Chapter 4. Development of Global purchasing in China

Transcription

1 Chapter 4 Development of Global purchasing in China 4.1 China s strategy to Global Purchasing The status quo of global purchasing in China As technology continues to progress and the continuous development of economic globalization, networks evolving competitive markets, global purchasing has become a way to fully utilize the resources located around the world, reduce costs, and enhance core competitiveness of enterprises and maximize profit. In recent years, as China's manufacturing industry is becoming stronger, coupled with abundant material resources and relatively cheap labor resources, more and more multinational companies come to China to establish cross-border procurement centers of research and development the rapid development of global purchasing in China has been expanded. There is no foreign company does not value the Chinese market. In their opinion, Chinese goods is in full range, do business has many advantage, affordable, high quality, innovation and accelerated innovation. As for multinational buyers and suppliers, the huge production capacity of China's manufacturing industry is immeasurable. And because of abundant labor force, low production costs, so the product is cheaper in the market, it has a strong competitive advantage in the international market, goods purchased from China are increasingly becoming an important source of profits to multinational companies. China has experienced nearly 30 years of reforms and open, China's market economy was successful in abundant labor resources and strong manufacturing capacity, to seize the opportunities of global manufacturing industry restructuring and reorganization of production networks procurement. Chinese industrial division 1

2 started in a more favorable position in the world. Before 2004, multinational companies in China engaged in the export business of sourcing, although there are some channels, but only some of its relevant agencies to provide services for the procurement of export business, can not engage in substantive business operations, unable to meet the growing multinational firms purchasing requirements The influence of global purchasing to China As China further relax the purchasing policy of foreign investment in China, it stimulates more and more foreign firms purchasing in China. Global purchasing affects Chinese enterprises to open up a market share in the world, not only promoted the expansion of China's export products, but also effectively enhance the overall level of China's foreign trade, It is important on the further development of China's economy and integration of Chinese enterprises.to promote Chinese enterprises go into global purchasing activities, it no doubt promote economic development of China, to provide a majority of international markets to the Chinese enterprises, especially for the stable cities, such as Shanghai, Shenzhen, Tianjin, etc., with a strong production capacity as the basis for its convenient transportation, facilities and services. Global purchasing is in rapid development in China, will greatly expand the export of Chinese enterprises, in order to achieve the smooth progress of China's export economy, The generation of e-commerce has made traditional purchasing model a fundamental change. As the changed of purchasing system and patterns, enterprises purchasing and inventory costs can be reduced, the number of buyers and suppliers can be reduced and the cash flow speed can be accelerated. To promote Chinese enterprises to continue to learn and accelerate technological innovation, as more and more internationally multinational companies have entered China, many industries of international competition has become domestic, which also 2

3 forced multinational companies have transferred over the latest technology to the Chinese suppliers to enhance its competitiveness in the Chinese market. This is conducive to China's enterprises to introduce advanced technology multinational, rapid development of technology and market competition intensifies the logistics, capital flow and information flow can be efficiently operated in the supply chain. Modernization and intensification of e-procurement, operations of multinational companies is becoming an important process. Many multinational companies have adopted e-commerce purchasing to eliminate the inefficient purchasing management process. In order to adapt to the development trend of global purchasing, Chinese enterprises should actively participate in the "Network Process" for the products to enter the international purchasing. Experience and management philosophy, but also provided for Chinese suppliers the impetus for technological advances, in order to maintain long-term cooperation with multinational companies and innovate constantly, keeping up with the pace of international competition, establishing a double win partnership. On the one hand Chinese enterprises want to cooperate with buyers, to know better of the market, finding out the difference from the general global purchasing needs, the number, a wide range of features precisely reflect the mainstream of the world it is a representative of the effective purchase and propensity to consume demand. Its significance lies not only sold the bulk products, but more importantly through the buyers purchase intention can most accurately touch the pulse of the global market s supply and demand fluctuations, low-cost quickly grasp opportunities and market. On the other hand, mutual trust with the buyers, information sharing, in strict accordance with the requirements of buyers production plans, cost for buyers to provide accurate and high-quality products and high level of service to achieve double win situation. 3

4 4.1.3 Chinese enterprises strategy to develop global strategy Due to various reasons, Chinese enterprises have failed to take advantage of global purchasing opportunities. The main reasons are : (1) consumption habits and different ideas. While some of Chinese company's products are very competitive in the country, but due to the consuming habits, ethnic and cultural constraints, multinational corporations are not necessarily interested. (2) Different operating philosophy. Some Chinese companies are always trying to sell high-priced products to foreign multinationals likes to do one-shot deal, lack of long-term concept. In global sourcing environment, Chinese enterprises need to learn and adapt to the global sourcing of resource allocation, which can compete with international rivals in the process of establishing global production networks and procurement networks, the real increase in the international market competitiveness. Chinese companies involved in the process of purchasing with global multinational companies or international companies, not only to establish a stable relationship between supply chains, but also to promote the enterprises to accelerate their product structure adjustment and technological innovation, improve their product quality and competitiveness. While this could make Chinese companies more directly and more quickly understand the international market operation rules and requirements, in accordance with the rules of the international market for production, providing products. Industry is to enter the multinational global sourcing network, we must understand and become familiar with multinational purchasing procedures, to deepen the purchasing procedures, conditions and requirements of understanding to form a standardized procurement process to adapt to international procurement rules. 4

5 4.2 The development strategy of Medium-sized and small enterprise under Global Purchasing The strategy that Medium-sized and small enterprises use to integrate into global supply chain Medium-sized and small enterprises have to rely on their own characteristics to walk into the global supply chain. Under the background of the world s economic globalization and information technology, China make rapid economic integration into the world economy. China is facing unprecedented residual competition. How to integrate into global supply chains, it is what medium-sized and small enterprises in the competition for survival and development lay on. For small and medium private enterprises accounted for the main body, they are in the process of integrating into the global supply chain, did not like the big companies which take foreign direct investment and global merger, but to rely on their own features to integrate into the global supply chain. First, Medium-sized and small enterprises need to make purchasing innovation, changing purchasing patterns, moving into the inventory order-driven, user needs order-driven manufacturing orders, manufacturing orders drive purchase orders, purchase order-driven supplier, punctual response to user demand, thereby reducing storage costs, improve logistics speed and inventory turns. Change the management of the purchasing of goods to the management of supplier, protecting the interests of customers. There are many innovative ways of purchase, there are a variety of strategies can be adopted. Medium-sized and small enterprises make profit by reducing the number of upstream suppliers, expanding the supply of shipments, enabling suppliers to obtain economies of scale, companies and suppliers can benefit from the low cost. And, when many multiple vendors need the same service, company can select one 5

6 vendor to take the lead, coordinate the entire logistics process. Also in the early stages of new product development, company allow suppliers to participate, company can shorten development time, save resources and costs. Meanwhile, Medium-sized and small enterprises should also streamline downstream customers with selected customers to establish partnerships. Use EDI (Electronic Data Interchange) technology to share information with suppliers and customers. For the supply chain upstream and downstream sectors, Medium-sized and small enterprises has to develop benefit-sharing plans, supply chain parties to fully mobilize the enthusiasm and synergy. Secondly, Medium-sized and small enterprises can use VMI (Vendor Managed Inventory) technology to optimize inventory management, to solve large-scale inventory pressures, in order to integrate into the global supply chain. Be treated as an international supply chain inventory management model, VMI can help Medium-sized and small enterprises to achieve changes in customer demand for rapid response. Medium-sized and small enterprises in the VMI application should use with the inventory control and other advanced methods. In addition, small and medium enterprises can use logistics outsourcing methods to improve the ability to integrate into the global supply chain. Medium-sized and small enterprises want to reduce inventory, accelerate cash flow, they must build existing inventory management system for depth adjustment, consolidation around the warehouse to reduce the number of sub-sales Area to establish a centralized distribution center, the implementation of chip area sharing of resources, and the introduction of a third party logistics management, improve resource sharing degree and transport integration. Meanwhile, through the "outsourcing" of ways to introduce logistics partner, established the company's headquarters near the relative concentration of material storage centers, production of materials used sorting / distribution centers, manufacturing finished product storage center, rework, repair storage center. And 6

7 characteristics of Medium-sized and small enterprises according to the company, set up a company specializing in logistics planning department, responsible for the company centralized purchasing, production, sales, logistics management planning, execution, supervision and management control activities. Although Medium-sized and small enterprises want into the global supply chain process, need to integrate various resources, challenges. However, once the integration into global supply chains, bound to bring huge benefits. Especially as more and more international big business by outsourcing non-core businesses or external purchasing methods to be resolved, which means that Medium-sized and small enterprises operated according to their characteristics play a supply chain management advantages, will be able to integrate into the global supply chain. Medium-sized and small enterprises should be carried out for their own information technology business for many small and medium enterprises to seek low-cost, how to optimize purchasing, production, sales and other business aspects of the process to reduce operating cost ratio as the key to development. Enterprise information construction, is widely considered to help enterprises improve their competitiveness is one powerful tool. Through effective planning and design of information systems is the ability to help businesses more effectively to achieve different management and cost control. Domestic Medium-sized and small enterprises to survive and develop, most core capabilities are operating on the market and the rapid reaction capability and proper decision-making capacity. To achieve these two points, there must be a fast configuration, fast implementation, rapid application, quick-impact strong supply chain application platform, and the management of small and medium enterprises from the traditional manual methods or low levels of information management methods to enhance the modern scientific management methods. 7

8 4.2.2 The comparative competitive advantage of Medium-sized and small enterprises Medium-sized and small enterprises in the supply chain is to establish the relative dominance in the supply chain to establish the relative dominance of competing in the supply chain, those Medium-sized and small enterprises with unique advantages, will become a large enterprise customers chase object. In the global purchasing and supply chain integration context, China's small and medium enterprises are in the jungle and achieve dynamic stable supply chain to establish comparative competitive advantage, stable and strengthen their own members in the supply chain position. First of all, the profits of Medium-sized and small enterprises have to abandon the past and to grab ideas, foster collaboration thought. Every business, regardless of its strength and ability, in fact, is one specific part of the supply chain. Any business purports own position in the supply chain is relatively stable; a prerequisite for the overall market supply chain is to improve the ability to respond quickly to contribute. Does not account for the strength advantage for Medium-sized and small enterprises, the key lies in how their core competencies and business faster, better and more responsive to customer needs, to create maximum value for customers, creating its own dynamic in the supply chain Selection of comparative advantage. This requires relevant Medium-sized and small enterprises to grab profits abandon conventional ideas and to contribute as a way to make profit by shaping satisfied customers, to achieve a satisfactory profit. Secondly, Medium-sized and small enterprises have to identify their core business. Improve their competitive position in the supply chain, they purports their own entrenched obtain dynamic selection of comparative advantage, we must concentrate on the development of upstream and downstream sectors allow businesses to benefit from the core business for Medium-sized and small enterprises, which, if not correctly define their core business and focus on breakthrough, then it is easy to fail in a competitive game. 8

9 Medium-sized and small enterprises in order to be able to correctly define and develop its core business, it requires companies to identify their own situation in which the supply chain to conduct a comprehensive analysis, prioritizing, major breakthroughs, and can dynamically adapt. Medium-sized and small enterprises are more effectively influence the needs of downstream customers, oriented and correctly understand the situation, staying in a reasonable estimate position, making scientific analysis of the capabilities and limitations of sustainable development as the goal. Through the effective integration of resources and functional integration, company can establish their relative dominance. Furthermore, Medium-sized and small enterprises have to implement integrated management of continuous improvement, to make themselves maintain sustainable competitive advantage, secure their members in the supply chain position. This requires Medium-sized and small enterprises to deepen the understanding of competitors and partners to enhance and from other companies seeking access to technology's ability to constantly improve the product inputs, outputs and business processes, changes in the market respond quickly. To enhance the competitive advantage of companies, implemented improvement activities must be continuous, integrated, is able to enhance the competitive strength of the enterprise as a whole contribution, rather than a single, partial, merely to serve specific business areas. In the process of continuous improvement, Medium-sized and small enterprises should continue to focus on the real needs of upstream and downstream partners and changes in demand, upstream and downstream enterprises have to enhance information sharing, understanding what customers want to make improvements in the end, and what customers need, the organization for these needs with existing delivery capability into opportunities for improvement feedback. With the implementation of global sourcing strategy and supply chain integration, fast forward, the market competition pattern is also undergoing revolutionary change, 9

10 which is realized from the monomer to the enterprise network or the competition between supply chains. Competitive transformation of competition confined from the domestic market to the regional market and the global market. Therefore, either Medium-sized and small enterprises or government need to given high attention for global purchasing and supply chain integration trends. 10