I interviewed Connie Wu who discussed Pain Point of Chinese Small and Medium Private Companies to Go Further.
This is Connie WU, I am an automotive purchasing professional with 19years experience in the field of supply chain in automotive industry, including5 years working in tier 2 European company and 14 years working in tier 1 MNCs, covering machinery & equipment purchasing, indirect material and direct material purchasing, purchasing program management and supplier quality management. Before that, I was a teacher for 7 years, and spent 2 years working in manufactories as assistant to senior manager to prepare myself with necessary competence and skills for career development in MNCs. Our conversation today will be from the 2nd part of my career path.
Generally, we buy to print, buyer own designing responsibility; or, buy to spec. supplier own designing responsibility.
We source a supplier via 3C match: Capability, Capacity, Commitment.
capability to fulfil current demand and capability to learn;
capacity to fulfil current demand and capacity to support future growing business;
commitment to establish a sustainable supply chain with a total cost consideration, measurement is QCD (Quality, Cost, Delivery);
Before talking about the pain point, I’d like to share some observation from my 19 years supply chain developing.
I have a habit to visit the plant before reviewing an offer, and I always have a casual conversation with the owner of the company and the employees out of the meeting room separately during my visit.
I visited hundreds of various plants, like metal parts, plastic, foundry, electronic, rubber, chemical product, surface treatment, so on and so on.
If I can see a layout at the entrance of a plant, exit and fire extinguisher can be easily found, I’m happy; if not, I’ll be a little bit nervous.
From time to time, when I visited small and medium size Chinese private companies, I see the in house logistic is a mess, the production line is unbalanced from one station to the other, lack of IE concept, lack of human engineering consideration. Machinery & equipment preventive maintenance plan lack of MRO parts inventory management and emergency plan, incomplete mold profile. Inspection tools calibration not in a good track.
When I talked to the management team, I could not feel any collaboration between departments, between different functional roles, seems only sales know customer’s requirement. the technical guys don’t speak English, not able to directly communicate with foreigner customers, the sales guys mostly major in business English, no engineering background, not able to translate a technical solution professionally.What customer hear from the sales guys might not be same as what’s implemented in the company, this, happened very often with the companies of which the owner doesn’t speak English.
Chinese small private companies mostly start with buy to print business, at startup stage, the business was not so big, the owner decided everything, employees just implemented orders from the owner. When business growing, the Owner’s time and knowledge is not able to cover everything, there is not a team to actively support the business running, consequence arising therefrom: product and service fail to meet requirement and shipment delay. Then, it’s not far away from being quitted. When the owner & founder is getting old, the next generation is not interested in taking over the business, the situation is becoming more critical.
From my perspective, the pain point mainly come from following 2 areas:
Firstly, hardware investment, most small and medium sized companies invested the first fixed asset decade ago, due to budget limitation or whatever marco& micro reasons, the first building and the machinery & equipment were invested to meet the target that get on hand orders to be produced, when more orders came the next year, a similar investment concept repeated.
(Yeah, there were a few companies who invested the first asset with a long-term view, part of them have grown into big companies, and the rest died due to whatever reasons.Today, we focus on those survived small and medium sized companies.)
At the earlier time, labor cost was much lower, most company owners chose to invest simple individual machine instead of highly automated & integrated machine, when the machinery is not as smart as expected, we rely on experienced operators to make the parts controllable. Now, labor cost is becoming higher and higher, some experienced operators are becoming too old to continue the operation, and young generations are more interested in AI instead of repeated simple operation. Recruitment difficulties and sustainable deliveries become more and more critical day by day.
Secondly, organization development, in the past decade, the owner was acting as a superman / superwoman, he / she controlled everything, decided everything; he / she drives employees instead of coaching them; uses people instead of developing them; takes credit instead of giving credit; he / she always says “I” instead of saying “We”; opportunities always prioritize family employees and relative employees. Under this working condition, I’m not surprised to see employees’ reaction is just to get assignment done as told, not to strive for active, cherish only the hope of avoiding mistakes.
During my work, I saw some company owners inviting fresh blood from outside with very high payment trying to change the situation, but not many succeeded.
Because of paying high, the hirer’s expectation to the hired is also very high.The hirer &the hiredtend to not consider risks that are out there, but conflicts are everywhere, working style, culture, education and life background, personality, etc. especially when hiring a senior manager from a MNC.The hirer’s perspective is a superman / superwoman who can make things happen and meet the expectation overnight based on what was discussed during the interview; the hired’s perspective is to meet the KPI and to get the salary paid. Looks like a marriage without love, divorce is no surprising result.
My recommendation about the hardware investment is lean mindset, better to ask following questions and get an answer with a 360 degree view by involving all stakeholders, before spending the money
1, who’s the customer? domestic and abroad
2, what’s customer’s need? domestic and abroad
3, what’s the government regulations? Local government and target market regions and countries
4, where are we? How far away from driving continuously the supply chain in the direction of delivering Cost, Parts, Service, Safety, Quality, Speed, Flexibility, Innovation and Sustainability to the specific market.
5, how can we meet the goal? Short term, middle term, long term
Once demand is clear, plan is available, do it with a project management concept.
I’d like to share a case I recently handled, and I hope it can be some help to both the companies and global sourcing staff. The product is not a complicated one with about 10 assembly process, the first time I visited the plant I saw huge waste in each process, zig-zag in house logistic, useless move back and forth between process, unbalanced machine working time vs human operating time, oddly designed fixtures further increased operation time, etc. it takes me quite some time to convince the company owner there is a better solution with limited investment to get the part produced. After a detail discussion together with cross functional team and the company owner, agreed all the improvement action with hand-made layout and fixture drawings, I asked “do you understand?” answered “Yes”, I asked “how long can you get the agreed jobs done?” answered “5 weeks”. I was asking for a regular update each Friday, and wrote down everything in a meeting minutes. at the end, all the machine and fixture modification finished, one week behind of schedule, not too bad. I visited the company again and I was really shocked when I see the machine operation panel was built 2-metre long, it’s more than an operators’ arms length, but, it was designed for one operator!
Now, I’m happy to tell you the modified production line saved 2 labors and increased output 4 times. The project team is carrying this experience to other products. Treat suppliers as business partners, give them a hand, we’ll benefit from a win-win solution.
About the organization development, I’d like to remind the company owners there is no superman / superwoman in the world, to boost an inspiring working condition and to drive team work spirit is the key solution.
I’d like to share another case. I am one of the board members of an executive MBA alumni association. Last year, I organized a peer consultancy to help an alumni owned company for their organization re-development. We gave the owner good enough time to give us a brief introduction about the company, he talked how he’d like to run the company? What’s the problem? What he had done to help his employees but result not as well as expected. Then, we raised one question to him “do you know what’s the employee’s expectation?” he was suddenly silent. Seems he never thought about this question, or, maybe he thought what he was doing is what his employees want. we invited 3 employee representatives to write down their expectation anonymously outside the conference, secretly. After a heart deep inter-communication, the solution was available.
This company is global leadership in that niche market.
About Connie Wu
Automotive Purchasing Professional