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InterviewNotesInterviewDate:Feb.23,2000IntervieweeName:Mr.XinHongyaoCompanyandAddress:FAWSalesCompanyYingChunRd.LuYuan,Changchun,130011InterviewerName:PaulGao,JaneXuIndex1.Componentservicenetwork2.Supplychainmanagement3.PricingPolicy4.Competition5.‘3in1’businesspractice1.ComponentservicenetworkService&ComponentDepartmentinFAWHeadcount:18KeyfunctionsComponentsalesSalesmanagementMarketinformationgatheringFAWComponentWarehouseKeyfunctions:providing20componentcenterswithcomponentsonmonthlybasisService&ComponentDepartmentinFAWComponentCenter(20)ServiceCenter(396)FranchisedComponentStore(320)ChineseMilitaryandotherkeyclientsFAWComponentWarehouseMajorfeatures:Totalinventoryvalue:RMB65,000,000(componentsfornewtruckmodelscountfor40%)TotalSKU:around10,000Keycomponentsortisaround2,500Supplyrange:40+trucktypeMr.Xinclaimstheavailabilityratioofpartsatthechangchunwarehouseisaround85%ComponentCenterKeyfunctions:Providecomponenttoservicecenters,franchisedstoreandkeyclients(includeChineseMilitary)ComponentsalesMainfeatures:AllcomponentcentersarebuiltbyFAW,FAWdecidestheheadcount,jobdelegationandlaborcost4outofthe20componentcentershaspurchasethedistributionrightsfromFAWComponentcenterdensityinsouthChinaisrelativelyhighforthelocalcompetitionwithDFMMr.Xinclaimstheavailabilityratioofcomponentsatcomponentcenterisbetween75-80%ServiceCenter:KeyfunctionsProvidingreparationserviceforJieFangtruckbothwithinandafterwarrantyperiodComponentsalesTrucksales(only1/3oftheservicecentershavethebusiness)MainfeaturesAlmostalltheservicecenterhastwocomponentsalesoutletsThoughFAWservicecentersusuallyenjoysahighprofitrate,however,tothosecenterswhichwerebuiltonthebasisofoldlocalservicefactoriesanddidn’tseparatethebusinessclearlyfromtheformerbusinessbodies,profitareoftentakenawaybythelatter,someevenfacingbankruptcy.FAWsupportthebusinessofservicecentersbyinvestingtheircomponentinventory--Toimportantservicecenters:FAWprovidekeyaftermarketpartsvaluedatbetweenRMB200-500K.Initially,FAWrequirestheservicestationstopaybackitsinvestmentsafterthreeyears,butithasnotbeenabletodoso.--Tolessimportantservicecenters:popularcomponentsonlyproducedbyFAWwiththevalueofRMB100,0002.SupplychainSupplychainflowchartKeyissues80%to85%ofthetotalsalesofFAWcomponentarefulfilledthroughservicecenters(almostallthesalesarefocusedonthepopularcomponentsonlyproducedbyFAW);10%arefulfilledthroughfranchisedstoreComponentfactoryinsideFAWproducingaccordingtothecomponentdeliveringstatusComponentCenter(20)ServiceCenter(396)FranchisedComponentStoreChineseMilitaryandotherkeyclientsService&ComponentDepartmentinFAWComponentproductionfactoryInsideFAWOut-sourcedcomponentmanufacturersandsubstitutemanufacturers3.Deliverorderonamonthlybasisaccordingtotheinventorylevelandorderfromcomponentcenters2.Deliverorderonamonthlybasis1.Deliverorderonamonthlybasis,mostlyforthepopularcomponentsonlyproducedbyFAW4.Fulfilltheorderonamonthlybasis,componentwassenttoFAWcomponentwarehouse,componentinputisnotfinishedinacontinuousflow5.Fulfilltheorderonamonthlybasis,transportedbytrain6.FulfilltheorderPurchasethecomponentswithalowerpricefromothersourcesComponentneedstobeout-sourcedisoftenproducedbyseveraldifferentproduceratthesametime,thisleadstoprice-orientedcompetitionandhighproductioncostsinceeachproducercouldn’tr...