Four talents of Olympic suppliers

At the end of March, the Beijing Olympic Games started the torch relay. This will be the longest torch relay ever, lasting 130 days and a total mileage of about 137,000 kilometers. The torch will be passed in a total of 113 cities and regions in 31 provinces, autonomous regions and municipalities directly under the Central Government in China, and will also climb Mount Everest. Among them, the team that undertakes the task of escorting the torch will be dominated by Volkswagen.

Being the official supplier of the 2008 Olympic Games is undoubtedly a big deal for Volkswagen (China). Volkswagen will form 40 vehicle groups, including 346 vehicles for the core fleet, 583 vehicles for management and support, and 30 vehicles for security and media.

In addition to providing cars, Volkswagen also needs to ensure 24 hours a day technical support and service. To achieve this goal, Shanghai Volkswagen and FAW-Volkswagen will set up a special team consisting of more than 200 technical support and after-sales service staff.

This is a feat by any measure. The Olympics are like that, being able to test the limits of ability in any field.

Just as the Beijing Olympics will represent the pinnacle of human fitness - the world's greatest athletes will prove their excellence in their respective sports - the Olympics will also showcase the group of people, equipment and method. While the world watches athletes challenge themselves, competitors and records, the work behind the scenes to create the best possible competitive environment for athletes is equally exciting.

The experience of this Olympic Games covers major management areas. Last November, this magazine reported on Olympic marketing. This time, we report on the supplier's experience from the perspective of the designated supplier for the Olympic Games.

We describe these experiences using a framework based on supplier capabilities. In other words, what capabilities do you need to have to become an Olympic-level supplier?

The answer to this question is reflected in a Supplier Capability Chart. We have identified the following supplier capabilities based on expert opinion:

1, market position and corporate strength

2, technological advantage

3, cost, quality and continuous improvement

4, focus and early engagement

Capability 1: Market Position and Corporate Strength

When tourists watching the Olympics arrive at Beijing Capital International Airport, many of them will take a driverless train and be ferryed to Dongzhimen Station, 28 kilometers away . The entire journey will only take 16 minutes.

The trains the tourists will take will be built by Bombardier, and it will likely be a Bombardier plane that will take them to the Beijing airport. The Canadian industrial giant is the largest supplier to China's regional jet market and a major manufacturer of commercial aircraft in China. Log in to CEConline to read more management articles.

When Olympic organizers looked for train suppliers, they must have considered Bombardier's existing capabilities. One of the evaluation criteria is corporate strength and social responsibility. "Must be a well-known domestic or international company with market leadership."

Bombardier fits this requirement as it is the world's top train manufacturer and the third largest civilian aircraft manufacturer. After coming to China 50 years ago, Bombardier now has three joint ventures in China, with a total investment estimated at US$100 million.

Zhang Jianwei, President and Chief Representative of Bombardier China, is very confident in the company's position in the Chinese market. The European Railway Industry Federation quoted him as saying: "Bombardier now has a great reputation in China by participating in many challenging railway projects in China, and Bombardier understands the specific needs of the Chinese railway market very well."

Of course it is better if the supplier has a presence in the international market. Bombardier has this advantage. It has successfully implemented similar rail systems in countries around the world, including Vancouver's SkyTrain - the world's longest driverless train system - and similar systems in New York and Kuala Lumpur.

All of these market position and corporate strength considerations boil down to one question for any supplier: Can you deliver the specified quantity and quality of product on time?

Being able to deliver "on time" is the key to success for Bombardier -- the company has a very tight delivery schedule, less than two years after winning the $44 million contract in March 2006 time.

To support the implementation of this project, the company has adopted a vertically integrated strategy. Bombardier will design and build all aspects of the rail system. According to AFP, this includes a two-year optional program that provides operations and maintenance services.

In a statement, Bombardier said it had "Know How in a Box." Packed in the "box" is its ability to provide material supplies and support to the Chinese.

Providing support is easy if you understand your client's plans. Bombardier is a good student of China's national infrastructure program. In presentations made by the company, Bombardier astutely outlined the future of the nation's rail system. In particular, it stressed that between 2006 and 2010, Beijing was planning to invest 60 percent of its budget in transportation projects.

Bombardier's investment in capabilities is also reflected in Made in China. This year, it built a new factory in China to make train parts. The company calls it its own "fully integrated factory." The Qingdao-based facility includes a variety of functional departments, from engineering to procurement, production processes, manufacturing, assembly and testing, and even marketing. It is the first wholly foreign-owned enterprise in China's railway industry.

When the management process is in place, the results are often in place.

This project is just that. On December 10 last year, Bombardier Transportation (Group) announced that it had completed the design and installation of a driverless, fully automatic train system at Beijing Capital International Airport on time.

Chen Guoxing, Chief Commander of Capital Airport Expansion Project, commented on the success of the project: "Under very tight time, the Bombardier team delivered a world-class automated people mover system on time."

Supplier Experience:

·Buyers must seek reliable proof, and market position is such proof. Suppliers have to go to great lengths to establish their market position.

·Understand your client's strategy and link it to yours.

·If it is not possible to integrate all activities (from design to production to marketing), ensure control of these activities.

Capability 2: Technical Advantages

When spectators start to enter the 37 venues of the 2008 Beijing Olympic Games, they will be able to see not only the events of their choice, but also other venues in the other 36 venues. competition. And that's all thanks to broadband technology. The 1 million spectators in Beijing will share the Olympic feast with 4 billion spectators around the world through telecommunication technology.

So the Beijing Olympics has a new nickname: the Broadband Olympics.

Guaranteeing the supply of necessary technology will be the responsibility of suppliers and sponsors, including Beijing Netcom and Ericsson. Both companies exemplify the manufacturing and technical capabilities that all suppliers must possess.

“Unless you have an undeniable technology or cost advantage that is difficult for current vendors to replicate, you can’t easily walk in and take your place.” CEO of the Year John Sanderson in It was said at a management seminar. Sanderson is speaking as a member of the auto industry, but his words are wise words for suppliers in all industries.

Technical strengths are the capabilities Ericsson brings to this partnership. The Swedish company will supply Beijing with a command support system based on Ericsson's IP Multimedia Subsystem Platform (IMS). This technology makes it possible to centralize data, voice and network technologies through an IP-based infrastructure.

Want to see specific information on the athlete who just broke an Olympic record? Want to watch a basketball game live on your phone while participating in a track and field event? These fun experiences are fairly easy to do.

Technology is a proven factor: the Olympic agreement extends Ericsson and Beijing Netcom's partnership to build China's first commercial IMS network. "This contract confirms the maturity of IMS," said Mats H. Olsson, President of Ericsson Greater China.

Technological maturity is not accidental, but artificial.

In Ericsson China's case, technological innovation is the result of its full support for local R&D. Ericsson China has R&D facilities in Beijing, Shanghai, Nanjing, Qingdao, Dalian and Chengdu. According to the Shanghai Daily, Ericsson announced that it intends to increase its research and development expenses in China by 20% every year. By 2005, it had spent $200 million on research and development over the previous five years.

Ericsson not only invests in R&D, but also makes a profit. In most cases, R&D is a cost center or is only established in subsidiaries. In a paper titled The Growing Role of R&D Institutions in East Asia, Mark Dodgson, John Matthews and Tim Kastelle explain Ericsson's building of R&D into profit The Center's Approach:

"In this case, Ericsson decided to establish a self-financing R&D company. This company, although technology-oriented, was profit-oriented."

Maximizing investment is Ericsson's Olympic Games Partner - Beijing Netcom's shared strategy. To support its rapid expansion, Zhang Chunjiang, chairman of China Netcom, expects China Netcom to invest 50% of last year's capital expenditure on broadband services and upgrades.

China Netcom says its strategy is to maximize investment in broadband wireless infrastructure that it has already invested in.

For example, just after being selected as the partner of the Beijing Olympic Games, Beijing Netcom used its legacy network to establish 4 new platforms: service provision, network support, service assurance and cooperative development.

Supplier Experience:

·What technological advantages can you create over current suppliers, especially ones that are difficult for them to replicate?

· Maximize investment in current innovations and create new products that are related to existing products. This will allow you to expand your limited costs into more profitable projects.

·Consider transforming R&D from a cost center to a profit center.

Capability Three: Cost, Quality, and Continuous Improvement

During the Olympics, visitors to Beijing will see massive numbers of Volkswagens—not just as escorts for the Olympic torch relay, but on the streets of the entire city. Last year, Volkswagen (China) had a market share of 18%. This year, Volkswagen's sales in China are expected to reach 1 million.

Three years ago, the situation was not optimistic. In 2005, the automaker announced that it had lost money in China for the first time in 20 years. Despite being one of the pioneers in the local auto industry, VW itself has come under pressure on quality and cost as competitors grow, and its market share has fallen from an all-time high of 50 percent to 11 percent.

Cost and quality are dual challenges for all suppliers. Buyers are always under pressure to reduce costs and improve quality. The solution: continuous improvement in both cost and quality.

In order to turn losses into profits, Volkswagen (China) started a restructuring plan in 2005. The company dubbed the program the "Olympic Program," which couldn't be more apt: the challenges of implementing it were as difficult as any Olympic event.

To cut costs, the company is working to make better use of locally manufactured components—over 80 percent—and to use its factories more efficiently. This will make it possible to reduce the price.

The company has established a raw material testing laboratory in Beijing to speed up the approval process for locally produced goods. Tests that used to be done in Germany are now being transferred to this facility in Beijing. In three years, Volkswagen (China) has cut product costs by 40 percent.

To improve product quality, the company has adopted a process-oriented program called Mass Excellence. The program focuses on making processes more reliable. Companies require internationally competitive quality standards, starting with their own

suppliers.

After efforts to reduce costs and improve quality, Volkswagen (China) has focused its firepower on re-attracting consumers to its brand.

“Volkswagen is winning back customers in China,” Zhang Yu, Shanghai-based director of auto industry consultancy CSM Asia, said in an interview with Bloomberg News. The status of the largest foreign automaker will be unshakable."

The Volkswagen brand occupies three of the top four brands in China, according to a recent JD Power survey on customer satisfaction. Audi ranks first in customer satisfaction. FAW-Volkswagen and Shanghai Volkswagen ranked third and fourth respectively.

Due to the positive market response, Volkswagen (China) can now plan further developments. This year, it will introduce 12 to 14 new car models. "In 2008, you will see more new cars from the Volkswagen Group put on the market," said Dr. Winfried Vahland, CEO and President of Volkswagen (China), "By 2010, we will need a larger volume. "

Volkswagen - China's largest foreign automaker - will complete nearly 1 million production this year. The company will install two state-of-the-art engines in new models for the Chinese market.

The CEO's goal is to be the winner—whether before, during, or after the Beijing Olympics.

“As a partner of the Beijing 2008 Olympic Games, we are striving to win the gold medal of the most attractive automaker in the Chinese market. Volkswagen (China) is ready for future development.”

p>Supplier Experience:

·Find the largest part of the cost and take effective measures to cut it.

·Make sure your suppliers can provide you with internationally competitive raw materials.

·Check operational processes to make them as efficient as possible. Do this every year.

Capability Four: Focus and Early Engagement

Forty-four years ago, Olympic spectators first saw computers in action in Tokyo. There, the results of the match were stored on a computer for the first time. This year's Beijing Olympics will use more computers—20,000 to be exact, all of them Lenovo brands.

In addition to recording results and performing a host of other tasks, these devices also symbolize Lenovo's focus as a provider. Lenovo began to participate in the Olympic Games during the 2004 Olympic Games, which was the first time Lenovo served as a sponsor of the Olympic Games. The company devoted a large team to the project at the time.

“In everything from collecting and storing competitor data, to displaying scores, to events organized by BOCOG, our products will be at the heart of Olympic technology solutions.” Li Lan, Lenovo's vice president of global Olympic marketing, said in a media conference call.

Early engagement is important for all suppliers. For computer-equipment supplier Lenovo, it means buying time for planning and preparation -- especially for heavy testing. In the "Good Luck Beijing" test competition last August, all items related to computer hardware were tested in the actual competition. Those tests will continue until the weeks before the Olympics opening ceremony in August.

Many of the companies that, together with Lenovo, were major suppliers to the Beijing Olympics, also demonstrated their focus.

Focus is reflected in the supplier's willingness to work hard to promote the relationship between the two parties. This effort is often reflected in the investment of a company's time, money, equipment, personnel and other resources into the relationship between the two parties. Until the opening of the Beijing Olympic Games, Lenovo will have nearly 400 on-site technicians and engineers serving the Olympic Games.

Focus is also reflected in the early entry into the market. Ericsson started its development in China a century ago. Historical documents prove that the company started business in China in 1982 with an order for 2,000 Ericsson telephones. In addition to its direct investment in Made in China, Ericsson is pushing its own international suppliers to open factories in China. The company is equally focused on R&D in China, where R&D investment in China has grown by 30% annually since the beginning of this century.

Volkswagen (China) said its contract dates back to 1978, when the Chinese government under Comrade Xiaoping began to implement economic reforms and open-door policies.

Bombardier has signed about 40 contracts with China over the past 20 years. It is the first international train manufacturer to set up a joint venture in China.

Bombardier China's Jianwei Zhang summed up a creed of a world-class supplier. "For us, it's a long-term vision," he said of his company.

It's never too early for future suppliers to the Olympics and other big events to commit to a long-term vision - London The 2012 Olympics are only four years away.

Supplier Experience:

• Be prepared to mobilize resources, especially manpower and time.

·Start testing your abilities and products early.

·Develop a long-term vision for your target market and get started right away.

Supplier Communication Skills

Another important ability that suppliers must be prepared to demonstrate is communication, which includes a lot of trust and coordination. This capability has the following aspects.

Communication quality and quantity. How much information are you prepared to share with clients? How often are you going to share? Both of these issues are critical in developing partnerships with clients.

Information sharing. How much private information are you willing to share? This can include information about your products, processes and financial situation. Some customers request this information to help suppliers reduce costs and improve quality.

Open communication and trust. How much transparency and trust are you ready to achieve? Successful supplier-customer relationships are built on open, trusting relationships that result from excellent and frequent communication.

Accurate supplier data. How current and accurate is your product and process data? If you can't guarantee accuracy, it's difficult for a buyer, even a buyer like the Olympic Organizing Committee, to make a decision in a timely manner and to help you reduce risk.

Conflict resolution. Are you ready for conflict resolution? Conflict will arise in any intercompany relationship, just like the relationship between a supplier and a customer. How much each party contributes to efficient conflict resolution can greatly determine the success and lastingness of the relationship.