On July 11, 2024, at the 5th State-owned Enterprise Digital Procurement and Smart Supply Chain Forum hosted by the China Federation of Logistics and Purchasing and co-organized by Ebang Power, Zhang Yingfei, Deputy Secretary of the Party Committee and General Manager of China Shipbuilding Group Materials Co., Ltd., delivered a speech entitled "Implementing the "Win-Win" Concept, Adhering to Value Creation, and Accelerating the Construction of a Modern Supply Chain Management System for Ships".
He pointed out that in 2023, the total annual procurement amount of China Shipbuilding Group will exceed 200 billion yuan, and the amount of first-level centralized procurement will exceed 60 billion yuan. CSSC focuses on drawing a grand blueprint for the modern supply chain management system of ships from three aspects: one is to focus on the value creation of the management system and deepen the centralized procurement of military and civilian integration, the second is to focus on the value creation of bulk material procurement, innovate the ferrous metal procurement model and the whole supply chain service, and the third is to focus on the value creation of marine equipment procurement and solidly promote the procurement and supply guarantee services of mechanical and electrical equipment.
(Tips: 1. This article is organized by Ebang Think Tank according to the shorthand draft of the meeting, and has not been reviewed by me, or there are omissions, please understand.)
2. The "2024 Digital Procurement Development Report" jointly released by the Public Procurement Branch of the China Federation of Logistics and Purchasing and Ebang Think Tank selected 14 central enterprises as the best practice representatives of supply chain collaboration to achieve digital procurement.
The following is a transcript of the guest speeches:
Dear Assistant to President Hu Dajian, leaders and colleagues, good morning. I am very glad to have this opportunity to participate in this forum, and I would like to thank the China Federation of Things for providing a very good opportunity for learning and exchange. Today's exchange with you is entitled "Implementing the "Win-Win" Concept, Adhering to Value Creation, and Accelerating the Construction of a Modern Supply Chain Management System for Ships. First of all, I would like to briefly introduce to you our shipbuilding group and ship materials. The shipbuilding industry is known as the "crown of comprehensive industry", which is characterized by many parts, long supply chain, complex product structure, and high industrial relevance, which involves more than 50 industries such as steel, nonferrous metals, machinery, and electronics.
CSSC is the main force of our country's naval weapons and equipment construction, the backbone of our shipbuilding industry, an important force in the equipment and manufacturing industry, and a leading force in the development of marine equipment, as well as a practitioner of deepening reform and innovation of state-owned enterprises.
At present, China Shipbuilding Group is the world's largest shipbuilding group, in 2023, the total annual procurement amount of China Shipbuilding Group will exceed 200 billion yuan, and the amount of first-level centralized procurement will exceed 60 billion yuan.
CSSC Materials is the supporting unit of the Procurement and Supply Chain Management Center of China Shipbuilding Group, and it is also the supporting unit of our CSSC Procurement Management and the supporting unit of the first-level centralized procurement business. Our headquarters is located in Beijing, with about 1,300 employees, and 65 sub-subsidiaries in Shanghai, Guangzhou, Shenyang, Tianjin, Wuhan, Chongqing, Kunming, Xi'an, Zhangjiagang, Sanya and overseas. CSSC Materials earnestly implements the deployment requirements of the SASAC and the Party Group of China Media Group on procurement and supply chain construction, implements the concept of "win-win", adheres to value creation, and accelerates the construction of a modern supply chain management system for ships.
Briefly introduce the "win-win" concept of the topic of my report, the "win-win" concept is a concept of "win-win in advance, control and win-win after the fact" put forward by the party group of China Shipbuilding Group from the perspective of finance, and we also implement the concept of "win-win" in the modern supply chain management and procurement system of the service group to achieve our value creation.
Part 01 Focus on the value creation of the management system and deepen the integration of military and civilian centralized procurement
The first part is to focus on the value creation of the management system and deepen the centralized procurement of military-civilian integration, which may be a feature of our military central enterprises.
The first is to deepen the reshaping of the centralized procurement system. We are also based on the unified deployment requirements of the group's party group, and take centralized procurement as an important part of lean management. This year, we have also set up the procurement and supply chain management center of the group company, revised a series of management methods and systems, and deepened and expanded the centralized procurement of military and civilian materials, projects, services and other fields.
We have built a five-unified, five-centralized civilian material procurement management system. 5. Unification refers to the unified organizational structure, unified system and process, unified e-commerce platform, unified plan assessment, unified supervision and inspection; The five concentrations refer to centralized procurement management, centralized category management, centralized delivery period management, centralized supplier management and centralized risk management.
The second is to deepen the analysis of historical purchase prices and the study and judgment of the market. We have established a price database of historical procurement for first-class centralized procurement materials, drawn the curve of price changes, and analyzed the price changes, so as to provide reference for our shipyard operation orders and procurement price review.
We have optimized the market norm analysis mechanism of bulk materials, and conducted comprehensive research and judgment on the market changes and procurement strategies of our three major material products, namely ferrous metals, non-ferrous metals and energy and chemical products, every month, so as to provide strong data support for our shipping companies to step on the procurement timing and control procurement costs.
The third task is to deepen the management and control of suppliers and the revitalization of resources. Then, relying on the e-commerce platform of the group company, carry out the dynamic management of the whole cycle of online sourcing, access, daily maintenance and management, supplier assessment and evaluation, exit and other qualified suppliers of first-level centralized procurement.
At present, there are more than 100,000 members registered on our procurement e-commerce platform, including 5,200 qualified suppliers for first-level centralized procurement, and more than 30,000 suppliers with whom we have actual transactions. In 2023, we have 95 suppliers with a transaction volume of more than 100 million yuan, and 16 suppliers with a transaction volume of more than 1 billion yuan. At the same time, we insist on holding the supplier conference of the group company every year, and the number of online and offline participants in the third supplier conference last year exceeded 120,000, and the on-site signing exceeded 10 billion yuan.
The fourth task is to strengthen the construction of informatization and improve the efficiency of centralized procurement. We have established a procurement e-commerce platform as an implementation platform for centralized procurement, from supplier access and performance evaluation, demand management, plan management, sourcing inquiry management, contract management, logistics and distribution, quality acceptance, financial reconciliation, after-sales service and other business processes, to achieve seamless connection and traceability of procurement process information; Strengthen the analysis scenarios and applications of supply chain big data such as procurement compliance analysis, supplier access risk identification, bidder risk assessment, procurement energy efficiency assessment, customer credit evaluation, supplier performance ability evaluation and supplier performance evaluation, and strengthen the intelligent supervision of our ship supply chain.
In 2023, through our shipbuilding group procurement e-commerce platform, the amount of online procurement will exceed 100 billion yuan.
Part 02 Focus on the value creation of bulk material procurement, innovate the ferrous metal procurement model and the whole supply chain service
The second aspect of the exchange with you is to focus on the value creation of bulk material procurement, and innovate the ferrous metal procurement model and the whole supply chain service.
The first task is to strengthen strategic cooperation with major steel mills to achieve mutual benefit and win-win results. We have given full play to the benefits of large-scale procurement, deepened the cooperation with the group's two strategic cooperation suppliers, Anshan Iron and Steel and Xianggang, and established a long-term, efficient and win-win strategic alliance of the supply chain. In 2023, CSSC will complete a total of more than 3 million tons of shipboard orders. We have promoted Anshan Iron and Steel, Nanjing Iron and Steel and other steel mills to expand forward fixed lock orders, and explore the use of futures hedging mode to carry out forward orders, with the longest delivery date to December 2027. Because now in the boom period of the entire shipbuilding market in the past few years, most of our first orders are in 27 or 28 years, and some good shipyards, such as LNG component shipyards, have basically ordered in 29 and 30 years. Therefore, the locking of the price of long-term bulk materials, is a new topic for us, we actively cooperate with steel mills, and we also have some trading experience in futures hedging, we are using some of the price of ship plates is relatively close, and the correlation coefficient is relatively high for some varieties of forward price locking.
At the same time, focusing on the R&D and construction needs of high-tech ships such as LNG carriers, large container ships, and luxury large cruise ships, we have cooperated with strategic suppliers such as Anxiang Steel and other strategic suppliers in R&D, verification, production, and promotion of some high-end black materials such as pressure plates, high-strength ship plates, offshore steel, ultra-high-strength and low-temperature steel, and anti-crack steel, and have achieved fruitful cooperation results, promoted the localization of our key materials, and enhanced the security, stability and resilience of the supply chain.
The second task is to reduce the specifications and models of materials and deepen category procurement. We have carried out a new model of "bulk procurement of shipboards based on specifications, dismantling of the whole ship, aggregation of quantities, and bulk procurement, and reduced the number of specifications for shipboard procurement. In the three major conventional main ship types container ships, bulk carriers, and cruise ships, the number of ship board procurement specifications has been reduced by more than 10%. At the same time, we further promote the standardized procurement of first-class centralized procurement materials, and we take the optimization of section steel specifications as the starting point, actively promote the optimization of specifications, and gradually extend to pipes and other materials. Collect and analyze some price increase rules of Anshan Iron and Steel, Xiangshan Iron and Steel and other major cooperative steel mills, and we are currently working with our strategic cooperative steel mills to formulate unified price increase rules for steel mill ship plates.
The third task is to deepen and expand the integration and extension services of the whole supply chain of ship plates. We actively use the existing processing and distribution capabilities to provide our own shipping enterprises with steel cutting, pretreatment, surface fine inspection, thickness measurement, sampling and other industrial chain supporting services. We have processing and distribution bases in Bayuquan in the Northeast, Zhangjiagang in the Yangtze River Delta, Guangzhou in the Pearl River Delta and other places. In 2023, CSSC Materials and Huangpu Wenchong Shipyard in Guangzhou will begin to carry out value-added services for centralized warehousing, processing and distribution, and we will concentrate the storage and processing facilities and resources of the original shipyard on our entire CSSC materials platform, distributing 140,000 tons of steel plates for the shipyard, and the entire logistics through centralized distribution, the entire logistics and transportation cycle has been shortened by more than 30%, effectively improving the collaborative efficiency of the industrial chain.
Part 03 Focus on the value creation of marine equipment procurement, and solidly promote the procurement and supply guarantee services of mechanical and electrical equipment
The third aspect of communication with you is to focus on the value creation of marine equipment procurement, and solidly promote the procurement and supply guarantee services of mechanical and electrical equipment.
The first task is framework agreement procurement, optimize the supplier structure, and reduce procurement costs. We take standardized products as technical support, in the design stage we began to promote the standardization of the specification configuration of marine equipment, we are using the framework agreement procurement plus materials working group such a mechanism, to carry out the strategic research of marine mechanical and electrical equipment category procurement, the implementation of the same category of materials standardized design and product catalog selection, through the concentration of the same type of equipment material demand, to carry out framework agreement procurement, improve procurement efficiency, reduce the number of specifications of our supporting equipment.
In 2023, our frame procurement working groups will sign new framework agreements for 15 types of marine complete sets of materials, and a total of 123 framework agreements will be signed, the number of suppliers will be reduced by 41%, and the prices of most supporting equipment will be reduced by more than 10%.
The second task is to carry out in-depth fine management of the supply of key materials for major projects. Every month, we conduct systematic and regular analysis of the order and delivery date of more than 2,000 key equipment and materials for the key ship types such as large and medium-sized container ships, LNG carriers, PCTC automobile ro-ro ships, etc., and form analysis reports. Cooperate with our shipping companies to explore potential risks, pre-position the risk threshold of this supporting delivery period, and judge the degree of saturation of our suppliers' orders, the peak period of delivery, and the supply capacity, so as to avoid the risk of running on delivery.
Now that the order of ships is at its peak, some of our key supporting equipment manufacturers are also facing the problem of insufficient supply of their production capacity. In fact, in this regard, as the group's centralized procurement platform, we are to manage the demand for key equipment of each shipyard on the board, and coordinate the delivery period management of key equipment of suppliers in a centralized and unified manner.
The third aspect of work is to work closely with our production enterprises to promote localization and achieve cost reduction and efficiency increase. CSSC actively communicates and coordinates with our shipowners, and in the ordering process, we give priority to our domestic products under the same conditions, especially some of the products that we can match with CSSC Machinery Co., Ltd., and promote the localization of key equipment such as reliquefaction devices and cryogenic globe valves, and promote the replacement of some key marine equipment such as temperature control valves and oil supply units and propellers with localized equipment, and the cost reduction of a single ship has exceeded 10 million yuan after localization.
In Ida? In the domestic large-scale cruise ship project of Modu, we have also increased the depth and intensity of supplier sourcing, cultivated domestic high-quality suppliers, driven the research and development and construction of new materials, parts and new key system equipment, attracted more than 500 global suppliers to jointly promote the design and construction of our luxury cruise ships, and also completed the localization of more than 30 materials and added more than 20 cruise localized supply chain manufacturers, which has effectively promoted the linkage development of our related industrial chains.
In the next step, CSSC Materials will continue to support our CSSC Group to actively fulfill the responsibilities of the head of the shipbuilding and marine equipment industry chain, actively play a leading role, do a good job in the construction of our supply chain coordination and supply chain ecology, and accelerate the construction of a lean, collaborative, internationalized, tough, intelligent and green modern supply chain of ships. There is still a big gap in the construction of digitalization and smart supply chain in China Shipbuilding Group, and we also take this opportunity to hope that the next step can be to our leading central enterprises to learn, and I also hope that all the leaders and experts here can give advice, my speech is here, thank you.
The "2024 Digital Procurement Development Report" (hereinafter referred to as the "Report") was jointly released by Ebang Think Tank and the Public Procurement Branch of the China Federation of Logistics and Purchasing at the 5th State-owned Enterprise Digital Procurement and Smart Supply Chain Forum. With the theme of "Technological Change and Value Creation", the report selects 14 online shopping malls of central enterprises as the best practice representatives of supply chain collaboration to achieve digital procurement, aiming to show the advanced experience and remarkable results of central enterprises in digital transformation, supply chain optimization and online mall construction, and provide reference models and strategies for the industry.