FAWNanchangServiceStationINTERVIEWDATE:5May2025INTERVIEWERNAME:JaneXuIntervieweeNameMs.MaLinlinPositionGeneralManagerCompany&AddressFAWNanchangServiceStationTelephone/Fax0-13807081990BackgroundFAWNanchangServiceStationisformerlyNangchangBaoxianAutoReparationFactory,itisstillaSOEnowanditsmothercompanyisJiangxiSupply&SalesCompanyFAWNanchangServiceStationstartedtoselltrucks5yearsagoOrganizationandheadcountService:60Component:20TruckSales:15Managementfuntion:25Totalheadcount:120+80retiredpeople=200Itsold760trucksin1999,500areChangchunJieFang,260areQindaoJieFangSalesrevenueandprofit1999RevenueProfitrateServiceRMB1.4millionN/AComponentRMB5million(taxincluded)5%-7%TruckSalesRMB63Hardtocalculatesincestationhadn’treceivedthelastyearrebate*Totalsalesrevenue1999:RMB70millionKeyCostBreakdownin1999Salary:RMB774KDepreciation:RMB237KOthers(PR,management,etc.):RMB1million(detailsareavailable)Sum:RMB2millionNoprofitleftaftercostoffsetin1999Totalspaceoccupation:20,000m21KeyIssuesServiceandTrucksalesServiceprovidedbyNanchangServiceSation:Beforesalesservice:truckreparationafterbeentransportedMidsalesservice:Customizetruck/chassisaccordingtouser’srequestAftersalesservice:Providecustomerw/owarrantyservice“Double10Policy”:Customerswhobuytrucksfromstationcouldgetdiscountaround10%inpurchasingthecomponentinstation;Servicestationprovidestruckbuyersaspecialpolicywhichallowthemtogetfreereparationwithin10monthsafterpurchasethetruckfromstation.Ms.Maregarditasagreatdealforservicestationtogetcustomers’preferencethroughalowcostway1.Mostofthecomponentproblemshappenwithin10monthsareinthescopeofwarrantyservice2.Insurancecompanywillcompensatethehugedestroyinsomeaccidentsuchastruckbumping,etc.3.CustomerswhoboughttruckfromstationbutuseitelsewherewillhesitatetobebackforfreereparationsincethetrafficfeetheyspentonroadmightbemuchhigherthanthevalueofdestroyedpartOftenthecaseisthatcustomersturnbacktoservicestationonlyaskforfreereparationforelectronicpart,theactualservicecostforthiskindofreparationisprettylowMs.Masaid“Double10Policy”iswarmlywelcomedbycustomersandhasattractedmanybuyers,formostofthehigh-price-sensitiveindividualend-users,theywanttofeel“Safety”oftheirpurchasing.“Double10”couldprovidethemwiththisimpression“Buywithtruck”policyAftercustomersbuythetruck,NanchangServiceStationwillprovidethemsomeeasy-destroyedcomponentswithlowerpricefortheirusage/replacmentinthetransportationprocess,andpersuadeend-userstobuythecomponentstogetherwiththetruck“24hours”ServiceServiceteaminNanchangStationprovidecustomerserviceona24-hourbase,somereparationstaffevendrivetotheprovincearoundJingxiwherecustomergotstock,Nanchangstationwillbearthetransportationexpense.ThishaseffectivelybuildupthegreatimageofNanchangStationComponentMs.MasaidthecomponentpricefromChangchunaremuchhigherthanthosefromout-sourcedcomponentfactories’.IfassembleTruckAwithChangchuncomponentandTruckBwithout-sourcedfactories’component,thetotalcostgapcouldreachRMB20K.Shehadalready2informedthesituationtoMr.Zhu2andhadgotsomepositivereply--Mr.Zhu2hasstartedtotakeactionstowardstheproblem.Now,NanchangStationonlypurchase10%ofitstotalcomponentorderfromFAWChangchuComponentinventorymanagementarenotdonethroughPC,itwasstillmanuallycontrolled.Thereare3000to4000typesofcomponentinStation’scomponentwarehouse,thereislittleobsoleteinventoryMs.Mathinkit’shardtopredictthecomponentdemandbothintypesandvolumes.FulfillmentrateofcomponentordertoFAWislow,FAWcouldonlymeet45%oftherequirementAveragedeliverycircleofFAWcomponentis2monthswhilethatofout-sourcedmanufactures’couldbeonly3days.Someout-sourcedcomponentmanufactureevendispatchsalespeopletoServiceStationtocheckitsinventorylevelandupdateimmediately50%ofthecomponentsalesisfulfilledthroughretailwhileother50%issoldtootherservicestations/repairstationsMs.MasaidindividualcustomerstendtobuyqualifiedcomponentswithrelativelyhigherpriceOthersInternalmotivationsystem:Fortrucksalesstaff,he/shecouldgetRMB50perunitasacommissionforeachtrucksold,and,hecouldget20%oftheprofitofthatdeal(thiscouldpreventsalespeoplefromimpulsivelycutting/raisingtheretailprice)3