FAWWuhanSparePartsCenterINTERVIEWDATE:March9th,2000INTERVIEWERNAME:AnneWangIntervieweeNameMr.LiuYanlin,Mr.YuBinPositionEx-manager,ManagerCompanyandAddressFAWWuhanSparePartsCenter,Army59817Telephone/Fax(027)87952141(027)87952304callSparePartsCenterBackgroundKeyProcessesKeyIssuesConclusionsBackgroundTheWuhanSparePartsCentreislocatedinamilitarysiteofArmy59817.ItwasoriginatedfromtheformerMid-SouthFAWBranchandmovedfromChangshatoWuhanin1996.ThelocationofWuhanSparePartsCentreis20kmawayfromWuhanCity,oronehour'sdrive.OriginalconsiderationforchoosingthatplaceistoletWuhanSparePartsCentresupplythreeadjacentprovinces-Hunan,HubeiandJiangxi,inthesametime.However,nowthatJiangxiandHunanbothhasitsownsparepartssupplycentres,WuhanSparePartsCentre'slocationseemstobeunsatisfactory,asit'stoofarfromtheWuhanCityanddifficulttofind.Therehasbeenproposalforrelocationbutdetailsneedtobediscussedlater.WuhanSparePartsCentrehasasparepartswarehouseof4,000M2.Itstoresaround3,500to4,000SKU.Totalinventoryvalueis8.5MillionRMB.Averageturnoveris2timesperyear,includingalleasy-wornpartsandlong-termparts.MrLiuclaimedthat,byutilisingthespacemoreskilfully,atwo-floor,1000M2warehouseisalreadysufficienttostoreallthoseparts.Therearetotally4FAWemployeesinWuhanSparePartsCentre,includingonemanager,oneplanner,onecashierandoneaccountant.ThemilitarysiteprovidesWuhanSparePartsCentrewiththe4000M2-warehouseplace,aswellas3storekeepersand2porters.ThoseworkersgettheirsalaryfromthearmybutworksforWuhanSparePartsCentre.WuhanSparePartsCentre'stotalsalesin99decreasedsharply:1997:19MillionRMB1999(AfterApril):8.7MillionRMB1Mr.Liuthinksthatit'smainlybecauseoftheimpactfromotherFAWpartssupplyingchannels(FuAoCo.andSiHuanCo.)andsmallsuburbpartsproducers.CustomersofWuhanSparePartsCentreincludeservicestations,partsshopsandretailcustomers.Detailbreakdownandthemargintothemislike:PercentageofsalesMarginoverpurchasepriceServiceStations80%2%CorporateCustomers16%~17%5%RetailCustomers3.5%~4%Lessthan25%KeyprocessesMostofthesparepartsinWuhanSparePartsCentrearesourcedfromChangchunCentralWarehouse.Besides,WuhanSparePartsCentrealsopurchasespartsfromDalian/WuxiDieselEngine,orotherFAWlicensedpartssuppliersdirectly.Totalvalueofthosepartswillnotexceedseveralhundredsofthousands.Inordertoensurethatallpartsarrivedattheirdestinationatsametime,normaldeliverysequenceforFAWCentralWarehouseis:1stpriority:Xinjiang,GuangdongandWest-southChina2ndpriority:Mid-south,EastandNorthChina3rdpriority:HeadquarterofFAWForWuhanSparePartsCentre,partsaredeliveredevery25thofthemonth,andconfirmationofdeliveryshouldbesent5-10daysbefore.Thus,ifWuhanSparePartsCentredoesnotreceiveconfirmationbyevery20th,themanagerwillcallChangchun.Transportationtocustomersismanagedbyservicestationsthemselves.ThussomeservicestationsisnotwillingtogotoWuhanSparePartsCentreforsmallorders.Mr.Yuisplanningtocontractafleettohandlethetransportationtocustomersandaddupthecostintothepartsprice.Detailsneedtobediscussedinthisyear.Around5MillionRBMworth-inventoryisconsideredas"Static".Amongthose"static"inventories,50%isnormal,longtermparts,whileanother50%isobsolescenceABCInventorymanagementisonceadoptedinWuhanSparePartsCentre,butsoonabolishedasthemarketchangesfastandnoaccurateminimalstocklevelcanbeanticipated.Consideringobsolescence,threemethodsarefeasibletosolvetheproblematpresent:...