【Core Intelligent Driving】After three years of the epidemic impact, is JIT still suitable for the local new energy vehicle industry chain?

In the era of fuel vehicles, Toyota Motor Corporation's multi-variety, small-batch just-in-time production (JIT) production model has been accepted and recognized by domestic enterprises. More and more domestic enterprises are promoting JIT production.

However, JIT just-in-time production is in the form of a later process pull and is produced under the condition of using Kanban. And it has an important prerequisite – balanced production. However, in the three years affected by the epidemic, Toyota has repeatedly stopped production and reduced production in 2021, which has also made automobile production unbalanced.

This can't help but make people wonder, in the three years affected by the epidemic, is the JIT model still suitable for the local new energy vehicle industry chain? With the transformation of the automotive industry chain to electrification and intelligence, what adjustments should be made to the industrial chain?

Is JIT still suitable for the local new energy vehicle industry chain?

JIT, or Just In Time, is also known as the zero-inventory model. JIT originated from Toyota Motor Corporation of Japan, and in the context of that time, the necessary parts were sent to the production line in the necessary quantity at the necessary time, and only the required parts were delivered to production in the required quantity and only at the exact time required.

Under the JIT system, factors that do not bring any added value are wasteful. Among them, the most important is the waste caused by overproduction (i.e. inventory). Moreover, the product is completed just when it is to be transported to the customer.

Similarly, in the inventory management of materials, parts, etc. From the beginning of production to the production process. All "inventory" is on the production line, thus reducing inventory to a minimum. This is also an inventory management model extended by the JIT production method.

"The JIT model has led to efficient production and inventory management, which has also laid a solid foundation for Toyota to dominate the global automotive industry in its early years. Domestic independent brand manufacturers have also been imitating and learning this model in the process of production and operation. An automotive engineer of an independent brand pointed out, "For car companies, the idea of taking JIT is correct, but this is based on the premise of no serious natural disasters and man-made disasters, such as the current global epidemic that has lasted for 3 years." ”

Under the influence of the epidemic in the past three years, all industries have been affected to varying degrees. The global distribution of the automotive industry supply chain has also taken a hit. Even the new energy vehicle branch, which is now developing strongly, has also experienced a phased downturn in the first half of 2020.

Since the second half of 2020, new energy vehicles have bottomed out and seen explosive growth, which has caught the upstream chip industry by surprise, and even now, it has not completely eased.

In addition to chips, the penetration rate of new energy vehicles will further rise in 2021, and the demand for batteries will also rise. The price of key raw materials for batteries has soared due to tight resource extraction and poor transportation, forcing battery costs to rise.

The roof leak is partial to the overnight rain, just in this year's Q1, when the local industrial chain is going to open up full horsepower to produce capacity, the outbreak of the epidemic in Shanghai has put the new energy automobile industry chain under pressure again... Under the influence of the epidemic for three years, the shortage of new energy vehicle industry chain has almost become a "normalization". Under this normal situation, is JIT still suitable for the local new energy vehicle industry chain?

The "normalization" of out-of-stocks, how should the local automobile industry chain be adjusted?

In fact, every time retail and production stocks are insufficient, the same erroneous conclusion is drawn: the stock-out is caused by "insufficient inventory". Then, in the context of the current shortage of goods becoming the norm, the zero inventory model has appeared in the local "water and soil dissatisfaction". So in the context of out-of-stock becoming "normalized", how should the local automobile industry chain be adjusted to adapt to the present?

At the automotive special event hosted by Zhangjiang Hi-Tech 895 Entrepreneurship Camp and Aijiwei a few days ago, Wang Jianfeng, general manager of Zhiji Automobile Supply Chain, pointed out that the current automotive industry is not a single industry, and the upstream and downstream ranges involved are wide, and sometimes a very small process cannot be completed due to the impact of the epidemic, resulting in production delays. In the whole process, problems continue to emerge, but we must learn to sum up experience and clarify what methods to solve what problems are needed in the current automotive industry.

Another drawback of the JIT model is that it is difficult for vehicle companies to contact the suppliers below, and the customer network cannot be shared or traced. In the 2011 Earthquake in Japan, Renesas factory shutdowns were deeply affected by the car companies, but the car companies did not know that Renesas was the main supplier of its Tier1, and they could not predict the risk.

Therefore, increasing the visibility of the terminal supply chain is the next major adjustment direction of the local automotive industry chain. Zeng Guangming, deputy general manager of Xiaohua Semiconductor, believes that "suppliers should sort out step by step and formulate business continuity plans (BCP) for higher risk or critical component projects." Car companies need to verify regularly and supervise the implementation. The plan provided by the car company for the next six months is not only to Give 1, but also to Tier 2, chip manufacturers, etc., and chip companies must also make delivery plans and commitments. ”

He called on Tier 1 to speed up the process of chip localization. So far, the development of the automotive chip industry, low-end chips in the country can basically find the right supplier, some high-end chips such as SoC is still dependent on imports. "The change of the real supply chain model requires innovation and the establishment of redundancy mechanisms, which is a medium- to long-term process." Zeng Guangming pointed out.

The redundancy mechanism is more important than the on-time, on-demand mechanism when it is out of stock.

A fact in front of us is that during the epidemic in Shenzhen and Shanghai (April 1-17), the sales of local car brands have been greatly affected, and the number of domestic passenger car license plates has dropped by 29%-68% year-on-year. However, BYD is an exception, and the number of passenger car license plates from April 1 to 17 not only did not decline, but also increased by 89% year-on-year, of which 35,700 vehicles were listed from April to 17, far exceeding the second place FAW-Volkswagen's 29,500 vehicles.

The reason why BYD has become an exception is mainly due to its small industrial chain layout in Shanghai on the one hand, on the other hand, the most important reason is the result of its previous vertical integration, BYD has hundreds of large and small factories under multiple business units, and the main product types of each factory are basically self-sufficient.

In addition, according to BYD procurement sources, "the same product in addition to their own production will also develop suppliers externally, if the self-produced products are not good, it will increase the proportion of procurement of external products, in this way to enhance the competitiveness of self-produced products, on the other hand, it is also to ensure the stability of the supply chain." ”

At present, the intelligent automobile industry is accelerating its transformation to technology-driven, and the transformation of the entire supply chain should also be followed up in a timely manner, so that OEMs and suppliers can achieve two-way information exchange. At the same time, OEMs should continue to cultivate the agility and flexibility of their own supply chain system, balance the relationship between cost and quality, and polish the business chain is what needs to be considered for the future development of the supply chain and even the development of the automotive industry. (Proofreading/Andy)