Study On The Global Sourcing Strategy Of FAW-Volkswagen

The development of global economic integration has effected on the economic life all over the world. Auto Industry is one of the most highest globality of the world. MNC's R&D, purchasement, manufacturing and sales have become the main strategy in the worldwide. There is no boundary gradually between the country. Global Sourcing Strategy becomes the import way to gain the competitive advantage under the requirement of resource and competition.This paper's investigation starts from the relative theory of global sourcing, and then the status of global sourcing. Emphasize the global sourcing status of FAW-Volkswagen. The first chapter is about the subject background and the meaning of investigation. Also introduces the investigation status. The second chapter introduces some relative theories. The third chapter discusses the golbal sourcing status in foreingn and our country, analyses the influence factor. The forth chapter appraises the status of FAW-VW global sourcing procedure. The fifth chapter is about the basic global sourcing strategy of FAW-VW. The final chapter summarizes the whole paper and the hope with global sourcing.Global Sourcing plays an important role in the Auto industry globality. With the drastic competitive in the auto market, MNC is reforming the traditional purchase channel to implement the Global sourcing strategy to ensure good quality, lower price and JIT. Supply mode is from single part supply to module supply.Recent years, the MNC's supply net is extending to China speedy. The Auto company in China implements the Global sourcing strategy to increase the competitive advantage. Because Chinese company has advantage as the follows: - lower labor cost;-Import many advanced equipments to gain the manufacture advantage. - Big Auto company's combination make the company stronger. But after investigation, Auto industry and relative industry is position on the lower level. –Productivity is lower, not reaching the economic scale. –Ability of investigation and development is lower.- Management is behind of the developed country. –The price is higher and the quality is lower and so on. This year, the competition on quality, price happened in the auto market. Auto companies and relative companies must conquer the difficult and exert its strong suit. First of all, the company should strengthen the research and development ability. The second, Increasing the labor productivity to reduced the production cost. The third, Improving the quality, establishing the effective quality system. The forth, improving the management level.FAW-Volkswagen is a joint venture of FAW Group and Volkswagen AG and Audi AG. It is the result of FAW and VW global strategy. From the establishing date, FAW-Volkswagen has implemented global sourcing for more than 10 years. It is divided to production purchase and General purchase. In this period, FAW-VW has set up a scientific procedure to meet the requirement of global strategy. Every step of supply is under control. SAP R/3 system is also used to control the supply procedure in order to promote FAW-VW supply management level. FAW-VW supply management target is fair, open and equity.FAW-VW's global sourcing strategy under the theory of supply chain management is as follows,- competition between many possible suppliers. This way normally used to choose the equipment supplier. Under the competitor press, they often offer a lower price. –Establishing a long-term cooperation relationship. This strategy normally used to production purchase to ensure FAW-VW can develop continually. From the beginning of a project, the supplier will take part in the project from development to supply finally. Now some parts supplied JIT to reduce the cost of supply chain.- Promoting the cooperation between the foreign supply and domestic supply. Foreign supply owes the advanced technology and domestic supply has the lower labor cost advantage. Combination together to acquire the satisfied rate of performance and price. – Flat strategy helps to reach economic scale. In VW AG, Wol...