SHANGHAI -- Visiting a supplier plant outside of Shanghai, Steven Hsieh noticed that a paint stripe was missing on the floor to mark where a parts bin should be placed next to the production line. It was a small thing but essential to efficient manufacturing.
"There was no shadow line," he says. "They agreed to it, but it was not there. What I saw on paper was not on the floor."
As director of China Sourcing Ford Motor Company's supplier technical assistance in China, Hsieh (pronounced shay) is on the front line of global cost cutting. His job is to bring Chinese suppliers' quality levels up to international standards so their parts can be exported to Ford operations worldwide.
Hsieh faces frustrations every day, from language barriers to large headaches, such as when a supplier changes a Tier 2 supplier without notifying Ford.
"The challenge is not the cost," Hsieh says. "The challenge is on the quality side."
With a growing number of auto manufacturers and suppliers aiming to cut costs by sourcing more from parts from China, supplier-development programs like Ford's are essential. Parts sourced in China typically are one-third cheaper than the equivalent from the United States, although savings depend on the part.
General Motors, PSA/Peugeot-Citroen SA and Volkswagen AG have announced aggressive sourcing plans from China. A shortage of qualified local suppliers makes for ferocious demand for suppliers who can produce high-quality parts.
Exports of auto parts from China to the United States are booming. They rose from $835.2 million in 2000 to $3.22 billion in 2005, according to U.S. government data.
Cultural barriers
Cultural issues are his biggest headache, says Hsieh, who is from Taiwan. Suppliers simply don't understand why certain procedures must be followed to the letter, or why Ford must be told of any change.
For example, one company that Hsieh declined to name began buying plastic for an instrument panel cover from a new supplier without validating the materials supplier or notifying Ford. The product cracked, and the plant had to be shut down for three days.
"We are transforming an organization," Hsieh says. "It's all about communication. Knowing is one thing, but sustaining and implementing is more difficult."
Changes are rarely as simple as painting lines on a floor. For example, Ford requires all suppliers to use the same logistics software that Ford uses worldwide. The software tells suppliers the quantity and timing of a parts order shipment. The logistics group on Hsieh's team provides training on how to use the software.
"With the logistics software, we could master the Ford system," says Hsueh Ying-che, vice president of Fuzhou Jieh Chueng Automobile Fittings Co., an oil filter parts manufacturer in southern China.
A weekly conference call with a Ford project team also helps sort out problems, from software bugs to production line snags. Fuzhou Jieh Chueng's exports hit $1.2 million last year; Hsueh is aiming for $6.2 million this year. Ford is the biggest customer.
Penn State grad
Hsieh, now 46, got his doctorate in industrial engineering at Penn State University in the 1990s, and thought he would be teaching university students. Then a plant manager from Ford came to interview Hsieh for a research job and convinced him to work in Ford's manufacturing operations.
He worked in Detroit and Japan, and co-authored a book on manufacturing time reduction. Hsieh moved to China In 2003 to head up Ford's supplier-development program.
Hsieh was born in Taiwan, and Chinese is his native language. After years in the United States, he speaks English like a native, too.
Working with suppliers on the plant floor may be a more suitable environment for Hsieh, who is a sociable sort, than a research lab. His dad, who has a black belt in judo, tried to get the young Hsieh interested in the sport, but Hsieh was put off by the hours of solo practice required.
"Judo is a very lonely sport," says Hsieh.
Speed counts
Global companies sourcing parts from China want to get local companies up to speed quickly.
Hsieh must bring the supplier up to Ford's Q1 status, achieved by producing high-quality parts for six consecutive months. Reaching that quality level can take up to 15 months; then the six-month clock starts ticking for Q1 status.
"During the Q1 evaluation period, there are many complicated things," says Wilson Ni, vice president of sales and marketing for Asimco Technologies Ltd., of Beijing. Asimco supplies Ford with aluminum castings for export. It achieved Q1 status in 2005.
Ford engineers suggested better inventory control methods. They also required Asimco to build a separate line for the Ford export castings so supply would be ensured as volumes increased.
"When Ford tells us something to do, we just follow," says Ni.
For now, Ford is buying from local suppliers relatively low-tech components such as castings, speakers, cigarette lighters and car horns.
That points to a problem in sourcing from China: Most fully domestic Chinese suppliers can't produce high-tech components because they still have problems maintaining quality for high-volume production, says Sandra Zhou, a supplier market assessment analyst for consultants CSM Worldwide in Shanghai.
Hsieh admits as much. "We still don't touch safety parts," he says.
Still, he is encouraged by his progress in sourcing other types of parts.
"The Chinese export suppliers are outperforming the mature suppliers (in China) that have been supplying us for years in the overall score" of number of defects, says Hsieh.
Patience is a virtue
Asimco was one of the 14 suppliers recognized at a Ford conference in early March. All had achieved Q1 status.
They gathered in a four-star hotel in the east China city of Nanjing for two days to hear more than just praise. The conference also included vital information such as what kind of packaging to use.
Suzhou Sonavox Electronics Co., a car speaker manufacturer located an hour west of Shanghai, was the poster child of the event, giving a presentation on its road to Q1.
The company exported more than 4 million sets of speakers in 2005. Most of those speakers went to Ford. Volkswagen and DaimlerChrysler are also customers.
Ford began working with the company three years ago, says Suzhou Sonavox logistics manager Ding Xiaofeng. "They are very patient," he says. "They come to the plant often to give us guidance regarding product quality and technological processes."
That kind of patience would have served Steven Hsieh well had he become a professor. He approaches his job now with some of the same optimism for his students that a professor must have.
"Every supplier is developable," says Hsieh. "It just takes time."
You may e-mail Alysha Webb at [email protected]
