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  •  02/01/2020

Interview with CY Wei, President of USI – The Experience Sharing for Management and Cost Reduction of Global Supply Chain

(TEEMA Times No.146 Exclusive Interview, 2020.02) The concept of Industry 4.0 proposed by the German government seeks to combine information and communication technology, Internet of Things technology and production processes. This innovative and intelligent manufacturing concept has recently become a headline in the global manufacturing industry. However, in addition to establishing an intelligent factory, the enterprises also need to focus on management of raw materials procurement to achieve multiple goals, such as reducing production costs, improving production efficiency and strengthening industrial competitiveness. Corporate profits today are generally not high. Many losses are resulted from improper supply chain management. If those loss costs were saved, it would be a considerable net profit. In order to squeeze out the profit further from a meager profit, the enterprises have to start with supply chain management.

Take USI, a global leading electronics designer and manufacturer, as an example. Many years ago, it started to participate in the Operation Research Network platform promoted by the Taiwan Electrical and Electronic Manufacturers' Association (TEEMA) to standardize and automate complex paper procurement processes and achieve the advantages of reducing overall procurement costs. Combined with the recently promoted intelligent manufacturing projects, USI continues to maintain its leading position in the global electronic design and manufacturing industry.

CY Wei, the President of USI, who also serves as the procurement platform service committee of the TEEMA, pointed out that one of the most important tasks of business management is to diversify incomes and save operating costs. By introducing the electronic process mechanism, it can effectively reduce costs and bring great help to the operation team. He said, "After the introduction of the Operation Research Network from the TEEMA, not only has the efficiency of procurement personnel improved, but the platform also provides procurement management reports for procurement supervisors, which can save about 6% of procurement costs. The supply chain financial services were launched in 2018 also solves the problem of supplier's capital movement."

The TEEMA Launched the Operation Research Network to Assist Taiwanese Enterprises in e-Procurement 
USI, one of the members of the ASE Technology Holding Co., Ltd., provides electronic product design, miniaturization, material procurement, manufacturing, logistics and maintenance services for domestic and foreign branded products, such as communication products, consumer electronics, computer products, storage products, industrial products, and automotive electronic and other industries.

USI has many years of experience in the electronic manufacturing service industry, and integrates the advanced technology of packaging and testing of the ASE Group to maintain a leading position in global electronic design and manufacturing.

USI has deployed global expanding since 2018 with the strategies of Modularization, Diversification and Globalization. In addition to the expansion of production sites in Taiwan, Mexico and Huizhou of Guangdong in China, USI has also acquired a factory in Poland, and even established a joint venture with Qualcomm in Brazil, established a joint venture with Sugon in China, invested in PHI Fund and engaged in the privatization of Memtech in Singapore.

CY Wei said that since the 1980s, under the economic development strategy adopted by the Chinese government, many Taiwanese enterprises have begun to move production bases to China, expecting to reduce manufacturing costs, but they also face challenges in purchasing raw materials. In order to assist Taiwanese enterprises in solving problems, TEEMA consolidated the procurement management experience of board members' factories and chose Kunshan, China, where has the highest density of Taiwanese enterprises, as a base to establish the electronic procurement platform, the Operation Research Network, assisting Taiwanese enterprises to introduce electronic procurement processes to optimize procurement management, save procurement costs, improve the efficiency of procurement personnel, improve supply chain management, and provide free procurement management modules and reports, bidding and selling modules, shipment management modules, distribution chain management modules, and supply chain financing models for Taiwanese enterprises.

After 10 years of establishment and promotion of the Operation Research Network led by the TEEMA, there are currently 50 core factories and more than 6,500 suppliers joining. In 2019, the global procurement amount on the platform exceeded 30 billion. After USI joined the Operation Research Network, not only the procurement cost has been reduced, but the operating efficiency has also been greatly improved. It could be the best choice for Taiwanese enterprises to improve procurement efficiency.

Problematic Paper Procurement Processes Affect the Progress of Production Projects
In the early days, USI’s procurement process was similar to other enterprises, mainly with traditional paperwork. When the raw materials management personnel or project personnel put forward purchase requirements, they would open a requisition through the ERP system, and print the requisition for strategic procurement personnel to perform inquiries, bargaining and comparison. After completing the price comparison and determining the purchase, each unit would verify and approve according to the authority, and have the factory purchase unit place the order. Then supplier will be notified to deliver the products at the specified time, and the warehouse will finally receive and inventory.

Jack Chang, the Senior Director of USI, said that this seemingly ordinary process actually has big problems. First of all, in terms of the manual inquiries, you may not be able to conduct inquiries with all suppliers because the procurement information is not transparent. Secondly, in the lengthy price comparison process, the person in charge can easily choose to purchase from a familiar manufacturer because of their relations, which ultimately jeopardizes the company's interests.

Finally, because we usually use email to contact suppliers during the procurement process, it is easy to cause loss of information, and it is difficult to guarantee that it will not affect the scheduled production process.

Therefore, USI expects to develop and introduce a fair and equitable procurement platform. In addition to shortening the complicated procurement process, it can also reduce the manpower for transmitting paper requisitions and avoid the risk of losing important data. Finally, the procurement department also expects that the platform will ensure suppliers receive the inquiry to facilitate the established projects successfully.

Operation Team Leads the Projects and the Operation Research Network Show Benefits
After the Operation Research Network led by the TEEMA went online, USI immediately introduced the solution under the direction of the President CY Wei and smoothly connected with USI's ERP system to replace the traditional paperwork process. After USI applies it officially, it not only shortens the lengthy procurement process one week, but also successfully reduces the cost of paper delivery and avoids the risk of data loss.

Secondly, the Operation Research Network can be linked with the supplier's mobile communication APP system, which helps shorten the quotation time. Even if the person in charge is not in the office, the quotation can be made through the Internet platform, which can avoid the issue that the supplier does not receive the inquiry email. In addition, the system management mechanism is set that no one can see any quotation data before the bid is closed, and the bid cannot be changed after it is closed. It is a very fair operating platform that can prevent the procurement decision being made by relations. Finally, the Operation Research Network's quotation will be directly transmitted to the procurement operation system, which can also avoid the negligence of manually price filled in errors.

"For complex project quotations, the Operation Research Network can also aggregate the quotations of various manufacturers and sort the amounts based on the quotation items. Moreover, the system can take the lowest price of each item to calculate the best total price to negotiate the price." Jack Chang explained, "It is worth mentioning that the system has a record, which can be used for management analysis, and it is very helpful for the later audit operation."

CY Wei believes that the introduction of the Operation Research Network greatly helps the company's operations and management. First of all, the Operation Research Network is an equitable platform, and it also helps to reduce procurement costs. Secondly, it can keep away from human errors. Finally, the operation team can also speed up the decision-making process, which considerably helps to enhance the company's competitiveness. Consequently, many core manufacturers have also joined the Operation Research Network over the past 10 years.

USI believes that a complete system analysis should be done before the introduction of the Operation Research Network, and a complete introduction process should be formulated in accordance with the differences in system and its operation processes.

Supply Chain Financial Platform Services Solve the Funds Problem of Member
Looking back on this project, USI believes there are several key elements to introduce Operation Research Network successfully. First, the top executive must have a strong consciousness of promotion. In addition to formulating the introduction plan, the management mechanism must also be reviewed regularly. Secondly, before the introduction, enterprises should do comprehensive system analysis, and formulate a full introduction process according to the differences in system and its operation processes. Finally, in the promotion process, continuous optimization work should be carried out to enhance overall management.

Jack Chang pointed out that the USI was the first core enterprise to use the Operation Research Network, so we found that many parts of the system need to be improved in the early age. After contacting the technical unit of the Operation Research Network, we gradually modified the website functions to meet USI's needs. For example, the bid closing time is changed from days to a specified time, which can meet temporary or urgent procurement requirements. In the procurement approval section, it was changed to a three-tier supervisor approval to meet the operation procedures of most companies. In addition, the system also adds a non-standard product comparison table, which can provide users and their supervisors with analysis and decision basis, helps the operation team to grasp the overall operation of the company.

CY Wei said that the early Operation Research Network featured the e-Procurement processes. With the operation sites of the Taiwanese enterprises spreading around the world, the current scope of use is no longer limited to Taiwanese enterprises in Kunshan, China, and the addition of multi-language interfaces is also suitable for the worldwide branch offices. In our European branch office, we also have an exclusive language to choose from, and the functions are quite intact. As USI's Mexico and Vietnam sites are about to operate in 2020, they can also have the benefits of e-Procurement through the Operation Research Network.

It is worth mentioning that for assisting Taiwanese enterprises in solving working capital issues, the TEEMA began inviting financial institutions since 2018 to participate in the Operation Research Network to provide its members with supply chain financial platform services, so that small and medium enterprises can secure bank loans through accounts payable financing over payables due to their core suppliers, laying a stable foundation for their long-term operations.
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