By Li Zhiguo

Among the competitive auto industry of China, Shanghai General Motors is an auto company that adopted "multi-brands" strategy at a relatively early time, it is also the first auto manufacturer whose annual sales volume broke through 0.4 million. These achievements rely on the support of internal systematic competitiveness consisting of logistic, R&D, purchasing, manufacturing, marketing and information system.

Integrated logistics and transportation

Along with the increasingly intensified competition in auto market, the auto production is turning to be small batch and diversified, thus requiring more to the logistics management of auto enterprises. The core of SGM logistics system is to carry through integrated logistics strategy, which means to take close-loop management on every tache of logistics, from parts and accessories to rack, from local to different regions, and from home to abroad.

The integrated logistics of SGM can be separated into several aspects. The first is integrated logistics and transportation, namely milk run. SGM has nearly 15,000 varieties of parts at present, in which domestic parts take up almost 10,000 varieties, mainly distributing among more than 230 domestic parts suppliers in 10 provinces and cities of Jiangsu, Zhejiang, and Shanghai. In case each supplier delivers goods to every factory respectively, it will inevitably lead to the sharp increase of parts cost, and will not be good for the transportation management and quality control of parts, or will even lead to delayed delivery and mistaken transportation in respect of goods delivery by themselves, and will therefore result in non-lean operation of the whole parts supply logistics. So SGM creatively carries out "milk run" project characterized by close-loop mode, which is of high frequency, small batch, and timingness. Since the implementation of the project, part inventory has been decreased by 30 percent, 10,000 square meters' area of warehouse been saved, the transportation times been decreased by 20 percent, the comprehensive logistics cost been cut by 30 percent, and the balanced resource utilization been enhanced by 10 percent.

Integrated management of material bin and rack is another characteristic of SGM. At present, SGM is using 1000 varieties, 0.6 million turnover packaging instruments, which distribute among 200 circulating nodes at home and abroad. In order to further satisfy the demand of lean production, SGM planned and carried out "empty container management center" project since 2003. As a recycled systematic project, the Center dispatches and allocates empty container through an integrated management of the material bins and racks among every factory, milk run, supplier, third-party logistics service provider, etc. Take a certain gear box of SGM for example, after an integrated purchasing strategy is adopted, the packing charge for a single-vehicle could be reduced by RMB 773, and RMB 13 million could be saved in 5 years.

The last is integrated ocean shipping. Basing on integrated inbound logistics, integrated ocean shipping could reduce logistics cost effectively. For example, parts shipped from Shanghai to Yantai and Shenyang, after being integrated in distribution centers, the integrated ocean shipping could bring about 40 percent cost reduction for transportation from Shanghai to Yantai and Yingkou port.

Flexible production realized

At present, three big brands of SGM have a total of 260 vehicle types with different colors and configurations, and the vehicles could be delivered within 3 weeks after order placed. Swiftness and flexibility is another feature of SGM logistics. The management of SGM was determined to set up a lean factory that is dominated by pulling production when the factory was initially established, providing a good operation platform for the implementation of lean logistics. In order to fulfill the requirement of "lean logistics", SGM did a lot of jobs on swiftness and flexibility. Swiftness requires adjusting production in time on the premise of flexible same-line-production, that is, adjusting the production up when the type can be sold well, and vise versa. The main point of flexibility is to measure the responding speed of supply chain and manufacturing system, and the key to improve responding speed is to extend supply chain management. SGM is pushing forward localized and real-time supply of suppliers, optimizing the supply chain, cutting the supply semidiameter, and improving the responding capability of parts. Buick platform was started the earliest; the latter were GL8 and Sail. In case an assembly workshop is invested for each platform, then tens of millions US dollars are required to be invested. But SGM realized mix production, which completely cut the investment for instruments and 40,000 square meters workshop. At the same time, flexibility makes auto production to be much more flexible: when a car type is the bestseller, the output of another type could be lower, and vice versa. In today's market that is highly fluctuated, flexible production mode has saved a lot of money for SGM.

Further more, SGM is dedicated to improving logistics and lowering operating cost by using new logistics technologies. In Jinqiao South Plant Project of SGM, fully automated and semi-automated transportation of seat, instrument panel assy and engine assy are realized, logistics efficiency is improved; rear dump lorry is introduced, thus receiving efficiency is improved and safe and ordered receiving of material is realized; wireless pick-to-light system and electronic kanban system are implemented creatively through informationized means, and therefore a highly efficient, informationized, and electronic on-site logistics operation system is built. At present, SGM is spreading the successful experiences to new plants and new projects located in Yantai and Shenyang.