Meeting Global Supplier Performance Expectations _____________________________

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Meeting Global Supplier Performance
Expectations_____________________________

• J. Scot Sharland
• Executive Director
• Automotive Industry Action Group
• DCBA 2007 Chinese Suppliers Networking Event
• 26 October 2007

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Agenda

• AIAG at-a-glance
• Chinese Suppliers vs. Global Supplier Performance
  Expectations
• AIAG in China Know-How, Experience to Help
  Suppliers Meet / Exceed Global Performance
  Expectations

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AIAG at-a-glance
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Streamlining Industry Processes

• Supply-chaining is a method of collaborating
  horizontally among suppliers, retailers, and
  consumers to create value.
• The more these supply chains grow and
  proliferate
• The more they force the adoption of common
  standards between companies,
• The more they eliminate points of friction at
  borders,
• The more the efficiencies of one company get
  adopted by the others,
• And the more they encourage global
  collaboration.

Thomas L. Friedman, The World is Flat A Brief
History of the Twenty-First Century
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Who is AIAG?
AIAG is a unique not-for-profit organization
where retailers, automakers, suppliers and
service providers work collaboratively to drive
cost and complexity from the supply chain via
global standards development and harmonized
business practices.

• Globally recognized trade association founded in
  1982
• 1,100 member organizations
• 53 full-time staff
• 3 Senior Executive OEM loans
• 650 Industry Volunteers providing subject matter
  expertise
• Offices in Southfield, Michigan and Shanghai,
  China

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AIAG 3 Dimensions of Value

• AIAG facilitates global industry consensus to
  resolve supply chain issues
• Common business practices
• Systems Interoperability (vertical / horizontal)
• AIAG provides industry voice and presence at
  International Standards Organizations
• AIAG ensures effective communication delivery
  of consistent quality requirements, guidelines,
  education and training to the extended supply base

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Board of Directors
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Global Alliances
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Business Units

• Supply Chain
• Materials Management Steering Committee
• Electronic Commerce Steering Committee
• Quality
• Quality Steering Committee
• Collaborative Engineering Product Development
  SC
• Truck Heavy Equipment Steering Committee
• Life Sciences
• Health Focus Group
• Safety, Health Environmental Steering Committee
• International
• China / India

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Supply Chain Business Unit

• Automatic Identification
• Focus Standards and guidelines for bar code
  labels, direct part marking, and RFID
• Materials Management
• Focus Business practices and standards relating
  to improving flow of material throughout the
  supply chain
• Customs/Regulatory Compliance
• Focus Business practices and standards relating
  to compliance with regulatory requirements and
  facilitating trade while meeting customs mandates

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Quality Business Unit

• Includes
• Quality Steering Committee
• Quality Task Force
• Collaborative Engineering Product Development
• Truck Heavy Equipment
• Warranty
• Global Working Conditions

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Life Sciences

• Environment
• ELV - IMDS
• REACh
• Health
• Focus Group to Steering Committee
• Top three priorities
• Practice Transformation
• Wellness
• Performance Specification
• Safety

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• China Sourcing vs.
• Global Supplier Performance Expectations

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Automotive Growth Opportunity
60of growth from 9 emerging markets
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2nd Largest Auto Market and Growing Fast!

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Chinese Exported Auto Product Auto Parts
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The Industry Increasingly Sources in Low Cost
Countries
Source Eye for Transport, Sourcing in low cost
countries, 2006
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Major Risks
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Challenges to Auto Suppliers in China

• Raw material pricing volatility
• Appreciation of Chinese currency profit erosion
• Supplier financial solvency issues constraint
  next generation program funding
• Production scalability to support volume growth
• Protection of intellectual property

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Challenges to Auto Suppliers in China

• Competition is Intensifying
• Reduction in Chinese import custom duties for
  auto parts from 43.5 (1992) to 10 (2006)
• Incumbent suppliers in North America are NOT
  abdicating their current business/market share
• OEMs are contracting their Tier-1 supply base
  favoring larger more strategically capable
  global players
• Quality performance shortfalls/surprises despite
  ISO/TS 16949 certification
• Lack of infrastructure, EDI and logistics
  experience compromise GLOBAL On-Time delivery
  performance

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Supplier Performance Expectations

• Innovation
• Engineering competence
• Prototyping / tooling expertise
• e-RFX know-how and Web based tools
• Awareness of patents rights

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Challenges to Auto Suppliers in China

• Bottom Line
• Chinese Suppliers MUST meet / exceed the
  OEMs emerging Global Supplier Performance
  Expectations!

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Supplier Performance Expectations

• The single MOST IMPORTANT Performance
  Expectation
• QUALITY

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J.D. Power and Associates 2007 Initial Quality
Study SM (IQS)
2007 Nameplate IQS Ranking Problems Per 100
Vehicles
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AIAG in China Know-How Experience to help
Suppliers to Meet / Exceed Global Performance
Expectations
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AIAG China Initiative
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Nurture Relationships with Various Chinese
Organizations
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Collaboration MoUs Signed Since April 2006

• Info exchange
• Auto ID Forum

• Info exchange
• Supply chain forum
• e-Commerce

• Info exchange
• CCC

• Supplier Gap Assessment
• DCX and Ford purchasing team
• AIAG experts team
• Pilot grogram for 6 suppliers
• Financial support from CQ city
• Identify and close the Gap

• Info exchange
• Technical workshop

• Supply chain forum
• Info exchange

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AIAG- China Products Services

• Quality ISO/TS 16949, Quality Core Tools
  Training/Manuals FMEA, SPC, MSA, EPS
• NA-OEM Requirements Training/Manuals APQP,
  PPAP, Special Processes
• Supply Chain Development Training for MMOG,
  Lean Manufacturing
• EDI Training on EDI
• Working Conditions Training on Local Labor Laws
• GAP Assessment ISO/TS 16949 Readiness

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(No Transcript)
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AIAG-China works with global training partners to
provide consistent content delivery...
WORLDWIDE !
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AIAG Training Available in China

• Lean and Six Sigma Courses
• Non-Certification
• Lean Manufacturing Workshop
• Lean for Executives and Champions
• Lean Project Team Leadership
• Lean Tools Overview for Practitioners OEE TPM
  SMED MP
• Understanding Workplace Organization 5S
• Value Stream Mapping (VSM) for Lean
• Six Sigma for Executive and Leadership
• Six Sigma Champion
• Six Sigma Green Belt
• Six Sigma Black Belt (Combined with Project)
• Note All of above courses are available for
  on-site training.
• For more information including available course
  dates, contact Omnex Shanghai Office at (86 21)
  6267 8160, 6267 8360 or e-mail info-cn_at_omnex.com

• Quality-Related Courses
• Certification
• RABQSA-Certified ISO 90012000 Lead Auditor
  Training with AIAG ISO/TS 169492002 Supplier
  Auditor Certification
• Non-Certification
• Understanding ISO/TS 169492002
• Fundamentals of Internal Quality Auditing to
  ISO/TS 169492002
• Advanced Product Quality Planning (APQP)
  Control Plan/Production Part Approval Process
  (PPAP)
• Failure Mode and Effects Analysis (FMEA)
• Statistical Process Control (SPC) (2nd Edition)
• Measurement Systems Analysis (MSA)
• For more information including available course
  dates, contact Plexus China Co. in Shanghai at
  (86 21) 6867 1020 or Shenzhen at (86 755) 8161
  5171. Visit www.plexuschina.com.cn or e-mail
  info_cn_at_plexuschina.com.cn

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AIAG Training Available in China (Con't)

• Materials Management
• Non-Certification
• Introduction to MMOG/LE
• Using the Global MMOG/LE as a Continuous
  Improvement Tool
• For more information, including available course
  dates, contact QAD Shanghai Office at (86 21)
  5047 8600 ext. 6528 or e-mail gcg_at_qad.com
• Working Conditions Training
• For more information please contact Intertek at
  (86 21)6120 6565 ext. 5214 or 5524, e-mail
  viza.ye_at_intertek.com or j.j.chen_at_intertek.com

• Electronic Data Interchange (EDI) Course
• For more information including available course
  dates, contact Compuware-Covisint China at (86
  21) 62479222 ext. 205 or e-mail
  michael.zhu_at_compuware.com
• Heat Treatment System Assessment (HTSA) Course
• Effective Problem Solving (EPS) guideline Course
• Gap Assessment
• For more information including available course
  dates, contact UL-CCIC Company Limited at (86 21)
  5292 8665 or e-mail iso.sh.cn_at_cn.ul.com

For course description and details, view and
download the AIAG China Training Catalog at
http//www.aiag.org/files/China_catalog.pdf
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For more information
Please visit www.aiag.org or www.aiag.com.cn
(Chinese Web site) Or
contact admin_at_aiag.com.cn or
ychen_at_aiag.com.cn Tel. (8621)
50815716
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Thank You!