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www.continental-corporation.com
Keeping China Supplied Ensure a stable, efficient inbound supply chain
Andreas Subbe Director Supply Chain Management Automotive Asia Pacific
Continental Automotive Holding Co. Ltd
Public
Continental China 24 May 2016
2 Andreas.Subbe@ Continental AG
Agenda
Continental China - At a Glance 1
Market Challenges China 2
Supplier Management at Continental 3
Collaboration & Best Practice Examples 4
Key Messages 5
Public
Continental China
Continental Corporation Five Strong Divisions
3
Chassis & Safety
Vehicle Dynamics
Hydraulic
Brake Systems
Passive Safety &
Sensorics
Advanced Driver
Assistance Systems
(ADAS)
Powertrain
Engine Systems
Transmission
Hybrid Electric
Vehicle
Sensors &
Actuators
Fuel &
Exhaust Management
Interior
Instrumentation &
Driver HMI
Infotainment &
Connectivity
Intelligent Transportation
Systems
Body & Security
Commercial Vehicles &
Aftermarket
Tires
PLT,
Original Equipment
PLT, Repl. Business,
EMEA
PLT, Repl. Business,
The Americas
PLT, Repl. Business,
Asia Pacific
Commercial
Vehicle Tires
Two Wheel Tires
ContiTech
Air Spring Systems
Benecke-Kaliko
Group
Compounding
Technology
Conveyor Belt
Group
Elastomer Coatings
Fluid Technology
Power Transmission
Group
Vibration Control
PLT – Passenger and Light Truck Tires
Supply Chain Management Automotive
(SCMA)
24 May 2016
Andreas.Subbe@ Continental AG
Public
Continental China
In the Market for the Market Customized Solutions for Chinese Market
4
Caliper Actuation ABS Airbag
Control Unit
Chassis
& Safety
Powertrain
Interior
Tire
ContiTech
Passenger Car Tires Light Truck Tires
ESC
...
Short Range
Lidar
EMS(DI Injector, DI Pump) Transmission
Management
System
Fuel Supply NOx Sensor
...
...
48 V Machine
Hose
Lines
Engine
Belt
Engine
Mount
Air
Spring
Interior
Foil
Conveyor
Belt
Elastomer
Coatings
Two-Wheel Tires
...
...
Instrument
Cluster
Body Control
Units
Access & Start
Systems
Tire Pressure
Monitoring
Multimedia
Systems
Connectivity
& Telematic
Truck
Instruments &
Control Units
SCR Systems
S
C
M
A
24 May 2016
Andreas.Subbe@ Continental AG
Public
Continental China
Continental in China Locations Map
24 May 2016
5
Manufacturing
Locations
R&D Locations
Sales Offices
Joint Venture
Headquarters Heihe
Changchun
Tianjin
Shanghai
Changzhi
Ninghai
Wuhu Hefei
Lianyungang
Jinan
Zhangjiagang
Changshu
Beijing
Liuzhou Guangzhou
Taipei
Chongqing
Nanjing
Wuhan
Status: Mar. 2015
Manufacturing Locations: 26
Sales Offices: 27
R&D Center: 17
Joint Ventures: 13
Total Employees: >25,000
Shenyang
Qufu
Sanmen
Yangzhou
Baoding Qingdao
Yanzhou Changzhou
Andreas.Subbe@ Continental AG
Public
Continental China 24 May 2016
6 Andreas.Subbe@ Continental AG
Agenda
Continental China - At a Glance 1
Market Challenges China 2
Supplier Management at Continental 3
Collaboration & Best Practice Examples 4
Key Messages 5
Public
Continental China
China – Roadmap of Industrialization From Volume to Value
1980 1995 2020 >2025
Opening The
Manufacturing
House
Largest
Market of the
World
Innovation
24 May 2016
Andreas.Subbe@ Continental AG 7
Public
Continental China
Our Supply Chain Complexity in Asia Volatile Conditions Lead to High Inventories
24 May 2016
8 Andreas.Subbe@ Continental AG
Product
launches
Engineering
Changes
Inventories
Production
set-up
Big production lots
Machine breakdown
Line imbalance
Shared equipment
Intercompany
Clearance
Demand
insecurities
Complexity
No. of products (~4,000)
No. of customers (132)
No. of supplier locations (~3,500)
No. of materials (~52,000)
...
Levels
HQ / regions / locations
Responsibilities
Value flow
IO / Process levels
...
+
Long throughput
time Quality defects
Logistics
set-up
Sales variations
Demand forecast
Order leadtime
Production
throughput time
Transport time
Delivery reliability
Product quality
Process quality
Lead times
Flexibility
SAP parameters
Product
transfers
Product
launches
Engineering
Changes
Public
Continental China 24 May 2016
9
Invoicing
Delivery
Forecasting /
Order reliability
General Terms
› According INCOTERM
› ExW / FCA
› Customer picks up / controls supply
› 12 month FC / 1~3 month binding
› 10% max. fluctuation
› Model cycles of 5-6 years
› Capacity and volume agreements
once a year
› Common platforms for forecasting
and planning in use
› Clearly defined process for Quality
claims
› After confirmation from customer
› Customer Depots / DDU
› Safety stock requirements
› 0~3 month FC
› 100 % delivery performance
› Fast changing model cycles
› Higher frequency of capacity
and volume negotiations
› Planning tools are increasing but
still under development
› Unilateral deduction of warranty
amounts
Global OEMs Asia OEMs
Requirements of our Chinese Customers Challenges for Building a Robust Supply Chain
Andreas.Subbe@ Continental AG
Public
Continental China
Requirements for Our Supply Chain in Asia Collaboration with Customers and Suppliers
24 May 2016
10 Andreas.Subbe@ Continental AG
Effic
ien
cy
How to improve
collaboration with
customers and
suppliers?
We only can face the
challenges together
with our business
partners –
Growth
Together
Trans-
parency
› Establish most realistic forecast
planning through the entire Supply
Chain
› Agree on logistics requirements and
standard delivery terms
Reliability
› Align requirements between OEMs,
Continental Automotive and Suppliers
› Establish EDI or WebEDI process
Perfor-
mance
› Develop a robust and highly flexible
Supply Chain
› Reduce lead time within the entire
Supply Chain - inventory optimization
Public
Continental China 24 May 2016
11 Andreas.Subbe@ Continental AG
Partnership Across Entire Supply Chain Inbound Process Collaboration with Suppliers & Business Partners
CONTINENTAL
Quality
Warehouse
External
Warehouse
Subcontractor
Supplier
(external or
internal)
Customer
Production
External Warehouse
(3PL)
Inbound
Delivery
› Data exchange via EDI or Web-EDI > 85% with suppliers
› Consignment stock and subcontractor stock under SAP control
› MAT-label , ASN, Self – billing in progress
Source Make Delivery return return
Public
Continental China 24 May 2016
13
15. April 2010,
Iceland
11. March 2011,
Japan
October 2011,
Thailand
Crisis Management Expect the Unexpected
Andreas.Subbe@ Continental AG
15. April 2016
Japan
Public
Continental China 24 May 2016
14 Andreas.Subbe@ Continental AG
Agenda
Continental China - At a Glance 1
Market Challenges China 2
Supplier Management at Continental 3
Collaboration & Best Practice Examples 4
Key Messages 5
Public
Continental China
Supplier Management Overview @ CA SCM Close Loop from Supplier Sourcing to further Development
Andreas.Subbe@ Continental AG
24 May 2016
15
Supplier Business Partner Management Supplier Performance Evaluation & Surstainabilty
Risk & Allocation Management Supplier Development / Phase out
Conti
Supplier
Standards (GSCC)
Part I : Requirements (Mandatory Reqst & Binding)
Part II: Description ( Process & Measurement for
Acknowledgement)
SCU EDI
Delivery Performance
Service
Criteria
PSM
MMOGLE
100%
Basis for Sourcing
decision
Support Supplier
Comparison
Risk
Management
MSM
Allocation
PTN
LINKS
SCID
Enable Supplier
Improvement Action
15
Public
Continental China
› Early involvement in Sourcing Process & Sourcing Database setup
Supplier Business Partner Management Common Requirement Understanding in the very beginning
24 May 2016
16
SCR
Sourcing
› Clear structure on Supplier Requirement ( Global Supply Chain Concept | GSCC)
Send RFQ and
analyze offers
Sourcing
kick-off
Complete
Sourcing plan
Early Supplier
involvement
Maturity
evaluation
Perform project
team kick-off
meeting … …
Final negotiation
and award to
Supplier
Web-EDI Platform
… … … … …
Part I: Requirements:
- Order Communication
- Delivery Reliability
- EDI
- Preferred Sourcing Models
- MMOG/LE
- Labeling
- Package Requirements
…
Parts II: Explanations
Description of our SCM processes and
measurements
= Logistics Manual
Supplier confirms to have read and understood the
explanations
Part I:
Requirements
Parts II:
Explanations
Global SCC
Binding Known
CTT
Andreas.Subbe@ Continental AG
Public
Continental China
SCM Performance
(100%)
Supply Chain Performance Evaluation Service Criteria also be included
24 May 2016
17
Delivery
Perfor-
mance
MMOG/LE
Preferred
Sourcing Model
(PSM)
Service
Criteria
Service Criteria
Supplier behavior in case of
poor delivery performance
Flexibility regarding changes
in demand
Packaging / Labeling
Allocation Management
Information & Communication
Andreas.Subbe@ Continental AG
Public
Continental China
18
Suppliers Comparison Factor - SCF Impact on sourcing decisions
SCM Potential
Criteria for SCM Potential
GMMOG/LE V4
Mat Label
Supply On Performance Monitor
Supply On Document Manager
EDI/WEB EDI Connections
PSM Contract updated
SC Performance Trend
Allocation
SCMA Supplier Coach
SCM
Performance
*BASE = Basic Annual Supplier Evaluation
Andreas.Subbe@ Continental AG 24 May 2016
Public
Continental China
Risk Management @ Continental Automotive Expect the Unexpected
24 May 2016
19 Andreas.Subbe@ Continental AG
Supplier On-site support
Proactive Crisis Avoidance Processes
Parts Change / Termination Notification
Material Shortage
Management
Customer
War Rooms
Risk Management
Public
Continental China
Supplier Risk & Allocation Management Phases & Escalation Level of Material Shortage Mgmt.
20
Phase 1 /
„idle speed“
Phase 2 / Escalation level 1
„speeding up“
Phase 3 / Escalation level 2
„full speed“
Phase 4 /
„slow down & idle speed“
24 May 2016
Andreas.Subbe@ Continental AG
Public
Continental China
21
Supplier Management SCM Benefit from Supplier localization
Reduce the Transit time
No Duty / Customs Handling
Consignment + JIT
Returnable Package
Local Language and same time slot
Fast reaction
Improve communication
Shorten the Supply Chain
Reduce Workload
Speed
Efficiency
Quality
24 May 2016
Andreas.Subbe@ Continental AG
Public
Continental China 24 May 2016
22 Andreas.Subbe@ Continental AG
Agenda
Continental China - At a Glance 1
Market Challenges China 2
Supplier Management at Continental 3
Collaboration & Best Practice Examples 4
Key Messages 5
Public
Continental China
Our Approach on 3PL Management – Forwarder Management Collaboration in Strategic Partnership
24
Transparency
Positive
impact on
inventories
and TR
Material flow
optimization Cash
Premium
freight
reduction
Performance
Increase
Transaction
cost
decrease
Reporting
Tools
Evaluation and KPI
Tender
Business reduction of
LSPs in case of non-
performance
Strategic partnerships
24 May 2016
Andreas.Subbe@ Continental AG
Public
Continental China
Network Design: Collaboration across Plants Current and Future Network
24 May 2016
25 Andreas.Subbe@ Continental AG
› No/ little realization of synergies across
locations
› Lack of transparency about status of
transports and shipments
› Manual planning and execution
processes
› Cross-plant realization of transportation
synergies
› Full visibility about shipment status
› System supported planning, execution
and exception handling processes
Public
Continental China
Collaboration in Returnable Packaging Solutions Increase Competitiveness and Quality Level
24 May 2016
26
› China Returnable Packaging and Standardization
› Covering the supply chain from supplier till Customer 3PL warehouse
Andreas.Subbe@ Continental AG
Public
Continental China 24 May 2016
27 Andreas.Subbe@ Continental AG
Agenda
Continental China - At a Glance 1
Market Challenges China 2
KPI System for Best in Class Supply Chain 3
Collaboration & Best Practice Examples 4
Key Messages 5
Public
Continental China
Best in Class Supply Chain Key Messages
24 May 2016
28 Andreas.Subbe@ Continental AG
Best in class Supply Chain can only be achieved in active partnership with all
involved stakeholders as OEMs, Tier1, Suppliers and 3PL Service Providers
Transparency, Efficiency and Performance: Supplier Business Partner
Management to ensure right understanding about requirements during sourcing
Continuous Local Supplier Development and Performance Mmgt minimize risk
of disruptive situations, proactive Risk Managememt to minimize allocations
Asia and particular China will continue to be the world key market of growth
in automotive, continuous supply chain optimization and localization required
Various Collaboration Projects around transportation and packaging with
suppliers to ensure competitive, transparent and sustainable supply chains
Public
Continental China
THANK YOU!
Transparency
Partnership