total sales reached 476,600 engines and the cumulative sales revenue has realized 33.923 yuan.
 
Challenges
 
The stability of supplier group not only affects the production and operation of Yuchai, but also affects the social harmony. As the world's largest independent diesel engine manufacturer, Yuchai has many parts suppliers in the upstream industry and car manufacturers in the downstream. Yuchai Group is facing the mission to have its own sustainable development, and promote the common and stable development of the upstream and downstream of the industrial chain.
 
Solutions
 
Yuchai upholds the core concept of “green development and harmony win-win” to extend the implementation of social responsibility to upstream and downstream industry chains, which encourages and drives a group of upstream and downstream enterprises to assume social responsibility actively. This facilitates the sound and sustainable development of Yuchai.
 
Sharing social responsibility cost with its partners
 
Facing with the introduction of Labor Law, the increasing prices of raw materials, and the higher manufacturing cost for suppliers, Yuchai implemented a two-side joint technology to reduce cost continually. Meanwhile, the company took a series of effective measures, including conducting real-time monitoring on raw materials, deciding their prices according to different stages, and reappraising the weight of each working hour to improve labor productivity, so as to ensure the procurement of adequate and qualified accessories on time and at a reasonable price.
 
Yuchai provides special policy protection to products newly researched and developed by the suppliers so as to guarantee their upfront inputs being paid off accordingly, to inspire their initiative in research and development, to encourage them to increase inputs, and to help them grow up fast. In the past, due to the limited power of the suppliers, there were many quality problems with the developed products, and technical improvements required lots of time, labor, materials and abrasive tools, bringing high cost pressure. The early technology and quality intervention of Yuchai makes sure that the suppliers can manufacture products successfully at the first attempt, greatly lowering the cost and making a great contribution to saving resources and reducing squander.
 
Providing technical support to improve the suppliers’ ability to perform responsibility
 
1. Yuchai built YCSS information claim system and ERP second-stage supplier quality information sharing platform to report quality problems found by the company or its clients to the suppliers timely, which facilitates the suppliers to analyze and to make changes rapidly, thus shortening the period of making changes in quality.
 
2. Setting objectives for the suppliers. According to Yuchai’s general goal, the company set quality objectives for the suppliers in accessibility, re-loaders, reliability and claim ratio of the accessories, with an aim of promoting suppliers to conduct quality management and monitoring more actively and effectively.
 
3. Overcoming technical difficulties with suppliers together. As for difficulties and serious problems cannot be solved temporarily or forever by suppliers alone, Yuchai Group arranges relevant staff to analyze and formulate measures together so as to overcome the technical difficulties with the suppliers jointly.
 
4. Arranging technical and human resources staff to settle in the factories so as to support the suppliers. They mainly supports the suppliers from aspects of quality management, quality monitoring and production capacity. By the end of April, 2009, the company has provided supports for the suppliers for over 40 times, and the settled personnel includes professional staff in technology, quality, procurement and craft.
 
Signing letters of social responsibility commitment with partners to assume social responsibility jointly
 
Yuchai has signed social responsibility agreements with the suppliers since 2006 to guarantee that all the suppliers assume social responsibility in protecting the rights and interests of the employees and environment.
 
In January, 2009, representatives of Yuchai Group, its supporting main engine factory, supporting supplier union and service system published letters of social responsibility commitment jointly.
 
The letters of social responsibility commitment promise to the society: first, abide by the laws and regulations, and advocate social recognized business ethics and code of conduct; Second, actively protect natural resources, ecological environment, develop environmental friendly technology and product green products; Third, promote technological innovation, implement circular economy, and to be a pioneer enterprise for energy conservation and emissions reduction; Fourth, be responsible for the quality of product and service quality; be honest and trustworthy; Fifth, improve the core competitiveness of service, to maximize the user use value; Sixth, respect and care staff, safeguard the legitimate rights and interests of employees, and to ensure the work safety; Seventh, support charity projects and take an active part in public welfare activities and community construction; Eighth, assistant each other and build a harmonious industrial chain to achieve win-win situation.
 
Helping suppliers control the risk of financial crisis to ensure supply chain safety
 
After the financial crisis, Yuchai supported the suppliers from the internal side to ensure the supply chain safety. In late 2008, Yuchai carried on the investigation to peripheral supplier factories, and researched how to implement the risk control of financial crisis, how to carry out technical and quality support, aiming to help suppliers safely go through the financial crisis.
 
On the other hand, Yuchai actively developed new markets to look for a new way to protect the safety of the whole supply chain. by carrying out the special action -breakthrough of “product crisis”, the company developed the market demand for targeted products; for the 4 billion yuan subsidies for farm equipment in 2008, Yuchai took timely route of the rural market, and enhanced research on rural market demand, to develop marketable products and occupy the rural market so as to ensure that Yuchai decrease at the minimum degree and occupy the market in the fastest pace while the whole industry decline dramatically, which effectively ensured the safety of the industrial chain.
 
Achievement
 
Owing to the technical support, the product quality of Yuchai has improved steadily. The number of quality loss and three guarantees claim has reduced from 6274 and 2486 in 2006 to 1742 and 867 in the first quarter of 2009 respectively.
 
In 2008, the sales revenue of Yuchai Group reached RMB 20.988 billion, ranking first in sales of domestic enterprises in the same industry for 8 consecutive years, and having been increasing at double-digit rates for 8 straight years.
 
Under the support of Yuchai, the supplier's technology innovation capability and control ability of product quality have been greatly increased. A growing number of suppliers and partners are joining Yuchai to fulfill corporate social responsibility.
 
Prospect
 
Yuchai is actively exploring the supplier relationship management to build YC strategic alliance- the new relationship between Yuchai and suppliers. By the YC strategic alliance, it will optimize, integrate, and layout the spare parts supply chain to promote the synchronized development of suppliers and Yuchai.