Dongfeng Motor Co., Ltd.: Working with suppliers to jointly build an effective supply chain

Company profile
 
Dongfeng Motor Co., Ltd. (DFL), founded on June 9th, 2003, is an auto joint venture by Dongfeng Motor Corporation (50% shares) and Nissan Motor Co., Ltd. (50% shares). DFL is headquartered in Wuhan. Seven business units are under DFL: Dongfeng Nissan Passenger Vehicle Company, Dongfeng Venucia Vehicle Company, Dongfeng Infiniti Motor Co., Ltd., Dongfeng Automobile Co., Ltd., Zhengzhou Nissan Auto Co., Ltd., Dongfeng Motor Parts and Components Group Co., Ltd. and Equipment Company of Dongfeng Motor Co., Ltd. Its main production bases are distributed in Hubei, Guangdong, Henan, Liaoning, Jiangsu, etc. DFL has 67,242 employees on the payroll (by the end of June 30th 2016). Its overall sales volume in 2016 was up to 1,339,670 vehicles, with the year-on-year growth of 9%.
 
From joint venture to joint effort, from joint effort to harmony, with internationalized and professionalized management concept and methods, scientific strategic layout, and balanced development in R&D, production and sale, through the promotion of brand power, products and sales service quality and the enhancement of market shares, DFL has achieved an outstanding operating performance with an annual sales volume of over one million vehicles and sales revenue of over RMB 100 billion, and has accumulated extremely competitive strength. Moreover, through continuously improving energy-saving and eco-friendly technologies, DFL endeavors to create a green and healthy environment, strengthen social responsibility and duty, and build an energy-saving, efficient, and eco-friendly auto company, so as to make great contribution to China’s automotive industry and harmonious social development. 
 
Challenges
 
Automobile manufacture and use brings an important influence on the economy and the environment. To reduce the production cost, improve product added value, and reduce energy consumption and pollution need the overall action of automobile industry chain. Facing the competitive market environment, automobile manufacturing enterprises, while guaranteeing product quality, also need to enhance enterprises’ competitiveness by improving the overall competition ability of supply chain.
 
Solutions
 
DFL is devoted to building a fair and sound cooperation mechanism of mutual trust, win-win cooperation and common development with its partner suppliers and assisting suppliers to make improvements together. It promotes THaNKS activity actively, uses whole valued chain TDC to manage innovations in the field, takes the process of components production as an object, makes improvements together with suppliers based on common ideas and methods of improvement, extends suppliers from Tier 1 to Tier N, and realizes cost optimization during the whole process of components production. The company also enhances collaboration with relevant functional departments of suppliers to find out waste in components production, delivery, quality and design, and makes measures for improvement and implements them, which reduces the cost of components and improves the competitiveness and earnings of suppliers, thus achieving a win-win situation for suppliers and main engine plants.
 
Achievements
 
Social benefits
 
The THaNKS activity launched by Dongfeng Nissan Motor Co., Ltd. of Dongfeng Motor Company Limited is expanding and deepening after years of efforts and attempts. In 2016, there had been 80 suppliers taking part in the THaNKS activity of Dongfeng Nissan Motor Co., Ltd., and among these 69 are Tier 1 suppliers and 11 are Tier 2 suppliers. By carrying out THaNKS activity with teams of Dongfeng Nissan Motor Co., Ltd. jointly, some Tier 1 suppliers have already had the capacity of implementing this activity with Tier 2 suppliers independently.
 
Meanwhile, the THaNKS activity of Dongfeng Nissan Motor Co., Ltd. explores new improvement methods and visual points unceasingly so as to maximize effects by ways of engineering data benchmarking and flexible use of internal expert resources. Taking productivity improvement as an example, THaNKS makes improvements from removing of regular waste to the optimization of technological parameters, and from the earlier manual operation technique to iFA simple automation. Owing to these efforts, the THaNKS activity made a contribution worth of 3100 million yuan in lowering purchase cost for Dongfeng Nissan Motor Co., Ltd. in 2016.
 
The THaNKS activity of Dongfeng Nissan Motor Co., Ltd. also spares no efforts to replace disposable carton boxes with plastic turnover boxes, which, on the one hand, lowers the packaging cost for components, and on the other hand, reduces environmental pollutions brought by the dealing and remanufacturing of carton boxes. The ratio of recyclable plastic boxes in the purchased containers has reached 90% for many core suppliers. At the same time, the ThaNKS activity of Dongfeng Nissan Motor Co., Ltd. upholds the principle of “joint participation and mutual benefit” firmly to create a harmonious and win-win situation of supply chain. On the one hand, THaNKS adopted suggestions given by suppliers on Dongfeng Nissan Motor Co., Ltd. and took them as a project to seek solutions; on the other hand, THaNKS absorbed excellent improvement ideas and methods from supply chain and promoted and applied them in improvement activity of other suppliers. As the old saying goes, it’s better to teach a man fishing than give him a fish. These activities for common improvement can enhance the improvement awareness and capacity of the whole supply chain imperceptibly.
 
Economic benefits
 
Dongfeng implements THaNKS activity to share advanced working methods with suppliers, which effectively promotes win-win cooperation with its partners. Dongfeng Automobile Company of Dongfeng Motor Company Limited carried out THaNKS activity in 2016 to provide on-site improvement and support for 62 suppliers, with an aim to reduce waste in the whole process of components production and various sections with low or no added value. As a result, the 3MIS (the failure rate of cars in 3 months after they are sold) is lowered and the engineering guarantee capacity and quality control capacity are improved. This activity improves the quality of suppliers continuously and meets the manufacturing needs of medium and high-end products. In total, 1201 proposals are discovered and 3MIS is lowered by 33% through the THaNKS activity.
 
Zhengzhou Nissan Auto Co., Ltd. of Dongfeng Motor Company Limited also launched THaNKS activity. It provided trainings on QCD improvement basic knowledge and activity flows for over 100 people from 18 selected suppliers in 2016, which improved their on-site improvement ability. The research and implementation of projects not only reduces cost waste for suppliers, but also conveys a thinking and way of improvement for suppliers, which greatly improves their market competitiveness.
 
Prospect
 
The supply chain management mode of China's automobile manufacturing industry, exist in a self-sufficient way based on the integration of production, supply and sales in the past. Although this way provides for absolute dominion and mastership for the automobile manufacturing enterprises, it does not maximize the use of the resources and information in the tide of global economic integration. DFL supply chain management innovation provides reference and experience for domestic automobile enterprises.
 
In the future, DFL will continue to improve the supply chain management and make the cost and quality of auto parts meet the needs of the competition, making the supply chain management become an important part of enterprise development.