Study Of Purchasing Centralization Of Lear China

Lear Corporation, one of the world's leading interior supplier for auto industry founded in 1917 and of listed company in Fortune 500, is awarded"Most Favorite Company"by magazine of《Fortune》in 2007.Lear now is holding more than 300 locations worldwide in 35 countries, including 6 R&D centers, hiring 90000 employees, sale revenue is 15.3 billions USD in 2007.Lear run her business in China since 1997, now established plants in Beijing, Changchun, Shanghai, Nanjing, Nanchang, Wuhan, Chongqing, Guangzhou, Ningbo, Shiyan, Xiangfan and Liuzhou etc., covering seat, electric and electronic parts with the main products.With the price increase of crude oil and slow down of global economy in recent years, the market and demand in main auto making and consuming counties are reduced. The financial crisis of US in 2008 and the economic crisis later on strongly shocked auto industry, the main auto makers all operated in the edge of bankrupt, this of course brought huge negative influence to Lear, tier one supplier to auto OEMs. Secondly, with the competition accelerated, they are increasingly costing more for more and more demand, expectation, price reduction and quality requirement from customers. The third, fast growth of Lear China takes unclear procedure and process, and incomplete organization for purchasing function, which always brings confliction and argument between plants and headquarter. By this situation, Lear decided to re-engineer her purchasing process in wholly owned China plants by reducing extra labor, consolidating purchasing volume and re-assigning responsibilities to optimize purchasing cost, deliver most competitive materials to customer and realize customer satisfaction. How to design new purchasing process of Lear China will be the main topic and key contents of this essay.Business Process Reengineering is created by Professor Michael Hammer from Massachusetts Institute of Technology and Mr. James Campy, the CEO of CSC Consulting Company in 1980's. BPR is the redesign of business processes for substantial improvement. Said simply, it is the redesign of the way work is performed. A process is any series or combination of tasks or activities which produce a result. BPR is an excellent tool to use in inducing velocity within an operation. Process mapping can reveal the constraints and bottlenecks in an operation. This identification can facilitate the streamlining of processes, increasing both productivity and throughput.The main problems of current purchasing procedure:(1) Processing simple, lack of full control and management, with big risks(a) Simple method to source suppliers(b) Incomplete bidding process(c) Lack of customer service and customer first idea for employees (d) No integrated platform/system for purchasing data share(2) Plants located nationwide, purchasing separately, with lower power(3) Separate plant is only responsible for plant itself serving for own benefits(4) Confliction sometime between plant benefit and plants benefitsNew process design of Lear China Purchasing and re-organizing The main task for purchasing process reengineering this time is to set up a controllable but simple purchasing process by combine purchasing demand of all plants to get more purchasing resources and more purchasing power to realize purchasing savings as quick as possible, and to reduce purchasing and contracting risk by taking finance and legal involved into the whole procedure of purchasing, to improve purchasing part quality from the beginning by setting up a new function of supplier development team. Setting up new organization to improve control and stepping into purchasing specialization and functionalization to ensure smooth transferring. Secondly, reducing supplier quantity step by step and getting rid of those without competiveness in cost, service and quality, civilizing strategic suppliers of Lear to reduce deliver time, improve reaction speed and cooperation from suppliers to cope with increase of customer expectations. Meanwhile, establishing supplier relation management system and product lifetime management system to realize data share, strengthening corporate culture and staff training to ensure smooth operation of new procedure and new labor origination.BPR is a continuous processing, it must be re-engineered again and again to adapt new change with the development of time, customer demand, competition and environment outside.A new and clear central purchasing process is established now by purchasing centralization of Lear China with involvement of finance and legal, realizing risk control and purchasing data control, and a new labor organization is set up based on new purchasing procedure. After near five months operation, the main tasks set before BPR are achieved, purchasing saving of 2009 realized, supplier reaction and service improved, efficiency of purchasing improved. In addition, new procedure and new organization make obligation and responsibility more clear, reduce decision making level and people are all engaged in new procedure. All in one, the purchasing process re-engineering this time can be preliminarily named as successfulness.