DC-SC-M

Design Chain – Supply Chain – Management (CTI Nr. 8353.1 ESPP-ES)

Researchers:

Dr.Robert Alard, Dr. Philipp BremenDr. Josef Oehmen, Yanmei Zhu

Partners:

Academic:

Chair of Technology and Innovation Management of the ETH Zurich, 
Zhejiang Advanced Manufacturing Institute of the Hong Kong University of Science & Technology

Industrial:

maxon motor ag
Mettler-Toledo AG
Micronas Semiconductor Holding AG
Micropool GmbH
Pro-Concept Management SA
Schindler Aufzüge AG
Schindler Management Ltd.
SIG Combibloc International AG

Funding:

partially financed by CTI Nr. 8353.1 ESPP-ES

Web site:

www.dcscm.ethz.ch

Motivation

Asia, eminently China, is becoming more and more a powerhouse in manufacturing, especially for high-volume, low-cost production. This will lead to an increasing importance of the Asian markets from the procurement and manufacturing perspective for Swiss companies. Cost pressure and competitiveness are forcing more and more Swiss and European enterprises to relocate their highvolume production to Asia, where labor rates are extremely low. For most Swiss companies, especially the SMEs, the production dislocation to Asia poses some major challenges regarding organizational, ICT-related, and IPR-related aspects.

Objectives

The aim of the Design Chain – Supply Chain – Management project (DC-SC-M) is to develop a methodology and processes to integrate Asian manufacturing capabilities into the design and supply chain of Swiss enterprises to enhance their long-term competitiveness in a sustainable manner.

Results

The procurement from China has become increasingly important for Swiss companies. Cost savings due to low labor costs, the development of the Chinese sales markets through Chinese suppliers and the need for procurement from China due to legal (keyword: local content) or technological factors (e.g. certain production and technology skills can only be found there) are normally cited as reasons for companies to purchase procurement objects from China. However, the procurement of products from China poses a challenge for Swiss companies in many ways, and involves numerous strategic as well as operational problems and various risks. Therefore, five work packages within the project DC-SC-M tackled different issues and developed practical solutions along with seven industrial partners.

Work package 1 dealt with procurement market research and supplier identification. The aim was to improve the understanding and the evaluation of the procurement market of China (including general cultural and social conditions) as well as to develop adapted methods and criteria for the supplier evaluation. Another important aspect was the strategic formation of the supplier relationship (e.g. regarding balance of power between the Swiss customer and the Chinese supplier). Furthermore, the issue of risk management was approached in order to holistically capture and evaluate the risks that can occur with the procurement from China and the involvement of the Chinese supplier (macro- and micro-economic risks). The subject TCO (Total Cost of Ownership) was incorporated due to the great interest of the industrial partners, and first basic TCO approaches were created and tested.

Work package 2 addressed the topic of redesign. Sales and procurement in low-cost countries often necessitate a redesign. Work package 2 analyzed triggers for redesigns and offered management approaches. A classification of redesigns was developed. This supports the common understanding of redesign, which is not always understood, particularly by specialists in the area of procurement. Design processes as well as the supporting IT tools have to be adapted for the Chinese procurement market. The starting point for procurement decisions are the product criteria, especially regarding offshoring (distant countries) and nearshoring (near countries, regional or local, respectively). Therefore, redesigns should always be taken into account and included at an early stage.

Work package 3 highlighted the organizational processes necessary for the integration of the Chinese supplier into the supply chain of the Swiss customer. For example, this concerns aspects such as the quality assurance, the design of delivery schedules and the ensuring of Supplier Codes of Conduct (Reputation Management). For this purpose, reference processes were developed in collaboration with the industrial partners, which are also used operationally by the companies.

Work package 4 addressed the supplier integration regarding information technology. For this purpose, different tools (PDM, PLM and collaboration platforms) were analyzed. Furthermore, requirements for the design of IT support within the area of tension between European customer and Chinese supplier were defined. Due to the specific issues in the area of IT-support, several expert workshops were organized in the context of this work package in order to discuss specific aspects.

Work package 5 tackled the topic of IPR. This subject, which is of great importance for companies, was highlighted from different angles. A basis was worked out that demonstrates the present situation of IPR in China. Based on the experiences of leading companies with great experience in the area of IPR, applicable strategies for IP protection in China were presented. Furthermore, a catalogue of measures showing how such IP strategies can be implemented and measured in a company was developed.

The DC-SC-M Project was concluded with an industry seminar, which involved a total of 14 companies. Further information about the project and the industry seminar: www.dcscm.ethz.ch.

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