The Study On The Forward Sourcing Model In FAW-Volkswagen Automotive Company Ltd.

At present China car industry is under great pressure of price competition and structural adjustment. In recent years as the rapid development tendency of car into families the price of cars is lower and lower. The pressure of cost has become the primary problem that many companies have to face. The cost is difficult to bear for many middle-large or small-large companies and be threatening the development of several big ones at the same time. The sale quantity decreases continuously and the benefit-gotten ability is lower and lower. On the other hand, the development and reformation committee of state has formally published the new "China Automotive Industry Policy" in 2004 on the basis of researches to the car development condition about recent 10 years. The new policy completely abandons the local content-oriented views on car industry and at beginning of the policy it stipulates the development targets "the products produced by domestic car enterprises owning independence property rights should account for 50% in the whole sale quantity of cars till 2010; The big domestic car enterprises should get into 500 strong ones of the world in 2010;The export of domestic car parts should account for 40% in the whole sale quantity in 2010". How to rapidly form the large-scope development under the new circumstances has become a master problem that several big domestic car factories have to focus onFAW group and FAW-VW who are at the leading position in China car industry field shoulder new historical mission. After thorough analysis of new competition condition the FAW group definitely form the directive management ideas, say, "to enlarge scope to millions; to make management digitized and operation internationalized".FAW-VW is the core competition enterprise in FAW group. Its purchasing cost accounts for 70% in all cost at present. There are two potential aspects on cutting cost down: abroad CKD parts import and effective purchasing of domestic sourcing. Cost mainly consists of three aspects: productive, manufacturing and management segments. In the controlling productive cost field purchasing is very important. The key strategy decision concentrates on purchasing decision. Thus FAW-VW brought forward the management thought "cost is the first signal" at the beginning of 2003 and entirely put forward ERP, cost controlling and project management.On the basis of analyzing the new changes of China car industry and FAW-VW face, summarizing advantages of purchasing resources, this article introduces the purchasing management model which takes localization as its direction used by FAW-VW now. It mainly analyses its problems: avoiding tariff with reason as a main method and purchasing decision depending on the harmony of policy relations are blurred concept decisions. It educes the conclusion that the purchasing management model will block the scope development of FAW-VW. Forward Sourcing management model, which is wholly new, is first brought forward and brought into effect by FAW-VW in China. Forward Sourcing is a kind of purchasing model that puts the purchasing work forward, sets the purchasing aim and makes resource plans at the beginning of programming projects and gets along with the whole process of projects in harmony. Its characteristics are fully programming the purchasing resources by using project management theory, coordinating the relationship between enterprises and providers, ensuring the cost advantages of projects and the harmonized process, avoiding the investment waste and social resource waste. The basis is to make investment cost of purchasing parts minimized. It includes the least investment, the lowest expenses on certification, satisfaction with the plans of project programming and the least expenses on logistics. The core of Forward Sourcing is sure to get most benefits by adopting new technology and using proper society resource and the least investment. At the same time it ensures that both enterprises and customers can get most benefits and makes full use of society resources. I...