1. Improving the Effectiveness of the Forward Purchasing Strategy at Jiangsu Aucksun Metal Co.,Ltd. By Phongwarin Buranasathitwong & Suchaluck Boonipat

3. PROLOGUE Jiangsu Aucksun Metal Co., Ltd is a China-based company engaged in processing and logistics services of steel plates and aluminum alloy plates. The Company provides galvanized steel plates, hot-dip galvanizing steel plates, aluminum alloy plates, cold-rolled steel plates, hot-rolled steel plates, stainless steel products, electrolytic tin products and other steel plates, among others. The Company's clients are mainly information technology (IT) manufacturing enterprises. It operates its businesses principally in Jiangsu province, Shanghai and Zhejiang province, China.

4. PROLOGUE For the procurement and supply of row material, The company was founded not long ago, how to improve and manage the material flow and the associated operational process. The procurement of raw materials are not play a critical role in well-being , but also affects the smoothness and the financial performance of the entire Aucksun supply chain.

5. PROLOGUE Aucksun was register in 2002 and started operations a year later, so it’s a mid-level management and the most of employee also quite young. The core competency is focused on integrated procurement and metal material processing, value added service for IT industry which has bring future to China

7. BACKGROUND ZJG is the city, where was ranked second among China’s top 100 cities in 2006 based on the composite social and economic index. The superb geographic location of ZJG offer the good transportation infrastructure, constituting a four dimensional transport system that includes land, rail, water and air.

13. The organization of Aucksun General Manager Association GM Association GM Operations Dept. Business Support Dept. Manufactering Dept. Information Dept. Administration Dept. Plant & Factory Material & Supply Quality Control Production Customs Clearance Human resources Finance & Accounting Sales & Marketing

17. Aucksun’s ERP system Aucksun has a self-invented ERP system, with which the company can operate harmoniously. The reason Aucksun don‘t use these famous ERP system is that they think its own system will fit its operations more due to its own specialty. This ERP system is composed of three main parts, execution part, management part and decision-making part. These three parts make sure Aucksun run smoothly.

28. Distribution Process of Imported Material In this service, all of the materials are imported by the supliers and shipped to a domestic dock and then finally to Aucksun. Therefore, the supply and price of row materials have a big impact on Aucksun

29. Distribution Process of Supplied Material In this service, all of the materials are directly purchased by the customers and shipped to a domestic dock and then finally to Aucksun. Therefore, the supply and price of row materials have little impact on Aucksun

30. Problem Description and Statement

32. Competition within the Industry Focus on High Technology

33. Suzhou Nippon Metal Co., Ltd Invested by: Japan Nippon Steel Co., Ltd The steel sheets produced by Japan Nippon Steel Co., Ltd. Its service objectives are copiers manufacturers( such as Sharp). Competition within the Industry Yangtze River Delta Jiangsu Province Jijie Metal Co., Ltd (Suzhou) Wuxi Meifeng Metal Co., Ltd (Wuxi) Nippon Metal Co., Ltd. (Suzhou) Jijie Metal Co., Ltd Invested by: Taiwan Jijie steel Co., Ltd The steel sheets produced by Japan Nippon Co., Ltd and Taiwan China Steel Co., Ltd. Its service objectives are computer manufacturers (such as Asus) and LCD manufacturers (such as Auo). Wuxi Meifeng Metal Co., Ltd Invested by: Japan Sumitomo Co., Ltd, Shanghai Sumitomo Co., Ltd and Taiwan Meisheng Co., Ltd The steel sheets produced by Japan Kobe Metal Co., Ltd. Its service objectives are LCD manufacturers(such as Sharp, Chimei)

38. Aucksun’s Solution 1. Better Collaboration with Downstream Customer 2. Better Supply bas management with emphasis on how to deal with supply disruption solution

39. Nature of the Steel Industry In 2007, the country produced 489.2 million tons of crude steel, recording a production growth of 15.7% from the previous year, while the Chinese consumption of crude steel reached 434.4 million tons, rising by 11.9% from the previous year.

40. Ranked behind China were Japan and the U.S., with a production of 120.0 million tons and 97.2 million tons respectively.

41. In 2007, China’s steel industry revealed signs of consolidation in a market that was previously rather fragmented, and in need of mergers and acquisitions. Within the market, the 10 leading steelmakers produced 162.7 million tons of steel products, accounting for more than 50.0% of the country’s total output. Shougang Group and Tanggang Group in North China Baoshan Iron and Steel (Baosteel) Group and Maanshan Steel Group in East China Wuhan Iron and Steel as well as the Panzhihua Iron and Steel Group in Central China

49. Distribution Process of Imported Material

50. Distribution Process of Supplied Material

63. High Supply Risk and High Impact on Profit: Strategic Items Product that are crucial for the buyer while face with scarcity/ difficulty of supply Highest impact on customer experience Price is large portion of the system cost Long-term partnership with suppliers such as Strategic Alliance, Vertical Integration Low Supply Risk and High impact on Profit: Leverage Items Buyer dominate Many supplier - encourage competition in price Have large impact on bottom line & Profit Purchasing Strategy: Vendor Selections, Targeted pricing, Competing Bidding High Supply Risk and Low impact on Profit: Bottleneck Items Product that can only be acquired through one supplier Seller dominate Do not contribute a large portion of the production cost but supply is risky Ensure continuous supply is important -Long term contracts and/or carrying stock Low Supply Risk and Low impact on Profit: Non-Critical Items Product that are easy to buy with low financial impact Standardization: Simplify and Automate the procurement process Decentralized procurement policy is appropriate – no need for managerial process

64. Push and Pull Strategy Aucksun : the Push strategy mainly with its’ forward purchasing strategy Push-based supply chain: Production and distribution decision are based on long-term forecasts Pull-based supply chain: Production and distribution decision are demand driven so that they are coordinated with true customer demand rather than forecast demand Should achieve balance between push and pull strategy varies with the type of product

66. Thank you for your attention